Randgold fails to offer cash for Ashanti

JOHANNESBURG/LONDON, Aug 12 - Randgold Resources declined to say on Tuesday if it would sweeten its bid for Ashanti Goldfields with cash -- seen as crucial to win backing for its bold offer against that of giant AngloGold .

The London-listed gold mining firm unveiled its plans on Friday, just days after the Ghanaian firm -- which is twice Randgold's size -- formally accepted a deal to be swallowed by South Africa's AngloGold, the world's second biggest gold producer.

Randgold Chief Executive Mark Bristow declined to comment during a news conference on a cash element to the bid.

A source familiar with the situation told Reuters a share-only offer was Randgold's "current thinking" and that the company "was not discussing anything else at the moment".

Randgold's proposed offer of one new share for every two Ashanti shares valued the target at nearly $1.5 billion when it was first set out.

This was around 30 percent higher than AngloGold's bid, but the premium narrowed this week to less than 15 percent after Randgold shares lost ground and AngloGold's surged.

Analysts say Randgold's bid looks like a long shot, especially since Ashanti's biggest shareholder, London-based platinum mining firm Lonmin , has said it is mostly interested in getting cash from its 28 percent stake.

AngloGold's competing stock offer would be more appetising for Lonmin, they say, as it would easily be able to sell AngloGold shares for cash, but this could be more difficult with a stake in Randgold, which has much less liquidity.

"There was no cash alternative offered today, and it's difficult to see where Randgold Resources would get the cash in order to sweeten the bid and still afford additional investment in Ashanti," said John Meyer, mining analyst at London-based Numis Securities.

GHANA GOVERNMENT

Bristow would not say whether Randgold had spoken to the Ghanaian government -- which holds 17 percent of Ashanti and has a veto over any takeover -- about the proposed offer, but said the firm knows "how to do business" in Africa.

Sources familiar with the situation have told Reuters that the Ghanaian government had encouraged Randgold to make a bid since it is not completely satisfied with the AngloGold deal.

Randgold, which has been in talks with Ashanti for some time, was queried on the timing of its announcement.

"There's nothing sinister about it at all. It's part of a genuine process," Bristow said, adding that press speculation had forced his firm to make a public statement on a bid.

Ghana's government has yet to react to the Randgold offer.

Analysts said the Ghanaian government might be more attracted to the Randgold bid since it would end up with a bigger stake in the merged firm.

Bristow said Randgold's smaller size would be an advantage for Ashanti since the Ghanaian firm would retain its identity, have a listing in London and keep its Ghana headquarters.

Randgold also lacks operational experience, analysts said, since its only functioning mine, Morila in Mali, is being run by AngloGold. Randgold gold sales totalled just $131.4 million in 2002 compared with $2.04 billion at AngloGold.

Ashanti has a market capitalisation of about $1.2 billion compared with Randgold's market value of about $590 million.

London-listed shares in Randgold Resources closed 6.3 percent higher on Tuesday, but volume was thin. Traders said the shares were bouncing back after being oversold the previous day following news of the bid.

AngloGold shares finished 1.7 percent firmer at 267.90 rand. The mining giant said earlier it planned a bond issue shortly to help finance its mine expansion plans in South Africa.