| Thu 25 Sep 2003, 9:52 | | RANDGOLD RESOURCES CONFIRMS FORMAL MERGER PROPOSAL |
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RANDGOLD RESOURCES CONFIRMS FORMAL MERGER PROPOSAL
RANDGOLD & EXPLORATION COMPANY LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1992/005642/06
Share code: RNG
ISIN: ZAE000008819
Nasdaq trading symbol: RANGY
RANDGOLD RESOURCES CONFIRMS FORMAL MERGER PROPOSAL
London 23 September 2003
Introduction
The Board of Randgold (LSE: RRS) (NASDAQ: GOLD) announces that it has today
submitted a formal merger proposal (the "Merger Proposal") to the Board of
Ashanti. The Merger Proposal is subject to certain preconditions, including the
recommendation of the Board of Ashanti. If completed, the Merger will create a
major, independent, pan-African focused gold business. Randgold believes that
the Enlarged Business will be a low cost gold producer with critical mass and
significant growth potential and will be self-financing from completion.
Randgold believes that its proposal represents a genuine and attractive
alternative to the transaction currently proposed by AngloGold, with a lower
level of conditionality.
It is intended that the Ashanti name will be retained for the Enlarged Business
and that the Ashanti brand will be relaunched on the London Stock Exchange with
full UK index membership. The Enlarged Business will also be listed in Ghana
and the US. Accra will be the operational centre of the new Ashanti.
The Merger would be effected by means of a scheme of arrangement between Ashanti
and Ashanti Shareholders under Section 231 of the Ghana Companies Code.
The Merger Proposal
Under the terms of the Merger Proposal, each holder of an Ashanti Share and each
holder of an Ashanti GDS will be entitled to elect to receive either:
- 0.5 Randgold Shares; or
- 0.5 Randgold ADRs; or
- 50 Randgold GhDRs.
Based on the Closing Price of Randgold ADRs on NASDAQ on 22 September 2003, (the
Last Practicable Date), of US$26.36, the Merger Proposal values each Ashanti
Share (or Ashanti GDS) at approximately US$13.18 and values the fully diluted
ordinary share capital of Ashanti at approximately US$1.8 billion.
The Merger Proposal equates to approximately:
* a premium of 15.1 per cent. to the Closing Price of Ashanti GDSs on 22
September 2003 (the Last Practicable Date); and
* a premium of 24.7 per cent. to the current value of the proposed transaction
announced by AngloGold on 4 August 2003.
On completion of the Merger, existing Randgold Shareholders will own
approximately 30 per cent. and existing Ashanti Shareholders will own
approximately 70 per cent. of the Enlarged Business, respectively.
Key benefits of the Merger
Randgold"s vision is the creation of a major, independent, pan-African gold
business focused on creating value and with ready access to the world"s leading
capital markets.
The Board of Randgold believes that the combination of Randgold and Ashanti will
have the following key attributes:
Improved access to major international capital markets:
* relaunch of the Enlarged Business under the Ashanti name in London, the
primary international mining market;
* increased liquidity with inclusion in the upper quartile of the FTSE 250
index; and
* full listings in Ghana and the US.
Creation of a major new gold counter:
* pro-forma market capitalisation of approximately US$2.5 billion;
* approximately 2.0 million ounces pro-forma attributable annual production;
* approximately 24.9 million ounces pro-forma attributable proven and probable
reserves;
* approximately 46.6 million ounces pro-forma combined resources; and
* approximately US$267.0 million pro-forma EBITDA.
Strengthened investment appeal to a broader investor audience:
* the only pure gold company with a primary listing on the London Stock Exchange
and membership of the FTSE 250 Index;
access to index demand from UK tracker and benchmark funds;
* alternative emerging market counter; and
* significant reduction in the proportion of reserves committed under Ashanti"s
hedging contracts.
Self-financing, low-cost gold-producer with significant growth potential:
* highly complementary asset bases with strong organic growth potential;
* strong uncommitted cash flow capable of funding ongoing and development
capital, including Obuasi and a future dividend stream;
* target of a position in the lowest industry cost quartile, as currently
enjoyed by Randgold;
* potential to further develop and expand Morila and Geita into premier long-
life, highly profitable operations;
* immediate short-term growth potential from Loulo;
medium term opportunities in the form of the Tongon prefeasibility project in
the Cote d"Ivoire and underground extensions at Bibiani and Loulo;
* prospect of significant long-term sustainable growth from the mineralisation
being outlined at depth at Obuasi ("Obuasi Deeps"); and
* prospective exploration being conducted in Ghana, Mali, Cote-d"Ivoire,
Senegal, Tanzania and Guinea, amongst others.
