• Market Watch

AngloGold to pay an 'exit tax' of billions

- 2023-11-13 00:00:00

Sikonathi Mantshantsha - AngloGold Ashanti will pay the South African and Australian governments an "exit tax" of more than R5.4 billion for moving the primary listing of its shares to the New York Stock Exchange (NYSE) and its domicile to London.
The miner will pay Australia's government Landholder Duties estimated at US$46 million (R853 million) while South Africa's tax authority will get an estimated R4.6 billion in Securities Transfer Tax and dividend withholding tax. AngloGold Ashanti said the final amounts will depend on the currency exchange rates on the payment day.
AngloGold Ashanti said the tax amounts were calculated based on its closing share price of US$18.15 and US$7.6 billion closing market capitalisation on the NYSE on 22 September, the day before its primary listing officially moved to the NYSE from the Johannesburg bourse.
The gold producer now maintains secondary listings on South Africa's JSE and A2X markets as well as the Ghana Stock Exchange.
AngloGold Ashanti was fashioned out of the combination of the gold interests of Anglo American, which has maintained a primary listing on the London Stock Exchange since May 1999, Ghana's Ashanti Goldfields as well as various gold miners in Australia. Today, it also operates in the US and South America.
While this is a significant one-off boost to SARS, which needs every cent it can collect to help the government meet its expenditure obligations, AngloGold Ashanti's departure is a significant loss to South Africa.
This is the last significant corporate tax it will ever levy on the gold miner that was first formed by the Oppenheimer family more than a century ago.

Impediments
Once a prime mining jurisdiction, South Africa is becoming less and less attractive to investors and this year ranked 57 out of 62 jurisdictions assessed by Fraser Institute's Investment Attractiveness Index.
Among other major structural impediments, Eskom has for 17 years been failing to fully supply mining companies with all the electricity required to operate. This year railway and ports operator Transnet moved the least amount of goods in 30 years.
Mining companies rely on the state-owned companies for the provision of electricity and shipping their commodities to customers.
Since 2020, the company, currently chaired by Maria Ramos, a former director-general of South Africa's National Treasury and then chief executive of Absa Group (then Barclays Africa Group), has not maintained any South African operations. It sold its Mponeng Mine and associated operations in September 2020 to Harmony Gold.

Taxes
That means its direct tax obligations to the South African government have dropped from mining royalties, corporate income and other taxes and employee pay-as-you-earn tax to now only those levied on dividends and the trade of securities on the JSE.
The miner, which now has operations in Australia, Argentina, Brazil, Colombia, the Democratic Republic of Congo, Ghana, Tanzania and the US, said it paid corporate taxes to these governments amounting to US$674 million during the year ended December 2022, its last as a South African company.
At the current R322 share price, the stock has risen 18% over the past year.

Nevada
Meanwhile, AngloGold Ashanti said it expects to make a final investment decision whether to proceed and develop its North Bullfrog Project in Nevada next year, where it has recently completed a feasibility study.
The project has now proceeded to the engineering phase. AngloGold Ashanti is proposing to develop an open-pit mine to explore the resource.
It is awaiting permits from the state's and US federal authorities, who have accepted and approved its Plan of Operations and environmental reports.
"Federal and state permitting processes are expected to formally commence during the first quarter of 2024 and AngloGold Ashanti anticipates receiving the approval to start construction in the first quarter of 2025," said the group.
The Nevada North Bullfrog Project is one of three AngloGold Ashanti greenfields projects in the US, in addition to the Silicon, Sterling and Mother Lode projects. Only in one other country does AngloGold Ashanti have other current greenfields investments, namely Colombia's Quebradona and La Colosa developments.

Colombia
In September 2023, AngloGold Ashanti agreed to sell its 50% stake in Colombia's Gramalote Project for up to US$60 million.
It has already received a cash payment of US$20 million of this amount, with the balance dependent on project construction and production milestones the Gramalote Project reaches.
At the Expanded Silicon Project, AngloGold Ashanti says its conceptual study remains in progress and expects to capture synergies "from the increased economy of scale and integrated infrastructure, with potential for large scale mining".
It anticipates completion of the study and the mineral resource declaration during the next few weeks. – Fin24