Filed by AngloGold Limited
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Ashanti Goldfields Company Limited
Commission File No. 1-14212
Transcript of the AngloGold Limited Conference Call Held on 15 October 2003
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OPERATOR
Good morning. My name is Teresa and I will be your conference facilitator
today. At this time I would like to welcome everyone to the AngloGold conference
call. All lines have been placed on mute to prevent any background noise.
After the speaker's remarks, there will be a question and answer period. If you
would like to ask a question during this time, simply press star then the number
one on your telephone keypad. If you would like to withdraw your question, press
star then the number two on your telephone keypad. Thank you. I will now turn
the call over to Mr. Steve Lenahan. Mr. Lenahan you may begin your conference.
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STEVE LENAHAN - CORPORATE AFFAIRS - ANGLOGOLD
Thank you very much Teresa. Ladies and gentlemen, good afternoon from the
AngloGold team here in London and in Johannesburg. Good morning to our
participants in the United States.
Before I hand the microphone over to Bobby Godsell to talk to you about our
announcement this morning in South Africa time, I must read to you a cautionary
statement concerning forward-looking statements which may be made during this
call.
Certain statements during this call will be forward-looking within the meaning
of Section 27 of Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including without limitation those statements concerning
timing, the performance of conditions, tax treatment and the completion of the
merger, the value of the transaction consideration, expectations regarding
production and cost savings at the combined groups operations and its operating
and financial performance and finally synergies and other benefits anticipated
from the merger.
Although AngloGold and Ashanti believe that the expectations reflected in these
forward-looking statements are reasonable, no assurance can be given that these
expectations will prove to have been correct.
For a discussion of important terms of the merger and important factors and
risks involved in the company's businesses which could cause the combined
group's actual operating and financial results to differ materially from these
forward-looking statements, please refer to AngloGold's and Ashanti's filings
with the U.S. SEC, including AngloGold's Annual Report for the year ended 31
December 2002 and Ashanti's Annual Report for the year ended 31 December 2002
filed with the SEC in June 2003 and any other
documents in respect of the merger that are furnished to the SEC by AngloGold or
Ashanti under cover of Form 6-K.
After that lengthy cautionary statement, I'm going to hand over to Bobby
Godsell.
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
Thank you, Steve. Let me just add to the cautionary statement an apology to
South African callers who have had difficulty in accessing this teleconference.
It's sourced out of the U.S and is a formula that has worked for us previously.
We are aware that there has been a problem this time around. I hope most of the
people who wanted to get onto the call have got onto the call. I guess global
telephony is not a perfect science.
So anyway, good morning and good afternoon and thank you for joining us. In the
press release issued earlier today in Johannesburg, AngloGold has presented and
the Ashanti Board has unanimously recommended revised and final terms for our
proposed merger of the companies AngloGold and Ashanti Goldfields. We believe
this outcome represents significant progress, and we'd like to say a few words
about our revised offer and then take such questions as may exist in conference
callers.
To start with a key fact, the new ratio offered to Ashanti shareholders is 29
AngloGold shares to every 100 Ashanti shares. This represents an increase over
our previous offer of 26 to 100 of approximately 11.5%. Using last night's
closing price, this values Ashanti at $10.89 and the total equity of the company
at approximately $1.4 billion.
Ashanti has also released a statement indicating that its board has now
considered both our revised terms as well as the terms of the Randgold proposal
and has resolved unanimously to recommend that Ashanti shareholders vote in
favor of the resolutions necessary to implement the merger with AngloGold.
The revised merger proposal has been made in the context of the emphatic support
of Lonmin and the continued support of the board of Ashanti. Lonmin, which has a
27.6% shareholding in Ashanti, has given AngloGold an irrevocable undertaking
that they will not have any discussions with Randgold, also that they will not
accept or support any proposal from Randgold unless such a proposal includes a
fully underwritten cash alternative which the board of Ashanti determines to be
a superior proposal. Any scheme of arrangement would require support from 75% of
shareholders present and voting, and therefore this level of commitment from
Lonmin is an extremely significant step forward.
The other terms and conditions of AngloGold's original merger proposal remain in
place. One of these conditions is the support of the government of Ghana. We
understand from previous media reports the government of Ghana, especially in
the capacity as an Ashanti shareholder, will take note of any recommendations
coming from the Ashanti board.
In the government's capacity as regulator, we expect that they will take some
time to consult their advisors, led by Soc Gen, and review this new information.
AngloGold remains committed to invest the capital in Ashanti's assets to make
the most of its world-class asset base. This will include an investment of an
anticipated $1.5 billion of investment in the Obuasi mine in Ghana, including
$170 million, which is additional to that budgeted by Ashanti and $700 million
for the investment in the Obuasi Deeps project.
AngloGold believes that the merger is a strategic combination, bringing together
complementary strengths to create value for the shareholders of both companies.
The combined group will have a powerful investment case, with AngloGold bringing
financial resources and deep level mining technical expertise to maximize the
value of Ashanti's portfolio of top-tier, low cost and long life gold mines.
As an example, the AngloGold management anticipates that the revised capital
expenditure profile at Obuasi will improve underground working conditions and
mine planning, thereby increasing efficiencies with the objective of reducing
anticipated cash costs at Obuasi by $20 per ounce, in real terms, over the next
five years.
There is also the potential of at least $15 million of annual synergies from
reduced financing administrative and procurement costs and from the
consolidation of this currently shared ownership at Geita, as well as a breadth
of technical capabilities to ensure the optimal development of organic growth
opportunities. We believe that, given the certainty of this opportunity to
create a leading, well-capitalized and very liquid gold company, it is to the
advantage of all interested parties that the merger be achieved without further
delay.
