The godfather of gold, AngloAmerican plc, is officially done with the yellow stuff.
On Tuesday the company announced that is had sold its remaining shares in AngloGold Ashanti, its final interest in gold mining.
In a statement, the company announced it had sold its last 39 911 282 shares in AngloGold Ashanti to investment funds managed by Paulson & Co Inc for $32 per share in cash. The transaction generated $1.28-billion.
This should come in handy for the ailing mining giant as it scrounges for cash amid a financial crisis sweeping the globe.
”The proceeds will be used for general corporate purposes,” said the company.
Gold has been performing well recently as the metal is seen as a safe haven for investors when currency volatility peaks and equities shed their value.
This raises the question — why get rid of what can potentially be viewed as an asset?
According to Moneyweb data, AngloGold Ashanti’s share price has risen 21.5% in the past three months, significantly outperforming the market.
However, the company has indicated in the past that it does not view AngloGold Ashanti as core to its business.
”The company has long stated that its shareholding in AngloGold Ashanti was not core to the business,” said Pranill Ramchander, spokesperson for Anglo American.
”The sale of the stake is not based on our view of the gold price or on the prospects of the company.”
He said that Anglo American’s long-term strategy aimed to focus on operations with a ”long life”.
”The focus is on commodities that would benefit the company in the long term,” he said.
Gold mining operates at the deepest excavation levels and is among the most expensive types of mining.
South Africa’s gold reserves, which used to be among the most abundant in the world, have been mined for more than 100 years.
AngloGold Ashanti chief executive Mark Cutifani welcomed the deal, particularly the interest shown by Paulson & Co.
According to Business Insider the company is a hedge fund run by John Paulson, who notoriously shorted the sub-prime mortgage market and made a fortune.
”As the world deals with the global economic crisis the value of gold, as the only true ‘hard currency’, is coming to the fore, as evidenced by the investment choices of some of the world’s most seasoned investors,” said Cutifani in a statement.
”We’re extremely pleased that someone with John Paulson’s track record and reputation has chosen AngloGold Ashanti as one of his investments through which to increase his exposure to the gold market. The Anglo American share overhang, with its depressing effect on our share price, has now gone and I’m excited about the opportunities that lie ahead for us.”
