Wrap Text
Groundbreaking partnership to revive Obuasi Gold Mine
AngloGold Ashanti Limited
(Incorporated in the Republic of South Africa)
Reg. No. 1944/017354/06)
ISIN ZAE000043485 – JSE share code: ANG
CUSIP: 035128206 – NYSE share code: AU
(“AngloGold Ashanti” or the “Company”)
16 September 2015
NEWS RELEASE
GROUNDBREAKING PARTNERSHIP TO REVIVE OBUASI GOLD MINE
(Accra, Ghana, 16 September 2015) – Randgold Resources Limited (“Randgold”) and
AngloGold Ashanti have concluded an investment agreement (the “Agreement”) aimed at the
formation of a joint venture to redevelop and operate AngloGold Ashanti’s Obuasi gold mine
in Ghana. In terms of the Agreement, Randgold will lead and fund a development plan
designed to rebuild Obuasi as a viable long-life mining business with an attractive cost
structure and returns.
Obuasi, located in the Ashanti region of Ghana, 320 kilometres northwest of the capital
Accra, is a large, high-grade deposit with proven and probable ore reserves (as reported by
AngloGold Ashanti in their 2014 Annual Report) of 24.53Mt at 6.70g/t for 5.29Moz, part of a
substantial mineral resource base. In 2012, AngloGold Ashanti initiated a programme to
modernise the mine, principally by starting to develop a ramp access that will ultimately run
from surface to high-grade blocks of ore underground. The ramp will supplement current
vertical hoisting infrastructure and help debottleneck the underground operation by allowing
for greater ease in transporting people and materials underground, and transporting ore to
surface. This is a necessary step ahead of the envisaged transformation of the mine into a
modern, mechanised operation.
At the end of 2014, AngloGold Ashanti converted Obuasi to limited operations, ceasing
underground production, retrenching the workforce, but continuing to process tailings and
starting a feasibility study on the redevelopment of the mine. Development of the decline
ramp has continued over this period.
The development plan will build on this feasibility study with the intention of establishing a
more focused, efficient, mechanised high-grade operation, and is expected to take about four
months to complete. If the development plan meets both parties’ investment criteria, and
assuming all other conditions are satisfied, Randgold and AngloGold Ashanti will form a new
joint venture company.
Randgold and AngloGold Ashanti will then be jointly responsible for funding the
redevelopment of Obuasi in line with the agreed development plan. A Randgold group entity
will be appointed as operator of the mine, and Randgold and AngloGold Ashanti will appoint
an equal number of directors to the board of the joint venture company, with board and
shareholder decisions to be approved by both parties.
Randgold chief executive Mark Bristow said “Obuasi is a world-class resource. We now
have to see if we can convert it into a world-class mine. We have a long history of
cooperation with AngloGold Ashanti and we look forward to working with them again on
charting a new course towards a viable future for Obuasi.”
“AngloGold Ashanti has since 2012 effected a range of improvements to modernise Obuasi
and – in line with its strategy – has progressed a feasibility study as the critical next step
toward breathing new life into this important mine,” AngloGold Ashanti CEO Srinivasan
Venkatakrishnan said. “Our partnership with Randgold has proved successful for well over a
decade in bringing value from sustainable gold mining to all stakeholders and we believe that
pooling the extensive expertise and the capital of these two companies will improve our
ability to bring Obuasi’s world-class high-grade gold deposit to account.”
Transaction Timetable and Key Conditions
Randgold is expected to deliver the new development plan to both parties’ boards by 31
January 2016. Formation of the joint venture is conditional on the satisfaction of a number of
conditions, which include the approval by the boards of Randgold and AngloGold Ashanti of
the final development plan prepared by Randgold, approval of the transaction by the South
African Reserve Bank (“SARB”), consent of the lending banks under certain existing
financing agreements of AngloGold Ashanti, completion by Randgold of due diligence to its
satisfaction and receipt of any applicable anti-trust approvals (the “Initial Conditions”). SARB
approval is required to be obtained within 45 days from the date of the Agreement, and
AngloGold Ashanti’s financing consent within 60 days, with the other Initial Conditions to be
satisfied by 19 February 2016 (the “Approval Date”).
In addition, formation of the joint venture is conditional on the receipt of the approvals
necessary for the implementation of the development plan and formation of the joint venture
from the Government of Ghana on terms acceptable to the parties, including agreement of a
revised stability agreement and a development agreement reflecting the agreed development
plan and their ratification by the Parliament of Ghana and the issue of all necessary
environmental licences and permits for the project (the “Government of Ghana Conditions”),
which are planned to be satisfied by 31 March 2016. Subject to the transaction completing,
Randgold and AngloGold Ashanti will each fund their pro rata share of the agreed costs
incurred in implementing the development plan from the Approval Date and certain other
agreed costs from the date of the Agreement. Randgold will also assume responsibility for
its proportionate share of certain liabilities arising under guarantees given by AngloGold
Ashanti in relation to the liabilities of its Ghanaian subsidiaries.
Under the terms of the Agreement, the Iduapriem mine, and certain other non-core assets,
will be retained under the sole ownership of AngloGold Ashanti.
The Agreement has been entered into between group entities of Randgold and AngloGold
Ashanti, with their payment obligations under the Agreement and the joint venture agreement
referred to above, guaranteed by Randgold and AngloGold Ashanti, the group parent
companies.
About AngloGold Ashanti
AngloGold Ashanti is a global gold mining company with a geographically diverse, world-
class portfolio of operations and projects. Headquartered in Johannesburg, South Africa,
AngloGold Ashanti is the world’s third-largest gold mining company, measured by
production.