Our revised terms reflect our commitment to implementing a transaction that is
in the best interests of our own shareholders, as well as those of Ashanti. With
this merger, we are creating real value and a truly pan-African enterprise that
not only can compete on the world stage but, indeed, can lead it. Thank you very
much.
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STEVE LENAHAN
Teresa, we would now be happy to take participants' questions.
QUESTION AND ANSWER
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OPERATOR
Thank you, sir. At this time I would like to remind everyone, in order to ask a
question, please press star, then the number one on your telephone keypad. We'll
pause for just a moment to compose our Q&A roster. OK. Sir, we are compiling our
Q&A roster at this time. Your first question comes from Benjamin Pass from
Sapphire International. Mr. Pass, your line is open. Please go ahead with your
question.
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BENJAMIN PASS - SAPPHIRE INTERNATIONAL - ANALYST
Yeah, a couple of questions regarding the modification made to the original
offer. Was yesterday the first time that the Ashanti board learned of the
adjustment to the consideration, and at what point in the board meeting did that
come out?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
We certainly made our revised proposal yesterday. I have no idea at what stage
this was introduced to the board meeting. I'm not privy to that process at all.
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BENJAMIN PASS - SAPPHIRE INTERNATIONAL - ANALYST
OK. Can you give me a sense of what discussions you guys have had since the
original offer was made on the 0.26 from today, kind of detail the discussions
of what you've talked about with the government and how they've reacted? Was
this modification driven by the government or is this strictly as a result of
the Randgold bid?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
As we've indicated in our statement, I think that the major driving force in
moving to a final and revised offer was the level of support we believed we
would achieve, particularly from Lonmin and then our hope and anticipation that
the Ashanti board would renew their recommendation of our offer, which they have
subsequently done. And we're pleased that they've done it in a unanimous way.
In regard to the government, that process has been really a process of their
appointed advisors examining our own proposal. In that process, we've had
contact with the advisors in the sense of responding to questions and requests
for information. Beyond that, we're awaiting the report of the government
advisors and we have some regulatory issues, issues that we scout out in our
announcement of the 4th of August that require discussion and agreement with the
government to completion.
But we are awaiting an opportunity to take those issues up, either directly with
the government or with their advisors.
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BENJAMIN PASS - SAPPHIRE INTERNATIONAL - ANALYST
At any point since the original offer was made, has the government expressed a
dissatisfaction with the original terms through Soc Gen, its advisor?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
We've not been in a negotiation about the terms. Soc Gen has been gathering
information to do a due diligence or to render, I assume, in due course, an
informed opinion about the nature of our offer.
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BENJAMIN PASS - SAPPHIRE INTERNATIONAL - ANALYST
If, hypothetically, the government through Soc Gen comes back and says that
they are not satisfied with the revised 0.29, you say in your press release that
this is the final offer. If that becomes an instance, are you guys prepared to
walk? Is this it? If the government says 0.29 is unacceptable for whatever
reason, will you walk away?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
We're using the word final in its completely ordinary meaning, so it means
that, in terms of direct share, this is our final offer.
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BENJAMIN PASS - SAPPHIRE INTERNATIONAL - ANALYST
OK. So, if the government said that 0.29 was not acceptable to them and they
wanted 0.31, would you be willing to move the offer to a 0.31 if that would be
what it takes to get the government's approval?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
Let me reiterate. We've quoted our final offer and we mean that it's our final
offer.
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BENJAMIN PASS - SAPPHIRE INTERNATIONAL - ANALYST
So, this is the most we can expect to see from AngloGold. That's the definition
of final?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
That's right.
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BENJAMIN PASS - SAPPHIRE INTERNATIONAL - ANALYST
OK. Thank you very much.
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OPERATOR
Your next question comes from Peter Townsend of BJM
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PETER TOWNSEND - BJM - ANALYST
Hi. Good day, gentlemen. Bobby, as you see it, is this closing the door on
Randgold from coming back with any other offer except an all-cash offer or a
fully underwritten cash offer?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
Well, Peter , firstly, I'm glad you made it on the call.
And secondly, as I've indicated, I mean Lonmin is committed to continue to
support our offer. They are committed not to consider an offer from Randgold
other than one that was fully underwritten by cash.
If you add to those two facts the fact that both offers are proposing a scheme
of arrangement - and in a scheme of arrangement a 75% majority is required, I
think it then becomes simply a matter of fact that while the first two steps are
in place, it's difficult to see how Randgold's offer could be successfully
completed.
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PETER TOWNSEND - BJM - ANALYST
OK, thanks, Bobby. And then one other quickly - as far as you see it as well
the assurance that Lonmin has given you is binding and I presume by that I mean
legally binding.
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
Yes, indeed. I mean when we enter commitments with other parties, that is
indeed our intention.
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PETER TOWNSEND - BJM - ANALYST
OK, thanks very much.
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OPERATOR
Next question comes from Heather Douglas of BMO Nesbitt Burns. Ms. Douglas, your
line is open. Please go ahead with your question.
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HEATHER DOUGLAS - BMO NESBITT BURNS - ANALYST
Thanks very much. Good afternoon, everyone. I'm curious if the Government of
Ghana says "No," following up on an earlier question, what is AngloGold's plan
B? Obviously, the final is final - I got that, but what other steps will you
take if the government says no?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
Well, I think from day one when we first indicated a public commitment to
trying to undertake this transaction, we indicated we would need the support of
Ashanti shareholders but we would also need the support of the Government of
Ghana. And, of course, the Government of Ghana's got an important role as
regulator and shareholder.
