AngloGold Ashanti bids £1.9B for LSE-listed Centamin

AngloGold Ashanti will buy London-listed gold miner Centamin for £1.9 billion in the latest consolidation to leave a gap in the London market.

AngloGold's cash and share deal of 163p/share for each Centamin share is a premium of  37.6% from the 30-day volume-weighted average Centamin share price as of 9 September 2024. Following completion, AngloGold Ashanti shareholders will own approximately 83.6% and Centamin shareholders 16.4% of AngloGold Ashanti's enlarged issued share capita.

Centamin operates one of the world's largest gold mines in Egypt, Sukari, and has delivered consistent results for the last three years under the (oft-praised—no easy feat in London) steady stewardship of chief executive Martin Horgan.

In 2023, Sukari produced 450,058oz of gold, up by 2% year-on-year and in line with guidance. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) were up 25% YoY at US$398 million, thanks to strong gold prices and cost savings.

Centamin posted results from the first two months of Q3 in light of the announcement, showing an AISC of $1,290/oz sold against output of 93,278oz and sales of 102,563oz over the two-month period. It has a production guidance of 470,000-500,000oz for 2024.

Egypt attractive

On Tuesday morning, in a joint release to the market, Horgan said that the deal "will allow our assets to grow as part of AngloGold Ashanti's larger, diversified portfolio, benefitting from AngloGold Ashanti's track record of responsibly developing and operating large-scale open pit and underground mines in Africa in close partnership with the host governments and communities".

Both chair James Rutherford and Horgan pointed to Egypt's significant geological potential and the steps taken by the government to attract investment, perhaps hinting that the group expects to grow in that jurisdiction.

"This transaction is an endorsement of Centamin's achievement in re-establishing Sukari as a world-class operation and occurs as the Egyptian government has taken important steps to attract foreign investment to develop the country's significant geological potential," Rutherford said.

"The Centamin board believes that the strategic merits of the transaction are compelling and that the terms offer Centamin shareholders participation in the continued growth of our operations under the stewardship of AngloGold Ashanti," he added.

Similarly, Jochen Tilk, chair of AngloGold, emphasised that the deal "adds to our portfolio the pre-eminent gold producer in Egypt and offers enormous geological potential that we are very well placed to develop".

Centamin not only has the producing Sukari deposit but is also developing the Doropo gold project in Côte d'Ivoire, which recently completed its definitive feasibility study.

The study confirmed an estimate of 1.88Moz probable reserves at an average grade of 1.53gpt of gold supporting a 10-year life-of-mine, at an average annual production of 167,000oz, with production in the first five years at 207,000oz at an AISC of US$1,047/oz over the life-of-mine. 

Blow to London?

The deal was pronounced a 'blow' to the London market, as the consolidation will see Centamin lose its listing to join AngloGold Ashanti in becoming the world's fourth-largest gold producer, with a projected guidance of over 3Moz (AngloGold Ashanti has guided for between 2,590-2,790oz gold).

This will mean that Endeavour Mining will be the only large-scale producer listed on the London exchange.

AngloGold has projects in Africa, Australia, and the Americas and a share price of $28.80/share on the NYSE, its primary listing. It is also listed on Johannesburg and Ghanaian stock exchanges. Its share price has grown almost 68% from a year prior and 58% so far this year.