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AngloGold UK listing to split global, SA units

Johannesburg - Africa's biggest bullion producer AngloGold Ashanti [JSE:ANG] said on Wednesday it was restructuring its mining and exploration operations outside South Africa under a new UK-based company and was also seeking $2.1bn in a rights issue.

The company said in a statement that such a move "would allow independent management teams to execute distinct strategies in order for each entity to compete as effectively as possible".

The move mirrors those of other large mining groups seeking to reduce exposure to South Africa, the vast resources of which come with the risk of a volatile labour market, policy uncertainty, dizzying shaft depths and soaring costs.

Following a trail already blazed by its former parent Anglo American, which moved its primary listing from Johannesburg to London in 1999, AngloGold said that separate listings would allow independent management teams to execute distinct strategies for each entity to compete as effectively as possible.

The company's share price fell 10% on the news in morning trade in Johannesburg.

Chief executive Srinivasan Venkatakrishnan, who goes by the name of "Venkat," said that AngloGold plans to distribute to shareholders about 35% of the new company to be listed in London by the middle of next year, with AngloGold initially retaining a 65% stake.

Srinivasan Venkatakrishnan will remain chief executive of AngloGold Ashanti and will be joined by Christine Ramon as chief financial officer.

AngloGold will have a shareholding of above 20% in the new company that will seek a listing in London and be led by chief executive-designate Charles Carter along with president and chief operating officer Ron Largent.

Charles Carter, currently AngloGold's executive vice president for strategy and business, has been lined up as CEO of the new company.

Carter said in a conference call that he expected the new entity, the operations of which currently account for 65% to 70% of AngloGold's earnings, is expected to join the blue-chip FTSE 100 index and will be valued at about $6bn to $7bn.

Investec analysts said in a note that the new company could be valued at about £3bn.

AngloGold's market capitalisation before Wednesday's announcement was R68.77bn, according to Thomson Reuters data.

Divergent strategies

"We believe this strategy can drive meaningful value for shareholders in multiple ways. It will create two simpler and more focused entities," Venkat said on a conference call.

"The proposed restructuring and recapitalisation will enable two distinct parts of our business (to be) led by different management teams with increasingly divergent strategies, one for the south African (operations) and one for the international portfolio."

AngloGold's operations outside of its domestic base are found in the Americas, Australasia and elsewhere in Africa.

Its South African operations, which accounted for about 30 percent of its total gold production of almost 1.1 million ounces in the quarter June 30, highlight many of the challenges facing the country's mining industry.

AngloGold's Mponeng mine west of Johannesburg is the deepest in the world, with bullion being extracted 4kms beneath the earth's surface. Mining at such depths sharply raises costs at a time when bullion's spot price is depressed.

Its South African mines were also hit by a wave of violent strikes that swept the industry in late 2012, setting the stage for a five-month strike in the platinum sector this year, which has further unnerved investors in the country.

Gold Fields last year also cut its South African risk exposure by spinning off its labour-intensive units in the country into a new company, Sibanye Gold [JSE:]. That left its mechanised South Deep mine as the company's only mine its home country.

Venkat will remain chief executive of AngloGold and will be joined by Christine Ramon, former CFO at petrochemicals giant Sasol [JSE:]and one of South Africa's most high-profile female executives, as chief financial officer.


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