| Tue 30 Jul 2002, 0:00 | | ANGLOGOLD LIMITED - ACQUISITION OF PEREZ COMPANC`S |
|
CERRO VANGUARDIA S.A.
ANGLOGOLD LIMITED
(Registration number 1944/017354/06)
(Incorporated in the Republic of South Africa)
("AngloGold")
Acquisition of Perez Companc`s entire equity interests in Cerro Vanguardia S.A.
Introduction
The Board of Directors of AngloGold is pleased to announce that agreement has
been reached with Perez Companc International ("Perez Companc") and has acquired
its entire equity interests in Cerro Vanguardia S.A. ("CVSA") for a cash
consideration of US$90 million ("the transaction"). Prior to the transaction,
Perez Companc and AngloGold each owned 46.25 per cent interest in CVSA.
CVSA owns the exclusive right to exploit the Cerro Vanguardia Mine, which is
located in Patagonia in the Santa Cruz Province of Argentina. AngloGold
acquired its original interest in CVSA from Minorco in 1999 and participated in
the completion of the development and the commissioning of the Cerro Vanguardia
Mine, as well as its operation since that time.
Fomento Minero de Santa Cruz Sociedad del Estado ("Formicruz"), the Santa Cruz
state mining promotion company, will retain its 7.5 per cent free carried
interest in CVSA. Formicruz has advised AngloGold that it will not exercise its
pre-emptive rights to acquire any additional interest in CVSA as a result of the
transaction. Therefore, the transaction has doubled AngloGold`s interests in
CVSA and the Cerro Vanguardia Mine to 92.5 per cent.
AngloGold`s Rationale for the Transaction
The transaction, which is immediately accretive to AngloGold`s earnings and cash
flow, will reduce AngloGold`s cash and total operating costs per ounce and
further diversify its production, reserve and resource base on geographical,
operational and orebody terms.
The transaction consolidates AngloGold`s ownership of the Cerro Vanguardia Mine.
AngloGold is confident of the existing and upside potential of this asset.
Overview of the Cerro Vanguardia Mine
The Cerro Vanguardia Mine is one of the lowest cost gold producers in the world.
The mine is currently entirely an open-pit operation. The orebody comprises a
series of hydrothermal vein deposits containing gold at relatively high grades.
Silver exists in vast quantities and is produced as a by-product. The mine
produces gold bullion dore which is shipped via port facilities in the Santa
Cruz Province (for which CVSA receives certain incentives) and is refined in
South Africa and England.
As at 31 December 2001 the total ore reserves of the Cerro Vanguardia Mine were
2.4 million ounces and total ore resources were 3.6 million ounces. Current
plant throughput is 900,000 tonnes per annum. However it is planned to increase
this to 1 million tonnes per annum from 2004 at relatively minimal capital
costs. The existing reserve base is sufficient to support a life of mine to
2012. However, recent exploratory drilling has confirmed additional resources of
400,000 ounces of gold. These additional resources and further resources that
may result from continued exploratory drilling could extend the life of the open
pit operations or allow the annual gold production from these operations to be
increased.
In addition to resources minable using open-pit techniques, exploratory drilling
has indicated that the hydrothermal vein mineralisation extends at depth. A
small percentage of underground mining is planned below the current pits in the
existing life of mine plan. However, the extension of mineralisation at depth
could expand the extent of the planned underground operation and therefore
further extend the life of mine. Finally, the vein mineralisation extends as a
stockwork structure into the country rock of the existing veins. This results in
lower grade resources, which are currently being mined and stockpiled to be
extracted by heap leach techniques once sufficient ore resources have been
stockpiled. On site heap leach testwork has confirmed the viability of this
proposal.
For the year ended 31 December 2001, AngloGold`s 46.25 per cent interest in CVSA
produced attributable operating profit including realised non-hedge derivatives
of US$15 million and attributable earnings before interest, tax, depreciation
and amortisation ("EBITDA") of US$24 million. Attributable gold production was
136,000 ounces of gold at a total cash cost of US$133 per ounce. Similarly for
the six months ended 30 June 2002, attributable operating profit including
realised non-hedge derivatives was US$9 million and attributable EBITDA was
US$14 million. Attributable gold production was 62,000 ounces for the six months
at a total cash cost of US$101 per ounce.
CVSA holds tax and foreign exchange stability and investment agreements with the
governments of the Santa Cruz Province and Argentina. The terms of these
agreements ensure that there will be no adverse change in the tax payable by
CVSA or the provisions for the remittance or payment of foreign exchange. CVSA
and the Cerro Vanguardia Mine have the support of the local government, which
has an economic interest in the operation, both through Formicruz and via a
royalty arrangement. Throughout Argentina`s current political and economic
crisis, the Cerro Vanguardia Mine has continued to generate cash and profits.
AngloGold is convinced that it will continue to do so over its anticipated life.
Financial effects and funding of the transaction
The table below shows the financial effects of the transaction upon the earnings
per share and net asset value of AngloGold for the year ended 31 December 2001,
as determined in accordance with International Accounting Standards:
Before the After the Percentage
transaction transaction change (%)
Amounts in US Dollars
Headline earnings per 2.67 2.71 1.5
share (1)
Basic earnings per share 2.29 2.32 1.3
(2)
Net asset value per share 10.38 10.38 -
(3)
Notes:
Computed by dividing headline earnings before unrealised non-hedge derivatives
by the weighted average number of shares in issue of 107,139,446.
Basic earnings per share is computed by dividing the net profit by the weighted
average number of shares in issue of 107,139,446.
Computed by dividing shareholders` equity by the number of shares in issue of
107,634,058.
AngloGold will use its existing but undrawn debt facilities to settle the cash
consideration of US$90 million. As a result of the transaction, AngloGold`s
level of gearing, expressed in terms of net debt to total capital employed, will
be approximately 20 per cent.
Johannesburg
30 July 2002
JSE Sponsor: UBS Warburg
Date: 30/07/2002 01:52:00 PM Produced by the JSE SENS Department
