03 May

South African Gold Producers Agree to Settle Lung-Disease Suit

Mining companies including Anglo American Plc agreed to settle a class-action lawsuit from workers who said they contracted deadly lung diseases in South African gold mines.

The agreement provides for compensation for all eligible workers suffering from silicosis or tuberculosis who worked in the companies’ mines at any point since March 1965, the parties said in a statement Thursday.

The six producers last year set aside about 5 billion rand ($396 million) to settle the lawsuit. The settlement will be submitted to South Africa’s South Gauteng High Court for ratification.

The workers say they were negligently exposed to large amounts of silica dust over decades, causing silicosis and pulmonary tuberculosis. South Africa’s mines, which have produced a third of all the world’s gold, have drawn in millions of poor, black workers from across the region in the 130 years since gold was discovered.

The mines remain among the world’s deepest and most dangerous even after the end of apartheid rule in 1994, before which safety standards and environmental restrictions were minimal.

There is no limit on the number of potential claimants, the parties. The agreement was reached following three years of negotiations and is the first class action settlement of its kind in South Africa.

“The parties to the agreement believe that a compromise settlement is far preferable for all concerned than an inevitably lengthy and expensive litigation process would be, allowing for claimants more quickly to receive compensation and relief for their conditions,” they said.

Anglo American, African Rainbow Minerals Ltd., AngloGold Ashanti Ltd.Gold Fields Ltd., Harmony Gold Mining Co. and Sibanye Gold Ltd. were represented by the Occupational Lung Disease Working Group. Spoor, Abrahams Kiewitz Inc. and the Legal Resources Centre represented the class members.

Source: https://www.bloomberg.com/news/articles/2018-05-03/south-african-gold-producers-agree-to-settle-lung-disease-suit

26 Feb

Deal Wizard of South African Gold Mining Is Scaring Investors

Investors might be running out of patience with Sibanye Gold Ltd.’s colorful chief executive, Neal Froneman.

The South African miner’s stock plunged by a record 16 percent Thursday after the company warned it may consider selling assets, metals streams and — only as a last resort — new shares, if the recent strength in the rand persists.

Sibanye is under pressure to reduce debt after a rapid-fire series of deals that transformed the company from a staid and steady gold producer to a diversified precious-metals miner with both southern African and U.S. assets.

The company’s net debt is 2.6 times underlying earnings and almost as high as its current market value.

So far, investors have given Froneman, an industry veteran who earned himself the the nickname ‘Mr Fix-It’ for turnaround successes in the 1990s, the benefit of the doubt. But Thursday’s plunge suggests that might not continue forever.

“The biggest issue here is there is too much debt,” said Arnold van Graan, an analyst at Nedcor Securities. “We are seeing a lot of balance sheet risk building up if the rand-gold price stays where it is.”

South Africa’s rand has gained about 20 percent versus the dollar in the past three months, as investor optimism builds following leadership changes in the ruling party and President Cyril Ramaphosa’s appointment. Gold priced in rand has declined by about 14 percent in the same period.

Gold and platinum-group metals are sold in U.S. dollars, and while the majority of Sibanye’s gold and a substantial amount of the group’s costs are denominated in rand, its results and financial condition are affected if there is a material change in the value of the rand.

Sibanye gained 1 percent in Johannesburg Friday. The plunge in the company’s share price was overdone and it is still generating free cash flow, Morgan Stanley analysts said in a note. But the company’s debt level could present a challenge if the rand keeps strengthening.

To read the full article, click here. 

02 Feb

Ethiopia could be sitting on one of world’s great untapped gold deposits

To the west of Ethiopia near the Sudanese border lies a place called the Asosa zone. This may be the location of the oldest gold mine in the world. Dating back some 6,000 years, it provided a key source of gold to the ancient Egyptian empire, whose great wealth was famous throughout the known world. It may even have supplied the Queen of Sheba with her lavish gifts of gold when she visited King Solomon of Israel almost 3,000 years ago.

The excitement in this part of the world is more about the future, however. Some local inhabitants already make a living from prospecting, and several mining companies have been active in the area in recent years, too.

But what comes next could be on a much bigger scale: I have just co-published with my colleague, Owen Morgan, new geological research that suggests that much more treasure might be buried under the surface of this east African country than was previously thought.

Treasure trail

The Asosa zone is made up of flatlands, rugged valleys, mountainous ridges, streams and rivers. It is densely vegetated by bamboo and incense trees, with remnants of tropical rainforests along the river valleys. The zone, which is part of Ethiopia’s Benishangul-Gumuz region, is spotted with archaeological sites containing clues to how people lived here thousands of years ago, together with ancient mining pits and trenches.

Local inhabitants have long taken advantage of these riches. They pan for gold in Asosa’s streams and also extract the precious metal directly from outcropping rocks.