Optimisation of the existing Obuasi operations together with the maximisation of
returns from the phased development of Obuasi Deeps:
* in excess of US$1 billion of estimated total investment over the 51 year life
of Obuasi, including US$100 million for project management;
* Enlarged Business capable of financing the investment programme from combined
operational cashflows;
* significant potential additional value possible at shallow depths utilising
existing infrastructure at an estimated cost of US$340 million over 25 years;
* Obuasi Deeps developed in three distinct phases over the life of the mine:
- Phase I: US$170 million over the next 30 years;
- Phase II: US$180 million between 2018 and 2041;
- Phase III: US$250 million between 2022 and 2051; and
* phased approach maximises project returns.
Committed and experienced combined management team:
* combined management team would be one of the most experienced in Africa;
* extensive experience in global equity markets, debt financing, orebody
modelling, grade control, mine planning and feasibility studies;
* extensive operational experience in open-pit, underground and deep level
mining;
* in Geita and Morila, Ashanti and Randgold have made significant discoveries
and designed, financed, constructed and commissioned world class gold projects
in remote parts of Africa that demonstrate real returns on capital;
* Randgold"s proven track record of delivering on its strategy would complement
Ashanti"s longstanding operational culture;
* existing technical and project management capabilities, augmented as necessary
by international consultants, would provide all requisite technical and
management expertise; and
* expertise to continue to develop and maintain a healthy exploration and new
business portfolio.
Strong African identity, centred on Ghana, reinforced by a common strategic
vision:
* exclusively African operations:
* Ghanaian listing;
* retention of the Ashanti name and legacy;
* Accra office maintained and enhanced as the operational centre of the Enlarged
Business;
* significant Ghanaian representation on the Board of the Enlarged Business;
* Government of Ghana, as a major shareholder, represented on the Board of the
Enlarged Business;
* Government of Ghana"s rights under the Golden Share respected;
* commitment to the continued development of a skilled national based management
and workforce in all the countries in which the Enlarged Business would operate;
and
* commitment to broaden African ownership and/or participation in the Enlarged
Business through outsourcing, business partnerships, joint venture initiatives
and share ownership.
Status of discussions
Discussions are ongoing and there can be no guarantee that an agreement between
Randgold and Ashanti will be reached or that the Merger will be effected.
Further announcements will be made in due course, as appropriate.
Commenting on today"s announcement Dr. Mark Bristow, Chief Executive of
Randgold, said:
"We established Randgold in 1995 as the foundation on which to build an
independent and substantial African gold business. Around the same time,
Ashanti through its recapitalisation was pursuing a similar goal. Together we
now have a unique opportunity to achieve this shared vision through the creation
of a merged entity, which will be even greater than the sum of its parts."
"Our proposal is a winning proposition which will create significant value for
both companies and their stakeholders. The new Ashanti will be well-placed to
become Africa"s leading gold business: a self-financing, low-cost producer with
a strong, well-balanced management team, equipped to take full advantage of its
exciting growth potential. In addition, it will be a major new gold counter,
with strengthened appeal to a broader investor audience and ready access to the
world"s key capital markets."
Enquiries:
Randgold Resources Limited
Chief Executive +44 (0) 779 775 2288
Dr Mark Bristow
Financial Director +44 (0) 779 771 9660
Roger Williams
HSBC Bank plc
Adrian Coates +44 (0) 20 7991 8888
Tim Morgan-Wynne
Jan Sanders
Randgold Investor and Media Relations
Kathy du Plessis +27 11 728 4701
Cell: +27 (0) 83 266 5847
randgoldresources@dpapr.com
Sources and Bases:
1. The fully diluted ordinary share capital of Ashanti has been sourced from
Ashanti"s 2002 Annual Report.
