Ashanti Goldfields Company Limited Restructuring Plan submitted to Ashanti's Bank Group

Business Wire, Dec 3, 1999

LONDON--(BUSINESS WIRE)--Dec. 3, 1999--

Ashanti Goldfields Company Limited ("Ashanti") announces that it has submitted a financial and operating review and restructuring plan (the "Plan") to its hedge counterparties and to its lending banks in accordance with the terms of the agreement reached with the hedge counterparties on 30 October 1999 (the "Agreement") and which was announced on 1 November 1999.

Ashanti's hedge counterparties are currently considering the Plan. In the meantime, the hedge counterparties have agreed to extend the margin free arrangements until 5.30 p.m. on 17 December 1999 unless any of the hedge counterparties notifies Ashanti by 5.30 p.m. on 8 December 1999 that it wishes the extension to expire at 5.30 p.m. on 9 December 1999. Subject to certain exceptions, Ashanti's lending banks have agreed to roll-over those of Ashanti's facilities which were to have expired on 2 December 1999 until 17 December 1999.

Ashanti will be commencing discussions with the Government of Ghana as Regulator to seek its view on the Plan. These discussions will commence immediately. A further announcement will be made in due course.

In the meantime, Ashanti has appointed Barclays Capital to arrange a debt facility to enable Ashanti to complete and commission its Geita Project in Tanzania. At this stage, there can be no assurance that such a facility can be arranged.

As announced in Ashanti's third quarter report, Ashanti has completed a revised life of mine plan to maximise the net present value of the ore reserves and resources at Obuasi. As a result of this revised life of mine plan, surface operations will cease by the end of 2000 and tailings retreatment by the end of 2002. From this point onwards production will be from underground only and will be treated through the Sulphide Treatment Plant (STP). Production is expected to be approximately 550,000 ounces per annum at cash operating costs below US$ 200 per ounce. The level of annual sustaining capital expenditure will also be reduced. Overall the new life of mine plan is expected to result in improved free cash flow.

Due to the planned cessation of surface mining in 2000, the closure of low capacity shafts at the northern end of the mine, and the reduction in the number of treatment plants in operation, the Company will take a write-down of the current book value of these assets which is currently estimated to be US$140 million, but is subject to review by the Company's auditors.

As a result, for the year ended 31 December 1999, earnings per share after this exceptional item will decline but there will not be any material cash flow impact. Further details of the proposed writedowns and a full disclosure of the revised life of mine plan for Obuasi will be announced with the preliminary results for the year ended 31 December 1999.

Certain of the statements made in this announcement are forward-looking in nature. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. These factors include, but are not limited to, statements made elsewhere in this announcement. In addition, risk factors relating to Ashanti can be found in its public SEC filings.

Ashanti undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. Any statements should be evaluated in light of these factors.