adminLONDON — South Africa-based miner AngloGold Ashanti Ltd said it plans to raise $2.1 billion in a rights issue and spin its international assets into a new London-listed company. The news comes amid a slump in gold prices, which have fallen by a third in the past three years and helped drive AngloGold to a $2.2 billion net loss last year.
AngloGold, the world’s third-largest gold producer by volume, has also struggled with rising energy and labour costs in South Africa, where it produces around one-third of its gold annually.
The company’s Johannesburg-listed shares slumped by nearly 10 percent following its announcement yesterday.
“It has become increasingly clear that the two distinct parts of our portfolio require different strategies, focused management and should be appropriately capitalised to realise their full potential and unlock further value for shareholders,” said AngloGold Chairman Sipho Pityana.
The gold miner’s move follows mining giant BHP Billiton’s recent decision to split some of its less profitable assets into a new Australian-listed company. Fellow gold miner Gold Fields Ltd also split its South African assets into a new company called Sibanye Gold Ltd in 2013.
AngloGold will retain a 65 percent stake in the new London-listed company, which will have 14 gold mines in the Americas, Africa and Australia that last year generated nearly $4 billion in revenue.
The company, likely to be included in London’s benchmark FTSE100 index, will have a market value of around $6 billion to $7 billion, according to its chief executive-designate, Charles Carter. It will have secondary listings in New York and Johannesburg.
The rump, South Africa-focused AngloGold Ashanti will retain its Johannesburg and New York listings. The company said it plans to use the proceeds of its rights issue to fully pay down its net debt—a condition imposed on the restructuring by South African regulators.
The demerger will take place in the first half of 2015 with the capital raising taking place beforehand, AngloGold said. Both steps will need shareholder approval.
Meanwhile, a sluggish offshore drilling market could deteriorate further next year due to weak demand and a flood of new vessels, even though a few places such as Mexico and Brazil remain promising for exploration, industry executives said yesterday.
Rig rates have fallen sharply over the past 18 months as oil companies cut capital spending, saving cash for dividends, just as dozens of brand new offshore rigs ordered during the boom times hit the seas, creating overcapacity. “The market is going to be bad this year, it is going to be worse next year, then it will be stabilising,” Rune Magnus Lundetrae, chief financial officer (CFO) of Seadrill, the world’s biggest driller by market capitalisation, said on the sidelines of an industry conference.- Reuters.
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