OWN CORRESPONDENT, London | Tuesday 5.30pm
ASHANTI Goldfields of Ghana said it has clinched a $100-million loan and extended an existing $270-million credit facility, resolving its cash crisis.
Ashanti announced the signature of agreements covering a new $100-million debt facility to complete its Geita gold mining project in Tanzania, as well as extending a $270-million revolving credit facility.
The company also said that it has negotiated margin-free trading for three years, following an amendment of its agreement with its 14 hedge counterparties. Ashanti found itself in severe financial difficulty after the board miscalculated following an announcement last September by 15 European central banks that they were restraining supplies of gold and that gold was important to the reserve system.
The announcement caused the price of gold to soar, but Ashanti’s hedge book “had been structured with the expectation that gold prices would continue their steady decline”, the company said earlier this week. As a result of its miscalculation, Ashanti faced margin calls — demands from hedging counterparties for cash deposits to cover hedged positions — reportedly for millions of dollars.
Last Wednesday, Ashanti announced it had reached agreement with shareholders and the Ghanaian government, clearing the way for the sale of 50 percent of the Geita Project. Ashanti has estimated that the mine, expected to be fully operational later this year, will produce half a million ounces of gold a year. The sale of a 50-percent stake could raise more than $200-million towards financing the project, a company source said.– AFP