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Friday, 10 November 2023 14:41

AngloGold to pay South Africa an 'exit tax' of R4.6bn.

By Lehlohonolo Lehana.

AngloGold Ashanti will pay the South African Revenue Service (Sars) a total of R4.5 billion in taxes as part of the transaction to move its corporate domicile to the UK and primary listing to the New York Stock Exchange (NYSE). 

The transaction will take place before Tuesday and will see it finally exit South Africa. 

AngloGold, created from gold mines bought and built by Anglo American, the mining giant founded by the Oppenheimer family more than a century ago, was the dominant gold miner for decades, but gradually became a shadow of itself as it closed and sold old mines in SA, preferring offshore investments.

It has a dividend-withholding tax bill due of R4.18 billion and will pay a securities transfer tax of R351 million. This equates to a total of $240 million but will likely be lower due to the exchange rate.

This will be a welcome boost for Sars, which is under immense pressure to meet the collection forecasts announced in the budget due to lower growth, depressed commodity prices, and the impact of load shedding on corporate profits. 

In practical terms, a new UK holding company, AngloGold Ashanti plc, purchased AngloGold Ashanti Limited. This means that the new entity now holds all of the group's assets outside of the country. 

At the time it announced the transaction, it anticipated these costs to equal about 5% of its market capitalisation. These payments to Sars, together with estimated landholder duties in Australia of $46 million, will equate to somewhere around 3.5% of its market capitalisation. 

Earlier this year, AngloGold Ashanti chair Maria Ramos said: "This is a logical progression for AngloGold Ashanti, which is well aligned with the evolution of the business in recent years and will assist in unlocking value in a way that's minimally disruptive for our stakeholders. This proposed corporate structure, including a primary listing on the NYSE and a corporate domicile in the UK, will considerably enhance our position in the world's largest capital markets, while keeping key functions in Johannesburg and a full inward listing on the JSE for our South African shareholders."

Analysts and observers said this was a landmark development that would leave a mark in South Africa's corporate history although others said this was "always going to happen" as the company "no-longer had any assets" in the continent's mining powerhouse.

Initially founded as Anglo Gold after the amalgamation of Anglo American's gold interests and those of its associated companies in 1998, the company quickly amassed gold properties across many jurisdictions. These included properties in Australia, South America and elsewhere.

By 2004, Anglo Gold and Ashanti Goldfields had completed a merger that culminated in the creation of AngloGold Ashanti and in 2005, the merged entity signed a $700 million revolving credit facility before raising a further $500m in a an equity offering a year later.

However, a restructuring over the past few years culminated in the complete disposal of all its assets in the African country in 2020. It completed the sale of the Mponeng underground mine in September 2020 before it proceeded to dispose of the Sadiola mine in Mali in December that year.

This change in domicile and listing structure is aligned with the transformation of AngloGold Ashanti's asset base into a diversified global portfolio of high-quality producing assets and projects. The company has a long standing and growing presence in the US and no longer has operating assets in South Africa," the company said earlier this year.

A primary listing in the US is expected to "create enhanced access to the world's deepest pools of capital, including the opportunity to improve share trading liquidity" while the new set-up will help it built up “on a position of strength with the secondary listing "in the US.

"Despite US investors currently holding approximately 35% of the share register, a US primary listing is expected, in time, to facilitate greater performance and valuation comparisons with the AngloGold Ashanti Group's more liquid and higher valued North American peers."