Govt explains acceptance of Anglogold bid

Accra, Oct. 30, GNA - Government on Thursday said its decision to accept the verdict of the Board of Ashanti Goldfields Company (AGC) to merge with Anglogold was fuelled by the benefit it held for the company, its shareholders and the country as a whole.

It said the advice on the bid offers from Societe General and the interest of Lonmin, a major shareholder in AGC, indicated that the Anglogold offer was a preferred one in relation to that of Randgold's. Briefing Journalists in Accra, Mrs Cecilia Bannerman, Minister of Mines, said the decision was based on several factors including Anglogold's superior financial strength and technical expertise in deep level mining.

Mrs Bannerman, who was giving background to what informed Government's decision, said it noted that significant increase in the total market capitalisation of the Ghana Stock Exchange (GSE) by nearly 500 per cent.

Mr Yaw Osafo Maafo, Minister of Finance and Economic Planning, Papa Owusu-Ankomah, Attorney General and Minister of Justice and Nana Akomea, Minister of Information supported her.
"There was also the expectations that the new company will trade at similar levels on the GSE as on world class Exchanges in Johannesburg, London and New York."
She said Anglogold's commendable proposals on social issues including maintenance of AGC's current employment policies, staff working environment and community development were also factors that favoured their choice.
The enlarged business would in the immediate term rehabilitate the Obuasi Hospital at 3.3 million dollars while ploughing back one per cent of its earnings to establish a community trust for the Obuasi and Tebrebie mines.
Mrs Bannerman said the decision was also backed by the fact that Anglogold in the last five years, had one of the highest dividend payouts to shareholders in the gold mining industry, which should begin to offer Ashanti shareholders dividends after so many years of no dividends.
"Ordinary share value for Ghanaian investors will improve from the current seven dollars to 11 dollars per share, " the Mines Minister said.
She said both proposals were improvements on a stand alone Ashanti Goldfields and had different risk and reward profiles. "Government is confident that the lower risk and more certain reward features of Anglogold's offer will better benefit Ashanti and Ghana both in the short and long term."
Mrs Bannerman said government would lay before Parliament for approval the proposed stability agreement required to implement the transaction with Angloglold, saying: "Government will continue to monitor developments in the assets of Angloglold and Ashanti in securing the best returns for shareholders."
Mr Osafo-Maafo answering a question said it was not possible for the Government to have raised the investment needed to turn Ashanti around.
"It would have meant raising a sizeable bond paper ranging from 400 to 500 million dollars. This was not going to be possible, otherwise we would be spreading ourselves thin. Besides Government has no expertise in deep mining."
Papa Owusu Ankomah said the process was not a done deal until three quarters of shareholders ratified the transaction and Parliament approved it.
The merger of AGC and Anglogold makes the new enlarged business the number one gold mining company in the world with a production of 7.6 million ounces annually.
The combined company would also have a reserve ore resource base of 83 million ounces.