| Thu 1 Jul 2004, 8:49 | | AngloGold Ashanti acquires 29.9% stake in Trans-Si |
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AngloGold Ashanti acquires 29.9% stake in Trans-Siberian Gold plc
AngloGold Ashanti Limited
(formerly AngloGold Limited)
Incorporated in the Republic of South Africa
Registration Number: 1944/017354/06)
ISIN Number:ZAE000043485
JSE Share Code: ANG
(`AngloGold Ashanti/Company
AngloGold Ashanti acquires 29.9% stake in Trans-Siberian Gold plc
Introduction
AngloGold Ashanti Limited (`AngloGold Ashanti`) is pleased to announce that
it has agreed to acquire a 29.9% stake in Trans-Siberian Gold plc (`TSG`),
through an equity investment of approximately GBP17.6 million (the
`Transaction`). TSG, admitted to trading on the London Stock Exchange`s
Alternative Investment Market, is the UK based holding company for the TSG
Group`s Russian gold business, operated through its four Russian subsidiaries.
Overview of TSG
The TSG Group holds mining and exploration licences in respect of its three
existing projects, Asacha, Rodnikovae and Veduga, as well as an exploration
licence over an extensive area surrounding Veduga. AngloGold Ashanti`s
investment in TSG will be used to help bring the most advanced of these, the
Asacha and Veduga projects, into production, as well as to fund TSG`s ongoing
exploration and corporate development initiatives. Details of the Asacha and
Veduga projects are as follows:
- Asacha: Located in the Kamchatka region in eastern Russia, the project
currently has a total measured and indicated gold equivalent resource base of
648,000 ounces (determined in accordance with the Australian Code for reporting
of Mineral Resources and Ore Reserves (the `JORC Code`)). A bankable feasibility
study was completed in March 2004 and Standard Bank was mandated, as lead
arranger, to provide project finance on 19 May 2004. It is anticipated that the
mine will be commissioned during 2006 with production of approximately 90,000
ounces of gold and 180,000 ounces of silver per annum at a cash cost of
US$160/oz. Exploration continues at Asacha to in-fill and further expand and
upgrade the Mineral Resource and Ore Reserve.
- Veduga: Located in the Krasnoyarsk region of Russia, the project currently
has a measured and indicated gold resource base of 1.3 million ounces with a
further 1.0 million ounces of inferred gold resources (determined in accordance
with the JORC Code). A scoping study was completed in March 2004 and drilling
results released on 19 May 2004 indicate that the resource base may grow
significantly from current levels. Exploration efforts continue as part of a
16,000-metre diamond drilling programme that commenced in November 2003 designed
to in-fill, expand and upgrade the Mineral Resource and Ore reserve
classification of the existing orebodies. It is currently anticipated that the
mine will be commissioned in the latter part of 2006 with production commencing
in 2007 at a rate of approximately 170,000 ounces of gold per annum. The project
is subject to the completion of the above further exploration, metallurgical
testwork and the completion of a bankable feasibility study.
In addition to these projects, TSG also holds a mining and exploration
licence in respect of Rodnikovoe, which is located 65km north of Asacha.
Previous exploration defined a Mineral Resource of some 406,000 ounces of gold
and 4 million ounces of silver in accordance with Russian C1 and C2 Mineral
Resource classification categories. TSG has planned further exploration to
determine the Mineral Resource in accordance with JORC. It is possible that
Rodnikovoe could provide additional ore for the Asacha mill.
TSG is also considering the acquisition of, and in certain instances has
submitted applications to acquire, further mining and/or exploration licences in
various regions in Russia.
AngloGold Ashanti`s proposed investment in TSG
The investment will be made through a subscription in two tranches, each of
approximately 6.13 million newly issued ordinary TSG shares. The first tranche
will be issued at a price of 136.95 pence per share following the satisfaction
of a number of conditions, including the passing of various resolutions by TSG
shareholders, which is expected to take place towards the end of July 2004. The
second tranche, which will be issued at a price of 149.40 pence per share, is
subject to the satisfaction of a number of conditions, including the signing of
a binding agreement to implement the project financing for the Asacha project,
referred to above. This is expected to occur by the end of 2004. Following its
subscription for both tranches, AngloGold Ashanti is expected to hold a 29.9%
shareholding in TSG. TSG has agreed that AngloGold Ashanti will have the option
to participate in any future share issues, on equivalent terms or, in the case
where employees exercise share options to subscribe for additional shares or
existing warrants are exercised, at the prevailing market price, so that it can
maintain its shareholding at 29.9%.
