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AngloGold sets new safety record, maintains guidance

AngloGold Ashanti CEO CEO Srinivasan Venkatakrishnan (Venkat)

AngloGold Ashanti CEO CEO Srinivasan Venkatakrishnan (Venkat)

Photo by Duane Daws

8th May 2017

By: Martin Creamer

Creamer Media Editor

     

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JOHANNESBURG (miningweekly.com) – Gold mining company AngloGold Ashanti has achieved its first ever March quarter without a fatal accident, the company said on Monday when it reported production of 830 000 oz at an average total cash cost of $813/oz for the three months to March 31.

The Johannesburg- and New York-listed operator of the world’s deepest mines has passed 282 days without a fatal accident in South Africa, beating 2014’s record 242 days, while also maintaining its full-year guidance overall.

The South African operations have now exceeded five-million consecutive shifts without a fatality and the Sadiola, Yatela, Siguiri, Iduapriem, and Obuasi gold mines in continental Africa plus Sunrise Dam in Australia ended the March quarter injury free.
 
The 830 000 oz output at $813/oz, compared with 861 000 oz at $702/oz in the first quarter of 2016, with costs pushed higher by lower grades and significantly stronger currencies in key operating regions.

The company’s international operations, which account for almost three-in-four of its gold ounces mined, delivered another good plan-meeting quarter, while the South African operations, with the exception of Mponeng, had a poor production performance in a traditionally seasonally weak period.
 
“Our international operations have again delivered a strong result, with our brownfields investments proceeding to plan. On the back of the strong safety result, we are closely scrutinising the underperforming areas of our South African operations to restore margins. Remedial steps taken to ensure they recover from a difficult start to the year are already bearing fruit,” AngloGold Ashanti CEO Srinivasan Venkatakrishnan said.
 
The company is re-investing in high-return, brownfields projects to improve the overall quality of its portfolio and extend mine lives.

Net debt improved by 3% from the first quarter of last year to $2.05-billion, with net debt to adjusted earnings before interest, taxes, depreciation and amortisation remaining within its own target of 1.5 times, through the business cycle, and well below its debt covenants of 3.5 times. AngloGold Ashanti has ample liquidity of $1.46-billion, with no near-dated maturities, and sufficient covenant headroom. 
 
Production from the international operations was 632 000 oz at a total cash cost of $714/oz for the first quarter, up from 625 000 oz at a total cash cost of $674/oz in the corresponding period last year, with exceptional performances from Siguiri, Iduapriem, Kibali and Cerro Vanguardia in Argentina.

All-in sustaining costs (AISC) for the first quarter were $963/oz, up from $822/oz for the first quarter of 2016, with the increase attributable to the impact of stronger local currencies, lower average grades and the planned increase in sustaining capital expenditure (capex).
 
Total capex during the first quarter of 2017 was $216-million, up from $128-million for the first quarter of 2016.

Total capex included $186-million of sustaining capex and $30-million of project capex.

Capex is expected to increase in the remaining three quarters of the year, in line with historical seasonal trends.

The added focus on a safe start-up contributed to an unusually slow ramp-up in South Africa, after the year-end break.

This was compounded by more lower-grade areas mined at some operations than planned, fractured ground in areas currently being mined at TauTona and Moab Khotsong and instances of unwarranted deviations from mining plans.

Steps taken to address the poor adherence to mining plans, management work routines and to improve productivity have already resulted in an improvement in mineable face length, leading to production volume recoveries in the second half of the first quarter of 2017.

These improvements will also contribute to the forecast for an overall increase in production rates over the remainder of the year.

FULL-YEAR GUIDANCE
 
Adjusted earnings before interest, taxes, depreciation and amortisation were $314-million for the first quarter of 2017, down from $378-million for the first quarter of 2016.

Full-year guidance remains unchanged at production of 3.6-million ounces and 3.75-million ounces and capex of between $950-million and $1 050-million.

Total cash costs for the year are being guided at between $750/oz and $800/oz; and AISC at between $1 050/oz and $1 100/oz.

 

Edited by Creamer Media Reporter

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