I cannot imagine us being able to complete the deal or, indeed, even wanting to
complete the deal absent the regulatory consent that we seek and need and absent
an emphatic acceptance of our deal as the scheme of arrangement requires from
the shareholders.
I also have to say that throughout this period of time, I have no reason to
believe that the support of the Government of Ghana and the resolution of the
regulatory issues that are currently outstanding will not be achieved. And
equally, I would say with regard to a timetable, some weeks ago we extended our
offer which initially was due to expire at the end of September. We extended it
by a month to the end of October. It would be very much my hope that we would be
able to resolve outstanding issues in that timetable.
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HEATHER DOUGLAS - BMO NESBITT BURNS - ANALYST
But AngloGold is willing to extend that October 31 deadline if necessary?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
On the issue of timetables, I don't want to make and I don't think there's any
need to make emphatic commitments.
I would just reiterate that we are - I mean with the Ashanti board yesterday,
we've taken some enormous steps forward. The issues that remain to be resolved
are relatively few and relatively straightforward, and I can see no reason why
we shouldn't get resolution with the Government of Ghana by the end of October.
Obviously nobody can dictate to any government a definitive time table.
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HEATHER DOUGLAS
Your offer to Ashanti included some other conditions related to the government
of Ghana in terms of conditions with them that extends the mining lease at
Obuasi, a stability agreement for taxes, customs, duties. And it didn't actually
say anything about the golden share, but I'm sure you're talking to the
government about the golden share. Can you elaborate any more about if the
government has given any indication on that and how make or break these
conditions are?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
Well, you're correct in the issues that you articulated as are also referred to
in our 4th of August announcement. There is a package of regulatory issues. What
we want is the confidence and capacity to raise the capital to immediately start
a very intensive training program to firm up the Deeps already.
We need a measure of long-term certainty, as deep mines are kind of a
decades-long project. In the packages of issues, I think it's inappropriate for
me to speculate on these individually. It's a sort of four or five-point agenda
that requires finalization. And we look forward to entering into expeditious
negotiations to finalize those issues between now and the end of October.
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HEATHER DOUGLAS
OK, great. Thank you very much.
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OPERATOR
Your next question comes from Jim Copland of Goldman Sachs. Mr. Copland, your
line is open. Please go ahead with your question.
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JIM COPLAND - GOLDMAN SACHS - ANALYST
Thank you very much and good afternoon. Has your due diligence revealed
anything that's changed your view of the assets at all since the update that you
provided in Denver, either positive or negative?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
I think the one area where we have, indeed, done a little bit more work is
around the Siguiri assets. And that has simply led us to be, let me put it this
way, optimistic about the ore body potential of that mine, to be more optimistic
than, perhaps, we were at an earlier stage.
And the politics of the increased offer, however, have really been in the
context of achieving a very emphatic level of support from Ashanti's largest
shareholder and the continued support of the Ashanti board.
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JIM COPLAND - GOLDMAN SACHS - ANALYST
Great. Thanks very much, Bobby.
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OPERATOR
Your next question comes from Ed Guinness of Tiedemann. Sir, your line is open.
Please go ahead with your question.
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ED GUINNESS - TIEDEMANN - ANALYST
Hi. A couple of questions. First, if another bidder were to come into the
situation, would you still see your offer as final? And when do you see being
able to close this deal?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
If I address your second question first, clearly, in terms of understanding
where the key stakeholders stand, the outstanding stakeholder is that of the
government of Ghana. And we, I'll just repeat, would hope to have dealt with all
the outstanding issues of the government of Ghana as regulator, and hopefully
also as shareholder, by the end of this month.
Given the scheme of arrangement stages that we have to go through, it's likely
to take between three and six months and will depend in particular on whether
the SEC does or does not conduct a full review, and also it will depend on the
time which the Ghana high court takes to exercise its duties under the scheme of
arrangements.
So the estimate is between three and six months. I really don't want to
speculate upon other bids. We're addressing what's on the table now and our
comments are directed in that regard.
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ED GUINNESS - TIEDEMANN - ANALYST
Thank you.
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OPERATOR
Your next question comes from Craig Shaw of Shorewater Limited.
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CRAIG SHAW - SHOREWATER LIMITED - ANALYST
Thank you. Good morning gentlemen. The original offer indicated that the
Ashanti shareholders would not be privy to the final dividend in February should
the deal close before that time.
I wondered whether the final offer changes the landscape on that or whether
we'll still see that restriction?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
The only change that we've introduced is to the ratio. All other elements of
the deal remain as they were before.
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CRAIG SHAW - SHOREWATER LIMITED - ANALYST
OK. Thanks very much.
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OPERATOR
Your next question comes from Patrick Chidley of BJM
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PATRICK CHIDLEY - BJM
Yes. Hello. Good afternoon. Good morning. My first question actually has sort of
been asked a lot of times already. Does final really mean final and what would
change your view on what's final or not?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
Final means final.
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PATRICK CHIDLEY - BJM
OK. Thank you. And then is there any recourse you have on it if they back out on
the agreement not to accept Randgold paper unless it's underwritten?
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R.M. GODSELL - CEO - ANGLOGOLD LTD
Could you just repeat the second question? You're breaking up and I don't
actually, just didn't get the gist of the second question.
