AGC in Move to Raise $89m - Chief Financial Officer

Mr. Sriniasan Venkatakrishnan, Chief Financial Officer of Ashanti Goldfields Company (AGC) Limited, has said the company had prepared the ground to raise up to US$89 million with an application to market a right issue in the United States of America.

Reports gathered by Chronicle Monday this week, indicated that the company first outlined its plans for the right issue last year, when it finalized terms of a financial overhaul backed by platinum producer Lonmin, which had a "non-core" holding of 32 per cent.

Information gathered from the US Securities and Exchange Commission (SEC) shows that Ashanti registered the planned issue last week and could start marketing the new shares once the SEC had approved its plan.

The once struggling mining company had planned to issue up to 16.5 million shares with the maximum issue price of US$5.40 per share.

Mr. Venkatakrishnan also confirmed the company's forecast for total gold production of more than 1.57 million ounces this year.

According to the company's third quarter report, AGC recorded un-audited earnings of US$22.5 million during the third quarter, which represented a 55% improvement over the corresponding period last year.

Earnings per share for the quarter, after considering warrants that were exercised, as part of refinancing were 18 cents, an improvement over the last year's 13 cents.

The financial review also revealed that 407,328 ounces of gold were produced at spot revenue of US$ 128.3 million at US$315 per ounce, US$33 higher than last year's.

Hedging income was lower at US$10.1 million as a result of higher spot price.

The total revenue was $141.2million, which was US$5 million higher than the US$136.2 million recorded last year.

Gold price for the quarter was US$347 compared to US$331 peer ounce last year. Also the company effected a significant reduction in its floating lease rate exposure reducing it by 1.6 million ounce from 4.38million ounces to 2.78 million ounces.

The cash operating costs for the quarter were US$199 per ounces, US$ 10 higher than last year.

The principal increases were in Obuasi, Siguiri and Geita. There was an increase in operating profit for the quarter from $24.1 million last year to $24.4 this year.

During the quarter, AngloGold, a mining company in South Africa, transferred the neighbouring Ridge 8 property to Geita, a subsidiary of Ashanti, during the quarter but the consideration of US$17.6 million would be left outstanding until the project finance loans are fully repaid by Geita.

AngloGold had transferred to Ashanti for no consideration, its 50% share of the receivable, which resulted in an exceptional gain of US$8.8 million. Ashanti had written down the value of this property to nil, thereby recording a compensating exceptional loss of US$8.8 million.

Cash flow for the third quarter was lower at US$13.2 million (2001:US$25.1 million) due to the payment this quarter of approximately US$13 million of the refinancing and restructuring costs accrued last quarter.