AngloGold looks to sell mines in the US, Mali to reduce debt

02 Apr 2015


The world's third-biggest gold producer, S Africa's AngloGold Ashanti Ltd, has put on the block its three gold mines, two in Mali and one in the US, in order to raise capital to reduce its debt.

AngloGold said yesterday that a potential buyer has approached it for the Sadiola and Yatela mines in Mali, while the company is trying to find a partner or buyer for its Cripple Creek & Victor (CC&V) mine in the US.

Earlier, AngloGold had revealed that with its planned asset sale the company intends to reduce its debt by $1 billion or a third from its current level of $3.1 billion.

AngloGold intends to sell its 41-per cent stake in Sadiola and its 40-per cent interest in Yatela operations, which produced a combined 96,000 ounces of gold in 2014.

The miner said it has requested the potential buyer to submit a binding bid for the Mali mines.

CC&V mine, which produced 211,000 ounces of gold in 2014, is a surface mining operation which provides oxidised ore to a crusher and valley leach facility, one of the largest in the world. Further expansion work at the mine is expected to augment production from 2015.

Johannesburg-based AngloGold is the world's third-biggest producer of the precious metal after Canada's Barrick Gold and US gold producer Newmont Mining. The company has 20 gold mining operations in four continents with gold reserves of 57.5 million ounces and mineral resource of 232 million ounces.

Commenting on the possible sale, AngloGold's chief executive officer Srinivasan Venkatakrishnan said: ''As we have mentioned since the latter part of 2014, we will work actively to reduce our net debt levels over the next two to three years to provide the company with greater financial flexibility, but in doing so, we will not act in haste nor compromise long-term value.''

''There can be no assurance, however, that a sale and purchase agreement for these transactions will be entered into or that any sales transactions will be completed,'' the miner said.

In the past two-and-a-half-years gold prices have fallen 33 per cent to around 1,200 an ounce from 1,784 in October 2012, impacting the profitability of gold miners. Like its peers, AngloGold has been pursuing a range of measures to simplify its portfolio, improve cash flow and reduce debt.

The company targets to cut its overhead expenses by two-thirds, while improving its asset quality by bringing into production two new low-cost mines, selling or closing some non-core and loss-making assets.

It has said it wants to bring a partner in to develop a new gold mine in Colombia.

The company has suspended its loss-making Obuasi mine in Ghana and is undertaking a mine modernisation study and is also looking for partnership for its future operation.

Last year, AngloGold sold its Navachab mine in Namibia to a private equity group for $105 million.

The measures yielded 18 per cent reduction in all-in sustaining costs at $1,026 an ounce for 2014 compared to 2012, with further reductions forecast this year.

For the year 2014, the company reported net loss of $39 million, compared to a $2.2 billion loss in the previous year. Revenue was down 5 per cent at $5.4 billion while gold production increased 8 per cent to 4.4 million ounces.

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