Midas commentary for February 17, 2000

10:30p EST Tuesday, February 15, 2000

Dear Friend of GATA and Gold:

Here's some news and comment about Ashanti Goldfields
and its deal today with its creditors and minority
shareholders, including the government of Ghana.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

ASHANTI DIRECTORS, SHAREHOLDERS, CREDITORS IN DEAL

ACCRA, Ghana, Feb. 15 (Reuters) -- Directors,
creditors, and major shareholders in troubled gold
group Ashanti Goldfields Co. Ltd. reached an agreement
late Tuesday on major board changes and a $100 million
loan, a source close to talks in the Ghanaian capital
said.

The source, who declined to be named, told Reuters that
dissident shareholders who brought legal action in an
Accra court to force changes to the board agreed to
withdraw the suit. The deal included agreement to sell
50 percent of the company's Geita gold project in
Tanzania, the source said.

The source said the parties also agreed that co-
chairmanships would be granted to the Ghanaian
government, which holds a 20 percent stake of Ashanti
in the form of a golden share and to fellow shareholder
Lonmin.

The shareholders who brought the court action, led by
Adryx Mining amp; Metals Ltd., also would have
representatives on the board of directors, the source
said.

An Accra court ordered the company last Wednesday to
hold an extraordinary general meeting to discuss the
board.

A $100 million loan, for which Barclays Plc would act
as agent, had also been agreed and would serve as
working capital and fund development of the Geita
project, the source said. The court ruling barred
Ashanti from making new financial commitments ahead of
the extraordinary general meeting.

The source said other financial institutions with
interests in Ashanti, including Chase Manhattan Corp.,
Goldman Sachs Group Inc., and Credit Suisse, also took
part in the negotiations to resolve Ashanti's financial
troubles, which stemmed from hedge-book losses when the
gold price spiked up last October.

---

By Michael Kosares
www.USAGold.com

Let's keep our perspective on Ashanti. Perhaps they
worked their problems out for the time being (perhaps
they haven't), but what we, as gold owners, gained in
the long term is the over-arching perception that the
gold carry trade/forward game is on the downhill side
of this market's Continental Divide. (Aside: Time to
slip it into third, keep control and glide down to the
bottom).

Let's not lose sight of what really happened today.

To wit: The new board of directors for Ashanti was
elected because they have an anti-hedging stance.

Normandy quickly followed with its announcement
renouncing hedging.

To wit: These two facts out of today's gold news are
probably more important in terms of their long-term
effect on the gold price than if Ashanti would have had
to cover a massive amount of gold and thereby pushed
the price through the roof. Why? Because Ashanti now
won't be back to take away the punch bowl later!
Ashanti now is committed to higher gold prices -- as a
board of directors and as a company.

That's significant no matter how the press tries to
characterize it.

Resolution: We are base-building here after a long
winter in the gold market. Let's appreciate our
victories, both minor and major (I consider this a
minor victory) and realize that the financial press
will always attempt to paint the picture anti-gold.

The real story is that the mining companies are
throwing in the towel.

At the same time, let's not fool ourselves: The bullion
banks et al. will not go down without a horrific fight.
If anyone thinks otherwise, they haven't been paying
attention.

Conclusion: Own the physical, sit back and watch. These
events will continue to hold our collective interest as
well they should. If you're not on a fuse, this stuff
shouldn't bother you. Days like today ought to whet the
appetite for additions to the physical holdings, not
provoke lament.

In abstraction: I don't think this downside is going to
last. Why? Those of you who are concerned about gold's
reaction to the Ashanti news, let me ask you a simple
question: Do you think Ashanti still has designs on
becoming another quasi mining company/quasi hedge fund?
When it grows up, does Ashanti still want to become
another Barrick?

I don't think so. I think the goldmeisters regained
control there. So who were the winners today and who
were the losers?

In my view, the Ashanti story is far from over. Those
margin calls haven't disappeared. Not yet. Nor has the
fact that this company to a large degree has capped its
profit potential -- a company that provides a large
proportion of its country's income.

But as I say, this is a sideshow, and it's politics,
and I've never known politicians to simply let
something rest.

The main event is that the carry trade continues to
unwind. These prices will encourage physical buying.
Let's see what tomorrow (and the unsettled politics)
brings.