• 720 days Will The ECB Continue To Hike Rates?
  • 721 days Forbes: Aramco Remains Largest Company In The Middle East
  • 722 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,122 days Could Crypto Overtake Traditional Investment?
  • 1,127 days Americans Still Quitting Jobs At Record Pace
  • 1,129 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,132 days Is The Dollar Too Strong?
  • 1,132 days Big Tech Disappoints Investors on Earnings Calls
  • 1,133 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,135 days China Is Quietly Trying To Distance Itself From Russia
  • 1,135 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,139 days Crypto Investors Won Big In 2021
  • 1,139 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,140 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,142 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,143 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,146 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,147 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,147 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,149 days Are NFTs About To Take Over Gaming?
Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

  1. Home
  2. Markets
  3. Other

More SA Mining Stock Bears Come out of the Woods

Lately we've been subjected to quite a lot of negative news and bad publicity surrounding the South African golds and DRDGold in particular. The objects of this bearish sentiment range from the strength of the SA Rand to mining- and worker-related issues at the SA mines.

Regardless of the reason for the current bearish outlook, this is all part of the cycle of fear and greed and it doesn't mean the end is here! It's a cycle that has repeated itself many times over in virtually all markets and at times in individual stocks, including DRDGold. (Remember back in the mid-'90s when seemingly everyone was super bullish on DROOY? That was just before the crash in DROOY's price in 1997-98. Now some of those very same advisers are telling everyone to sell and give up on DROOY at the low part of the cycle!)

According to a recent newswire article by Nicky Smith, DRDGold, formerly Durban Roodepoort Deep, was considering shutting down a third of its South African production, it told a group of fund managers at last week's mining Indaba in Cape Town. Ilja Graulich, the investor relations executive, said the proposal to cut production was one of a range being considered and had come from the company's discussions with its shareholders and institutions. He added that nothing had been decided on how to structure the South African operations to deal with the ever-virile rand.

The article went on to point out that in the past 18 months the company has had to cut 6,000 jobs (DRD currently has 14,000 employees). In the past 12 months it has cut South African output by about 70,000 ounces, the article said. The company produces about 560,000 ounces a year in South Africa while its Australasian operations produce about 350,000 ounces.

The article referenced a nameless fund manager who was quoted as saying that DRDGold had a strategy session at the weekend where the proposals had been considered. It was after this session that fund managers were briefed in Cape Town.

In recent weeks there have been suggestions in analysts' research reports that DRDGold would shut down all its South African operations. This kind of talk is typical at bottoms where everyone becomes myopic from focusing too much on the current depressed prices and lack the foresight to see the road ahead.

Emotions always come to the fore at extremes along the price cycle -- either fear or greed -- and fear is definitely the strongest of the two. This is why bottoms are often much more emphatic than tops when the trend finally reverses.

Back to homepage

Leave a comment

Leave a comment