Anglo American could take longer than its May 2009 deadline to sell its remaining stake in AngloGold Ashanti due to the depressed price of the stock market and the general equity market, analysts said yesterday.
Anglo indicated in May 2006 that it was likely to divest completely from AngloGold within three years. It had first indicated it would get out of AngloGold in October 2005.

At the time, Anglo said AngloGold was “valued differently from other mining assets by the equity capital markets and tends to be followed by quite distinct investors. A decision has been made to give AngloGold Ashanti greater strategic flexibility by no longer seeking to retain it.”
Stephen Meintjes, an Imara SP Reid analyst, said Anglo could delay selling its stake in AngloGold because of the decline in the company’s share price. “An extension is quite possible,” he said.

AngloGold’s market value has fallen 33 percent to R57 billion since Anglo last reduced its stake in AngloGold in October last year. Meintjes said it was unlikely that the equity market would be able to easily absorb a R9.4 billion sale of AngloGold shares by Anglo.

Pranill Ramchander, an Anglo spokesperson, said on Monday: “We will continue to explore all available options to exit our remaining stake in AngloGold Ashanti in an orderly manner. Given the different market valuations ascribed to pure play gold stocks, compared with diversified mining companies, we believe it is in our shareholders’ interests that we exit that shareholding at full market value.”

Ramchander said Anglo’s shares in AngloGold were not the subject of a lock-up and the group was in a position to sell the shares when it deemed fit.

In April 2006, Anglo cut its stake in AngloGold from 51 percent to 41.8 percent and put $1 billion (R10.3 billion at yesterday’s exchange rate) in the bank. In October last year, the group sold 67.1 million AngloGold shares for $2.9 billion, which cut the group’s stake to 17.3 percent.

Anglo’s stake is now about 16.5 percent after it took up 11.1 million AngloGold shares earlier this year. Had Anglo not taken up the 11.1 million shares - costing almost R2.2 billion - its stake in AngloGold would have fallen to 13.5 percent.

An analyst, who wished to remain anonymous, said: “I’m not sure what the effect would be of this overhang on AngloGold’s share price. If anything, the effect on AngloGold’s share price would be negative.”

Anglo shares fell 2.13 percent to close at R185.95 yesterday. AngloGold lost 1.77 percent, closing at R163.55.

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