AngloGold Ashanti to Split Assets; Create New UK Company
Following the BHP Billiton’s demerger last month, AngloGold Ashanti (JSE:ANG) (LSE:AGG) (NYSE:AU) is set to restructure its international mining operations by splitting its non-South African assets into a newly created UK-based company.
The new entity, which will be called Newco, has received approval from the South African Reserve Bank (SARB) and will own AngloGold’s portfolio of gold production and exploration assets located outside South Africa.
“Our decisive response to a challenging gold price environment has seen us return to growth, aggressively reduce costs and improve free cash flow, all while posting a record safety performance,” AngloGold CEO Srinivasan Venkatakrishnan said.
As part of its division process, which will required shareholder approval, AngloGold will sell $2.1 billion of shares to pay down “unsustainable debt” as it seeks to revitalize a business battered by the long-term decline in gold prices.
"It has become increasingly clear that the two distinct parts of our portfolio require different strategies, focused management, and should be appropriately capitalized to realize their full potential and unlock further value for shareholders,” AngloGold Ashanti chairman Sipho Pityana said.
"In South Africa we will create a standard bearer for the mining industry with a structure allowing it to chart an exciting growth trajectory while allowing investors to properly value its high-quality, cash generative portfolio."
Newco will seek a premium listing on the London Stock Exchange, an inward listing on the Johannesburg Stock Exchange and a listing of American depositary receipts on the New York Stock Exchange.
Although AngoGold is splitting its business from South Africa, the company has full confidence in the country.
"I disagree about bunching all these transactions together. This is a different transaction. We are based in SA. We remain domiciled in SA. We are not shedding our South African assets. We see an opportunity to generate value on both legs of the equation by unlocking our South African assets separately and retaining a majority stake in Newco," Venkatakrishnan said.
"It’s got nothing to do with a view of SA. This would have happened regardless of the jurisdiction. It’s not driven by geography but driven by value unlock."
As for the new company, Charles Carter will become Newco’s CEO with Ron Largent as president and chief operating officer. Pityana and Venkatakrishnan would initially serve as non-executive director on the Newco board, with Pityana as deputy chairman.
AngloGold will initially hold 65 percent of Newco while the remaining 35 percent will be unbundled to shareholders.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.