AngloGold Ashanti: Tau Lekoa - finalisation of sale

Monday, 26 July 2010 04:54

AngloGold Ashanti announced that the Department of Mineral Resources has transferred the mining rights for its Tau Lekoa Mine to Buffelsfontein Gold Mines Limited, a wholly-owned subsidiary of Simmer & Jack Mines Limited (Simmers). Full ownership of Tau Lekoa and the adjacent properties of Weltevreden and Goedgenoeg will pass to Simmers on 1 August 2010.

AngloGold Ashanti entered into an agreement with Simmers in February 2009 for the sale of Tau Lekoa and the adjacent properties of Weltevreden and Goedgenoeg for a total purchase consideration of:

R600 million (payable at completion of the transaction and adjusted as set out below); and
a royalty determined at 3% of the net revenue (gross revenue less state royalties) generated by the Tau Lekoa mine and any operations developed at Weltevreden and Goedgenoeg. The royalty will be payable quarterly, from 1 January 2010, until the total production from Tau Lekoa, Weltevreden or Goedgenoeg upon which the royalty is paid is equal to 1.5 million ounces and provided that the average quarterly rand price of gold is equal to or exceeds R180,000/kg (in 1 January 2010 terms).

Full details of the agreement were published on 18 February 2009 and can be accessed on www.anglogoldashanti.com/Additional/Press/2009/Tau+Lekoa+Sale.htm. In terms of the agreement, Simmers will settle the R600 million purchase consideration payable at completion as follows:

R450 million in cash; and
the balance in cash or shares in Simmers. This remaining R150 million is subject to an offset adjustment (up to a maximum of R150 million) based on the free cash flow generated by Tau Lekoa between 1 January 2009 and 31 July 2010 and including an offset for the royalty payable from 1 January 2010 to 30 June 2010. This balancing amount will be determined based upon a final audit of the July 2010 production figures.

From 1 August 2010, Simmers will treat all ore produced from Tau Lekoa, Weltevreden or Goedgenoeg at its own processing facilities. As a result AngloGold Ashanti will have increased processing capacity available allowing for the processing of additional material from its other Vaal River mines and surface sources. This is expected to produce an estimated 7,000oz of gold for the remainder of this year. Tau Lekoa produced 124,000oz of gold (equivalent to 2.7% of group production) in 2009.

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