JOHANNESBURG (miningweekly.com) – Gold major AngloGold Ashanti, which saw a 225% increase in income from uranium sales in the quarter to March, was planning a new R1-billion-plus uranium expansion at the Kopanang mine to take production to more than two-million pounds a year, AngloGold Ashanti CEO Mark Cutifani said on Friday.
Reporting overall headline earnings of $150-million for the quarter, Cutifani said that AngloGold Ashanti’s uranium business was “going from strength to strength” as a result of increasing its exposure to the spot price through a restructuring of its uranium contracts.
“We remain bullish on the prospects for uranium, and are examining further ways to continue to improve the value contribution from uranium,” Cutifani said.
Uranium production was up another 5% to 369 000 lb in the quarter, in line with AngloGold Ashanti’s 1,4-million pounds full-year target from the present 1,2-million pounds.
Uranium’s contribution towards the total cash costs of the South African operations was now $5/oz or R 1 684/kg.
Cutifani said that the company had been studying ways to improve the value contribution of uranium to the business and would ask the board to decide on the go-ahead of the Kopanang uranium expansion project in the third quarter.
“We are looking to expanding our uranium capacity, which is good news for South Africa because that will involve capital expenditure in South Africa. We can see real and significant value improvements over the next three years,” he said.
The Kopanang plant was originally expected to cost R2-billion, “but the investment required will be substantially below, that and I am talking tens of percent”.
With the Kopanang uranium plant in 2011, AngloGold Ashanti was targeting a “better-than two-million pounds of production”.
“On a long-term basis we see a uranium price at around $65/lb to $70/lb, so we are very optimistic about the uranium business and our ability to make a significant contribution.
“You will see the $5/oz net back to the South African operations in costs multiplied by four as we lock in the expansion and the business improvement,” Cutifani added.
Analysis had identified recovery improvement opportunities that would be incorporated into the design of the Kopanang expansion, which would lower the current $24/lb cost base.