JOHANNESBURG, International rating agency Moody's Investor Relations has praised the restructuring initiatives taken by South African miners of gold and platinum group metals (PGM) to protect their sustainability and profitability, saying that these steps are benefiting their credit profiles.

In a report received here Tuesday, Moody's vice-president and senior analyst Douglas Rowlings said the changes would also shore up the production profiles of gold miners following a cycle of under-investment in reserves development since 2013.

South African mining groups' restructuring initiatives will protect their credit quality by returning South African operations to a state in which they are free cash flow-generating, Rowlings said. Improved free cash flow generation and accumulating offshore cash balances will be channeled towards expansion opportunities outside South Africa, reducing their operating risk profiles.

The report, entitled Metals and Mining: South Africa, Restructuring of South African Operations is Credit Positive for Gold, PGM miners, says the restructuring of South African operations will be positive for the credit profiles of AngloGold Ashanti, which is on Baa3 positive rating, Gold Fields, which is on Ba1 positive, and Sibanye Gold, which is on Ba2 stable.

The profitability of South African gold and PGM mining operations has been under increasing pressure because of the still low, but slightly improved, gold and PGM price environment.

According to the Fraser Institute, a Canadian think tank, the continued lack of clarity and certainty over South African mining policy is increasing the risk attached to mining operations in the country, reflected in the continued lowering of South Africa's investment attractiveness.

Moody's said it expected mining companies to keep a tight rein on capital expenditure if there is no framework that provides policy predictability and certainty.

Many mines' useful lives could be extended with new equipment and infrastructure to reduce costs and improve entry to ore bodies, Rowlings said. If the substantial expansionary investment required to reconfigure loss-making mining operations and make them profitable is not forthcoming, mines will either be restructured or closed.