AngloGold closes in on prize
October 30, 2003
By Sherilee Bridge
Johannesburg - AngloGold, whose $1.4 billion Ashanti merger proposal has been given the Ghanaian government's blessing, said yesterday it could be another three to six months before the deal was concrete.
"Ideally, we would like the deal to be closed by the end of the first quarter 2004," said Steve Lenahan, a spokesperson for AngloGold.
He said the terms of agreement with the Ghanaian government would be finalised "sooner rather than later".
Having secured the "unconditional support" of both Ashanti's board of directors and Ashanti's largest shareholder, UK platinum company Lonmin, AngloGold has elbowed rival Randgold Resources out of the bidding war.
At the heart of the agreement, Lenahan said, was the development of Ashanti's Obuasi mine, whose success would dictate the future pulse of the merged entity. AngloGold has estimated that the project may cost as much as $1.5 billion.
It was this kind of "capital endowment" and its "superior operational experience in deep-level mining" that helped sway the government's decision.
With a pro forma production of 7.3 million ounces of gold for 2003, AngloGold Ashanti would rival Newmont Mining as the world's largest gold producer.
With upside potential from the group's portfolio of projects expected to push annual production above 8 million ounces, AngloGold Ashanti would soon take the title.
Immediately adding 31 percent to AngloGold's reserve base, the merger was expected to realise synergistic savings of $15 million a year.
If the merger goes ahead, AngloGold would retain control of the company with 87 percent of the shares and existing Ashanti shareholders would be left with 13 percent of the combined group.
AngloGold's largest shareholder, Anglo American, would have its shares in AngloGold diluted to 44 percent from its present 51 percent holding in the local gold mining company.
The deal must still be sanctioned by regulators and the high court of Ghana before implementation can begin.
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