UPDATE 1 – South Africa’s Anglogold plays down merger prospects amid deal talks

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TORONTO / JOHANNESBURG, March 31 (Reuters) – South African firm Anglogold Ashanti does not need to pursue mergers and will not scale up on its own, its acting chief executive said on Wednesday, softening the speculation that it could participate in other deals in the sector.

Sibanye-Stillwater CEO Neal Froneman this month pitched the idea of ​​a merger with peers AngloGold and Gold Fields, arguing that consolidation is needed for South African gold miners to be competitive worldwide.

Anglogold’s interim CEO Christine Ramon declined to comment directly when asked about a possible tie-up with Gold Fields during a panel discussion at the Mining Indaba Virtual Investment Program alongside Froneman and Mark Bristow, director of Barrick Gold.

Consolidation can bring benefits, including operational synergies, but can also add complexity and costs, she said.

“I think bigger doesn’t necessarily mean better. We wouldn’t be looking to build a ladder just for fun.”

Ramon, who replaced Kelvin Dushinsky as interim head of Anglogold last year, said the miner is focused on developing its own assets and has the backing of investors. “For us it is much more important not to be distracted,” she said.

Anglogold shares were flat on Wednesday.

The stock initially rose 2.6% while Gold Fields fell 2.6% after Froneman launched the prospect of a deal on March 8. Sibanye shares fell 1.2% that day.

Froneman has expressed interest in acquiring a mid-tier gold company with over one million ounces and operations outside of South Africa with the goal of growing its gold business.

Sibanye, which started out as a pure gold producer, went on to become the world’s largest platinum miner with its 2019 takeover of London-listed rival Lonmin.

Gold currently generates less than 20% of Sibanye’s profits, and the miner wants to diversify beyond platinum to support a sustainable dividend, Froneman said on Wednesday.

“To do that, you can’t be cyclical,” he told the panel. “You cannot have a strategy or a policy that puts you in the vagaries of commodity prices.”

(Reporting by Jeff Lewis in Toronto and Tanisha Heiberg in Johannesburg; editing by Jan Harvey and Mark Heinrich)

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