Ashanti's value may reach pounds 1.1bn

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ASHANTI Goldfields, 45 per cent owned by Lonrho and operator of one of the largest gold mines in the world, is set to be valued at between dollars 1.42bn and dollars 1.67bn ( pounds 950m and pounds 1.1bn) after next month's international offering of 26.8 per cent of its shares, mostly owned by the government of Ghana.

A prospectus issued by Ashanti yesterday for its impending listing in London and Ghana said the offer price was expected to be in the range of dollars 17-dollars 20 a share. On this basis the historic price earnings multiple for the Ashanti shares would be between 15.1 times and 17.7 times.

Ashanti, unlisted in London since 1969, aims to recommend a final dividend for the year to September of 25 cents, payable in April 1995 and equivalent to two-thirds of a full year's dividend, implying a pro forma prospective yield of between 1.9 per cent and 2.2 per cent.

Andy Quinn, of James Capel, brokers to the issue, said both these ratings were modest in relation to those of other leading quoted gold mining companies.

The prospectus notes that Ashanti has an insignificant tax charge at the moment, which is boosting its earnings. But Ashanti says the charge is likely to increase significantly in 1994/5 as previously high capital expenditure and associated tax allowances are reduced.

Ashanti is planning to lift production from 860,000 tonnes in 1993/4, up 12 per cent on the previous year, to 1 million tonnes in 1994/5, while holding costs below dollars 180 a tonne against a current gold price of dollars 387. The international offer will close on 18 April.

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