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Gold/Mining/Energy : Birim Goldfields Inc. (BGI-T) -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (498)	2/14/2000 11:30:00 PM
From: Brian MacDonald	Read Replies (2) \| Respond to of 922

OT, Russ et al, Thought that the following article would be of interest. Note that, "if Ashanti fails, there is a clause in the 1994 prospectus that the mine's lease reverts back to the Ghanaian government, which owns 20 percent of the company's shares." I would think that the banks and 'partners' will find a way to work this out with Ashanti as it's in their best interests to do so. To do otherwise means that Ghana wins big and they lose big. Only a few more days left - this time - to see what happens. Brian ---------- ASHANTI'S SHARES PLUNGE AS ITS DIRECTORS RESIGN By Neil Behrmann www.TheMiningWeb.com February 14, 2000 Ashanti's shares plunged following the resignation of key members of the board, including Mark Keatley, chief financial officer. Crunch time looms as the mine struggles under the burden of its huge short gold position. If Ashanti fails, there is a clause in the 1994 prospectus that the mine's lease reverts back to the Ghanaian government, which owns 20 percent of the company's shares. The government stresses that it doesn't want to re-nationalise, but that effectively is what the clause means. Thus in New York Monday the shares collapsed 26 percent to $1.75, a new nadir compared with the 12- month peak of $10.50. "The nightmare continues and it can be only bad news for minority shareholders and possibly the bank creditors too," says Charles Kernot, London-based mining analyst at Paribas. This horror gold mining story takes place in a rare boomlet for the metal. What irony! Growing numbers of fund managers are beginning to conclude that there's a squeeze on Ashanti and several other producers. So it would not be surprising if they did not attempt to drive the gold price higher, thus intensifying the squeeze even further. Latest casualties in the debacle are Ghana's finance minister, Richard Kwame Peprah, who has resigned as chairman of the board. Cynical analysts are wondering whether he's jumping the punctured paddle boat because he doesn't want to be associated with a potential bankruptcy. He is replaced by Phillip Tarsh, a non-executive director and a retired former executive of the old Lonrho under the late Tiny Rowland. Fortunately, Tarsh is liked and respected by the mining analyst community. Keatley, who is probably resigning because of pressure from the Adryx minority shareholders, was bamboozled by the complex hedge advice that he accepted from the bullion bank rocket scientists. Some non-executive directors will also "retire" at the next board meeting. Previous attempts at solvency, notably sales of assets, backing by an independent central bank, pleas for aid from the World Bank, offers of takeovers by Lonmin (the biggest shareholder), and other mining groups fell by the wayside. Now the Ashanti board is proposing a "solution" that it believes "should be acceptable to all stakeholders." It proposes to secure a new debt facility of up to $100 million for Ashanti to complete the Geita gold mining project in Tanzania; delay the proposed sale of a 50 percent joint venture interest in Geita; and restructure the board with experienced independent directors. None of this covers all the debts. The big question is what happens to the 17 bullion bank creditors that are eager to roll over the hedge forward sale positions of the mine. Analysts estimate that they were struck at an effective spot price of $260 an ounce. In the complex scenario, Ashanti's creditors haven't disclosed what changes have been made to the hedge book. But T. Hoare Cannacord, advisers to the Ghanaian government, estimated in October last year that 11 million ounces had been sold via futures and put options (limited risk) derivatives, and a further 3 million were written call options (a very dangerous hedge). Losses on the hedge book were then $570 million with banks calling for margin or deposits of $270 million. Ashanti agreed to issue to the creditors five-year warrants (long-term options) of 15 percent of its issued capital. If all goes well in the restructuring, the bullion banks won't call in the margins for three years. But there is still a long way to go and if some creditors are unhappy when the short-term margin deadline expires February 17, they may break away, cut their losses, and buy back the gold. -END-