Gold producer AngloGold Ashanti Limited has agreed to sell the Tau Lekoa mine together with the adjacent Weltevreden and Goedgenoeg project areas to Simmer and Jack Mines Limited, a producer of gold and uranium, with effect from January 1, 2010 (or after).

The aggregate consideration consists of:
 
(a) R600 million less an offset up to a maximum of R150 million for unhedged free cash flow generated by the Tau Lekoa mine in the period between January 1, 2009 and December 31, 2009 as well as an offset for unhedged free cashflow generated by the Tau Lekoa mine in the period between January 1, 2010 and the effective date of the transaction. Simmers shall endeavor to settle the consideration entirely in cash, however Simmers may issue to AngloGold Ashanti ordinary shares in Simmers up to a maximum value of R150 million with the remainder payable in cash; and
 
(b) a royalty, determined at 3% of the net revenue generated by the Tau Lekoa mine and any operations as developed at Weltevreden and Goedgenoeg. The royalty will be payable quarterly for each quarter commencing from January 1, 2010 until the total production from the sale upon which the royalty is paid is equal to 1.5 million ounces and provided that the average quarterly rand price of gold is equal to or exceeds R180,000/kg (in January 1, 2010 terms).
 
The Transaction is conditional upon the fulfillment of, amongst others, the following conditions precedent: 

• Simmers raising sufficient cash to settle the consideration subject to the share value;
• the receipt of all Ministerial consents and/or other Government agency approvals in South Africa, as required to transfer all rights, title and interests to the mining properties forming part of the sale assets;
• if and to the extent required, the approval of the transaction by Simmers shareholders; and
• certain regulatory and other third party approvals, if and to the extent required, including the South African Reserve Bank, the JSE Limited and the South African Competition Commission.

Mark Cutifani, CEO of AngloGold Ashanti, said: "We have been able to execute another important step to focus our asset portfolio. The transaction will act to strengthen our balance sheet further and after an orderly transition process will enable us to focus our key human resources and financial resources across our strategic asset base and growth initiatives."