AngloGold to issue $700m in bonds as eases back Covid-19 emergency debt

ANGLOGOLD Ashanti is to issue $700m in bonds with the net proceeds being put to reducing a $1bn bridging finance raised in the teeth of the Covid-19 pandemic in April.

The step is an indication of growing ease among the global mining industry that it has the ability to control the impact of the virus on operations.

Speaking on behalf of the South African mining sector, Roger Baxter, CEO of the Minerals Council, said on Monday: “Our industry, like the rest of the country, has shown a sharp decrease in the number of cases reported daily. It is our hope that the worst is over.”

AngloGold sold its remaining South African operations – Mponeng and Mine Waste Solutions – to Harmony Gold for $300m this month.

AngloGold said proceeds from the bonds would reduce the outstanding borrowings under the firm’s $1.4bn multi-currency, syndicated revolving credit facility which would remain the firm’s primary source of short-term funding.

A portion of the bonds, issued at a coupon of 3.75% and expiring in 2030, would also cancel part of the bridging finance. The bond issue would be completed by October 1, AngloGold said.

Instead of balance sheet pressure, AngloGold Ashanti has since April enjoyed a significant increase in net cash before growth capital – improving four-fold as of June 30 – raising the prospect that, at the current gold price, the company could edge to net cash by December. At the firm’s interim, it had net debt of $1.43bn, down 18% from $1.74bn end-December.

AngloGold’s cash balance also stands to benefit from an estimated $500m in unrealised financial benefits in the form of unpaid VAT and joint venture cash held in the Democratic Republic of Congo (DRC) where AngloGold has a stake in the Kibali mine with Barrick Gold, and Tanzania where AngloGold operates the Geita mine.

Of this, some $293m in attributable cash is in the Kibali joint venture account that Barrick is negotiating with government authorities to repatriate.