AngloGold to restructure

AngloGold Ashanti, which announced that they were going to restructure the business as well as look for more funding from their shareholders. Wow, the cost savings were big and Mark Cutifani did a lot of work whilst he was there to streamline the business, the company has been under pressure to restructure their debt, as well as some vocal shareholders calling for a split in the various businesses.

Those shareholders specifically are none other than John Paulson, of Paulson & Co. the hedge fund that called the last financial crisis and of course monetised it too. See this Bloomberg article: AngloGold Plans $2.1 Billion in Shares as Paulson Wins Split. The local business will have no debt after the rights issue, the London based business (of which the local business will still hold 65 percent of the London listed business) will keep the balance after the rights issue. Where that will be, i.e. at what price is the reason for the heavy sell off. The market is reckoning the discount will be big, relative to the prior days closing price.

As you know, our interest is only with the rest of the market, we do not own any gold companies. It is too hard to understand the dynamics of the metal that they produce, the price thereof. Various conspiracy theories about the Fed and the manipulation of the gold price, as well as understating of inflation (a very long list of why the gold price should be higher than current levels), is too much when trying to determine whether real supply and demand have a real push or pull over the price. Too hard, too many push and pull factors, too many historical references, sometimes you have to ignore entire sectors as a result of not understanding the real dynamics of the underlying metal. I will concede that there is going to be increased demand in the coming years, the richer people get, the more *nice* things that people want. Makes sense.

The last thing to note about AngloGold Ashanti is that they are open to the idea of investing in other commodities, it must be no secret then to suggest that platinum mining is on the cards, I guess that would be the obvious one. Sadly for shareholders (the stock basically changes hands, all the shares in issue over a year) the stock in New York was down 15 percent last evening. And in fact, since they have been an ADR program there (In New York), 14 August 1998, the stock in Dollar terms is down 40 percent. Wow.