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AngloGold Ashanti Sells CC&V for $820m Plus Royalty to Cut Debt

AngloGold Ashanti Sells CC&V for $820m Plus Royalty to Cut Debt

AngloGold Ashanti Limited has agreed to sell its Cripple Creek & Victor mine in the United States to Newmont Mining Corporation for US$820 million in cash, plus a net smelter return royalty , as part of its strategy to cut debt.

The US$820 million in cash proceeds from the sale of Cripple Creek & Victor (“CC&V”) will immediately strengthen the Company’s balance sheet and allow it to implement a deleveraging strategy to lower financing costs. AngloGold Ashanti will also no longer have to fund the remaining capital of approximately US$200 million required to complete the CC&V Mine-Life Extension 2 project, further improving its free cash flow position.

“After a competitive bidding process, we’re pleased to have arrived at a transaction that recognizes the value of this asset,” Srinivasan Venkatakrishnan (Venkat), CEO of AngloGold Ashanti, said. “This deal significantly de-risks the balance sheet without diluting our shareholders, and places us in a much stronger position – it puts 820 million US dollars into our bank account, saves 200 million US dollars in capital expenditure, and gives us continued exposure to the asset through an uncapped royalty on future underground production.”

Over the past 24 months AngloGold Ashanti has pursued measures to simplify its portfolio, improve cash flow and reduce debt from internal sources in order to enhance financial flexibility. All-in sustaining costs were 18% lower on average last year than in 2012, reflecting discipline in operating expenditures, corporate overheads, exploration and capital investment. The quality of AngloGold Ashanti’s diversified asset base, which has good exposure to lower oil prices and weaker local currencies, has also continued to improve, with the new, low-cost Kibali joint venture in the Democratic Republic of Congo ramping up to full production, and the Tropicana operation in Australia now at planned output levels.

“Our focus continues to be on creating a long-term, high-margin gold portfolio,” Venkat said. “Our two new operations are going from strength to strength, our core cash-generating mines continue to perform well and we’re getting a strong tailwind from lower oil prices and weaker currencies – all while keeping our long-term options intact.”

The Transaction consideration consists of two components:

(1) US$820 million (R10.25 billion, calculated at an exchange rate of R12.50 per dollar) payable in cash upon the fulfilment of all conditions precedent to the Transaction (“Completion”); and

(2) The net smelter royalty (“NSR”) which is payable on all ounces of gold to be recovered over the remaining life of CC&V through future underground mining operations or from ongoing surface mining operations that extract ore bodies that are currently intended to be mined via the proposed underground mining operations (“NSR Ore”). The NSR is payable quarterly in arrears at the rate of 2.5% of the net revenue, after refining and smelting costs, based upon the product of the average spot gold price and gold ounces produced from NSR Ore in the relevant quarter.

At Completion, AngloGold Ashanti will be reimbursed for any cash contributions made to CC&V after 30 June 2015. Completion is subject to a number of conditions precedent, including:

(1) The waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of the United States, if applicable to the Transaction, shall have expired or have terminated;

(2) The approval of the South African Reserve Bank; and

(3) The receipt, to the extent required to implement the Transaction, of any other Government Entity approvals in the United States.

Completion will occur on the first business day of the calendar month following the satisfaction of the conditions precedent. It is anticipated that the conditions precedent will be satisfied and Completion will occur by the beginning of August 2015.

The Transaction Consideration, including the Company’s valuation of the NSR, has been categorised as a Category 2 transaction in terms of the Listings Requirements of the JSE Limited.

www.anglogoldashanti.com

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