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AngloGold Ashanti revives plans to spin off SA mines - Sources

Aug 23
20:08 2017

Africa's top bullion producer has hired Deutsche Bank to evaluate options but discussions are at an early stage, one of the sources said.

AngloGold and Deutsche Bank declined to comment according to the report.

The miner is looking at listing its international assets, which include gold mines in Western Australia and Brazil, in London, while the South African assets, some of which will be sold as part of the plan, will remain in the existing Johannesburg listing, the sources added.

"AngloGold is reviving aspirations to spin off the international assets from the South African ones," a second source said.

Sources added that bullion producer Harmony Gold was likely to buy some of the assets AngloGold plans to offload in South Africa. Harmony Gold declined to comment.

In 2016, AngloGold's South African operations produced 967,000 ounces of gold or 26 per cent of its total output.

The company said in June it could cut up to 8,500 jobs in South Africa as part of a restructuring after heavy losses.

AngloGold abandoned a plan to spin off its South African business in 2014, five days after announcing the proposal, after major shareholders objected to a $2.1 billion rights issue that was part of the plan and was intended to cut AngloGold Ashanti revives plans to spin off SA mines — Sources debt levels.

Since then the company has cut net debt to $1.92 billion at end-December from $3.13 billion in 2014, indicating it may not need to tap shareholders to carry out the deal this time.

If the spin-off happens it could boost the credit rating of the company, which, like other South African miners, is trading at a discount to its international peers, due to domestic political instability and concerns over a stronger rand.

AngloGold, which operates in nine countries including Ghana, Mali, Tanzania, Brazil and Australia, is rated just above junk by credit agency Moody's, while S&P has the miner in junk status with a stable outlook.

Should the spin-off happen, AngloGold would be the latest miner to reduce exposure to South Africa, where political instability, controversial new mining rules and a stronger rand have made it less attractive to operate.

Anglo American and diversified miner Glencore have sold their coal assets in the country, while BHP Billiton made its exit in 2015 by spinning off assets into newly created South32.


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