AngloGold, South Africa's second-biggest gold producer, is eyeing Lonmin Plc's 32 percent stake in Ghana-based miner Ashanti Goldfields Co. Ltd., a source close to talks said on Thursday.
Ghana owns just under 20 percent of Ashanti Goldfields, which produced 1.6 million ounces of gold last year, so the West African country would need to give the go-ahead for any deal.
The source told Reuters that Ashanti executives met Ghana's economic management team on Thursday to discuss a deal.
"The economic management team met this afternoon and that has been quickly followed by a board meeting," said the source. "Negotiations have gone very, very far."
The source, who declined to be named, said the board meeting broke up on Thursday night with no final deal being struck, but he said discussions were continuing.
A second source in Accra said AngloGold officials and Ashanti executives both met Ghana's President John Kufuor on Tuesday, paving the way for Thursday's meeting with the former British colony's economic management team.
Gold has enjoyed a strong run of late and AngloGold has consistently talked about the need for consolidation in the industry. It has been looking around for a deal since it lost its recent bid for Australian gold miner Normandy Mining Ltd.
An AngloGold spokesperson declined to comment on Thursday about any deal in Ghana.
"We are always on the look out for possible transactions that will add value for our shareholders, we will make announcements when there is something to announce," he said.
AngloGold's Chief Executive Bobby Godsell and Ashanti's CEO Sam Jonah are said to have similar views about the gold mining industry and have talked about more cooperation in the past.
Jonah told Reuters in February he wanted to play a leading role in consolidation but said the company wanted to remain focused on Africa, where it saw the biggest opportunities. The South African giant has been expanding into the rest of Africa and is always looking for new opportunities.
It is currently a 50-50 partner with Ashanti in Tanzania's Geita gold mine, which has reserves of 9.6 million ounces.
The Ghana-based company posted pre-exceptional earnings of $79.7-million in 2002 from sales of $552.2-million. It said it had proved and probably ore reserves of 27.8 million ounces.
Ashanti nearly collapsed in 1999 under the weight of losses in the gold derivatives market but has since overhauled its debts with the help of platinum-focused miner Lonmin Plc, which injected $75-million to protect its stake in Ashanti.
Lonmin said last November it was under no financial pressure to sell its Ashanti stake but did not consider it a strategic asset and said it intended to sell the shares.
