Northern Star to Acquire De Grey Mining in A $5B All-Share Deal Amid Gold Sector Consolidation

LOCAL MARKET COMMENTARY

South Africa's Top 40 index dipped 0.38% on Friday to 76,052 points, while the All Share fell 0.33% to 84,510 points. October saw the budget deficit widen to R46.08 billion, although the trade surplus edged up to R14.63 billion. M3 money supply growth accelerated to 7.79% from September's 7.25%, but credit growth slowed to 4.26% from 4.63%. The central bank highlighted that deteriorating infrastructure, including water systems and transport networks, poses a significant risk to the financial system. Johann Rupert, Richemont’s chairman, emphasized the importance of extending a trade pact granting duty-free access to the U.S. for South Africa and other African nations.

EUROPEAN MARKET COMMENTARY

European stocks ended higher on Friday after a mixed start, as investors digested new eurozone inflation data. Flash estimates from Eurostat showed eurozone inflation rose to 2.3% in November, exceeding the European Central Bank's 2% target and aligning with economists' forecasts. The data strengthens the case for a cautious rate cut at the ECB's upcoming meeting on December 12. In France, harmonized inflation ticked up to 1.7% in November from 1.6% in October, matching expectations from economists.

US MARKET COMMENTARY

The S&P 500 and Dow Jones Industrial Average hit record highs during a shortened Black Friday trading session, driven by gains in technology stocks like Nvidia. Retail stocks were also in focus as the holiday shopping season began. This rebound followed Wednesday’s losses, when technology stocks led declines amid concerns that strong U.S. inflation could make the Federal Reserve cautious about cutting interest rates.

ASIA MARKET COMMENTARY

Asia-Pacific markets edged higher this morning, starting a data-heavy week with a focus on economic indicators from China, Japan, South Korea, and more. China's official manufacturing PMI for November rose to 50.3, its highest since April, exceeding expectations and improving from 50.1 in October. However, non-manufacturing PMI dipped slightly to 50.0, while the composite PMI remained steady at 50.8. Australia's retail sales showed a robust 3.4% year-on-year growth in October, the fastest since May 2023. South Korea’s preliminary trade data revealed exports grew by 1.4% in November, falling short of forecasts and slowing significantly from October's 4.6%.

CURRENCY MARKET COMMENTARY

South Africa's rand strengthened on Friday despite mixed month-end economic data, while the U.S. dollar edged higher this morning as markets anticipated a critical week for Federal Reserve rate cut expectations. The yen's recent recovery was supported by bets on potential rate increases in Japan. Meanwhile, U.S. President-elect Donald Trump demanded on Saturday that BRICS nations pledge not to pursue or support a currency to rival the dollar, threatening 100% tariffs if they failed to comply.

COMMODITY MARKET COMMENTARY

Gold prices fell this morning after a four-session rally, as a stronger U.S. dollar and profit-taking weighed on the metal. Investors are now looking to upcoming U.S. economic data for insights into the Federal Reserve's monetary policy. Meanwhile, oil prices inched higher, supported by positive factory activity data from China, the world's second-largest oil consumer, and renewed tensions in the Middle East as Israel resumed attacks on Lebanon despite a ceasefire.

 African Media Entertainment Limited (AME) +3.20%
African Media Entertainment Limited, listed on the Johannesburg Stock Exchange, posted strong results for the six months ending 30 September 2024. Revenue increased by 8% to R154.2 million, while operating profit jumped 23% to R24.3 million. Net profit before tax rose 13% to R28.9 million, with profit attributable to equity holders growing 19% to R17.3 million. Headline earnings advanced 18% to R17.1 million, with EPS and HEPS up 20% and 19%, respectively. The interim dividend was raised by 20% to 120 cents per share.

Fairvest Limited (FTA) 0.00%
For the year ended 30 September 2024, Fairvest reported a 5.9% rise in revenue (excluding straight-line rental income) to R2.03 billion. Basic earnings per A and B shares surged by 70.8% and over 100%, respectively. Headline earnings per A share increased 9.8%, while B shares rose by 11.4%. Net asset value per A share climbed 14.5% to 1,611.62 cents, and per B share by 1.7% to 485.69 cents. Dividends grew 4.4% to 138.34 cents per A share and 4.8% to 43.29 cents per B share.

Quantum Foods Holdings Limited (QFH) 0.00%
For the year ended 30 September 2024, Quantum Foods' revenue fell 8.9% to R6.33 billion, down from R6.95 billion the prior year. Operating profit (before capital items) rebounded significantly to R232 million, compared to a loss of R35 million previously. Headline earnings per share rose to 80.4 cents from a loss of 17.4 cents, while earnings per share improved to 80.0 cents from a loss of 17.8 cents. No final dividend was declared, consistent with the prior year.

PBT Group Limited (PBG) -2.26%
PBT Group's revenue from continuing operations edged up 0.3% to R549 million for the period, though gross profit slipped 2.0% to R129.3 million. EBITDA rose by 1.4% to R67.0 million, while normalised headline earnings dipped 0.8% to R32.6 million. Earnings per share increased 0.9% to 31.7 cents, but profit after tax and profit attributable to owners both declined by 2.2% to R46.9 million and R29.1 million, respectively. The company declared a 27 cents per share interim distribution, a 3.8% increase from the previous period, supported by strong cash flows.

Public Joint Stock Company Gazprom (GAZP) 0.00%

Gazprom, Russia's largest gas producer, reported a third-quarter loss of 53 billion roubles ($492.5 million) in 2024, citing a one-off tax increase anticipated for 2025. This contrasts with a profit of 56.4 billion roubles in the same period in 2023. However, nine-month net income surged to 990 billion roubles from 353 billion roubles in 2023, driven by higher gas prices, increased supplies, and successful oil and LNG sales, including a 27.5% stake in Sakhalin Energy acquired from Shell for $1 billion. EBITDA for the nine months rose 23% year-on-year to 2.14 trillion roubles, among the highest in Gazprom's history. Despite robust results, future challenges loom as gas sales to Europe remain strained due to geopolitical tensions and a transit deal with Ukraine expiring at year-end, with Kyiv ruling out an extension.

Northern Star Resources Limited (NST) +0.81%

Australian gold miner Northern Star Resources announced on Monday that it will acquire De Grey Mining in an all-share deal worth A$5 billion ($3.3 billion), capitalizing on high gold prices to drive sector consolidation. The acquisition provides Northern Star with access to De Grey's Hemi gold development project in Western Australia, promising low-cost, medium- to long-term growth. De Grey shareholders will receive 0.119 Northern Star shares per De Grey share, valuing the offer at A$2.08 per share—a 36.8% premium to De Grey's last closing price of A$1.52. Following the news, Northern Star shares dropped up to 5%, while De Grey shares surged 28% before settling at A$1.93.

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