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By Angus Macmillan
Dow Jones Newswires

JOHANNESBURG, Jan. 3 -- If AngloGold Ltd. is
pipped at the post by Newmont Mining Corp in
its bid for control of Australia's Normandy
Mining Co., it will face a dwindling range of
growth strategies. U.S.-based-Newmont has
raised its bid for Normandy to A$1.93 a share
-- valuing the company at A$4.3 billion --
and eclipsing AngloGold's A$4.1 billion offer
made last week.

A failed bid for Normandy could mean one of
two things for Anglo: that it must look for
another acquisition to diversify its asset
base outside South Africa, or risk being
swallowed by a larger competitor attracted by
its low cost base. AngloGold has twice
sweetened its initial offer for Normandy --
Australia's largest gold group producing 2.3
million ounces a year -- only to be trumped
each time by a stronger Newmont response.

"If they miss out on Normandy, they must sit
back and assess things carefully before
making any other moves," said Nick Goodwin,
gold analyst at SG Securities.

But Keith Francis, a trader at Barnard Jacobs
Mellett Securities, said AngloGold may have
to find an alternative quickly or risk
"losing face" in the market.

The company initially bid for Normandy in
November to diversify its international gold
operations, increase the free-float of its
shares, and reduce its dependency on South
African production.

AngloGold is the world's biggest gold
producer, with annual output of more than six
million ounces. South Africa accounts for 68
percent of output, the rest of Africa 12
percent, Australia 7 percent, North America 7
percent and South America 6 percent. Control
of Normandy would meet Anglogold's geographic
diversification goal by reducing South
Africa's contribution to group output to 50
percent.

Alternative growth strategies for AngloGold
include bidding for fellow South African
heavyweight Gold Fields Ltd., exploring
merger synergies with Barrick Gold Corp.
bidding for small gold miners, and expanding
its own international operations.

Goodwin says the Gold Fields option is
counterproductive as it would give AngloGold
a bigger stake of total South African
production. But Gold Fields also has
significant operations in Ghana and
Australia.

"I still think this would be the most logical
alternative for AngloGold if it fails in its
Normandy bid," said David Davis, gold analyst
at SCMB Securities.

Supporting this argument is that AngloGold's
parent company, Anglo American PLC, owns just
under 17 percent of Gold Fields.

Davis also sees potential for AngloGold to do
a deal with Barrick which last year gained
control of U.S.-based Homestake to become the
world's second largest gold producer.

"BHP and Billiton forged an interesting
merger last year to form BHP-Billiton.
Perhaps AngloGold and Barrick could do the
same," proposed Davis.

However, a serious stumbling block for such a
deal is that Barrick is on a much higher
market rating than AngloGold. "Barrick is
overrated and AngloGold is underrated, so I
think Barrick shareholders would complain if
their rating was diluted," said Davis.

He believes AngloGold should consider
expanding its own international operations or
look for suitable individual mines to
acquire. This strategy has been utilized to
good effect by Harmony Gold Mining Co., South
Africa's third largest gold miner and its
most highly rated.

But whatever alternatives AngloGold may
adopt, it is likely its focus will remain on
profitability rather than size. Chief
executive Bobby Godsell said recently that
the return on assets is more important to the
group than the ounces of gold produced.