2. Share price information has been sourced from Bloomberg.
3. The current value of the proposed transaction announced by AngloGold on 4
August 2003 is calculated by multiplying the fully diluted number of shares in
AngloGold which would be issued to Ashanti Shareholders pursuant to the terms of
the proposed merger announced on 4 August 2003 by the Closing Price of AngloGold
American Depository Shares on the New York Stock Exchange on the Last
Practicable Date.
4. The statement "Randgold Shareholders would own approximately 30 per cent. of
the Enlarged Business" is calculated by dividing the existing issued share
capital of Randgold by the pro-forma number of Randgold Shares which will be in
issue after completion of the Merger (as calculated in 7 below).
5. The statement "existing Ashanti Shareholders would own approximately 70 per
cent. of the Enlarged Business" is calculated by dividing the number of Randgold
Shares which will be issued to Ashanti Shareholders under the Merger Proposal by
the pro-forma number of Randgold Shares which will be in issue after completion
of the Merger (as calculated in 7 below).
6. The statement "inclusion in the upper quartile of the FTSE 250" is based on
a comparison of the pro-forma market capitalisation of the Enlarged Business (as
calculated in accordance with 9 below) with the market capitalisation of the
constituent companies in the FTSE 250 index as at 22 September 2003.
7. The pro-forma number of Randgold Shares in issue after completion of the
Merger of 96,622,772 is based on adding the issued share capital of Randgold of
28,710,028 as at 30 June 2003 (as sourced from Randgold"s 2003 2Q Report) to the
67,912,744 new Randgold Shares issued to Ashanti Shareholders under the Merger
Proposal (as calculated in accordance with 8 below).
8. The 67,912,744 new Randgold Shares to be issued under the Merger Proposal is
based on multiplying the fully diluted number of Ashanti Shares in issue of
135,825,488 (as sourced from the Ashanti 2002 Annual Report) by the exchange
ratio as set out under the terms of the Merger Proposal.
9. The pro-forma market capitalisation of the Enlarged Business of
approximately US$2.5 billion has been calculated by multiplying the Closing
Price of Randgold"s ADRs on NASDAQ on the Last Practicable Date by the pro-forma
number of Randgold Shares which will be in issue after completion of the Merger.
10. The pro-forma attributable annual production of approximately 2.0 million
ounces for the Enlarged Business has been calculated by adding the attributable
annual production of Randgold as at 31 December 2002 of 0.4 million ounces (as
sourced from the Randgold 2002 Annual Report) to the attributable annual
production of Ashanti as at 31 December 2002 of 1.6 million ounces (as sourced
from the Ashanti 2002 Annual Report).
11. The pro-forma attributable proven and probable reserves of approximately
24.9 million ounces for the Enlarged Business has been calculated by adding the
attributable proven and probable reserves of Randgold as at 31 December 2002 of
2.9 million ounces (as sourced from the Randgold 2002 Annual Report) to the
attributable proven and probable reserves of Ashanti as at 31 December 2002 of
22.0 million ounces (as sourced from the Ashanti 2002 Annual Report).
12. The pro-forma combined resources of approximately 46.6 million ounces of the
Enlarged Business has been calculated by adding the resources of Randgold as at
31 December 2002 of 8.8 million ounces (as sourced from the Randgold 2002 Annual
Report) to the resources of Ashanti as at 31 December 2002 of 37.8 million
ounces (as sourced from the Ashanti 2002 Annual Report).
13. The pro-forma EBITDA of the Enlarged Business of approximately US$267
million has been calculated by adding the 2002 pre-exceptional EBITDA of
Randgold of US$80.8 million (as sourced from the Randgold 2002 Annual Report) to
the 2002 pre-exceptional EBITDA of Ashanti of US$186.2 million (as sourced from
the Ashanti 2002 Annual Report).
HSBC Bank plc, which is regulated in the United Kingdom by the Financial
Services Authority, is acting for Randgold, and no-one else in connection with
the matters referred to in this announcement and will not be responsible to any
person other than Randgold for providing the protections afforded to customers
of HSBC Bank plc, or for advising any such person on the contents of this
announcement or any transaction referred to in this announcement.
This announcement does not constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale or distribution of securities in any
jurisdiction in which such offer, sale or distribution is not permitted.
