AGC ask shareholders to remain calm.

Mr Kwamena Anaman, Group Corporate Affairs Manager of Ashanti Gold Fields Company (AGC), on Friday urged all shareholders to remain calm and await the outcome of the merger talks currently under way with Lonmin London.

Mr Anaman said Ashanti's decision to go into some form of relationship with Lonmin, a London mining conglomerate, was meant to secure and enhance shareholder value of the company.

"The decision to engage in the talks is to ensure that the golden share of the people of Ghana including the 20 per cent shares of the government is enhanced."

He made these points in a contribution to a talk show programme on an Accra FM station.

Mr Anaman stressed that the current management of the company will under no circumstances "sell their birthright", but will ensure that the identity and originality of the company is maintained.

"If some agreement is reached, Ashanti will be known as Ashanti Plc, with the same identity and with a new market capitalisation of about 2.2 billion dollars instead of the 1.2 billion currently on the Ghana Stock Exchange".

Ashanti currently has a corporate net debt of 400 million dollars.

He denied that Ashanti is running to Lonmin as a result of the problems it is having with hedging arising from the recent increase in gold price on the world market.

"These talks have been going on for about a year now. It is meant to further the diversification programme since Lonmin is engaged in mining of platinum and gold and is known to be the third largest producer of platinum in the world.

"We then decided to see the possibility of some co-operation with Lonmin".

Mr Anaman said the sharp rise in gold price was indeed a surprise not only to Ashanti, but all others in the gold industry.

He said the company stress-tested their hedge books but with the current situation, which was not anticipated, much pressure has been put on the company's liquidity status.

He explained that Ashanti for instance had to go into hedging to address the unstable price status in the market, especially in the face of a looming glut that might occur from the proposed sales of gold reserves by the IMF, World Bank and some European countries.

Hedging is a bold option adopted in an unfavourable commodity market, which allows operating companies to sell a specified amount of their products or commodities at a higher price over a period, irrespective of future price changes.

As to whether it was a useful practice, Mr Anaman said, "not without doubt. We made 650 million dollars over the last five years".

He said the Obuasi, Iduaprim and Anyanfuri mines combined, made a loss of some 35 million dollars but for the hedging programme, some of them would have been closed down.

Mr Anaman refused to comment on the sacking of Mr Fred Ohene-Kena as Mines and Energy Minister who is also a member of the board of Ashanti.

"I don't think I am competent to comment on that. I would rather want to pass that on," he said.