Anglo ups stake in Brazilian mine
ANGLOGOLD Ashanti is buying out its partner, Kinross Gold, from a Brazilian mine for $220m. Anglo wants to secure the remaining 50% of Serra Grande to boost its production in Brazil.
ANGLOGOLD Ashanti is buying out its partner, Kinross Gold, from a Brazilian mine, Serra Grande, for $220m in cash.
Anglo gold, one of the world’s top five gold producers, wants to secure the remaining 50% of Serra Grande it does not own, boosting its production in Brazil, a country it has identified as a key growth area.
Serra Grande produced 134 000oz last year, which represented a 13% drop at the mine managed by Anglo gold, because of operational difficulties and dilution of ore processed from the three mechanised underground mines and an open pit. In its 2011 annual report, Anglo gold described Serra Grande as a “mature operation”, but the asset was attractive because of its exploration potential.
A “fast-track exploration plan” added 380 000oz to inferred resources, and the intention was to spend $20m over the next two years to add another million ounces to resources.
“We believe there is significant potential for us to grow in Brazil,” Anglo gold CEO Mark Cutifani said yesterday.
“Our exploration team has enjoyed significant success in Brazil already in recent years and we believe that the aggressive exploration campaign under way at Serra Grande has the potential to continue that track record,” he said.
Gold Fields did something similar recently by buying out its partners at its mines in Ghana and Peru to have great exposure to the revenue from the mines, and a more simplified ownership structure of its assets.
Toronto-listed Kinross said the mine it called Crixás was not a strategic asset. “Crixás is a nonoperated, noncore asset for Kinross,” Kinross CEO Tye Burt said yesterday. “Its divestiture is consistent with our strategy of portfolio optimisation, and focusing our resources on the company’s core operations and priority projects.”
By taking over the Kinross stake in the conditional deal, which is expected to be finalised before the end of June, Anglo gold will boost its production by about 70 000oz of gold a year and add 375 000oz to its reserves. It will grow the company’s resource base by 1,2-million ounces. “This deal simplifies our portfolio and gives us greater exposure to Brazil,” Mr Cutifani said.
Anglo gold’s production from Brazil will grow to between 540 000oz and 550 000oz a year from 428 000oz in 2011.
“We have a track record in recent years of making good, value accretive acquisitions in the Americas — first in taking out the minorities at our Cripple Creek mine in the US and then the purchase of the São Bento deposit in Brazil,” Mr Cutifani said.
“Continued success of our exploration efforts at both sites means that these acquisitions have yielded exceptional value and now we expect a strong uplift at Serra Grande,” he said.