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PATRICK CHIDLEY - BJM
Sure. What recourse do you have on Lonmin if they back out of the agreement not
to accept the Randgold paper unless it's underwritten?
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R.M. GODSELL - CEO - ANGLOGOLD LTD
It's a solid commitment between two parties who I think know what they're
doing.
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PATRICK CHIDLEY - BJM
Legally binding agreement, basically?
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R.M. GODSELL - CEO - ANGLOGOLD LTD
That's certainly the way we see it.
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PATRICK CHIDLEY - BJM
OK. Thank you. Great. Thank you very much.
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OPERATOR
Your next question comes from Stephen Dian of D R Asset Management.
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STEPHEN DIAN - D R ASSET MANAGEMENT - ANALYST
Have we a plan B or a plan C, as other callers have asked but as far as not
just a Randgold proposal, but maybe a third party bidder?
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R.M. GODSELL - CEO - ANGLOGOLD LTD
Again, you know, I really - that's something that I don't want to speculate
about. I couldn't say anything useful or worthwhile about that, you know, this
transaction has been in the marketplace since the middle of May. Who knows what
the future will bring. But, you know, I'm focused at the moment on this
transaction and to the extent that I think we are completely focused on
Randgold.
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STEPHEN DIAN - D R ASSET MANAGEMENT - ANALYST
OK. And I understand final means final from what you say and everything, but it
seems our energy is focused on a Randgold proposal. What happens in another step
after that? That's what we're trying to get at. OK. I understand that's your
answer, I guess, so you cross that bridge when you come to it.
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R.M. GODSELL - CEO - ANGLOGOLD LTD
I'm not trying to be funny. I could sit here and invent something, but I
promise you it would be doing you a disservice because, you know, we're going to
have think who is it, what are the terms of the offer, where does the value lie
- I can assure you that as very excited as we are about the combination of
AngloGold's capital-
raising capacity and technical know-how and Ashanti's enormously rich ore
bodies, that there is a point at which value accretion becomes value dilution.
And we are disciplined to recognize that point - you know, there are just so
many elements of your question that aren't really determinable until it happens.
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STEPHEN DIAN - DR ASSET MANAGEMENT - ANALYST
OK, I understand that. You'll cross the bridge when you get to it. Is this the
final offer due to synergies - to valuations - is that what you're trying to
say? Is it because after that, it doesn't make sense to bump it up anymore? Is
that why?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
As you said, we'll cross that bridge when we come to it.
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STEPHEN DIAN - DR ASSET MANAGEMENT - ANALYST
I mean I understand what you mean by fair and final. But to explain why it's
final, is it you can't afford to pay anymore or to offer any more shares?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
We've made an offer, the offer has been in the language set out in our press
release and in the Ashanti release emphatically accepted - in many ways,
irrevocably accepted by the largest shareholder of Ashanti, and it's been
unanimously recommended by the board. It's - that's the context in which we've
made our final offer, and I think it's a context in which the word final is both
appropriate and sensible and actually to be expected.
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STEPHEN DIAN - DR ASSET MANAGEMENT - ANALYST
OK, thank you very much.
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OPERATOR
Once again, if you do have a question, please press star, then the number one on
your telephone keypad. We'll pause for just a moment while we compile our Q&A
roster.
Your next question comes from Luca Ipolito of Chesapeake Partners.
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LUCA IPOLITO - CHESAPEAKE PARTNERS - ANALYST
Thank you. I don't want to beat a dead horse, but maybe you can help us on the
legal or technical meaning.
In the U.K., for example, when you say final, that final has a very definite
meaning and it's very precise and actually means final. In the U.S. where I'm
calling in from, final pretty much means nothing and you can do anything you
want. The Ghana system strikes me as more similar to the U.K. system. But can
you give us an idea of whether there is a rule in Ghana as to the meaning - the
legal meaning of the word and if so how does it apply here?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
Well, fortunately I have James Hartop sitting across the table, and I'll ask
him to address that question. But before he does because I want there to be no
confusion on this, beyond regulatory meanings there is a plain English meaning,
and that is the meaning we're attaching to the term.
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LUCA IPOLITO - CHESAPEAKE PARTNERS - ANALYST
OK.
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JAMES HARTOP - UBS (ANGLOGOLD ADVISOR)
Ghana is based on a U.K.-type legal system, but there isn't the same history of
a takeover code and therefore not the same intricate understanding of what final
means as there is under the U.K. code.
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LUCA IPOLITO - CHESAPEAKE PARTNERS - ANALYST
OK, so lack of precedents if you will?
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UNIDENTIFIED PARTICIPANT
Correct. A definite set of rules, yes.
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LUCA IPOLITO - CHESAPEAKE PARTNERS - ANALYST
OK, thank you.
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OPERATOR
Your next question comes from John Clemow of Investec.
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JOHN CLEMOW - INVESTEC - ANALYST
Hi, Bobby. [Inaudible]. Can you tell us, has there been any approach to Lonmin,
either by yourselves or other parties that [Inaudible].
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
I'll just check because you really were breaking up. Is the thrust of your
question, are we aware of, or party to, any deals that would affect Lonmin's
shareholding in the merged company? Is that the thrust of your question?
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JOHN CLEMOW - INVESTEC - ANALYST
Yeah, that's correct.
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
OK. The answer is no.
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JOHN CLEMOW - INVESTEC - ANALYST
OK. Lonmin has made a decision that it's happy with AngloGold [Inaudible] , but
it's not happy with Randgold's paper?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
Well, actually that's the inference I would draw from a series of public
statements, and from the most recent commitments that Lonmin had made for us.
