UBS-South African Gold Sector Further re-rating potential？-20250818

SA-listed gold miners have materially outperformed YtD...

We increase our long-term real gold price assumptions to $2,800/oz (from $2,200/0z)underpinned by a broadening investor base as well as our expectation that gold willremain a relevant strategic asset for portfolio diversification against macroeconomic andgeopolitical risks over the long-term, Whilst our price targets for the South African goldminers are still based on a pure 12m forward EV/EBITDA target multiple approach, thisincorporation drives a material increase in Our NPVs for AngloGold and Gold Fields at~40% whilst Harmony experiences a 27% increase (Figure 4). Our ratings remainunchanged, but we lift our price targets as we incorporate higher multiple assumptions.While AngloGold (Buy) has been a key outperformer YtD (+154%), it remains ourpreferred pick in the SA-listed gold miners under coverage with Neutral ratings on bothGold Fields (+135%)and Harmony (+94%)vs the GDX(+70%) and gold price (+27%).

...with potential for multiples to re-rate further...

AngloGold's positive operational momentum continues to drive increased confidence intheir FY25/26 guidance delivery, while their renewed focus on returning cash toshareholder helps promotes better capital allocation. With the strategic consolidation ofthe Beatty District (Nevada) and the Arthur pre-feasibility expected in early 2026, we seethe most scope for further multiple re-rating closer to its North American peers. Wesubsequently lift our target multiple from 4.5x to 5.0x, driving an ~14% uplift in ourprice target to R1,180/sh. Gold Fields recently highlighted that they had successfullynavigated the 2Q25 winter period at Salares Norte with the project ramp-up on track.We believe this should help to rebuild management credibility and justifies our targetmultiple uplift from 4.2x to 5.0x, driving a ~26% increase in our price target to R580/sh.However, Gold Fields still needs to deliver on our improving unit cost and volumeassumptions, so we still see some potential execution risk with near-term FCF yieldsimpacted by acquisitions. Harmony has underperformed its SA-listed peers YtD as theirgrowth ambitions have weighed on medium-term cash generation potential and thepositive earnings momentum has dissipated. With production and unit guidancevisibility more limited, we only increase our PT by 5% to R295/sh as we incorporate a3.5x target multiple (5 year average 3.6x) and expect updated guidance at theirupcoming FY25 results.