Johannesburg - AngloGold Ashanti put mines up for sale as the world’s third-largest gold producer tries to cut debt after the price of the precious metal plunged.
The company plans to cut borrowing through a number of “self-help measures” after investors balked at a $2.1 billion (R23 billion) share sale in September, AngloGold’s chief executive Srinivasan Venkatakrishnan said on a call with reporters today.
“We may also consider a sale or joint venture of an operating asset for value,” he said.
“People ask us ‘what do you mean for value?’ It basically means the shop isn’t open for bargain hunters.”
Venkatakrishnan, known as Venkat, is beginning a strategic fightback after investors rejected a plan to split AngloGold’s local and international mines, a move that would have required the company to raise $2.1 billion, or a third of its then market value.
He wants to reduce net debt by $1 billion, a third of the total, over the next three years.
The stock rose 4.7 percent to 97.89 rand at 10:05 am in Johannesburg, while the all-share index was little changed.
AngloGold has fallen 45 percent since it announced the split plan on September 10 while gold has declined 6.8 percent to $1 170 an ounce in the period.
Investor demand for the safe-haven assets has reduced due to signs of an improving US economy and the prospect of tighter monetary policy.
“The share doesn’t reflect what the true potential of the value of the business is and our potential to deliver returns over the longer term,” Venkat said.
Ghana Mine
The potential sales are in addition to the company seeking joint ventures for its Obuasi mine in Ghana and Colombian assets, which have received numerous expressions of interest, he said.
The chief executive declined to name assets, saying he didn’t want to “box ourselves in.”
AngloGold had $3 billion of net debt, a ratio of 1.64 times earnings before interest, taxes, depreciation and amortisation at September 30, it said today in a statement.
That’s higher than South African rivals Gold Fields and Harmony Gold Mining but lower than Barrick Gold and Newmont Mining, the world’s biggest gold miners, the company said, citing data from HSBC and Bloomberg.
AngloGold is prioritising various “self-help measures” such as reducing operating expenses and increasing output over a share sale to cut its debt, Venkat said.
The company’s adjusted headline earnings, which exclude one-time items, were $2 million in the three months ended September 30, compared with a loss of $4 million in the previous quarter, the company said.
Production increased 2.7 percent to 1.13 million ounces.
All-in sustaining costs, which include all operating expenses, fell 2.3 percent to $1,036 an ounce, 10 percent less than a year ago.
For the full year, AngloGold estimates production of 4.35 million ounces to 4.45 million ounces, at the top end of its previous forecast, while all-in sustaining costs are seen at $1 025 an ounce to $1 075 an ounce. - Bloomberg News