OT, But important to the financial health of a BGI partner
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JOINT ANNOUNCEMENT BY ANGLOGOLD AND ASHANTI
ASHANTI TO SELL A 50% INTEREST IN GEITA TO ANGLOGOLD
Ashanti Goldfields Company Limited (``Ashanti') and AngloGold Limited (``AngloGold') are pleased
to announce that they have signed a non-binding Heads of Agreement for the sale by Ashanti to
AngloGold of an effective 50% joint venture interest in the Geita project in Tanzania.
AngloGold will pay Ashanti US$205 million in cash for a 50% share of the project and will procure
or provide project financing to the Geita project totalling US$130 million. Ashanti and AngloGold will
each be responsible for repayment of 50% of this project financing from their respective shares of
project cashflow.
This project financing will be used to repay in full the existing US$100 million bridge loan arranged by
Barclays Capital (the ``Bridge Loan') and the balance will be used to reduce inter-company loans
made to the project by Ashanti. AngloGold will acquire 50% of the balance of these inter-company
loans. The result will be that Ashanti will have available US$335 million in cash which will be applied
to repaying the Bridge Loan and other indebtedness. US$65 million of the cash, which amounts to
half the project financing, will be repayable by Ashanti out of Geita cashflows.
As at December 31, 1999, Ashanti had spent US$138 million on the development of the project,
funded by inter-company loans of US$115 million and supplier finance of US$23 million.
The parties intend to enter into a joint venture agreement which will govern the operation and
management of the Geita mine (the ``Geita Joint Venture'). The Geita Joint Venture will be
governed by a committee (the ``Joint Venture Committee') which will have equal representation
from both partners, with equal voting rights and neither side having a casting vote. Apart from the
first chairmanship which will be joint, the Joint Venture Committee will be chaired on a rotating basis
by representatives of Ashanti and AngloGold.
Ashanti and AngloGold propose to explore the feasibility of expanding the Geita Joint Venture plant
capacity from 4 million tonnes per annum to 7 million tonnes per annum by 2004. If requested to do
so, AngloGold will fund Ashanti's share of expansion costs on terms to be agreed.
Commenting on the deal, Ashanti's CEO Sam Jonah said: ``The Geita project attracted offers from a
number of the world's top gold producers. In the final analysis, AngloGold's offer not only represents
the best value for Ashanti shareholders, but is also sensitive to management and stakeholder issues
important to Ashanti. In addition, the deal will enable us to repay a substantial portion of our existing
debt, reduce gearing and place Ashanti's finances on a much firmer footing.'
AngloGold CEO Bobby Godsell said: ``This deal represents a further important step in the pattern of
increased co-operation between gold producers worldwide. This co-operation is vital, both to secure
the future of producers in continuing tough market circumstances, and to enable them to create value
for their shareholders.
``AngloGold and Ashanti are obvious partners in an African gold mining context. AngloGold is the
world's largest gold producer, with approximately 5.8 million ounces per annum produced from deep,
narrow vein ore bodies in South Africa. However, an additional 1.7 million ounces per annum now
come from shallow underground mines and from open-pit operations similar to Geita. Our share of
Geita output will represent a further significant step in changing the mining risk profile of
AngloGold.'
Ashanti and AngloGold also intend to form a joint venture (the ``Associated Joint Venture') to which
AngloGold will contribute its adjacent Nyamulilima Hill property (also known as ``Ridge 8') and to
which Ashanti expects to contribute its entitlement under its Spinifex Joint Venture. The Associated
Joint Venture will be held equally by Ashanti and AngloGold and will be managed on the same basis
as the Geita Joint Venture.
The two companies also announced today that they have agreed to enter into a strategic alliance in
Africa. Both see Geita as a first step in a broader African partnership, and have agreed to consider
inviting the participation of each other in any future gold mining projects, in any part of the African
continent, including their respective home countries.
On Tanzania, Sam Jonah said: ``Attracting a third major gold mining company to invest in the Lake
Victoria gold belt illustrates the growing confidence the global mining community has in doing
business in Tanzania, and the prospectivity of the region. We are confident that with an African
partner of AngloGold's stature, we can develop this asset to its maximum potential for the benefit of
all Tanzanians and the shareholders of both partners.'
The transaction is subject to a number of conditions, including final legal documentation, South
African Reserve Bank approval, regulatory approvals and Ashanti shareholder and creditor
approvals. It is planned to complete the transaction within the next six months. Definitive, legally
binding agreements should be entered into within the next two months, at which stage a further
announcement will be made.
Certain of the statements made in this announcement are forward-looking in nature. By their nature,
the forward-looking statements involve risk and uncertainty because they relate to events and
depend upon circumstances that will occur in the future. These factors include, but are not limited to,
statements made elsewhere in this announcement. In addition, risk factors relating to Ashanti and
AngloGold can be found in their respective public SEC filings. Neither Ashanti nor AngloGold
undertake any obligation to publicly update any forward-looking statements whether as a result of
new information, future events or otherwise. Any statement should be evaluated in the light of these
factors.
Queries : AngloGold
In South Africa In South Africa Investor Relations Media Steve Lenahan James Duncan +2711 637
6248 (tel) +2711 637 6147 (tel) +2711 637 6107 (fax) +2711 637 6399 (fax)
slenahan@anglogold.com +27 82 892 8052 (mobile) |
