Ashanti Secures Bank Approval for Geita Transaction. Circular to Shareholders to be Despatched Shortly.

Business Editors

ACCRA, Ghana--(BUSINESS WIRE)--Oct. 24, 2000

Ashanti Goldfields Company Limited ("Ashanti" or "the Company") announces that it has secured the approval of its Lending Banks to the sale of a 50% interest in the Geita Project to AngloGold Limited ("AngloGold"), which will realise for the Company US$335 million in cash and for the Company to enter into a joint venture with AngloGold in respect of the Geita Project (together the "Transaction").

The approval is subject to the satisfaction of certain conditions precedent including the consent of Ashanti's shareholders. The Company's two principal shareholders, Lonmin Plc and the Government of Ghana, which together hold 51.4% of the Company's issued share capital have undertaken in writing to vote in favour of the Transaction. Closure of the Transaction is expected to occur by 30 November 2000.

Ashanti and the Bank Group have also agreed and signed the revised banking agreements necessary to enable the sale to proceed and to provide Ashanti with a working capital facility until the end of 2001. The Transaction will enable the Company to repay more than US$300 million of its bank borrowings. Ashanti has also confirmed with its hedging counterparties the continuance of the margin free hedging arrangements to the end of 2002, as previously announced.

If the Transaction does not proceed, then the Company will not have adequate working capital for its present requirements and by 30 November 2000, a standstill or other accommodation will need to be reached with the Bank Group.

Ashanti's directors will unanimously recommend to Securityholders to vote in favour of the Transaction. A circular, convening an EGM for the end of November 2000 will shortly be despatched to shareholders. Further details concerning the Transaction are set out below. The Company is also taking the opportunity of submitting, for shareholders' approval at the EGM, the appointment and service contract of Srinivasan Venkatakrishnan ("Venkat") whom the Board appointed as Chief Financial Officer on 1 July 2000.

Ashanti has been advised on the Transaction by CIBC World Markets plc. Key points:

1. Ashanti will receive US$335 million in cash on Closure, being

US$205 million in proceeds plus the net proceeds of the Geita

Project financing of US$130 million.

2. This will enable the Company to repay at least US$300 million of

bank borrowings. The Bridge Facility, which is expected to be

drawn as to approximately US$80 million by Closure, and US$151

million due under the Company's Revolving Credit Facility will be

retired. In addition a further repayment of US$70 million, which

amount may be redrawn for working capital purposes will be repaid

on Closure. The balance of the proceeds will be used to meet taxes

and costs associated with the Transaction and to provide

additional working capital.

3. The Company's two principal shareholders, Lonmin Plc and the

Government of Ghana, which together hold 51.4% of the Company's

issued share capital have undertaken in writing to vote in favour

of the Transaction.

4. Ashanti will restructure its banking facilities with effect from

Closure. The total facilities provided under the Amended RCF will

amount to approximately US$189 million of which US$70 million will

constitute the Working Capital Facility, available to be drawn

until 31 December 2001, with the balance being fully drawn.

5. The US$130 million Project Finance Amount is to be provided or

procured by AngloGold by Closure. A term sheet from third party

financiers has been agreed and the finance document is currently

being negotiated. If the third party finance is not available by

Closure, the US$130 million will be provided by AngloGold under

terms already agreed. The Project Finance Amount will permit the

repayment of indebtedness incurred in financing the development of

the Geita mine and the funds will therefore not be retained.

6. Together Ashanti and AngloGold will investigate the possibilities

of expanding the Geita mine beyond its current capacity and will

continue to search actively for additional reserves within the

Geita Project. If Ashanti is unable to provide or procure its

share of any funding requirement, then unless Ashanti so agrees,

there will be no dilution of its interest in the Geita Joint

Venture.

7. Ashanti has confirmed the continuance of margin free trading until

31 December 2002, and thereafter for 2 years at levels higher than

previously available to Ashanti, subject to compliance with

certain covenants. The margin free trading arrangements do not

apply to any hedging conducted in respect of Geita production. In

the event of third party project finance, arrangements have been

agreed, subject to documentation, for the Geita hedging to be

available without margin calls.

8. Repayments of the working capital facility together with a tranche 

under the Amended RCF (approximately US$8 million) must begin in

March 2002 and will be made in four quarterly instalments with the

balance of the Amended RCF then still due, repayable by 15 January

2003. The Directors expect that the Company will need, before 31

December 2001, to seek replacement facilities or financing for its

then ongoing working capital requirements.

9. The new bank agreements, together with certain individual hedging

agreements, contain certain covenants, restrictions and events of

default which are tightly drawn and, although not unusual in

similar circumstances, are relatively onerous for the Company.

Consequently, the Directors consider that the Company will

continue to need approvals, waivers or other accommodation from

its Bank Group. If not forthcoming, non-compliance with these

provisions could lead to almost all of the Company's indebtedness

becoming immediately repayable and its hedging agreements being

terminated. In these circumstances, the Company will be reliant

for the continued availability of its facilities, including the

Working Capital Facility, on the Bank Group's continued

willingness to provide the facilities.

10. The Amended RCF, like the Revolving Credit Facility it replaces,

restricts the Company from declaring and paying cash dividends.

11. As part of negotiations to secure additional working capital, the

Company has closed out certain forward sales to offset a forward

purchase which would, unless extended, have been due for

settlement at the end of December 2000 and was estimated to amount

to US$23 million. This has resulted in a net amount due of

approximately US$15 million, US$8 million of which has been rolled

into the Amended RCF, and has crystallised an exceptional loss of

approximately US$15 million, which will be accounted for in the

fourth quarter of this year.

12. If the Transaction does not proceed then the Company will not have

adequate working capital for its present requirements and by 30

November 2000, a standstill or other accommodation will need to be

reached with the Bank Group.

This summary and key points should be read in conjunction with, and in the context of, the full text of this announcement.

CIBC World Markets plc, which is regulated in the United Kingdom by the Securities and Futures Authority Limited, is acting exclusively as financial adviser to Ashanti and no one else in relation to the Transaction and will not be responsible to anyone other than Ashanti for providing the protections afforded to customers of CIBC World Markets plc or for providing advice in relation to the Transaction.

This announcement contains a number of statements relating to future results of Ashanti that are considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act 1995 of the United States of America. Statements that are not historical facts, including statements about Ashanti's beliefs and expectations, are forward-looking statements. Such statements may include statements regarding anticipated production or construction commencement dates, construction completion dates, working capital, expected costs or production output and the anticipated productive lives of mines. These statements are based on current plans, estimates and projections, and therefore undue reliance should not be placed on them. Ashanti can give no assurances that such results, including the actual production or commencement dates, construction completion dates, working capital, costs or production output or anticipated lives of the projects and mines discussed will not differ materially from the statements contained in this announcement. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Ashanti, which may cause actual results to differ materially from those expressed in the statements contained in this announcement. For example, future revenues from projects or mines described herein will be based in part upon the market price of gold, which may vary significantly from current levels. Such variations, if materially adverse, may impact on the timing or feasibility of the developments of a particular project or the expansion of specified mines. Other factors that may affect the actual construction or production commencement dates, costs or production output and anticipated lives of mines include the ability to profitably produce and transport gold extracted therefrom to applicable markets, the impact of foreign currency exchange rates on the market prices of gold and activities by governmental authorities where such projects or mines are being explored or developed, including increases in taxes, changes in environmental and other regulation and political uncertainty. Forward-looking statements speak only as of the date they are made, and Ashanti undertakes no obligation to update publicly any of them in light of new information or future events.