Ashanti needs world-class management - Anglogold

Accra, Oct 9, GNA - Mr Bobby Godsell, Chief Executive Officer (CEO) of Anglogold on Thursday said Ashanti Goldfields Company (AGC) Limited represented the resilience of a reputable African giant but it needed "the fine world-class expertise and management of Anglogold to establish a global mining company with firm roots within Africa".

Mr Godsell, who was briefing Journalists on the rational for his company's bid for AGC, noted that in the proposed merger between Ashanti and Anglogold, "we have the opportunity of combining Ashanti's exceptional ore bodies, operating experience and world-class management with deep underground experience and financial strength of Anglogold."

He said Ashanti faced an important decision in its history and with its "fantastic reputation with over 100 years behind it, showing what a group of dedicated professionals can achieve, but what was needed was the building of a real future for the company capable of meeting the technology of the new mining culture".

Anglogold, a South African mining giant, is one of two companies that have put in a merger bid for Ghana and Africa's third mining giant, AGC to form what they called a global mining giant.

Anglogold partners Ashanti in its Geita operations in Tanzania. The other bidder is Randgold, another South African company.

Mr Godsell said Ashanti was a company looking for a new partner that would enable it to realise its full potential and to bring out its attributes that it could not source itself.

He argued: "Ashanti has two types of shareholders, who do not have the inclination or the capacity to provide the required level of capital to allow the company realise its full potential."

The Anglogold CEO said the company was left to generate substantial earnings, which it could not because it had neither existing cash flow nor balance sheet to allow its finance to grow organically.

Mr Godsell said Anglogold "is the partner that offers the greatest upfront sustainable value at the lowest risk level.

"This is key, because to justify a merger of two companies you have to demonstrate new value by ensuring a complementary fit of assets, expertise and capital by realising synergies."

Commenting on the comparisons with the Randgold bid, Mr Godsell said the price offer was not clear in that, "one cannot simply compare the value of the offers by relying on the values implied by the exchange ratios.

"Both Randgold and Anglogold offers are in shares, which means that the value to be received by Ashanti shareholders from both the Randgold and Anglogold offers will be determined by the share prices of Randgold and Ashanti not now, but after completion."

He said to evaluate the respective value of the offers one must make a judgment about where share prices would trade after completion and not where share prices currently were.

Mr Godsell explained that under the Randgold offer, Ashanti would actually constitute 70 per cent of the enlarged group, thus it was essentially a repackaging of Ashanti's assets saying, "it is hard to see where value is being created to allow shares of the combined group to trade any higher than the current market value."

He said Anglogold, contrary to Randgold's claim, offered a lower level of conditionality.

"No Anglogold shareholder approval is required, no financing and Anglogold does not require the same approval from the South African Reserve Bank. But in Randgold's recent 20F filing, the South African Reserve Bank has previously stated it would not allow Randgold and Exploration to either dilute its stake below the 35 per cent or lose management control of Randgold Resources," Mr Godsell said.

He also argued as untrue Randgold's position that its inclusion on the London FTSE 250 index would dramatically increase the trade in its shares.

"The fact of the matter is that, comparatively, gold shares are predominantly traded on the New York Stock Exchange and not on the London Stock Exchange."

He said inclusion on the LSE index might be a useful public relations feature, but its not going to significantly increase the liquidity of the share.

Anglogold shares traded at an average of 54 million dollars per day in value terms compared to the 14 million dollars average trade of Randgold after its inclusion in the FTSE 250.