But you are asking a question about Lonmin and it's probably best directed to
Lonmin.
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JOHN CLEMOW - INVESTEC - ANALYST
OK. That's fine. Second question is, I've been, as I'm sure a lot of us were,
I've been having a look at some of the valuations of Canadian companies who sold
assets there and they seem to have valuation metrics that are three or four
times that which you've [Inaudible]. Could you comment on why you think there's
a difference in valuation with Ashanti and a valuation in Golden Star and
IAMGOLD in particular?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
I have to tell you, at this transaction we've not been particularly transfixed
by valuation metrics for the companies concerned, and particularly since we've
had a competitor, we've not been transfixed by shared prices at a moment in
time.
We're kind of value fundamentalists. We look at an ore body and we look at an
earnings stream, and that's where we've made our judgments. And I would just
state here that, in regard to Ashanti, there's really, going forward, we think,
two very different earnings streams.
There's the capital constrained earnings stream where the asset has to be
developed out of existing cash flows and where there is not an existing capacity
to raise significant new equity or indeed funding of another kind for a major
project such as Obuasi Deeps. And that's one kind of cash flow.
There's a cash flow where you are able to mobilize the capital to scope out
Obuasi Deeps property, to accelerate the drilling, to run this as an integrated,
properly funded from day one, project, which is the way we are at deep level
gold mines in South Africa and we're just completing one at Moab Khotsong.
That's what I would call earnings stream B.
And we've been focused on the difference between those earnings streams. We see
the value accretion of our offer in enabling Ashanti to move from what I would
call a capital constrained organic growth strategy to a fully funded growth
strategy.
So, through all of this we've been looking at value in real terms. We've been
looking at predicted earnings views and not at share price multiples.
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JOHN CLEMOW - INVESTEC - ANALYST
I think those are admirable comments, but in Ghana when you're dealing with the
public opinion and they can see a company like Golden Star, which I'm looking at
the screen now, at the market capital, $450 million for production of 140,000
ounces. All of which is in Ghana, compared to Ashanti with a market capital of
1.4 billion and a production of 1.6 million ounces.
It seems like it might be quite a difficult thing to sell to the Ghanaian
politicians and the people, that the valuation of Ashanti is correct and the
valuation of Golden Star is incorrect.
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
I understand your question. I've actually spent a fair amount of time since May
in Ghana and am thinking of applying for permanent residence. The debate has
been about what actually has to be done to get Obuasi Deeps off the ground. What
actually has to be done to optimize the operations of the existing Obuasi mine.
What would be the optimum way to take the Siguiri mine forward?
And in that debate we've been focusing on concrete plans with concrete costs and
asking who is able to mobilize the money? And that's the debate, I mean, I find,
by the way, the level of analysis and commentary on this transaction in Ghana to
be very extensive and at a high quality. And I think because the argument in
life, generally, goes that you need to invest some real money in
developing assets before you can reap the benefits, well, this is why it has
been very well understood.
And I think it is more concrete and clearly understood than the concept of
market capitalization, which is of course an arrogmatic computation rather than
money in the bank.
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JOHN CLEMOW - INVESTEC - ANALYST
Thank you very much.
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OPERATOR
Your next question comes from Xavier Riera of CDC. Your line is open sir; please
go ahead with your question.
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XAVIER RIERA - CDC - ANALYST
Yes. I'm sorry. I joined the call a little bit late. Can you tell me when do you
expect SocGen to come up with their recommendation? Are we talking about days or
at the end of the month?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
The only response I can offer because, you know, I can't speak for either the
government of Ghana or their advisors, but, you know, we did extend our offer
until the end of October. It remains our hope to wrap this thing up by then.
I think it's really in the interest of everybody that we get finality on this
issue. It's been around for quite a long time and, you know, from our point of
view, thank you, we are very keen to move from negotiating a deal to
implementing the improvement and expansion plans that we're very excited about.
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XAVIER RIERA - CDC - ANALYST
OK. And I'm sorry I can't really, but can you tell me how spell final please?
All right. Congratulations on the deal.
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OPERATOR
Your next question comes from Robert Knappp of Millennium Partners.
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ROBERT KNAPP - MILLENNIUM PARTNERS - ANALYST
Hello. I have a question maybe it's sort of coming at it from a different
perspective of a few of the holders. You know, when the convertible notes are
redeemed at the end of last August, the shares were trading around four dollars.
And if people wanted to talk about valuation disparities they could have wiled
away hours and hours and hours pondering why Ashanti was so cheap.
And the discussion just seems to be that people are recognizing the amount of
capital expenditure you've committed to putting in place and when you're looking
at a country like Ghana and you're thinking about the kind of commitment you've
made, you know, I have to say that as an Ashanti shareholder what I worry about
is you walking away.
I mean, this whole thing with Randgold has been something of a circus. At what
point do you throw up your hands in frustration?
--------------------------------------------------------------------------------
R.M. GODSELL - CEO - ANGLOGOLD LTD.
Our answer to that question is not yet, but thanks for your comments.
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ROBERT KNAPP - MILLENNIUM PARTNERS - ANALYST
You're welcome.
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
There have been times.
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ROBERT KNAPP - MILLENNIUM PARTNERS - ANALYST
I'm sure there have been. Do you - if you were called on to extend again past
October, what will be your decision-making process?
