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Sunday, 13 February, 2000, 13:09 GMT
Crisis for Ashanti Goldfields

Gold prices have been on a rollercoaster in the past year Gold prices have been on a rollercoaster in the past year

Ghana's largest company, Ashanti Goldfields begins a week of crisis talks with its creditors, its shareholders and the government on Monday.

The company, Africa's third largest gold producer, is facing huge losses from its wrong-footed bet that gold prices would continue to tumble.

We are determined to see change quickly for the benefit of all investors
Michael Martineau, Adryx Mining
Since then, gold has risen sharply, partly as a result of actions by other gold producers, and Ashanti is facing huge losses from its hedging.

The company's share price has tumbled and it has been forced to try and sell one of its prime asset, the Geita gold mine in Tanzania, which is still under development.

Now shareholders are stepping up pressure on the company.

The court ruling could destroy the company
Kwame Tetteh, Ashanti lawyer
Last week, a major shareholder went to court in order to force the company to hold an emergency general meeting in order to oust its board of management, including chief executive Sam Jonah.

And the Ghanaian government also stepped up the pressure against the company.

The Ghanaian finance minister, Richard Kwame Peprah, has resigned from the board after Ashanti sought to appoint new members.

Battle with shareholders

The company is also facing a battle on two other fronts.

Sam Jonah: chief executive may be ousted Sam Jonah: chief executive may be ousted
Shareholders from Adryx Mining, who own a minority stake in Ashanti, forced the company to call an extraordinary meeting on March 3, which will prevent the company taking up a $100m rescue loan from the government.

"We are determined to see change quickly for the benefit of all investors," explained Micheal Martineau of Adryx.

The move was bitterly opposed by Ashanti.

"(This ruling) could destroy the company" said Kwame Tetteh, a lawyer acting for Ashanti.

And bankers, who have delayed until now collecting the money owed them from the hedging bets, will meet Ashanti on Thursday to demand repayment of their loans.

Ashanti has debts of $450m and a shortfall of working capital of $200m.

Other African gold producers, notably Lonmin (formerly Lonrho) and AngloGold, have been eyeing Ashanti, hoping to pick up the company at a bargain price.

But the Ghanaian government, which privatised the group ten years ago but still holds a blocking "golden share", has strongly resisted the idea of selling Ashanti to a foreign company.

The government is believed to be considering all options, including renationalisation, in order to save the jewel in Ghana's economy.

Ghana's minister of mines and energy, John Abu, said he was calling a meeting of bankers and creditors together to discuss Ashanti's future.

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See also:
07 Feb 00 |  Business
Gold price surges
01 Nov 99 |  Africa
Ashanti wins three-year gold reprieve
20 Oct 99 |  Africa
Saudi investor offers lifeline to Ashanti
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The gold market is fun again
13 Jul 99 |  The Economy
Gold mining: In the devil's workplace
28 Apr 99 |  The Economy
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07 May 99 |  The Economy
Gold: Setting a standard
07 May 99 |  The Economy
Treasury offloads gold reserves

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