SELLING AS­SETS SHOULD NEVER BE A GOOD THING

Finweek English Edition - - SIMON SAYS -

Another strug­gling sec­tor is min­ing and in par­tic­u­lar gold min­ing. This is il­lus­trated by An­gloGold Ashanti’s an­nounce­ment that it is selling one of its US mines for $820m − and the share price surged on this news. Selling off as­sets (in this case gold mines) should not be great news, but in this strug­gling in­dus­try it is cer­tainly viewed as such. The deal is clever in that the com­pany gets an un­capped roy­alty on fu­ture un­der­ground pro­duc­tion as well as re­duced debt and cap­i­tal ex­pen­di­ture costs. But ul­ti­mately the re­al­ity is that it is selling as­sets to keep go­ing – that’s never good.

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