[miningmx.com] – ANGLOGOLD Ashanti is to de-merge its international assets, including the troublesome Obuasi gold mine in Ghana, and establish a debt-free local firm with a mandate to diversify into other commodities.
In terms of proposals that have already won the approval of the South African Reserve Bank (SARB), AngloGold will demerge 35% of its international assets into a UK holding company (NewCo), listed in London and to be headed by Charles Carter, AngloGold’s current vice-president of strategy and new business.
The NewCo would retain its secondary listing in Johannesburg and enter the FTSE 100 Index, whilst the AngloGold ‘rump’ would be free to invest in other commodities, perhaps including platinum. It would be led by Srinivasan Venkatakrishnan, current CEO of AngloGold Ashanti.
First, however, AngloGold Ashanti is hoping to raise $2.1bn in a rights issue, the size of which analysts said was sitting on the price of AngloGold shares which had traded down 9.5% in Johannesburg shortly after the announcement.
As a condition of SARB approval for the de-merger, however, it was agreed that Newco would carry remaining debt after the rights issue which is calculated to be $1bn to $1.1bn and leave the balance sheet of the South African-domiciled company entirely unburdened.
Commenting in a press call this morning, Venkatakrishnan said the de-merger strategy would create “… simpler and more focused entities” which would have the ability to produce improved returns for shareholders. “It will enable each team to execute their respective and divergent strategies,” he said.
The Newco would start its life with annual production of 2.87 million ounces of gold production equal to revenue of $3.85bn, based on the output of AngloGold’s international assets in its 2013 financial year, and exploration potential from properties owned in Colombia.
AngloGold Ashanti – which will be renamed – would have gold production of 1.3 million ounces that Venkatakrishnan envisaged would fall to one million ounces over time owing to reduced grades and efficiency-related cuts.
After a period of continued cost efficiencies, a drive to fast-track the much-vaunted technological innovations, and perhaps portfolio right-sizing, the South African firm would set about diversifying its asset base – a strategy that would not include additional gold acquisitions.
“We are not looking at other gold assets, far from it,” he said in a telephonic interview, adding that the local firm would still have a 65% stake in the Newco.
“We have got good quality assets. What don’t want to do is to pick up other commodities for the sake of it,” he said.
Carter would be assisted at Newco by Ron Largent, current chief operating officer of AngloGold’s international operations, as its COO. A CFO would be sought. The local firm would see Mike O’Hare as its COO, current COO of AngloGold Ashanti.
Michael Kirkwood and David Hodgson are to resign from the AngloGold’s board to join the Newco while AngloGold’s current chairman, Sipho Pityana, will retain his position.
While AngloGold has more than a fifth of the Newco’s shares, it will be able to nominate two of its directors to non-executive positions of the Newco.
