What is one to make of Anglo American's announcement today (28 June) that it has lifted its stake in Gold Fields from 16.7 percent to just above 20 percent - a move it deems necessary in order to equity account its holding in South Africa's second largest gold producer?

The market's reaction was relatively phlegmatic with Gold Fields' share price barely moving in response. This suggests that Anglo American's statement has been taken at face value. But South Africans, and many others apart, know Anglo rarely works on one plane only. Before we indulge in a number of takeover scenarios, Anglo's move, by design or not, makes it a serious player in the future affairs of Gold Fields.

Two simple facts need to be understood. As matters currently stand, Anglo has the loudest voice Gold Fields' future. Secondly, another 4 percent in Gold Fields would present Anglo with an actual veto. "Gold Fields is already essentially secure from a takeover unless Anglo's blessing can be sought," Investec's John Clemmow said in response to the deal.

Gold Fields must now await its fate ? a fact upon which Willie Jacobsz, Gold Fields' investor relations manager, places a brave face: "This is a huge vote of confidence in Gold Fields.," he says. He also says the company is "delighted". Anglo American originally took its stake in Gold Fields when the share price was in the early R20's and it is now around the R130's. This is an indication they still see significant upside in Gold Fields," said Jacobsz.

The move explains large volumes traded in Gold Fields primarily by UBS Warburg which enjoys a close relationship with Anglo American. Anglo declined to comment further on the transaction.

Gold Fields' future?

One senior South African gold analyst said Anglo American's explanation made sense, although he said the possibility of the purchase being a preamble to future corporate activity in a rapidly consolidating gold sector could not be discounted. "You can't argue with the explanation, it does make sense that they buy the extra 3.9 percent and report 20 percent of Gold Fields earnings through their income statement," said the analyst. "But you just can't write off the fact that there could be a bid coming for Gold Fields further down the line and they're trying to position themselves for it," he said.

The speculation is not new. Analysts have punted a move on Gold Fields by its South African rival AngloGold or North American major Barrick, or both, for almost two and half years now. But given the radically altered state of the current gold market, most agree that a solo raid by AngloGold is unlikely, given merger discussions between the two broke down late in 2000 when the Gold Fields share price - then around R30 - was a fraction of its current level of R127.50.

But the likelihood of an offer coming from North American major Barrick is harder to discount.

Using a 20 percent stake in Gold Fields as a bargaining chip for the next round of industry consolidation could be a smart move on Anglo American's part, not dissimilar to the positioning of Franco Nevada prior to the Newmont raid on Normandy. Anglo American could be the king maker behind its own gold subsidiary AngloGold, which is widely believed to have its eye on Gold Fields' Driefontein mine, which is contiguous to AngloGold's Western Deep's complex.

"Barrick could take everything except Driefontein. That would give them the level of exposure they'd be more comfortable with; they wouldn't want the full four million ounces coming out of South Africa," said the analyst.

The rationale for a Barrick move in Gold Fields is compelling, given that chief executive Randal Oliphant has made it clear he is keen on having some of the group's portfolio in South Africa. The reserves and high production levels from South Africa would also dilute Barrick's hedge position, a move investors are baying for.