While it is not patently clear why Gold Fields is splitting its operations into two separate entities, a couple of black economic empowerment (BEE) operators have been given a chance to further flex their muscles.
These BEE operators are Sello Moloko, the former president of the Association of Black Securities and Investment Practitioners (ABSIP) and Jerry Vilakazi the former CEO of Business Unity South Africa (BUSA). Gold Fields said in its announcement “Two further HDSA directors will be appointed in due course”.
Gold Fields is splitting its operations in a move that will see the birth of a new JSE listed entity called Sibanye Gold. The new entity will house assets that were kept under an entity formerly known as GFI Mining South Africa Proprietary Limited. This entity holds the KDC and Beatrix gold mines as well as various service companies.
The original Gold Fields will be left with the South Deep project and its offshore mines in Ghana, Peru and Australia. The announcement said Gold Fields will also be left with an opportunity to realise value from its world-class portfolio of development and exploration projects. Gold Fields will remain under the stewardship of Nick Holland as CEO, Paul Schmidt as CFO and Mamphela Ramphele as chair of the board.
Theories are abound about why Gold Fields is doing this. The most popular is a suspicion that this is a move to separate toxic South African issues from the rest of the operation. But then the allocation of the South Deep project dilutes this theory.
With all that said, the star of Moloko is set to rise from the initiative. The Gold Fields announcement said Moloko, “currently a non-executive director of Gold Fields and executive Chair and Founder of the Thesele Group, will become the non-executive Chair of Sibanye Gold and will step down from the Gold Fields board”. Moloko has operated in the BEE space for a while after living Old Mutual in the mid 2000s. He has participated in a couple of high profiled BEE deals through Thesele Group. Many will know him as the chairman of financial services giant Alexander Forbes a positioned he got to the detriment of his standing as a BEE activist.
Vilakazi becomes a non-executive directors. Largely known for being the CEO of the Black Management Forum and converting to BUSA, Vilakazi is the also the chair of Palama.
The Sibanye board also feature high flying executive Rick Menell as non-executive director and Keith Rayner. Cain Farrel, the current Company Secretary of Gold Fields, will become the new Company Secretary of Sibanye Gold.
Neal Froneman, currently CEO of Gold One, will become CEO of Sibanye Gold. Charl Keyter becomes CFO.
Holland said “By unbundling the cash-generative KDC and Beatrix mines into Sibanye Gold, its cash flows can be utilised to extend the life of the mines and improve dividend payouts to shareholders. The first priority, however, will be to achieve stable and safe production”.
Froneman said the company will be committed to maintaining profitable, stable and low cost operations that provide a high degree of leverage to the gold price. “We will selectively pursue synergistic opportunities for consolidation in the South African gold industry and, as a separately listed entity, will be able to fully utilise our free cash flows for the benefit of the Company and its stakeholders”.
The group said there will be no job losses directly as a result of the creation and unbundling of Sibanye Gold. In addition all conditions of employment will remain unchanged.
The group also said “Sibanye Gold has committed itself to both continuing and enhancing Gold Fields’ sustainable development, labour relations, transformation and other BEE policies”
Our eyes will be on the BEE operators going forward. We will hold them more accountable.