New Buy Recommendation


Ashanti Goldfields Company, LTD
ASL-NYSE - $13.00


Our 900# investors were informed to purchase ASL @ $15.25/share on March 20, 1997.

Ashanti Goldfields (ASL-NYSE) conducts business within the continent of Africa producing, as well as exploring, for gold. During the past 15 months (note: ASL has recently changed from a September fiscal year end to a December calendar year) the company had gold production of 1.25 million ounces - 12 months ending December 1996 production equalled 1,024,803 ounces versus 936,738 ounces during the proforma 12 months ending December 1995.

At present there are 108 million shares outstanding. As of March 3, 1997, ASL had reserves and resources of gold equalling 32 million ounces. Resources and reserves at ASL's flagship operation, the OBUASI MINE in Ghana, currently stands at more than 21 million ounces.

During 1996, ASL embarked upon a major acquisition program to acquire already producing projects throughout Africa, inaddition has acquired 35 exploration properties covering the major greenstone belts in twelve African countries. Through its acquisition program, the company has been transformed into a truly multinational group with four operating mines and two major mining projects, which are expected to be in production by the end of 1998.

In addition to the Obuasi Mine in Ghana, ASL acquired Cluff Resources, whose principal asset is the Ayanfuri Mine in Ghana, which produced 49K ounces of gold for the twelve months ending September 30. Another mining operation was acquired, namely, Golden Shamrock Mines, Limited. The principal asset of this acquisition is the Iduapuem Mine in Ghana. Gold production for the 12 months to September 30, 1996, was 115K ounces.

The fourth producing mines is located in Zimbabwe; namely, the Freda-Rebecca Mine. This operation contributed a total of 74,396 ounces of gold for the 9 months ending September 30, 1996.

Ashanti Goldfield intends to bring two more projects on line during 1998; namely, the Bibiani gold project about 80 km west of Obuasi, and the Siguiri gold project in northeastern Guinea. Other areas that the company is presently exploring in various stages are the Gerta property in the Lake Victoria goldfields in Tanzania, the KouleKoun prospect in Guinea, the Libiri prospect within the Sauora project in Nigeria. Elsewhere in Africa, projects are at various stages of explorations. These areas are Eastern Senegal, Bierkina, Faso, Eritrea, Ethiopia, Ghana, Mozambique and Zimbabwe.

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Other Corporate Business

  1. The average cost/ounce of gold is $265.00 - down in 1998.
  2. As of 30th of September, 1996, forward contracts totalling 952,000 ounces were scheduled for delivery in the year ending December 31, 1997 at an average price of $429, while 3.2 million ounces had been scheduled over the years 1998 to 2006 at an average price of US $463/oz.
  3. 108 million shares outstanding. 36 million shares owned by LONRHO. 21 million shares owned by Government of GHANA/ 26 million shares owned by US institutions.
  4. The company's ordinary shares are listed on the London Stock Exchange (AGLS), the Ghana Stock Exchange, Toronto Stock Exchange and the New York Stock Exchange (ASL).
    The ADRs trade in the US on the over-the-counter market under the symbol ASHFY.
    Dividend: 37.5¢ for the past 15 months. The remaining 25¢ to be paid on or about April 30, 1997.

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Year ended Dec 31

*1991 1996A 1997E 1998E
Sales 405.6 mil 458.7 mil NA NA
Net Income/sh 1.17 .64 .68 1.07
Dividend/sh .375 3.75 .375 .375
Gold Production 936,738 1,024,803 1,150,00 1,200,000
Cash operating costs 222 252 265 255
Shares outstanding 86.9 mil 107 mil 108mil 108 mil
* =Proforma; NA=not applicable

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Box A
April 2, 1997
Fundamental Comparison of
Major Gold Producers

Company			Symbol	Current	1997E est	1998Eest. 	PE Est.	PE Est.

				Price					1977	1998u

Newmont Mining		NEM	38 7/8	1.28 Dec	1.55 Dec	30x	25x

Santa Fe Pacific	GLD	16.25	 .26 Dec	 .22 Dec	63x	74x


Kloof Gold		KLOFY	7.625	 .22 June	 .36 June	35x	21x

Home Stake Mng		HM	15	 .20 Dec	 .33 Dec	75x	46x

Battle Mountain		BMG	6 1/2	 .12 Dec	 .19 Dec	54x	34x

Barrick Gold		ABX	23 3/4	 .83 Dec	 .81 Dec	30x	29x

		Average PE						48x	38x

Ashante Goldfields 	ASL	13.00	 .68 Dec	1.07 Dec	19x	12x

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In Summation

At this point in time in the business cycle, we believe that it is prudent in our well-diversed portfolio to have at least 3 - 5% of a world class gold mining company, as well as a small hoard of gold coins (we would only buy South African due to small markup - remember, gold is gold).

One holds gold when there is political uncertainty, world conflict or as a hedge against inflation.

We chose ASL due to its extremely attractive fundamentals, it is under followed, it is considered to be in a less stable area of the world (Ghana has been democratic forever), has unbelievable upside potential during the next five years (six operating mines by the end of 1998 from one in 1995) due to new mines, and its extensive exploration program, attractive yield of 2.7%, trading near its 52 week low and has 32 million ounces of reserves and resources. Take a hard look!

We will be monitoring ASL in our 900# and global portfolios for percentage gain performance. Broker Contact: Greg Nelson at 1-800-453-9408; Corporate contact: Allan Jordon at 1-212-697-3720.

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Copyright © 1997 S.A. Advisory