AngloGold Ashanti, the South African based transnational gold miner, and the top relative price-performing listed global Tier I gold name over the past year, has increased its convertible bond offering to $733m, from the $600m announced on Monday.  The coupon on the issue is 3.50%, implying that AngloGold Ashanti's perceived risk is world class.The convertible bond issue follows a string of positive news flow for AngloGold Ashanti for months, now, including last week's upbeat and strong quarterly results. The company's performance had been previously hampered by a number of factors now either cleared out of the way, or under attack, not least the group's debilitating hedge book.Seen as a stand alone entity, AngloGold Ashanti ranks as one of the world's leading gold producers, with a portfolio of long-life, relatively low-cost assets in key gold-producing regions around the world, a substantial project pipeline and an extensive, worldwide exploration programme.The group sold just over 5m ounces of gold in 2008, at cash costs of $444/oz (global average: $ 467/oz), and total production costs of $567/oz. Around 40% of the group's gold is dug out from deep-level hard-rock operations in South Africa; shallow underground/surface and deep underground operations around the world contribute the balance.AngloGold Ashanti has benefited from the lifting of a stock overhang; Anglo American, AngloGold Ashanti's erstwhile parent company, sold down $434m in AngloGold Ashanti earlier this year, followed by a final exit sale in which $1.28bn was realised for Anglo American. The latter sale was seen as significant, given that all the stock in that deal was bought by investment funds managed by Paulson & Co Inc.AngloGold Ashanti continues to reduce its hedge book, as mentioned, which was underwater to the tune of $1.8bn on March 31 2009, compared to $3.1bn a year earlier. The reduction of the hedge book is promoting greater all round liquidity health for the group. There will also be cash coming in from AngloGold Ashanti's $1.1bn sale of its stake in Australia's Boddington to Newmont.Global tier I gold stocks

Stock

From

From

Value

price

high*

low*

$ bn

Yamana

$ 8.87

-47.8%

168.0%

6.501

Goldcorp

$ 33.52

-36.3%

142.2%

24.475

Polyus

$ 41.00

-48.8%

192.9%

7.816

Harmony

ZAR 86.68

-34.8%

66.4%

4.364

Lihir

AUD 2.94

-19.2%

93.4%

5.392

AngloGold Ashanti

$ 34.55

-11.4%

158.4%

12.237

Zijin

CNY 8.79

-23.9%

133.8%

13.570

Barrick

$ 33.47

-36.2%

93.8%

29.227

Newcrest

AUD 29.50

-20.6%

78.2%

11.049

Gold Fields

ZAR 99.25

-20.6%

86.4%

8.264

Kinross

$ 16.88

-33.4%

146.4%

11.721

Newmont

$ 42.39

-21.2%

100.2%

20.304

Buenaventura

$ 25.14

-29.5%

179.3%

6.911

Freeport-McMoRan

$ 48.67

-61.7%

210.0%

20.040

Tier I averages/total

 

-31.8%

132.1%

181.871

Weighted averages

 

-36.6%

125.4%

Capital demands remain: AngloGold Ashanti is keen to develop La Colosa, its huge virgin discovery in Colombia, with a resource of more than 10m ounces of gold. This week AngloGold Ashanti chose to issue convertible bonds, a form of hybrid debt and equity, after raising $1.7bn in July 2007, following a rights issue.This year has witnessed some significant rights issues by gold diggers, including 34.30m shares sold by Iamgold to raise the equivalent of $258m, 172m shares sold by Lihir to raise the equivalent of $392m, 34.50m shares sold by Newmont to raise $1.3bn, 27.80m shares sold by Newcrest to raise the equivalent of $570m, 20.9m shares sold by Kinross to raise the equivalent of $361m, 9.2m shares sold by Agnico-Eagle to raise the equivalent of $265m, 88.55m shares sold by Osisko to raise the equivalent of $346m, 10.5m shares sold by Harmony to raise the equivalent of $114m, two issues by Red Back to raise the equivalent of $180m, and so on. Newmont has this year issued both equity and convertibles.Among gold diggers, however, it is only Barrick, the biggest by production and market value, that has been able to pull off a raising in the corporate bond market, where it issued bonds to raise $750m. While the coupon (interest rate) on corporate bonds is inevitably higher than on a convertible, bonds translate to zero dilution for existing shareholders.Gold miners have been seen most often during capital raisings announced during 2009, but the biggest completed capital placing of 2009 came by way of diversified miner Xstrata, which raised the equivalent of $6.2bn in a rights issue. The biggest, if it completes, would be as announced by Rio Tinto on  February 12, being the transnational mining group's intention to sell convertibles of $7.2bn to theoretical rival Chinalco, and equity stakes in some of its most prized assets for $12.3bn, also to Chinalco.Fresh listings, or initial public offers, have been rare, but one of the world's biggest so far was seen when aluminium group China Zhongwang went up on the boards in Hong Kong. Beyond Barrick in the gold mining subsector straight bond issuances this year include BHP Billiton, Rio Tinto, and Anglo American. Where the coupon on BHP Billiton's 2014 bonds computes at 5.5%, Anglo American's comparable term bonds offer 9.375%.SELECTED NON-BANK DEBT 2009

Stock

Value

price

$ bn

Instrument

$ m

Coupon

AngloGold Ashanti

$ 34.63

12.27

Convertibles

575

3.50%

Teck

$ 13.43

6.41

Notes

4225

NA

Anglo American

GBP 14.88

30.56

Convertibles

1700

4.00%

Rio Tinto

GBP 26.37

58.24

Bonds

3500

8.95 to 9.00%

Anglo American

GBP 14.88

30.56

Bonds

2000

9.38%

Gold Wheaton

CAD 0.20

0.24

Notes

99

10.00%

BHP Billiton

GBP 14.37

132.39

Bonds

3035

4.75 to 6.375%*

Aquarius

GBP 2.58

1.64

Convertibles

76

11.00%**

Barrick

$ 32.70

28.55

Bonds

750

6.95%

BHP Billiton

GBP 14.37

132.39

Bonds

3250

5.5 to 6.5%

Alcoa

$ 9.44

9.20

Convertibles

500

5.25%

Rio Tinto

GBP 26.37

58.24

Convertibles

7200

9% to 9.5%

Newmont

$ 42.15

20.19

Convertibles

518

3.00%

De Beers

N/A

N/A

N/A

500

NA

TOTAL

27927

NOTE: not all raisings shown are closed/finalised.

* Euro placing ** Rand placing; floating coupon, now at 11%

Source: Market & company information, compiled by Barry Sergeant