AngloGold Ashanti produced 4.4 million ounces of gold in 2014, generating US$5.2 billion in
gold income, utilising US$1.2 billion in capital expenditure. All-in sustaining costs, which
capture direct operating costs and sustaining capital, as well as corporate overheads and
exploration, fell 13% to US$1,026 per ounce in 2014 compared with US$1,174 per ounce in
2013. All-in costs, which also include capital expenditure on projects, fell 22% over the same
period, to US$1,148 per ounce from US$1,466 per ounce the previous year. These
production, capital expenditure and operating costs cost figures include CC&V.
As at 31 December 2014 (before the sale of CC&V) AngloGold Ashanti had an attributable
Ore Reserve of 57.5 million ounces of gold and an attributable Mineral Resource of 232.0
million ounces of gold. For the year ended 31 December 2014 incurred interest costs of
US$278 million.
At the end of the second quarter of 2015, AngloGold Ashanti’s Net Debt was $3.076bn. Debt
levels remain well below the covenant of net debt to adjusted EBITDA of 3.5 times and will
decline to 1.5 times following the receipt of the cash proceeds on the disposal of CC&V post
the quarter end. The net debt and net debt to adjusted EBITDA ratio at 30 June 2015,
including the CC&V gross proceeds of $819.4m (which factored in estimated closing
adjustments) and estimated transaction costs of $12m, reduces on a pro forma basis
respectively from $3,076m to $2,269m, and from 1.95 to 1.44 times.
Johannesburg
Financial Adviser, Corporate Broker and Transaction Sponsor:
Deutsche Securities (SA) Proprietary Limited, a non-bank member of the Deutsche Bank
Group
Legal Adviser:
Slaughter and May
Contacts
Media
Chris Nthite +27 11 637 6388/+27 83 301 2481 cnthite@anglogoldashanti.com
Stewart Bailey +27 81 032 2563 / +27 11 637 6031 sbailey@anglogoldashanti.com
General inquiries media@anglogoldashanti.com
Investors
Stewart Bailey +27 81 032 2563 / +27 11 637 6031 sbailey@anglogoldashanti.com
Sabrina Brockman +1 212 858 7702 / +1 646 379 2555 sbrockman@anglogoldashanti.com
Fundisa Mgidi +27 11 6376763 / +27 82 821 5322 fmgidi@anglogoldashanti.com
Certain statements contained in this document, other than statements of historical fact, including, without limitation,
those concerning the economic outlook for the gold mining industry, expectations regarding gold prices, production,
cash costs, all-in sustaining costs, all-in costs, cost savings and other operating results, return on equity, productivity
improvements, growth prospects and outlook of AngloGold Ashanti’s operations, individually or in the aggregate,
including the achievement of project milestones, commencement and completion of commercial operations of certain
of AngloGold Ashanti’s exploration and production projects and the completion of acquisitions, dispositions or joint
venture transactions, AngloGold Ashanti’s liquidity and capital resources and capital expenditures and the outcome
and consequence of any potential or pending litigation or regulatory proceedings or environmental health and safety
issues, are forward-looking statements regarding AngloGold Ashanti’s operations, economic performance and
financial condition.
These forward-looking statements or forecasts involve known and unknown risks, uncertainties and other factors that
may cause AngloGold Ashanti’s actual results, performance or achievements to differ materially from the anticipated
results, performance or achievements expressed or implied in these forward-looking statements. Although AngloGold
Ashanti believes that the expectations reflected in such forward-looking statements and forecasts are reasonable, no
assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ
materially from those set out in the forward-looking statements as a result of, among other factors, changes in
economic, social and political and market conditions, the success of business and operating initiatives, changes in
the regulatory environment and other government actions, including environmental approvals, fluctuations in gold
prices and exchange rates, the outcome of pending or future litigation proceedings, and business and operational risk
management.
For a discussion of such risk factors, refer to AngloGold Ashanti’s annual report on Form 20-F for the year ended 31
December 2014, which was filed with the United States Securities and Exchange Commission (“SEC”). These factors
are not necessarily all of the important factors that could cause AngloGold Ashanti’s actual results to differ materially
from those expressed in any forward-looking statements. Other unknown or unpredictable factors could also have
material adverse effects on future results. Consequently, readers are cautioned not to place undue reliance on
forward-looking statements. AngloGold Ashanti undertakes no obligation to update publicly or release any revisions
to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events, except to the extent required by applicable law. All subsequent written or oral
forward-looking statements attributable to AngloGold Ashanti or any person acting on its behalf are qualified by the
cautionary statements herein.
This communication may contain certain “Non-GAAP” financial measures. AngloGold Ashanti utilises certain Non-
GAAP performance measures and ratios in managing its business. Non-GAAP financial measures should be viewed in
addition to, and not as an alternative for, the reported operating results or cash flow from operations or any other
measures of performance prepared in accordance with IFRS. In addition, the presentation of these measures may not
be comparable to similarly titled measures other companies may use. AngloGold Ashanti posts information that is
important to investors on the main page of its website at www.anglogoldashanti.com and under the “Investors” tab
on the main page. This information is updated regularly. Investors should visit this website to obtain important
information about AngloGold Ashanti.
Incorporated in the Republic of South Africa Reg No: 1944/017354/06
ISIN. ZAE000043485 – JSE share code: ANG CUSIP: 035128206 – NYSE share code: AU
Website: www.anglogoldashanti.com
Date: 16/09/2015 04:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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