Bobby Godsell, CEO, AngloGold Ashanti
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What is up AngloGold Ashanti's sleeve?
Brendan Ryan
Posted: Wed, 26 Oct 2005

[miningmx.com] -- SPECULATION about the future of AngloGold Ashanti flows from an announcement of the proposed restructuring of controlling shareholder Anglo American (26 October), which no longer intends keeping AngloGold Ashanti as a subsidiary.

Anglo’s main options with AngloGold Ashanti are that it sell down some of its stake directly - for example in the way it sold its 20% stake in Gold Fields to Norilsk Nickel - or to let AngloGold Ashanti carry out an acquisition by issuing new shares which would dilute Anglo’s holding in the enlarged group.

Anglo has maintained its controlling 51% stake in AngloGold Ashanti through buying extra shares in the market after previous acquisitions by the gold group such as when it took over Ashanti Goldfields.

Anglo American CEO, Tony Trahar, stonewalled questions aimed at getting him to spell out precisely what Anglo intends doing. Legal opinion was that he could not comment further because of the strict regulatory laws governing the group, he said.

For his part, AngloGold Ashanti CEO, Bobby Godsell, was more eloquent in his replies during the conference call. But the end result was the same: he would not give a precise answer on AngloGold Ashanti’s intentions.

Asked if AngloGold Ashanti was currently negotiating a deal such as an acquisition which would dilute Anglo’s stake in the group Godsell replied: "We are always working hard looking at possible deals. When we get one we will announce it."

Asked if that was a "yes" or a "no" Godsell replied it was: "A 'yes' and a 'no'."

Godsell did elaborate on the problems involved in finding a suitable acquisition given current share price levels saying: "We will energetically pursue any acquisition that would create value. But it’s difficult to buy a company in the market place and then make money from it.

"It can be done as we did with Ashanti, but that was because Ashanti’s revenue generating potential was not being recognised in its share price.

"The reason was that Ashanti was being constrained by its two major shareholders - Lonmin and the Ghanaian government - who would not agree to change Ashanti’s capital structure," he said.
... if there was value to be realised
Godsell confirmed - in reply to an analyst’s query - that AngloGold Ashanti would look at making acquisitions in South Africa saying it would depend on "... if there was value to be realised."

But Gold Fields, which used to be the prime South African candidate for speculation over a takeover by AngloGold Ashanti, looks an unlikely target at this stage.

Not only did Anglo sell its 20% stake in Gold Fields to Norilsk, but AngloGold Ashanti made no move during the Gold Fields/Harmony battle which drove the Gold Fields share price down to levels that had to be considered cheap.

Looking outside South Africa there has long been speculation over a tie-up between Barrick and AngloGold. The two managements have a lot in common including their policy of hedging which is anathema to industry majors like Newmont and Gold Fields.

But, if you follow Godsell’s line of logic on looking for undervalued and under-appreciated plays where AngloGold believes it could add value, then you could also consider Placer Dome.

The Canadian gold heavyweight is going through a rough patch at present and its share price is underperforming its peers badly.
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Yet Placer Dome controls half of South Deep which is one of the world’s greatest remaining gold ore bodies. The caveats are that South Deep is situated in South Africa, involves deep-level mining and Placer Dome has made heavy weather of developing the mine so far.

Those are all factors which displease foreign investors who prefer large, open-cast mines operating in safe, first world countries but they would not worry AngloGold Ashanti.

But, at this stage, it’s all in the realm of market speculation which - as every journalist knows - no Anglo executive worth his trout fishing weekend quota at Dullstroom would ever comment upon.