AngloGold undergoes 'self-help'

AngloGold Ashanti is selling assets as it aims to cut debt after shareholders baulked at a $2.1-billion share sale in September.

The company plans to cut borrowing through "self-help measures", such as reducing operating expenses and increasing output, AngloGold CEO Srinivasan Venkatakrishnan said.

Investors yesterday gave the new plan a thumbs-up, with shares in the world's third-largest miner rallying more than 7% on the day. The share rose the most in a year.

"We may also consider a sale or joint venture of an operating asset for value," he said. "People ask us: 'what do you mean for value?' It basically means the shop isn't open for bargain hunters."

Venkatakrishnan, known as Venkat, is beginning a strategic fightback after investors rejected a plan to split AngloGold's South African and international mines, a move that would have required the company to raise $2.1-billion, or a third of its then market value. He wants to reduce net debt by $1-billion over the next three years.

The stock rose as much as 9% and was 8% higher at R100.94 midday yesterday.

Before yesterday's rebound, AngloGold had dropped by 45% since it announced it would split on September 10. Gold dropped 6.8% to $1170/oz in the period as investor demand for safe haven assets weakened with signs of an improving US economy and the prospect of tighter monetary policy.

"The share doesn't reflect what the true potential of the value of the business is and our potential to deliver returns over the longer term," Venkatakrishnan said.

The company is also seeking joint ventures for its Obuasi mine in Ghana and its Colombian assets, which have received numerous expressions of interest, he said.

The CEO declined to name specific assets, saying he didn't want to "box ourselves in".