The Ghanaian government's resolve to create a "golden age" for business is about to be tested. Faced with competing bids from AngloGold and Randgold Resources for Ashanti Goldfields, the west African nation's most prized asset, Ghana had been correct to step back and take professional advice on its 17 percent "golden share" in Ashanti, said Sam Jonah, the Ashanti chief executive.

"So far they have played it masterfully well," Jonah told Business Report On Sunday.

The "healthy uncertainty" encouraged another bid, said Jonah of this week's surprise announcement from Randgold that it was considering a $1.5 billion possible rival offer for Ashanti.

This squares Randgold up against AngloGold, which is roughly 12 times larger, for a modern day gold rush in what is the oldest and, quite possibly, one of the last mining frontiers.

AngloGold, which formalised its $1.1 billion bid a mere four days before Randgold stepped in, has secured the vote of Lonmin, Ashanti's other large shareholder. Lonmin holds a 27.6 percent stake.

The London- and Nasdaq-listed Randgold offer of one Randgold share for two Ashanti shares valued Ashanti at $11.47 a share, a premium of about 30 percent over AngloGold's 26 AngloGold shares for every 100 Ashanti shares offer valued at $8.71 a share on the day of Randgold's announcement.

Both companies have agreed that the 100-year Ashanti name be retained in one form or another and that the company would keep a listing on the Ghanaian stock exchange, making it the second largest in Africa after the JSE Securities Exchange.

But while both deals have their merits, the market has spent the better part of the week ridiculing Randgold's cheeky challenge.

Mining analysts argue that even if Randgold managed to clinch the deal, which is, in fact, double its market capitalisation of about $600 million, the company would be left short of development capital of up to $1 billion for Ashanti's Obuasi mine deepening, also of cash of between $300 million and $400 million to buy out Lonmin and with an onerous hedge book.

Randgold's indicative proposal reveals plans of a reverse takeover deal that transforms Ashanti into an "independent, pan-African" gold mining company with a production of just over 2 million ounces of gold a year.

By contrast, AngloGold aims to reclaim its lost status as the world's largest gold producer with a combined production in excess of 7 million ounces of gold a year.

AngloGold is at present the world's second- largest gold producer with an annual production of just under 6 million ounces while Randgold's existing production is around 420 000 ounces a year. One of the top 10 global gold miners, Ashanti boasts an annual production of about 1.6 million ounces.

Interestingly, AngloGold's proposal will ensure that the new merged company will be domiciled in Africa while a merger with Randgold may take the African firm offshore.

But Randgold chief executive Mark Bristow claimed a merger with his firm would mean the Ghanaian capital of Accra would be home to the company's headquarters and 70 percent of the ownership in the new company would be retained by existing Ashanti shareholders.

By contrast, on completion of the AngloGold merger its shareholders will own about 87 percent and existing Ashanti shareholders will own just 13 percent of the combined group.

Still mining analysts refuse to believe it is the Ghanaian government, which gets to have the final say, believing rather that Lonmin holds the trump card and its decision will decide Ashanti's fate.

Arguably Lonmin, the London-listed platinum company, will have some influence with a 27 percent stake and two non-executive representatives on the board.

But all Lonmin seems to want is the exit from its Ashanti investment that it has sought for some time.

The Guardian in the UK pointed out that an AngloGold win would leave Lonmin with an easily disposable 3.5 percent stake in a liquid South African stock while a Randgold deal would leave Lonmin holding 19 percent and a slimmer chance of making a quiet exit.

There are creative ways around the Lonmin hurdle - even if it is just about paying it cash at a premium.

That leaves the bidders to win over the Ghanaian government, which, under President John Kufuor, have made no secret of the fact that it is keen to keep the ties between the country and Ashanti.

If AngloGold took Ashanti, the government's stake will become a relatively inconsequential 2 percent holding in a colossal gold producer and then there are questions over whether AngloGold will allow it to hold on to its golden share on the Ghanaian assets.

Randgold, on the other hand, has promised a relaunch of Ashanti on the London Stock Exchange - even a possible ranking in the FTSE 250.

Jonah said Ashanti was the first African gold miner to list in London and the London listing did have a "certain prestige".

AngloGold said it believed the Ghanaian government would provide a clearer indication of its position by mid-September despite the Randgold proposal.

Bobby Godsell, the chief executive of AngloGold, said the deal had significance beyond the two companies it affected.

"The benefits extend over time to embrace South Africa and Ghana, the homes of the two companies, and to the African continent as a whole," he said.

Ashanti is by far Ghana's biggest foreign currency earner and its performance is said to dominate the national economy.

The government, being advised by French bank Societe Generale, will obviously lean towards a deal that could enhance the country's exchange earnings and investment status.

The UN Industrial Development Organisation said foreign direct investment in Ghana was expected to increase by more than $5 billion over the next three years but the country was in dire need of development funding for roads, hospitals and schools. - Business report (Johannesburg)