Anglogold Ashanti Proposes Corporate Restructure

AngloGold Ashanti Limited has made significant progress in the past two years in transforming its business to improve efficiency and competitiveness against the backdrop of a 25% drop in the gold price.

The company has returned to production growth, commissioned two new projects and significantly reduced costs.

In the second quarter of 2014, compared with the corresponding period a year earlier, production rose 17% to 1.098Moz, all-in sustaining costs fell 19% to $1,060/oz, corporate and marketing costs were down 65% to $20m and EBITDA was up 33% to $382m.

These results were achieved whilst posting a record safety performance.

Having evaluated several options to unlock further value in the business, the company’s Board and management have decided to explore the possibility of restructuring AngloGold Ashanti into simpler and more focused entities, which they believe will present the best opportunity to realise the potential of the current portfolio.

Accordingly, AngloGold Ashanti has applied for, and has received approval from the South African Reserve Bank (SARB) to restructure its international mining operations under a new UK holding company Newco.

This restructuring will be subject to approval of the shareholders of AngloGold Ashanti. Newco intends to seek a premium listing on the London Stock Exchange, an inward listing on the Johannesburg Stock Exchange (JSE) and a listing of American Depositary Receipts (ADR) on the New York Stock Exchange (NYSE).

The intention is that Newco would hold AngloGold Ashanti’s portfolio of gold production and exploration assets located outside South Africa.

AngloGold Ashanti would continue to remain a South African domiciled business that would focus on maximizing the value of its current portfolio and over time, the intention is that it would consider developing a multi-commodity growth strategy in South Africa and beyond.

It will remain listed on the JSE and retain a listing of its ADRs on the NYSE.

AngloGold Ashanti intends to partially demerge 35% of Newco to its shareholders and would initially retain a 65% controlling interest.

‘The South African regulatory authorities have been supportive in clearly understanding the strategic rationale of this proposed transaction, and also the benefit to be unlocked given our specific set of circumstances,’ Chief Executive Officer (CEO) Srinivasan Venkatakrishnan said.

‘These two very distinct sets of assets will benefit from the more focused structure and capital allocation.’

Venkatakrishnan said: ‘Each business will have greater focus and separate identities which enable them to chart distinct, value-creating strategies going forward.’

Newco will be led by CEO-designate Charles Carter, along with President and Chief Operating Officer, Ron Largent, who will be joined on the executive team by Graham Ehm, Maria Sanz Perez and David Noko.

A new CFO will be recruited for Newco in due course.

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