In addition to the equity investment, AngloGold Ashanti and TSG have also
agreed to form a broader partnership, on the following basis:
- Board representation: Two AngloGold Ashanti nominees will join the TSG
board with effect from the completion of the subscription for the first tranche
of shares.
- Personnel: AngloGold Ashanti will provide technical resources to TSG as
part of a consultancy agreement to be entered into between AngloGold Ashanti and
TSG. These services will be provided on an arms length basis at agreed market
related rates.
- Earn-in rights: AngloGold Ashanti will have an option to exercise an earn-
in right enabling it to acquire a 51% direct interest in any of TSG`s new mining
or exploration projects. This option excludes any projects that are the subject
either of any existing mining or exploration licence held by TSG or the subject
of any existing licence application by TSG and any assets that may be covered by
future licences in specific areas of Russia. AngloGold Ashanti reserves the
right, following notice to TSG, to elect to proceed with any business
development opportunity either on its own, or together with another party, other
than where AngloGold Ashanti has not considered such opportunity either on its
own or together with another party.
- Veduga financing: in the event that TSG seeks financing for the Veduga
Project, AngloGold Ashanti will have the right to provide such financing if it
offers terms that are equivalent to or better than any financing arrangements
offered by third parties.
The Transaction is subject to certain conditions precedent including the
approval of the South African Reserve Bank and the passing of various
resolutions by TSG shareholders.
Rationale for the Transaction
Russia hosts a large number of gold deposits and has an established mining
and resource industry. The country ranks fourth in the world by gold Ore
Reserves (behind South Africa, the United States and Australia) and currently
ranks fifth by annual gold production. Since 1999 Russia`s compound growth rate
in annual gold production has exceeded that of the top eight gold producing
countries.
AngloGold Ashanti`s investment in TSG will allow the company to participate
in several promising mining and exploration projects. It will also provide
AngloGold Ashanti with the opportunity of developing a better understanding of
the gold industry in Russia in general as well as particular opportunities for
further growth in that region.
Commenting on the Transaction, Sam Jonah, President of AngloGold Ashanti
commented:
`We are delighted to form this partnership, which helps TSG secure the
development of the Asacha project and opens up new horizons for AngloGold
Ashanti. This is a modest first move by AngloGold Ashanti, and one which we are
relatively sure will not be our last. It gives us the opportunity of
establishing an association with credible partners familiar with the
environment, which is the best way of mitigating the risks which are almost
always involved in an initial investment in a new region`, Sir Sam said.
Johannesburg
1 July 2004
Financial Adviser and JSE Sponsor
UBS
Legal Adviser (as to English and Russian Law)
Clifford Chance LLP
Ends
Queries Tel e-mail
Richard Duffy +27 11 637 6246 rduffy@anglogoldashanti.com
Michael Clements +27 1 637 6647 mclements@anglogoldashanti.com
Charles Carter +1 800 417 9255 cecarter@anglogoldashanti.com
Andrea Maxey +61 8 9425 4604 amaxey@anglogoldashanti.com.au
Disclaimer
Except for the historical information contained herein, there are matters
discussed in this news release that are forward-looking statements. Such
statements are only predictions and actual events or results may differ
materially. Such statements include, without limitation, those concerning:
development of TSG`s business, the economic outlook in the gold mining industry,
expectations regarding gold prices and production, growth prospects and outlook
of operations, including the completion and commencement of operations at
exploration and production projects, and synergies and other benefits
anticipated from investments. These forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause actual results
to differ materially from such forward-looking statements, including, without
limitation, risks associated with conducting business in Russia, risks
associated with holding a minority investment in a business, and the risk
factors set forth in our annual report on Form 20-F for the year ended 31
December 2003, which was filed with the Securities and Exchange Commission on 19
March 2004.
