South Africa’s gold miners buoyed by record bullion prices

South Africa’s long-embattled gold miners are looking to cut debt and boost dividends as the ascending gold price continues to break records in the midst of the global economic downturn this year.

The gold price extended its record-breaking run to trade at US$2,069.21 per ounce yesterday, which has provided a lifeline to South African miners, who have faced rising costs to extract gold from some of the oldest and deepest mines in the world.

Analysts and fund managers are predicting a sectoral growth spurt over the next two years amid rising investor interest and as South African gold miners spend more to bring net debt down while rewarding investors with dividends.

Sibanye Stillwater, one of the country’s most renowned miners, said its net debt fell by 40% year-on-year in the first quarter. Higher prices have also made more marginal ounces profitable for Sibanye, according to spokesman James Wellsted, who told Reuters: “Maybe mining secondary reefs … might be viable at these prices.”

Meanwhile, Pan African Resources is hoping to be net debt free by June 2021 and plans to increase its dividend payout up to 5% from 1% last year.

However, South Africa’s operating environment remains risky, as national power firm Eskom struggles to keep the lights on and the country continues to battle rising COVID-19 cases in underground mines where social distancing is a challenge.