Ghana's insistence on 10% stake and veto powers is likely deterrent, say analysts SA's three big gold miners are pouring cold water on the possibility of making a move for Ghana's Ashanti Goldfields Company, even though analysts say it could be a good fit with at least two SA producers.

The Ghanaian government and its investors have hinted that they might sell their stakes in Ashanti, but SA reticence could be put down to Ghanaian mining laws, which stipulate that the state maintains a mandatory 10% equity in all local exploration and mining ventures, as well as crucial veto powers over the ownership structure of Ashanti.

These strictures are daunting hurdles and could put off any suitor, say analysts, even though its operations look attractive.

"We have had no discussions with Ghana's government about taking a stake in Ashanti," said Chris Thompson, CE of Gold Fields, SA's second-largest gold miner. "Taking a stake in Ashanti would not do anything for us, it just would not make sense."

He said Gold Fields preferred to own the bulk of its underlying assets rather than take a stake in another company.

Bernard Swanepoel, Thompson's counterpart at the thirdlargest producer, Harmony, sounded a similarly dismissive note: "It is not something that we are contemplating at this stage."

The only show of interest, and pretty guarded at that, came from SA's largest producer, AngloGold. Chairman Bobby Godsell said: "I can only say that we have a strategic alliance with Ashanti that does commit us to talk to each other about business opportunities in Africa, including in both SA and Ghana."

Despite these denials of interest, both AngloGold and Gold Fields already have ties with Ashanti. AngloGold has a 50-50 joint venture in Ashanti's Geita Mine in Tanzania, while Gold Fields bought the northern portion of Ashanti's Teberebie gold concession in Ghana for $4,4m in August last year.

Speculation mounted that Ashanti could be in play after Ghana's finance minister said the government was considering selling part of its 19% stake in Ashanti in a bid to raise much-needed funds to pay off debts. Ghana is saddled with foreign debt totalling $6bn and domestic debt estimated at $1,3bn, and is looking to raise as much as $50m through the sale of its stake in Ashanti and other companies.

UK-listed mining company Lonmin said recently it was considering selling its 32% stake in Ashanti as part of its plan to focus on being a platinum producer.

But Ghana's powers over Ashanti's ownership structure and the government's mandatory 10% equity in the company may also deter would-be buyers.

"Unless the Ghanaian government says it wants to sell all its stake (in Ashanti), and relinquish control over the company, the government will be hard pushed to attract a suitor," said Leon Esterhuizen, a gold analyst at UBS Warburg based in Johannesburg.

"AngloGold would not have a problem with the government retaining a stake in the company, but they would prefer to have total management control," he said.

Lonmin fell prey to the Ghanaian government's veto powers in 1999, when then president Jerry Rawlings blocked a takeover bid by Lonmin for Ashanti.

Ashanti produces about 1,7million ounces a year, with its operations focused on its flagship mine Obuasi, as well as on the Bibiani, Teberebie and Iduapriem operations in Ghana, Siguiri in Guinea, Freda-Rebecca in Zimbabwe, and Geita in Tanzania.

It is best remembered for almost going bust in October 1999 when a sudden spike in bullion prices sank its hedge book and brought it close to collapse. Ashanti's hedge book, which was mark-to-market positive at $143m as of March 31, is unlikely to tempt Harmony as it prides itself on being an unhedged producer.

Analysts say that Ashanti would be a good fit in either AngloGold's and Gold Fields' portfolio, as both companies look to diversify their operations geographically and focus on producing low-cost ounces.

It is AngloGold, though, that local analysts see making a play for Ashanti's assets, if at all, as it is unlikely to be comfortable with taking a minority stake in the company. A more likely proposition, say analysts, is that AngloGold will bid for the remaining 50% in Ashanti's Geita mine.

"It would certainly make sense for AngloGold to go for Ashanti's 50% stake in Geita because they know the asset and have management control," said Warburg's Esterhuizen. He said Ashanti's Geita was more attractive than its Obuasi operation, which is widely seen as overstaffed and inefficient.

Market watchers reckon AngloGold will likely have first refusal on Ashanti's assets, but for it to take a bigger stake the Ghanaian government will have relinquish its veto powers, which it may not be willing to do.

Ashanti's New York-listed shares ended at $2,65 on Monday, while on the Ghana Stock Exchange they were flat at 18500 cedis. Dow Jones.