The TSG Group has three existing gold projects, Asacha and Rodnikovoe, both in Kamchatka, and Veduga, in the Krasnoyarsk region of Russia, as well as an exploration licence over an extensive area surrounding Veduga (see attached map).
AngloGold Ashanti's investment in TSG will be used to help bring the most advanced of these, the Asacha and Veduga projects, into production, as well as to fund TSG's ongoing exploration and corporate development initiatives. Details of these properties are given in an AngloGold Ashanti release to stock exchanges published today.
The investment will be made through a subscription in two tranches each of approximately 6.13 million newly issued ordinary TSG shares, following which, AngloGold Ashanti is expected to hold a 29.9% shareholding in TSG. In addition to the equity investment, AngloGold Ashanti and TSG have also agreed to form a broader partnership, in terms of which, inter alia, AngloGold Ashanti will have an option to exercise an earn-in right enabling it to acquire a 51% direct interest in any of TSG's new mining or exploration projects.
Commenting on the transaction, Sam Jonah, AngloGold Ashanti's President said that Russia is one of the world's most prospective gold regions (ranked fourth in the world by gold Ore Reserves and fifth by annual gold production), with an established mining tradition. "We are delighted to form this partnership, which helps TSG secure the development of the Asacha project and opens up new horizons for AngloGold Ashanti.
"This is a modest first move by AngloGold Ashanti, and one which we are relatively sure will not be our last. It gives us the opportunity of establishing an association with credible partners familiar with the environment, which is the best way of mitigating the risks which are almost always involved in an initial investment in a new region", Sir Sam said.
Except for the historical information contained herein, there are matters discussed in this news release that are forward- looking statements. Such statements are only predictions and actual events or results may differ materially. Such statements include, without limitation, those concerning: development of TSG's business, the economic outlook in the gold mining industry, expectations regarding gold prices and production, growth prospects and outlook of operations, including the completion and commencement of operations at exploration and production projects, and synergies and other benefits anticipated from investments. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from such forward-looking statements, including, without limitation, risks associated with conducting business in Russia, risks associated with holding a minority investment in a business, and the risk factors set forth in our annual report on Form 20-F for the year ended 31 December 2003, which was filed with the Securities and Exchange Commission on 19 March 2004.