More substantial exploitation of the region’s riches dates back to the Italian invasion of the 1930s. The Italians explored the Welega gold district in West Welega, south-east of Asosa.

Haile Selassie, emperor of Ethiopia from 1930 to 1974, believed the country had the potential to become a global leader in gold. But when the revolutionary Derg government deposed him and the country plunged into civil war, gold mining disappeared off the agenda for a decade and a half. It took until the early 2000s before the government started awarding exploration licences.

Several mines are up and running, neither of them in Asosa. One is at Lega Dembi slightly to the east, owned by Saudi interests. The other, at Tigray in the north of the country, is owned by American mining giant Newmont, and just started production late last year.

More is already on the way: the beneficiary of the Italian efforts from the 1930s in Welega is the Tulu Kapi gold prospect, containing 48 tonnes of gold. This was most recently acquired in 2013 by Cyprus-based mining group KEFI Minerals (market value: roughly US$2.3bn).

As for Asosa, the Egyptian company ASCOM made a significant gold discovery in the zone in 2016. It published a maiden resource statement that claimed the presence of – curiously the same number – 48 tonnes of gold. Yet this only looks like the beginning.

Read more here: How We Made it in Africa

 

05 Oct

Comic Relief and Fairtrade back ethical gold mining in east Africa

Comic Relief and Fairtrade have joined forces with the Dutch government to back a $15m (£11m) scheme to support ethical gold mining in east Africa after a successful pilot project in Uganda.

About a fifth of the world’s gold produced every year comes from small-scale mines where millions of people work in hazardous conditions without access to modern technology. They resort to extracting and crushing ore by hand before using water and then highly toxic mercury or cyanide to separate the gold. The ad hoc process is not only harmful for the individuals involved, some of whom are children, but pollutes their local environment. It is also highly inefficient, on average extracting only 40% of the available gold.

US interest rate rise to deepen debt crisis in developing world
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Fairtrade is working with specialist mining consultancy the Dragonfly Initiative in trying to raise up to $4m in investment by 2020 from specialist environmental and social investors, government bodies and big business to help small-scale artisanal mines. Half of the funds will be loans to support investment in better technology and the other half grants to support building the organisational change necessary.

“We are trying to generate a proof of concept which has the possibility to bring economic benefits to thousands of families. We also hope over time to increase supply of Fairtrade gold,” said David Finlay of Fairtrade. At present only about 400kg of the ethical precious metal is produced ever year.

“Miners want to improve standards but it is a real struggle. They want access to finance to acquire equipment and reduce reliance on mercury and enhance the recovery of gold. There will be both an economic and environmental benefit,” Finlay said.

Using a centrifuge device, which costs about $5,000, increased the extraction rate for gold to 70% in the Uganda trial. But introducing the machinery is only part of the answer alongside supporting miners to work in a more organised and safe way.

 

Read more: Comic Relief and Fairtrade back ethical gold mining in east Africa

26 Jul

Gold drifts lower as dollar firms ahead of Fed

BENGALURU  – Gold prices fell on Wednesday as the dollar firmed above multi-month lows, with investors waiting for clues on the U.S. Federal Reserve’s tightening plans after the conclusion of a two-day meeting.

The U.S. central bank will issue its monetary policy statement at 2 p.m. EDT (1800 GMT), where it is expected to hold interest rates unchanged and possibly hint that it will start winding down its massive holdings of bonds as early as September.

Spot gold fell 0.27 percent to $1,245.16 per ounce at 0629 GMT. U.S. gold futures for August delivery fell 0.61 percent to $1,244.50 per ounce.

“Markets are certainly a little bit cautious ahead of the Fed meeting and that’s probably hindering investor appetite,” said ANZ analyst Daniel Hynes. “I think the market will be looking for any comments around inflation.”

Economists expect the Fed’s benchmark lending rate to remain in a target range of 1.00 percent to 1.25 percent.

“At this stage, we would rather be neutral on gold as Fed wording could throw the market off (in either direction),” said INTL FCStone analyst Edward Meir.

Higher interest rates would push yields up and likely boost the dollar.

Higher yields increase the opportunity cost of holding non-yielding gold, while a stronger dollar makes bullion more expensive for non-U.S. investors.

“Stronger U.S. economic data has also weighed on gold, but has been negated by the weak inflation outlook,” said ANZ’s Hynes. “Assuming that we don’t see any sort of change in language from the Fed meeting, I suspect we’ll see safe haven demand pushing gold prices up.”

Long-dated U.S. Treasury yields jumped by the most in almost five months on Tuesday as stocks hit record highs. [US/]

Asian stocks steadied, while the dollar held firm as investors awaited the Fed’s policy decision. [MKTS/GLOB] [USD/]

[via Reuters Africa]