--------------------------------------------------------------------------------
R.M. GODSELL - CEO - ANGLOGOLD LTD.
OK, the decision-making process will be just like this - if we saw that there
was a valid reason - a new issue, a complication, something to be resolved - and
if we thought it was capable of resolution and capable of resolution with a
reasonable time, then we probably would be inclined to extend.
I have to say none of the issues that are currently on the table are new,
they're not particularly complicated, they're issues that the government of
Ghana has been aware of from the middle of May, and I can see no reason at all
why these issues should not be completed by October.
And you know, you'll appreciate that M&A activities are also very absorbing of a
management's time. We're a company with 19 mines to run, we are busy with these
and organic growth projects, we've got a very vigorous green field exploration
activity, and
what we don't want to do is to waste time on something that is never going to
come to resolution.
I think that sense of the criticality of time is well understood by all parties
including, I believe, the government of Ghana.
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ROBERT KNAPP - MILLINIUM PARTNERS - ANALYST
OK, thanks very much.
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OPERATOR
[Inaudible]
--------------------------------------------------------------------------------
UNIDENTIFIED ANALYST
Under what circumstances would the Ashanti board deem a Randgold offer superior?
It currently appears to offer a higher implied value relative to AngloGold's
offer, and if they raise the offer further, it would [inaudible].
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
I don't want to be funny, but I think you're on the wrong conference call. I
mean you can't possibly ask me to comment about what the Ashanti board would do
in the future. I can tell you what the Ashanti board put in its press statement
about what it did yesterday.
--------------------------------------------------------------------------------
UNIDENTIFIED ANALYST
OK.
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
That seems clear enough.
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UNIDENTIFIED ANALYST
I understand. There was a reference to - in your release that if the offer were
superior, that might be a condition by which things could be changed.
One more follow-up question if I may - if the Ghana government did not support
the AngloGold offer, would Lonmin's agreement with AngloGold lapse?
--------------------------------------------------------------------------------
R.M. GODSELL - CEO - ANGLOGOLD LTD.
Well, it's a hypothetical question. I don't know that I can give you a direct
answer. What I can say is what I said before - from day one, we believed we
needed to get Ashanti and its critical shareholders on board and we needed the
support of the government of Ghana. We've made a lot of progress. I have no
reason to believe that we won't be able to complete the process and relatively
expeditiously.
--------------------------------------------------------------------------------
UNIDENTIFIED ANALYST
OK, thank you.
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OPERATOR
Next question comes from Jessica Dickerman of Harvest Management
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MATT BORR - HARVEST MANAGEMENT - ANALYST
Hi. It's actually Matt Borr . I guess my only question is and I guess my only
worry is the process with Ghana has taken a very long time, and it would seem
that if Randgold were to come back with a hugely superior offer that the
government's going to be put in a hard place. And I'm just wondering how much
we've explored what the government's thought process is or if we can even do
that or is that - is that a risk?
--------------------------------------------------------------------------------
R.M. GODSELL - CEO - ANGLOGOLD LTD.
Well, you know, I don't think we would have revised our offer if we were not
hopeful - significantly hopeful of completing the transaction. The government of
Ghana will speak for itself. You know, there are some - from an operative view,
there are some advantages. Through this very drawn out process, almost every
aspect of this transaction has been put in the public domain, and certainly in
the context of Ghana, thoroughly debated.
And I must say if in the end the government makes a decision in favor of our
offer as I hope it will, I think it may be a situation where it's taken a long
time to make a decision, but in the making of the decision, we have a solid
commitment which will facilitate rapid implementation. And that's genuinely my
conviction.
--------------------------------------------------------------------------------
OPERATOR
OK, sir. Your next question comes from Peter Ryan of Brentanncourt Advisors.
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PETER RYAN - BRENTANNCOURT ADVISORS - ANALYST
I just have a question about the timing of the actual transaction. I understand
the timing is somewhat uncertain, but are there any circumstances under which
you could envisage Ashanti's
shareholders actually receiving the AngloGold dividend in January?
--------------------------------------------------------------------------------
R.M. GODSELL - CEO - ANGLOGOLD LTD.
No, we made this clear on the fourth of August that, you know, if we'd been
able to close this deal much earlier this year, that would have indeed been
conceivable. But from a simple equity point of view, people can't really be
entitled to the dividends unless they've been part of the earnings stream that
has produced them.
And it's quite clear that this deal is unlikely to close before the end of the
year, as I said, it will probably be three to six months from today, which takes
us very close to the end of the year and the earnings period is closed, so
because we didn't want to leave any uncertainty about this point whatsoever, we
have structured our transaction agreement such that the new shareholders will
start qualifying for dividends in a new earnings period, and that's not 2003.
--------------------------------------------------------------------------------
PETER RYAN - BRENTANNCOURT ADVISORS - ANALYST
I see. OK, thank you. And a second question is I understand that Lonmin is
committed to the AngloGold offer unless a superior offer provides a cash
alternative. Is it possible under Ghanaian law, and maybe I should address the
question more to the banker, is it possible for Randgold to actually offer a
superior cash offer to Lonmin alone and then to offer a superior share
alternative to the remaining shareholders? Is that possible?
--------------------------------------------------------------------------------
R.M. GODSELL - CEO - ANGLOGOLD LTD.
Our understanding is that the - under the terms of the agreement - is the cash
offer would have to be for 100% or at least a fully underwritten cash
alternative which would have to be for 100% of the issued share capital.
--------------------------------------------------------------------------------
PETER RYAN - BRENTANNCOURT ADVISORS - ANALYST
OK, thank you.
