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SA mining’s winners & losers in 2012

31 December 2012

ALL in all, it was a miserable year to be invested in South African-listed mining stocks, the gold industry in particular. This is demonstrated by the fact that the best performing 'gold sector' stock - DRDGOLD - is the one that has stopped mining gold in favour of retreating tailings, or dumps. It grew 43% in value during 2012.

Of gold miners proper, Gold Fields was the best performer losing only 16.5%.

Mysteriously, the more diversified AngloGold Ashanti performed only as well as Harmony Gold Mining Company which is almost entirely focused on mining South African gold with shares in the companies down 23% and 22.9% respectively.

Given the continued strength of the dollar gold price, and weakening of the rand, the performance of gold shares must be a real worry.

For among the worst performers, however, look no further than the platinum sector. Unsurprisingly, Lonmin lost 68% in value during the year while Aquarius Platinum was 63% weaker.

But there were real winners, too. Free of the industrial action that smacked Anglo American Platinum (-16%) so hard, Northam Platinum gained nearly 27% underpinning some comments from analysts that the South African platinum sector had offered value.

The venue of the first major industrial action that scourged the South African platinum sector in 2012, Impala Platinum turned in a reputable 0,8% decline in the year.

It was a terrible year to be a junior, or developing new assets.

Great Basin Gold was the worst performer of the 28 stocks analysed for the purposes of this column. The company, now in the hands of liquidators, lost 91% in 2012 while Wits Gold lost 47% in the year. Gold One International, now shorn of its founder Neal Froneman who joins Gold Fields's progeny, Sibanye Gold, lost 21% for the year.

Coal developers fared only slightly better. Coal of Africa was 70% weaker while Forbes & Manhattan Coal Corporation was 67% weaker reflecting the decline in coal prices internationally this year. One suspects the outlook for the international coal price has to be better in 2013, but that doesn't necessarily mean the investment climate will be improved for the miners owing to the government's proposed regulations on domestic and export pricing.

The criticisms of Cynthia Carroll, the outgoing CEO of Anglo American, appear to be mirrored in the firm's share price performance. It shed 11% in the year despite its exposure to Kumba Iron Ore which gained 13%. By comparison, BHP Billiton gained 26% in value during 2012.

There have been some major empowerment accidents in the South African mining sector over the years, but 2012 was kind to the likes of African Rainbow Minerals (ARM, +9%) and Exxaro Resources (+1.79%).

But it says much for having a quality asset and assured partner, that it's Assore, chaired by billionaire Des Sacco, that performed best on the JSE in 2012, gaining 88% - a remarkable performance given that over five-years, the company's value has grown 338%.

Source: www.miningmx.com