Goldminers Find Lustre Fading on ‘big is best’

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Liezel Hill March 23, 2013

Acquisitions were once the name of the game, but now the miners are looking to spin off their assets to unlock better value, writes Liezel Hill.

The world’s 10 biggest gold companies led by Barrick Gold spent more than $US100 billion in the past 20 years buying new mines and projects around the globe. Now they’re feeling pressure to throw the strategy into reverse.

Gold Fields spun off most of its South African assets in February. Billionaire hedge-fund investor John Paulson is calling for a break-up of AngloGold Ashanti. Barrick, which has 27 mines, is selling assets after an acquisition and cost overruns helped erase $US26 billion of the Canadian company’s market value.

An index of 14 large goldminers has lost 26 per cent in the past year, worse than the 7.1 per cent drop in a similar gauge of global oil companies. The gold industry, which underperformed the metal for five of the past seven years, has tried to stop the slide by ending gold-price hedges, raising dividends, building new mines and, most recently, pledging spending discipline. Spinning off or selling assets may be its next option.

”The next fad is going to be the unbundling of the majors,” >>MORE (