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OPERATOR
Your next question comes from Stewart Bailey of MineWeb
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STEWART BAILEY - MINEWEB - ANALYST
Hi, Bobby. Just two quick questions - has AngloGold received any support from
the South African government? Has there been any lobbying on AngloGold's behalf
from Pretoria?
And second of all, your irrevocable from Lonmin - does that preclude Lonmin from
talking to any third party who might enter the bid at some point?
--------------------------------------------------------------------------------
R.M. GODSELL - CEO - ANGLOGOLD LTD.
On the first question, Stewart, it's not our practice to involve governments in
business transactions unless there's very good cause. I mean, i.e., they own the
shares or there are particular laws and regulations that impact on the deal. In
the case of the South African government, that clearly does not exist. So we
have neither sought nor will we seek lobbying.
I mean, this is a matter in the first instance for the shareholders of Ashanti,
in the second instance for the government of Ghana in its capacity as a
regulator. Your second question, I mean really just out of fatigue and humility,
I'm going to hand across to James Hartop.
Or would you please repeat your second question.
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STEWART BAILEY - MINEWEB
And James, your irrevocable that you received from Lonmin. Would that preclude
Lonmin from talking to a third party that may come in with a scrip offer at a
later point?
--------------------------------------------------------------------------------
JAMES HARTOP - UBS
No it wouldn't.
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STEWART BAILEY - MINEWEB
Thank you.
--------------------------------------------------------------------------------
OPERATOR
Your next question comes from Thad Teaford of Carlson Capital.
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THAD TEAFORD - CARLSON CAPITAL - ANALYST
Yes. I still have some questions on the Lonmin undertaking. I know that people
keep asking some of the same questions over and over again. But I just want to
understand exactly what has changed between the initial offer with Lonmin and
this one?
You know, my understanding is that it's just that there would have to be 100%
cash offer from Randgold. I mean, can you tell me what else has changed at this
point?
--------------------------------------------------------------------------------
R.M. GODSELL - CEO - ANGLOGOLD LTD.
You know, there has been a process since we announced that we were talking in
the middle of May. There was an indication at the time from Lonmin that they
favored the offer and supported our bid.
Then we had the entry of Randgold. There have been various media indications
from Lonmin that they continued to support our bid and that they didn't look
with favor on Randgold paper. I think what we have achieved in the agreement to
which we allude in our press statement with Lonmin is an emphatic statement and
it's just what the word said.
They support our offer. They continue to support our offer. They won't enter
into negotiations with Randgold and they would not support a Randgold offer
unless it was fully cash underwritten and was deemed to be superior by the
Ashanti board.
So we've consolidated a set of conditions which we also indicate we can for all
intents and purposes make it impossible for Randgold to succeed. And it's in the
context of that, we call it near finality, certainly in regard to Lonmin and
Randgold or the Randgold offer, that we believed it was right to revise our
offer and that we believed it was right to make our offer final.
--------------------------------------------------------------------------------
THAD TEAFORD - CARLSON CAPITAL - ANALYST
But Lonmin is not prevented from talking with third parties about offers
whether it be in all cash or potentially in stock?
-------------------------------------------------------------------------------
R.M. GODSELL - CEO - ANGLOGOLD LTD.
Yes. I think there are - you can't write a complete script for the future. As
I've said before, we're focused on our offer and its current competitor. And
that's where the debate has been. I think what we've achieved is a statement of
great precision from both Lonmin and the Ashanti board on the relative merits of
our offer and the Randgold offer and that's what we've been seeking to achieve.
--------------------------------------------------------------------------------
OPERATOR
Your next question comes from Clive Ginsberg of Mariner.
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CLIVE GINSBERG - MARINER - ANALYST
Just want to get an idea of how firstly, why you think there was a delay of the
- by the Ghana Government in September I think the 15th was the original
expected outcome of their opinion as to acceptance or whatever. Was that only
attributable in your opinion to the Randgold bid or do you think there were
other issues?
--------------------------------------------------------------------------------
R.M. GODSELL - CEO - ANGLOGOLD LTD.
I think, looking back, there was nothing particular sinister or complicated or
difficult to understand. There are two different timetables that we should be
aware of. The Government of Ghana has asked and I think quite appropriately for
a very careful and comprehensive evaluation of our offer. And their advisors
have been energetic in pursuit of that. We indicated we hoped for closure close
to the end of September. If we have a month's slippage in that, this is not
going to be entirely extraordinary.
The other contract which is in my mind quite separate is the tabling in I think
the middle of September of Randgold of their formal offer and the need for the
Ashanti board to in a comprehensive way consider it and then review the original
recommendation of our offer.
Yes, I find it not extraordinary the amount of time that those two processes
have taken. I would just say that, you know, the one process is complete - that
is the Ashanti board's consideration of the two offers. What is outstanding from
the government is particularly their view on the regulatory consents and
concessions that are part and parcel of our offer. That's outstanding and I
think that's a couple of weeks out.
--------------------------------------------------------------------------------
CLIVE GINSBERG - MARINER - ANALYST
All right. And what about the government? When do you expect to - when do you
expect to hear something more definitive from them?
--------------------------------------------------------------------------------
R.M. GODSELL - CEO - ANGLOGOLD LTD.
You know, the government has indicated that it will take no - bear in mind that
I can't recall the exact words in a statement from the government - but that
certainly the government will take some direction from the Ashanti board. I mean
I think they've indicated that there's a role as a shareholder in which they are
obviously going to take note of the board of the company in which they hold the
shares.
