SOURCE: AngloGold Ashanti

AngloGold Ashanti

May 29, 2012 02:06 ET

Anglogold Ashanti Secures 100% Ownership of Serra Grande

JOHANNESBURG, SOUTH AFRICA--(Marketwire - May 29, 2012) - AngloGold Ashanti (NYSE: AU), which currently holds, through its subsidiaries, a 50% interest in the Serra Grande (Crixás) mine in Brazil, has agreed to acquire the remaining 50% stake in the mine from Kinross Gold Corporation ("Kinross") for US$220 million in cash ("the transaction"). The transaction will be funded from existing cash reserves and debt facilities and remains subject to various conditions, detailed below.

In 2011, the Serra Grande mine produced 134,000oz of gold at a cash cost of US$767/oz. The Serra Grande operation comprises three underground mines, namely Mina III, Mina Nova and Mina Palmeiras, and one open pit mine on the outcrop of the Mina III mineralised zone (between surface and level 50) as well as a single dedicated processing plant. To date the Serra Grande mine, which is operated by AngloGold Ashanti, has produced 3.4Moz of gold.

The acquisition, which will entitle AngloGold Ashanti to 100% production from Serra Grande, is expected to increase AngloGold Ashanti's annual attributable production from Brazil to well in excess of 500,000oz and the contribution from the Americas region as whole to more than 1Moz.

The transaction is expected to provide a number of benefits to AngloGold Ashanti, including:

  • Enhancing AngloGold Ashanti's production, Ore Reserve and Mineral Resource profiles by approximately 70,000oz a year, 375,000oz and 1.186Moz respectively;

  • Making a positive contribution toward AngloGold Ashanti's near term gold production profile in Brazil, which the company views as a key jurisdiction in its portfolio. Annual production from AngloGold Ashanti's Brazilian operations is expected to increase from 428,000oz in 2011 to between 540,000oz to 550,000oz whilst annual gold production in the Americas region is projected to increase to more than 1Moz per annum;

  • Securing 100% ownership of the Serra Grande mine in AngloGold Ashanti's hands with no concomitant increase in management costs; and

  • Providing AngloGold Ashanti with full exposure to further exploration potential at the Serra Grande mine, where more than 1.0Moz of Mineral Resources have been added over the past four years. AngloGold Ashanti anticipates that these additional resources and the exploration potential that exists at the site create the opportunity to further extend the life of Serra Grande.

"This deal further simplifies our portfolio and gives us greater exposure to Brazil, where we've had significant success in growing our production as well as our reserve and resource base," Mark Cutifani, AngloGold Ashanti's Chief Executive Officer, said. "We see long-term, lower risk, potential from Serra Grande, which is a key component of our strategy to grow the contribution from the Americas."

Terms of the Transaction
Under the terms of the transaction, AngloGold Ashanti's wholly owned subsidiary, AngloGold Ashanti Brasil Mineração Ltda. will acquire Kinross' 50% interest in Mineração Serra Grande S.A. ("MSG"), the principal asset of which is the Serra Grande mine, from Newinco Comércio e Partcipações Ltda ("Newinco") a subsidiary of Kinross which holds its 50% interest in MSG. Newinco has provided customary warranties and indemnities in respect of its 50% share of certain tax claims against MSG. Kinross has provided a parent guarantee in respect of the obligations of Newinco under the transaction agreements.

The parties are required to file a notification of the transaction with the Brazilian anti-trust authorities. The transaction is also subject to the fulfilment of various conditions, including:

  • the unconditional approval of the South African Reserve Bank of the transaction, in accordance with the Exchange Control Regulations of the Republic of South Africa; and

  • no material adverse event (as defined in the transaction agreement) having occurred.

The transaction is expected to be completed during the second quarter of 2012.
Johannesburg
29 May 2012
Primary Legal Advisers: Slaughter and May
Sponsor: UBS

Certain statements made in this communication, including, without
limitation, those concerning the economic outlook for the gold mining
industry, expectations regarding gold prices, production, cash costs and
other operating results, return on shareholders' equity, productivity
improvements, growth prospects and outlook of AngloGold Ashanti's
operations, individually or in the aggregate, including the completion and
commencement of commercial operations of certain of AngloGold Ashanti's
exploration and production projects and the completion of acquisitions and
dispositions, AngloGold Ashanti's liquidity, capital resources and capital
expenditure and the outcome and consequences of any potential or pending
litigation or regulatory proceedings or environmental issues, are
forward-looking statements regarding AngloGold Ashanti's operations,
economic performance and financial condition. These forward-looking
statements involve known and unknown risks, uncertainties and other factors
that may cause AngloGold Ashanti's actual results, performance or
achievements to differ materially from the anticipated results, performance
or achievements expressed or implied in these forward-looking statements.
Although AngloGold Ashanti believes that the expectations reflected in such
forward-looking statements are reasonable, no assurance can be given that
such expectations will prove to have been correct. Accordingly, results
could differ materially from those set out in the forward-looking
statements as a result of, among other factors, changes in economic and
market conditions, success of business and operating initiatives, changes
in the regulatory environment and other government actions including
environmental approvals and actions, fluctuations in gold prices and
exchange rates, and business and operational risk management. For a
discussion of certain of these and other factors, refer to AngloGold
Ashanti's annual report for the year ended 31 December 2011, which was
distributed to shareholders on 4 April 2012 and the company's 2011 annual
report on Form 20-F, which was filed with the Securities and Exchange
Commission in the United States on April 23, 2012. These factors are not
necessarily all of the important factors that could cause AngloGold
Ashanti's actual results to differ materially from those expressed in any
forward-looking statements. Other unknown or unpredictable factors could
also have material adverse effects on future results. Consequently,
readers are cautioned not to place undue reliance on forward-looking
statements. AngloGold Ashanti undertakes no obligation to update publicly
or release any revisions to these forward-looking statements to reflect
events or circumstances after today's date or to reflect the occurrence of
unanticipated events, except to the extent required by applicable law. All
subsequent written or oral forward-looking statements attributable to
AngloGold Ashanti or any person acting on its behalf are qualified by the
cautionary statements herein.

This communication may contain certain "Non-GAAP" financial measures.
AngloGold Ashanti utilises certain Non-GAAP performance measures and
ratios in managing its business. Non-GAAP financial measures should be
viewed in addition to, and not as an alternative for, the reported
operating results or cash flow from operations or any other measures of
performance prepared in accordance with IFRS. In addition, the presentation
of these measures may not be comparable to similarly titled measures other
companies may use.

AngloGold Ashanti posts information that is important to investors on the
main page of its website at  www.anglogoldashanti.com  and under the
"Investors" tab on the main page. This information is updated regularly.
Investors should visit this website to obtain important information about
AngloGold Ashanti.

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