Ashanti fights shareholder revolt

Unhappy at the direction Ashanti Goldfields (ASL-N) is taking to solve its financial woes, four groups of disgruntled shareholders have filed proceedings with the High Court in Ghana for a special shareholders meeting.

The shareholders, who represent 4.2% of the outstanding shares, are led by Adryx Mining & Metals, formerly the majority shareholder of Samax Gold. (Ashanti acquired Samax in November 1998, thereby doubling the size of the massive Geita gold project in Tanzania.) They are seeking new elections for the board of directors and the authority to sell assets.

For its part, Ashanti says it intends to defend its actions.

The major is attempting to raise the last US$100 million needed to complete the Geita project.

In addition, it is holding joint-venture discussions with prospective partners. Leading candidates include Barrick Gold (ABX-N), South Africa’s Anglogold (au-n), and Gold Fields (GOLD-Q). Ashanti says any sale of an interest in Geita would be used to repay debt.

Several large groups hold significant stakes in Ashanti, including Britain’s Lonmin, with 30%, and the government of Ghana, with 20%.

Construction at Geita is scheduled for completion by the end of 2000. The mine is expected to contribute 550,000 oz. gold annually at a cash operating cost of less than US$200 per oz.