Daily Equity Report

Anglo American Plc, previously the largest listed company on the JSE but now fourth after BAT, BHPBilliton, and SAB Miller, today completed the sale of its holding in AngloGold Ashanti Ltd (AGA).

AGA is a significant global player in the gold industry, producing 7% of global production in 2007, and trades in its current structure after a merger between AngloGold (formerly Vaal Reefs Exploration and Mining Company Ltd – incorporated in 1944) and Ashanti that was completed on 26 April 2004.

Former Anglo American CEO, Tony Trahar, announced plans a few years ago to streamline operations. One of the decisions was to gradually dispose of its stake in AGA (where it was the majority shareholder). This decision resonated with AGA CEO Mark Cutifani, appointed in November 2007, who believed that more value would be created for shareholders if the Anglo American stake was sold down than if they retained their holding. Cynthia Carrol, current CEO of Anglo American appointed in March 2007, continued with her predecessor’s plan and subsidiary’s wishes and executed the transaction over the last couple of years.

Anglo American sold the last of its portion (11.3%) this morning. The trade of 39 911 282 shares at R 319.50 ($ 32) went through this morning as a Corporate Finance Trade. Total proceeds of the sale of R 12.75bn ($1.28bn) will be used for general corporate purposes as disclosed by Anglo American in their SENS announcement this morning.

Anglo’s holding at the end of 2008 had been 16.2%, they therefore sold an additional 17.3 million shares over this period and they were sold at an average price of $28.32.

The 11.3% stake in AngloGold Ashanti was taken up by John Paulson’s hedge fund company, Paulson & Co. Paulson has been extremely successful recently, taking advantage of subprime issues by shorting many of the securities into the bursting of the housing bubble. His investments personally netted him $3.5bn in 2007 as the company’s Credit Opportunities fund returned 590% net of fees. He is now 76th on Forbes’ Billionaires list for 2009 with a net worth of $6bn.

The $1.28bn investment makes Paulson & Co one of AngloGold Ashanti’s largest shareholders.

The market clearly liked this fact as the share immediately traded 2.13% higher than yesterday’s close. It is logical that other investors will see this large stake by such a successful manager as a strong buy signal, and as such it isn’t surprising that AGA ended the day up 1.31% while the gold sector was down 2.08%. The gold sector, excluding AGA, returned -4.94% for the day.

Good luck to the cricketers tomorrow!

Take care,

Mike Browne
info@seedinvestments.co.za
www.seedinvestments.co.za
021 9144 966