Why AngloGold was worth more than Anglo American

FOR a brief but delicious moment, AngloGold Ashanti was worth more than Anglo American, its former parent company. On November 27, AngloGold hit a record high of R748bn while Anglo was at R690bn. It was a brief flickering of the improbable made true, in a year of striking price records for gold.What curious series of events has led us there, some might wonder.As it turns out, the similarity in valuation is not so curious after all; at least not for Anglo shareholders. To be fair to the UK miner’s track record for shareholder value, you’d probably have to add back Valterra Platinum, which Anglo demerged on May 31 in a transaction that gave Anglo shareholders 110 of the platinum miner’s shares for every 1,075 Anglo shares held. In fact, you might even add back Thungela Resources, now worth R11.8bn. The thermal coal miner was demerged from Anglo American in June 2021, but has been four times its current value.There are questions to be asked, however, about whether Anglo American’s portfolio simplification to focus on copper and iron ore will add value in the long term, especially considering the delicacy of its proposed merger with Canadian company Teck Resources. Shares in Anglo are 20% higher this year, easily outpacing those of former suitor BHP, up 14%. But a lot of that value could evaporate if the merger fails.The merger now has shareholders support but it is subject to scrutiny in terms of the Investment Canada Act. Canadian industry minister Mélanie Joly was quoted by The Wall Street Journal as saying Anglo’s Teck deal “did not do enough” to satisfy her government. “I think that Canadians should get more out of this merger of equals, and the process is continuing,” she said.Do streamlined companies have better ratings than companies with greater diversification? It would seem so, for now. Anglo rival Glencore has underperformed its peer group this year. In the past two months Goldman Sachs and UBS have called for its restructuring. It stopped short of this in a recent capital markets presentation, setting out a project pipeline instead.The other side of the equation is the extraordinary improvement in gold equities. At first, gold shares lagged the metal’s price, but this year they have caught up. The Van Eck Gold Miners ETF is 135% higher in 2025, while the gold price has risen 61% over the same period.“While no bull run lasts forever, the foundations of gold’s ascent — particularly the structural shift in private and official sector demand — suggest that price risks remain skewed to the upside over the next 12 months in the face of ongoing global uncertainty,” says Joni Teves, a strategist for UBS.For AngloGold Ashanti specifically, there may be more good news to come owing to a strong performance in production and cash cost containment. The group’s projects in Nevada are getting good press and have “the potential to trigger a rerating if capital intensity is reasonable and spending is phased”, says Steve Friedman, the Swiss bank’s gold and platinum analyst in Joburg.“Positive operational momentum and emphasis on cash returns could continue to support the relative outperformance,” he says.Shares in AngloGold are 221% higher this year.A version of this story first appeared in the Financial Mail.The post Why AngloGold was worth more than Anglo American appeared first on Miningmx.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com