DENVER -- The new week marks an unusual gathering of the world’s senior precious metal executives at the 2003 Denver Gold Forum. It is likely to be a bullish reprise of the 2001 event in several ways.

Most keenly watched and commented on will be the repeat of AngloGold [AU] updating investors on a planned acquisition. When it did so in 2001, with Normandy, archrival Newmont [NEM] had just begun to craft a competing bid that eventually carried it to victory, but at a considerable price.

Money managers will be poking and prodding at the strategy and tactics surrounding AngloGold’s $1.4 billion offer for Ashanti Goldfields [ASL], but which minnow Randgold has managed to muscle in on. It would be truculent to say that AngloGold failed to learn its Normandy lessons; the Golden Share was always going to be a wild card, ripe for exploitation.

The AngloGold bosses are no doubt experiencing the wrong sort of d?j? vu as they prepare to court Denver.

Formal offer

It is widely expected that Randgold [GOLD] will present its formal competing offer at the Denver Gold Forum, putting real numbers behind the forcefully expressed opinion of chief executive, Dr Mark Bristow, that AngloGold can be matched and beaten – not just in price, but in delivering lasting, superior value to shareholders and stakeholders.

Fanciful at first blush, Randgold is already battle scarred from its effort to win over sceptics. Skirmishing on earnings calls, at conferences, during roadshows and on the sidelines of everything, has delivered an initial triumph for Randgold in the rising spread between the bids. It has widened from $56 million (when Ashanti first confirmed AngloGold’s interest) to over $330 million. Were Ashanti shareholders to take Randgold’s price, they would pocket the equivalent of around $12.91 versus just over $10.43 from AngloGold.

However, every war comprises several battles and the current $2.50 spread remains more ephemeral than real.

Randgold captured critical high ground, but its true mettle can only be tested when the signed offer thumps down in front of the Ashanti board and key shareholders. It is not so much that AngloGold and Randgold are warring with each other than they are dicing like the Allies for the capture of Berlin. A common interest, but very different purposes for the prize.

Civil behaviour

AngloGold is a long way from retreating or losing just yet. In the absence of a formal Randgold offer and a few days of market digestion when it comes, there has been need of little beyond agitated observation.

Agitation because AngloGold believes Randgold serially misrepresents its abilities and accomplishments. There is also some distress because Ghana’s government is doing its best imitation of Auguste Rodin’s “Thinker” – impressively posed, but perpetually irresolute.

The government is supposed to deliver some sort of verdict this month, and the longer it takes the more opportunity for mischief making. A prime example was a vicious rant delivered on GhanaWeb¹ this week by an American based Ghanaian, Charles Kwaku Amoo-Asante, against any sale. Amoo-Asante’s diatribe against AGC CEO is a primer in nationalist dementia, but such logic can still trump market realities given the power of the “golden share”.

Where AngloGold finds cause to be aggrieved, Randgold feels that its competitor takes large liberties in claiming credit for the success of the Morila mine. Randgold hardly disguises its disdain for AngloGold’s culture which it interprets as sluggish, detached and spendthrift. Similarly, much of AngloGold’s s! uccess is regarded as opportunistic; a feeling that is no doubt mutual .

We would hesitate to say there is animosity, but it threatens, especially with suggestions that AngloGold and its parent, Anglo American [AAUK] might be straying from M&A “Queensbury Rules” via some vendor strong-arming.

The stakes

Once delivered, the formal bid must necessarily force AngloGold onto the back foot. Randgold has had weeks to filter its offer in a way that downplays AngloGold’s strengths whilst magnifying its weaknesses. The roles will soon be reversed and we look especially forward to AngloGold’s dissection which we bet will be acidly dispassionate and courteous as only Anglo can be.

This much is obvious – Randgold will laser in on the Obuasi Deeps, which AngloGold has all but claimed as something only it is capable of bringing to account. The argument will be t! hat the Deeps are currently little more than a borehole and some guesswork, so it will take at least a decade before anything concrete happens.

Second, Randgold will cut away AngloGold’s fleet replacement pledge by arguing that financing makes all things possible in mining. Third, Randgold will nakedly appeal to Accra’s conceit by promising continued independence for Ashanti. Fourth, Randgold will slash and stab at AngloGold’s version of Pan Africanism, very much flavour of the month, but essential to draw adulation and assent from Pretoria which still controls a capital lever to large for its own good (note that Randgold & Exploration has asked the Reserve Bank to allow it to dilute its stake in Randgold based on its newly minted empowerment credentials). Fifth, Randgold knows that even if its bid is perceived as weak, arbitrageurs may disguise it by shorting AngloGold, thereby sustaining the bid and still forcing a higher ! price. Sixth, Randgold will make it very clear that it will meet and r aise AngloGold. Seventh, Randgold will raise some alarms about Ashanti’s plodding operations and restless management team.

For now, the real winners are the Ashanti executives who can start strapping on their golden parachutes, whilst Ghana’s politicians and Lonmin are also basking in some glory as they’re up a third in dollar terms since May Day and double that in a year.

Yet the threat of Rodin’s Thinker is real. Too much dithering in this market could be very costly. There may be more to come from a higher gold price, but having almost doubled your money in Ashanti in one year is hardly a reason to become reckless.

If we were to take a bet, it would be that AngloGold will prevail, but at a higher price and thanks primarily to the support of Lonmin which has bristled with hostility toward Randgold. That begs the question – what deal has Randgold cooked up as a second prize?