AngloGold Ashanti CEO says New York listing could open the door to predators

Alberto Calderon, CEO, AngloGold Ashanti

ANGLOGOLD Ashanti CEO Alberto Calderon acknowledged the company would be susceptible to a takeover by moving its listing to New York from Johannesburg, but brushed off suggestions it could happen.

“It would be disingenous to think being listed in New York would not, on the margin, increase the ability [of AngloGold becoming] a takeover target. But I look at the landscape of the market and I see one or two digesting whales. You cannot avoid doing something because of the actions of others,” he said.

Earlier this week, Newmont secured a A$28.8bn takeover of Newcrest Mining consolidating its position as the world’s largest bullion producer.

More likely for AngloGold is that it would enable the company to embark on merger and acquisitions of its own in the future as it would be armed with stronger paper. Analysts at Bank of America commented in a recent note that “potential participation in ongoing gold sector consolidation” was a benefit of the New York listing.

Calderon told Miningmx in an interview the group wasn’t looking at doing anything in the merger and acquisition market.

“I don’t think it would have changed our strategy (to M&A) if we had the New York listing earlier because we had to fix the house,” he said. “And we don’t need to grow. At three million ounces a year [in production] we can keep replacing [ounces].”

AngloGold has forecast production of 2.45 to 2.61 million oz for this year. However, with in-house growth projects, including recent acquisitions consolidating properties in Nevada, the company will get to the three million oz level.

In terms of ‘fixing the house’, Calderon targeted cash costs of below $1,000/oz. But that target, made last year during Calderon’s first 12 months in charge, has been derailed by inflation. The company announced 14% on-mine cost increases in the first quarter although it has guided to a moderation in costs for the remainder of the year.

“I can’t be held responsible for inflation,” said Calderon of the forces driving cash costs. “I can’t be and I won’t be.”

Arnold van Graan, an analyst for Nedbank Securities commented in a note on Friday the change in listing wouldn’t automatically improve AngloGold’s rating. “We believe valuation multiples/ratings are driven largely by asset quality, consistent operational performance and delivering consistent free cashflow over time,” he said.