Then there's the regulatory issues. I'm - or what I'm particularly focused on is
the regulatory consents and concessions that we're seeking, and I would hope to
have finality on that subject within a couple of weeks.
--------------------------------------------------------------------------------
CLIVE GINSBERG - MARINER - ANALYST
OK, thanks.
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OPERATOR
Your final question comes from Ed Guinness of Tiedemann.
--------------------------------------------------------------------------------
ED GUINNESS - TIEDEMANN - ANALYST
Yes, I just wanted to clarify the dividend. You have a January dividend. What
do you expect the amount to be for the declaration; the payout date is typically
in February? And just so I'm clear again, when do you think that this merger
closes?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
I'm afraid I can't offer you a projection of the dividend. The dividend - we
pay an interim dividend in respect of the first half of the year and that
dividend was 51 cents I think at the illustrative exchange rate at the time.
That's for the first six months.
Now, you know, the dividend for the second six months will depend on the
earnings for the second six months. We are due to report shortly on our third
quarter, and we have the fourth quarter still ahead of us. Our dividend policy
is to pay out substantially all of the free cash available after meeting the
growth needs of the company. I mean we're a company with a very long dividend
track record. You know, I can give historically what our dividend has been. And
in terms of dividend yield, which of course is a function of the share price,
we've been typically in a kind of 3-5% range. But, you know, the critical issue
is what will the gold price do in the next six months and what particularly will
our cost of currencies - the currencies in which we incur our mining costs - do.
You're right to think about your timing. But I mean, you know, when we made our
first offer public in early August, we indicated that we thought it was unlikely
to close at the very best towards the end of the year. And therefore, we had
structured our transaction agreement with Ashanti shareholders to exclude the
payment of a second-half dividend for 2003.
--------------------------------------------------------------------------------
ED GUINNESS - TIEDEMANN - ANALYST
And I'm sorry, about the close of the merger - I'm sorry, when do you think the
merger closes?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
Three to six months from now.
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ED GUINNESS - TIEDEMANN - ANALYST
And the negating item for you is the Ghana high court?
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R.M. GODSELL - CEO - ANGLOGOLD LTD.
There are two issues - whether the U.S. Securities and Exchange Commission
conducts a full review, which in our experience could take as much as six weeks,
and also how quickly or slowly the Ghana court process proceeds. These are
parallel processes of course, you understand. It's not the one added to the
other. Other than that, James may have more to say about the timetable.
--------------------------------------------------------------------------------
JAMES HARTOP - UBS
No, I mean the only one thing that I'd say is that obviously this isn't a
precedented process in Ghana, and therefore, we'd be foolhardy, I think, to make
very confident predictions about what the timeframe will be. But it - that's our
sort of best guess. But that's why it's a little bit vague.
--------------------------------------------------------------------------------
ED GUINNESS - TIEDEMANN - ANALYST
And just so I understand the Ghana high court, when do you make a submission to
them and just what is their process?
--------------------------------------------------------------------------------
JAMES HARTOP - UBS
Well, it's relatively similar to a U.K. scheme of arrangement process, so that
we're submitting documentation and then moving into a scheme meeting.
--------------------------------------------------------------------------------
ED GUINNESS - TIEDEMANN - ANALYST
What is the criteria that they look at?
--------------------------------------------------------------------------------
JAMES HARTOP - UBS
Well, this will be - I mean it will be a shareholder vote or along the same
lines as a U.K. or South African scheme of arrangement.
--------------------------------------------------------------------------------
ED GUINNESS - TIEDEMANN - ANALYST
But a shareholder vote could be done probably in, you know, two-three months,
but what does the Ghana court approval process add in timing to that or what
process do they actually undertake?
--------------------------------------------------------------------------------
JAMES HARTOP - UBS
Well, they have a process whereby the evaluation is done by an independent
reporter, but because we're in uncharted territory, we obviously don't know
exactly what that will contribute to the timetable. We'd obviously hope that the
main period is just the preparation of the documentation, and then they'd have
time to review it, and then the voting process.
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ED GUINNESS - TIEDEMANN - ANALYST
OK.
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STEVE LENAHAN - CORPORATE AFFAIRS - ANGLOGOLD
Teresa, hi, it's Steve Lenahan here. I think we will leave things at that.
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OPERATOR
OK, sir. Do you have any final remarks?
--------------------------------------------------------------------------------
STEVE LENAHAN - CORPORATE AFFAIRS - ANGLOGOLD
No, I don't, other than to thank the participants for joining us and once again
to reiterate Bobby's opening remarks to apologize to our South African
colleagues for the trouble at the beginning of this call. Good morning and good
afternoon, everybody.
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OPERATOR
Thank you, sir. This concludes today's AngloGold conference call. You may now
disconnect.
ADDITIONAL INFORMATION
In the event a transaction is entered into between AngloGold and Ashanti,
AngloGold will file important documents with the SEC. IN THE EVENT A
TRANSACTION IS ENTERED INTO, INVESTORS AND SECURITY HOLDERS ARE URGED TO
CAREFULLY READ ALL SUCH DOCUMENTS FILED WITH THE SEC, BECAUSE THESE DOCUMENTS
WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders will be able
to obtain a free copy of any such documents at the SEC's web site at
www.sec.gov or by directing a request to AngloGold Limited, 14th Floor, 11
Diagonal Street, Johannesburg 2001, South Africa, Attention: Chris Bull,
Company Secretary.