Robert,
I don't know all the details of the Ashanti 'hedge book' affair, but with Goldman Sacks as your banker it can't be as bad as the way the stock was hammered yesterday. There was talk of a 'net short call of $450,000,000', but I'm afraid I don't quite understand it all yet.
Anyway, it looks to me as though they were asked to put up 'more margin' to cover the 'short', spelled - 'sold forward', position that they have to the tune of 10,000,000 ounces over the next several years. Apparently the 'partners' wanted their money ASAP (NOW!) and Ashanti had to scramble to find it - just like any 'margined' investor. BTW, this 'hedge process' is not unlike that of Barrick's or many other gold producers, etc.
They have a total reserve, in the ground, of approx. 23,000,000 ounces, so they could just as easily have sold forward another 1,500,000 ounces in the last few days, when gold was going up, to easily help cover that margin call. We'll likely never know what has transpired.
As for the $1.5 million to Birim, that's a really cheap entry deal for Ashanti, or the possible successor(Lonmin?), and they would have to be crazy to pass it up. One needs to focus on the fact that when that Ashanti mill closes down (the one near the Mampon deposit) because they have no more feed, some 1,900 people will lose their jobs. That is not a politically popular thing to do in Ghana - especially when the ore is sitting right there a few miles away and it would solve that problem. As I see it, the deal will get done.
And if it happens that it doesn't, I think Birim will have little problem finding a new partner. However, I still think that Ashanti has the inside track and that they will put the money on the table - and soon as it will help bolster their 'reserves' and ensure delivery of more gold against the 'hedge' for the next few years.
Brian |