DISCLAIMER: The content of this announcement, which has not been approved by
Ashanti, has been approved by and is the sole responsibility of the Board of
Randgold. Statements made in this release with respect to Randgold"s current
plans, estimates, strategies and beliefs and other statements that are not
historical facts are forward-looking statements about the future performance of
Randgold, Ashanti and the Enlarged Business. These statements are based on
assumptions and beliefs in light of the information currently available.
Randgold cautions you that a number of important risks and uncertainties could
cause actual results to differ materially from those discussed in the forward-
looking statements, and therefore you should not place undue reliance on them.
The potential risks and uncertainties include, among others, risks associated
with: fluctuations in the market price of gold, gold production at Morila and
Obuasi, estimates of reserves and mine life, future growth potential and capital
investment, and the integration of Randgold"s and Ashanti"s businesses. For a
discussion of important factors and risks involved in the companies" businesses,
refer to Randgold"s Annual Report on Form 20-F for the year ended 31 December
2002, which was filed with the US Securities and Exchange Commission on 27 June
2003, and Ashanti"s Annual Report on Form 20-F for the year ended 31 December
2002, which was filed with the SEC on 17 June 2003, and any other document in
respect of the proposed Merger which may be furnished to or filed with the SEC
by Randgold or Ashanti.
In the event that Randgold and Ashanti enter into an agreement regarding the
proposed Merger, Randgold will furnish to, or otherwise file with, the SEC a
scheme document/prospectus. In the event a transaction is entered into,
investors and security holders are urged to carefully read the scheme
document/prospectus regarding the Merger when it becomes available because it
will contain important information. In the event a transaction is entered into,
investors and security holders may obtain a free copy of the scheme
document/prospectus (when it becomes available) and other documents containing
information about Randgold and Ashanti, without charge, at the SEC"s website at
www.sec.gov. Copies of the scheme document/prospectus (when it becomes
available) would also be obtainable free of charge by directing a request to
Randgold Resources Limited, La Motte Chambers, La Motte Street, St. Helier,
Jersey JE1 1BJ, Channel Islands, Attn: David Haddon, Group Secretary, telephone
+ 44 (0) 1534 735 333, fax +44 (0) 1534 735 444.
Randgold does not undertake any obligation to update any forward looking
statements discussed in this announcement, whether as a result of new
information, future events or otherwise.
APPENDIX I
Definitions
"AngloGold" AngloGold Limited, a company
incorporated under the laws of
South Africa;
"Ashanti" Ashanti Goldfields Company
Limited, a publicly listed
company registered under the
laws of the Republic of Ghana;
"Ashanti GDS" the Global Depository Securities
of Ashanti, listed on the New
York Stock Exchange;
"Ashanti Shareholders" the holders of Ashanti Shares or
Ashanti GDSs;
"Ashanti Shares" the ordinary shares of no par
value in the capital of Ashanti;
"Board" the board of directors of
Randgold or Ashanti, as the
context requires;
"Closing Price" the closing middle market price
of the relevant security;
"Enlarged Business" Randgold, as enlarged by the
proposed combination with
Ashanti;
"Golden Share" the one special rights
redeemable preference share of
no par value in the share
capital of Ashanti owned by the
Government of Ghana;
"Ghana Companies Code" the Ghana Companies Code 1963
(Act 179) as amended;
"Last Practicable Date" 22 September 2003, the last
trading day prior to the date of
this announcement;
"London Stock Exchange" London Stock Exchange plc;
or "LSE"
"Merger" the proposed merger of Randgold
and Ashanti;
"NASDAQ" the NASDAQ National Market;
"Randgold" Randgold Resources Limited, a
company registered under the
laws of Jersey;
"Randgold ADRs" the Randgold American Depository
Receipts currently listed on
NASDAQ;
"Randgold GhDRs" the proposed Ghanaian Depository
Receipts of Randgold, 100 of
which will represent one
Randgold Share;
"Randgold Shareholders" the holders of Randgold Shares;
"Randgold Shares" the ordinary shares of 10 US
cents each in the capital of
Randgold;
"UK" the United Kingdom of Great
Britain and Northern Ireland;
"US" or "United States" the United States of America,
its territories and possessions,
any state of the United States
of America and the District of
Columbia, and all other areas
subject to its jurisdiction.
Date: 25/09/2003 08:55:30 AM Produced by the JSE SENS Department
