File picture: Nadine Hutton
File picture: Nadine Hutton

JOHANNESBURG - AngloGold Ashanti on Thursday announced a major sale of its South African assets in a bid to raise cash and cut losses. 

First up, AngloGold Shanati said that it has entered into an agreement to sell its Kopanang Mine, the west gold plant and related infrastructure to a Chinese capital management company, Heaven-Sent (HSC) SA Sunshine Investment, headquartered in Hong Kong. 

HSC holds a 74% interest in Village Main Reef (VMR), which owns and operates the Tau Lekoa Gold Mine in the Vaal River region.

The purchase consideration will be settled by a payment of R100 million in cash and the transfer of certain gold bearing rock dumps from VMR to AngloGold Ashanti. 

The sale assets exclude the Kopanang gold plant and the Kopanang rock dump, which will be retained by AngloGold Ashanti.

This comes after AngloGold Ashanti in June entered into a consultation process with employees in terms of section 189A of the Labour Relations Act to restructure its South African operations with the aim of ensuring that this business could be safely returned to profitability whilst mitigating job losses. 

This restructuring process included the Kopanang Mine ceasing mining operations and transitioning to care and maintenance.

But on Thursday, the miner said that the transaction will have a positive impact on the restructuring its South African operations as the Kopanang Mine would not be placed on care and maintenance, but would continue to operate under the ownership of the purchaser albeit with a reduced workforce.

Moreover,  AngloGold Ashanti agreed to pay severance packages to employees at the sold assets.

Meanwhile, AngloGold Ashanti entered into a definitive agreement with Harmony Gold to acquire some of its operations situated in the Vaal River region.

Harmony Gold will buy AngloGold Ashanti's underground mine Moab Khotsong, which incorporates the Great Noligwa underground mine, together with certain long life projects, tailings dams, and related infrastructure for a consideration of US$300 million in cash.

Chief executive Srinivasan Venkatakrishnan said AngloGold Ashanti was pleased to have agreed the sale of the Moab assets on fair terms to a well-established mining company with plans to secure its long-term future.

"This transaction is in line with our capital allocation strategy and our aim to effect the improvement of our global portfolio, through projects that extend mine lives, enhance margins and provide quicker cash turns on investment," Venkatakrishnan said. 

The transaction is subject to approval from Harmony's shareholders and other conditions precedent, including regulatory approvals though the board has unanimously approved it. 

Harmony Gold said it believes that the transaction is value accretive and will enhance its position as a robust cash-generative gold mining company, with a proven track-record of running assets effectively and efficiently.

"Buying Moab Khotsong means we boost our cash flows by more than 60%, increase our average overall underground recovered grade by 12% and grow our South African underground resource base by 38%," Peter Steenkamp, chief executive officer of Harmony said.

"The transaction benefits all our stakeholders. It creates value for our shareholders, preserves jobs and sustains the surrounding mining communities with the potential to significantly extend the life of mine of the Moab Khotsong operations."

Production from AngloGold Ashanti's remaining South African operations, comprising the long life Mponeng mine and Mine Waste Solutions surface operation, will constitute less than 15% of the company's estimated annual production.