Ashanti hopeful new Ghana govt will end veto

Ghana's biggest goldminer, Ashanti Goldfields Ltd , on Wednesday raised hopes that the country's new government could relinquish its golden share in the company and free it up to take part in mergers.

Chief Executive Sam Jonah, speaking after Ashanti reported record annual production, said the new president, former opposition leader John Kufuor, was genuinely committed to the private sector, much more so than the previous administration.

"We intend to capitalise on this new mood and enter into a new dialogue with him on restoration of Ashanti's value," Jonah said, adding that Ashanti wanted to play a part in the consolidation of the global gold mining industry.

The Ghana government holds a 20 percent stake in Ashanti, one of Africa's biggest gold miners, but can block a merger through its holding of a single golden share.

Jonah said that the veto, "much more than anything else", was hurting the company's share price, in decline for years.

The stock took a big tumble in October 1999, after a sudden spike in the gold price sank its hedge book and brought the company close to collapse. It has since come back from the brink but now faces a weak gold price and pressure to consolidate.

The company's American Depositary Receipts have not traded above $4 since November 1999, when Africa's third biggest platinum producer, British-based Lonmin Plc (LSE: LMI.L - news) , withdrew a $7 per share offer for Ashanti. The stock last traded at $2.50.

The Ghana government sank the Lonmin deal. Lonmin still owns the 32 percent Ashanti stake it held before the aborted merger.

CHANGE IN THE AIR

Jonah said no merger proposal was currently on the table.

"We are here to look after the interests of all shareholders and any option which will realise value for shareholders, we would have to progress at some stage," he said.

"We are not in the market saying 'Please come and merge with us'. What we are saying is that we ought be available for merger, takeover... and all sorts of things," he added.

Kufuor was sworn in as Ghana's president this month, ending the 19-year rule of former military ruler and twice-elected President Jerry Rawlings. Kufuor, who trained as a lawyer, vowed to fight corruption and try to revive Ghana's flagging economy.

Jonah was very upbeat on Wednesday at the prospects of seeing eye to eye with Kufuor on taking the fetters off Ashanti.

Jonah said it was up to the government to decide what it did with its 20 percent stake in the longer term but added:

"There are competing demands for hospitals, schools, roads and all of that. And one will have to ask the question whether retaining a 20 percent share in a risky business is the best way forward to use your money."

Ashanti has shored up its balance sheet by selling half of its prized Geita mine in Tanzania to AngloGold Ltd last October. Ashanti is also turning in improving operating results.

On Wednesday it reported an 11 percent rise in gold production to 1.74 million ounces for calendar 2000. Cash operating costs fell seven percent to $190 per ounce.