Ashanti Goldfields Company Limited Announces Acquisition of Pioneer Goldfields Limited.

Business Editors

ACCRA, Ghana--(BUSINESS WIRE)--May 12, 2000

Ashanti Goldfields Company Limited ("Ashanti") is pleased to announce that its wholly owned subsidiary, Ashanti Goldfields Teberebie Limited ("AGTL"), has reached agreement with Pioneer Group, Inc ("Pioneer") on the acquisition ("the Acquisition") of a 100% interest in Pioneer Goldfields Limited ("PGL") from Pioneer Goldfields II Limited ("PGL II"), a wholly owned subsidiary of Pioneer.

PGL's principal asset is its 90% interest in Teberebie Goldfields Limited ("TGL"), which in turn owns 100% of the Teberebie gold mine located in Ghana, West Africa. Through the Acquisition, Ashanti acquires the Teberebie gold mine, which is located adjacent to Ashanti's Iduapriem gold mine. The Iduapriem mine is 100% owned by Ghanaian-Australian Goldfields Limited ("GAG"), which is 80% owned by Ashanti and 20% owned by the International Finance Corporation.

The acquisition of the Teberebie mine will result in an increase to the Group's ore reserves of at least 1.6 million ounces. This will have the effect of extending the Iduapriem mine's life by approximately eight years at a production rate of over 150,000 ounces per year at a cash operating cost of around US$200 per ounce.

In addition, the Acquisition will have the benefit of reducing, as well as deferring for approximately eight years, the cash outlay involved in closing down the Iduapriem mine. Finally, the acquisition of the Teberebie mine will result in continued employment of the Iduapriem mine's current workforce.

Under the terms of the agreement, Ashanti will make an initial cash payment of US$5 million at closing and a deferred consideration of US$13.8 million payable over five years. The terms of the agreement also include the potential for contingent consideration cash payments of up to US$5 million dependent upon minimum gold prices and production levels.

Commenting on the transaction, Sam E. Jonah, Ashanti's Chief Executive said, "the acquisition of the Teberebie gold mine transforms a mine slated for shutdown next year into a long life mine with competitive operating costs. Acquiring Teberebie contributes to meeting Ashanti's objective of maintaining annual production at approximately 1.6 million ounces for the next ten years." In a related transaction, Ashanti has also reached agreement in principle with Gold Fields Ghana Limited ("Gold Fields"), a wholly owned subsidiary of Gold Fields Limited of South Africa, to on-sell certain assets of TGL including the Teberebie mine's north pit and gyratory crusher.

Joint Venture

Prior to the Acquisition, the Iduapriem mine had been scheduled for closure in mid-2001 when the currently economic ore would have been fully mined out. Upon completion of the Acquisition, Ashanti intends that GAG and TGL will create an unincorporated joint venture (the "Joint Venture") whereby higher grade Teberebie ore will be trucked three kilometres to Iduapriem's Carbon-In-Leach (CIL) plant for processing.

Under the Joint Venture agreement TGL would contribute the Teberebie ore body and associated assets and GAG would contribute the Iduapriem CIL plant and associated infrastructure that would process the Teberebie ore. PGL has already laid off all employees and removed their mining equipment. GAG will therefore use its current workforce and mining contractor to mine and manage the combined operation.

Financing of the Acquisition

The initial cash payment of US$5 million will be financed out of GAG's cash resources as well as from the proceeds of the sale of certain assets of TGL to Gold Fields. The deferred and contingent portions of the consideration will be financed out of the cash flows of the Joint Venture.

The deferred consideration of US$13.8 million is payable as follows: two payments of US$2.5 million in each of March 2001 and 2002, US$3.0 million in March 2003, US$3.75 million in March 2004 and US$2.05 million in March 2005.

As part of the Acquisition, Ashanti is providing a guarantee of up to US$7 million in respect of the total consideration payable by AGTL to PGL II.

Other details and conditions of the Acquisition

As at 1 May 2000, GAG had outstanding approximately US$25.7 million of overdue non-recourse, third party debt and approximately US$21.0 million of Ashanti inter-company debt. At the same date, TGL had an outstanding US$8.25 million loan from Skandinaviska Enskilda Banken AB ("SEB"). These outstanding debts will be restructured so as to enable the Joint Venture to finance the consideration for the acquisition of PGL.

All necessary regulatory approvals for the Acquisition have been obtained. The Acquisition is subject to customary closing conditions and Ashanti expects completion by the end of May.

Ashanti

Ashanti is an African-based international gold mining and exploration group with six producing mines in three African countries, Ghana, Guinea and Zimbabwe. A seventh mine, the Geita mine, is expected to be operational by June 2000 in Tanzania. The company has twenty-five active exploration projects in six African countries and has 37 million ounces of measured and indicated gold resources. In 1999, Ashanti produced 1.56 million ounces.

Information on PGL and TGL

In addition to Teberebie Goldfields Limited, PGL holds the Nangodi prospecting licence, which is adjacent to the Ghana/Burkina Faso border, and the Deba exploration permit in Niger. PGL's net assets as at 31st December 1999 were negative US$4.0 million and the company incurred a net loss of US$1.2 million in 1999. PGL did not consolidate the results of TGL operations in its 1999 financial statements.

TGL's Teberebie mine was developed by PGL as an open pit heap leach operation to process ore from the now depleted oxidised section of the deposit. The relatively high grade Teberebie resource that remains contains approximately 4 million ounces and is optimally suited to the use of milling and leaching processing technology. The Teberebie property lies immediately to the north of Ashanti's Iduapriem mine, which operates a 2.8 million tonnes per annum CIL processing plant as well as an open pit mine. TGL's net assets as at 31 December 1999 were US$38.4 million and the company incurred a net loss in 1999 of US$20.3 million.

Advisors

N.M. Rothschild & Sons acted as sole advisor to Ashanti in respect of the Acquisition.

Certain of the statements made in this announcement are forward-looking in nature. By their nature, the forward-looking statements involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. These factors include, but are not limited to, statements made elsewhere in this announcement. In addition, risk factors relating to Ashanti can be found in its public SEC filings. Ashanti undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise. Any statement should be evaluated in the light of these factors.