AngloGold Ashanti’s $2.5 billion (R44.8bn) acquisition of smaller rival, Centamin, which operates Egypt’s biggest gold mine, has been approved by its board although shareholders in the SA and New York-listed miner reacted indifferently, with the company’s share price falling by 4.9% just before the close of yesterday’s trade session on the JSE.
Shares in AngloGold Ashanti fell to R483.50, extending the stock’s 3.84% and 4.45% loss of value in the past seven and 30 days respectively. In contrast, shares in Centamin, which is listed in London, appreciated by 23.68%.
AngloGold Ashanti recommended the acquisition at a premium of 37% to Centamin’s share price of 120 pence as at the close of September 9.
Market analysts said the acquisition was a significant merger transaction in the gold sector which has been awash with merger activity in the past few years.
“It’s a key transaction that is significant for a gold industry that has been awash with merger activity. For AngloGold Ashanti, the deal broadens its profile and provides production impetus,” said an economist with a South African bank.
The transaction has also been given the nod by the board of Centamin, which operates Egypt’s largest gold mine, Sukari. The Egyptian mine has produced over 5.9 million ounces of gold since production started in 2009.
“Today's transaction will add a Tier 1 asset to our portfolio,” said AngloGold Ashanti CEO, Alberto Calderon.
“The transaction is free cash flow accretive in the first full year of production and net asset value accretive from day one; it will also offer additional upsides as we leverage our corporate infrastructure and our core competencies in exploration, operations and asset optimisation.”
Terms of the transaction stipulate that Centamin shareholders will receive 0.06983 new AngloGold shares for each Centamin share they hold, along with $0.125 in cash.
Centamin shareholders will post the deal and be entitled to receive and retain the interim dividend of $0.0225 per Centamin share in respect of the six-month period ended 30 June 2024.
Proceeds under this are scheduled to be paid on 27 September 2024. The deal was also seen as expanding AngloGold Ashanti's operations in Africa.
For their part, AngloGold Ashanti shareholders will own about 83.6% of the enlarged issued share capital after consummation of the deal.
“Centamin shareholders will benefit from up-front cash returns and ongoing participation in a larger, more diversified combined group with an enhanced capital markets profile and greater trading liquidity,” said another market watcher.
AngloGold Ashanti describes the Sukari gold mine operated by Centamin in Egypt as a “world-class Tier 1 asset with a long life (and) compelling cost”profile.
It had total cash costs of $970 per ounce and all-in sustaining costs of $1 196 per ounce in the full year t the end of December 2023 amid an attractive development potential.
“The addition of Sukari immediately increases AngloGold Ashanti’s annual gold production by circa 450koz to over 3Moz for the 12 months ended 31 December 2023 (subsidiaries are reported on a consolidated basis whereas joint ventures are reported on an attributable basis), with an immediate reduction to combined unit total cash costs and AISC,” the company said.
Martin Horgan, CEO for Centamin, said completion of the reinvestment phase alongside consistent operational delivery underlined the Tier 1 status of Sukari as a safe, low-cost and large-scale gold producer.
“The transaction will allow our assets to grow as part of AngloGold Ashanti’s larger, diversified portfolio, benefiting from AngloGold Ashanti’s track record of responsibly developing and operating large-scale open pit and underground mines in Africa,” said Horgan.
AngloGold Ashanti recently said negotiations for the consummation of the company’s joint venture project with Gold Fields in Ghana, previously described by Calderon as complex despite making significant progress, were continuing although no agreement had been reached yet.
AngloGold Ashanti says the proposed Tarkwa/Iduapriem joint venture project in Ghana will become the biggest gold mine in Africa, with expected bullion production of about 900 000 ounces per year.
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