Ghana's golden chance to land Ashanti gamble

If gold analysts were gambling types, the bets would be on. Now that London-listed Randgold Resources has formalised its offer to buy Ashanti, what are the odds on AngloGold increasing its offer for the Ghanaian gold company?

So far, AngloGold's only official reaction to Randgold's rival bid has been to extend the deadline for talks from the end of this month to the end of October.

Jonathan Best, AngloGold's chief financial officer, reiterated on Wednesday the view that its $1.1bn offer was "full and fair".

AngloGold has its size, reputation and capital-raising ability on its side, as well as Ashanti's support. Its plans to invest $700m in Ashanti's flagship Obuasi mine have been well received. But on Tuesday, smaller rival Randgold formally made an all-paper offer, which is considerably higher at just under $1.8bn.

The government of Ghana, which owns 16.9 per cent of Ashanti and has a "golden share", must approve the deal. Soci?t? G?n?rale, Accra's appointed advisers, are due to report back at the end of this month.

"The Ghana government has encouraged Randgold to bid only to persuade AngloGold to improve its offer," an executive at one of the companies involved told the FT. "The government wants as much as it can get for Ashanti, and it has played a waiting game which may well be successful."

The stakes are high for both companies. For Randgold it is the chance to propel itself into the big league. For AngloGold, it is a long-awaited opportunity to forget the debacle over Normandy, Australia's largest gold producer, and regain the number one slot among world producers.

Last year the South African company lost a long and bruising battle with Newmont of the US for control of Normandy.

The other important player is London-listed Lonmin, Ashanti's biggest shareholder with a 28.2 per cent stake. The platinum-focused miner has said Ashanti is an investment and not a core business.

"We reserve judgment on Randgold, but we have a duty to consider any offer," Edward Haslam, Lonmin chief executive, told the FT. "We have no tie to AngloGold." However, he added that the South African-based producer's bid is viewed with more favour.

"The attraction is that AngloGold paper is very liquid," Mr Haslam said. "We also feel AngloGold has the right experience to be Ashanti's partner and the cash potential to exploit Obuasi mine, which will be capital intensive."

Lonmin's eagerness to sell its Ashanti stake has only been increased by its decision, announced last week, to buy a bigger stake in Lonplats, its South African platinum assets, from Impala Platinum. "We can finance the Lonplats transaction within our existing facilities and we can cope with the gearing," Mr Haslam said.

"But it is self evident that our stake in Ashanti is worth a similar amount to what we are spending on this transaction. We expect to hear from the Ghana government soon."