https://www.miningweekly.com

Earthquake-hit AngloGold cannot say when it will return to normal

Earthquake-hit AngloGold cannot say when it will return to normal

AngoGold Ashanti CEO Srinivasan Venkatakrishnan (Venkat) tells Mining Weekly Online’s Martin Creamer that overall result for the company in the three months to June 30 showed significant improvement in all key areas. Camerawork and Editing: Nicholas Boyd.

11th August 2014

By: Martin Creamer

Creamer Media Editor

  

Font size: - +

JOHANNESBURG (miningweekly.com) - Gold major AngloGold Ashanti is unable to forecast when it will be back to normal at its earthquake-hit Great Noligwa and Moab Khotsong mines, where it expects to lose 30 000 oz as a consequence of the 5.3 magnitude earthquake near Stilfontein on August 5.

AngloGold Ashanti’s net loss narrowed in the second quarter as a rise in gold production, lower operating costs and the absence of the previous year's write-downs came close to offsetting a weaker gold price and higher capital spending. (Also watch attached video).

The JSE- and NYSE-listed company’s net loss in the three months to June 30 shrank to $80-million from $2.17-billion previously.

AngloGold Ashanti CEO Srinivasan Venkatakrishnan (Venkat) told Mining Weekly Online that the projected loss owing to the earthquake of 30 000 oz ounces would be revisited once mine ore passes had been studied.

Venkat added that the 30 000 oz was accommodated in the guidance range and was based on a slow ramp up so as not to compromise safety by rushing to restore production.

AngloGold Ashanti South Africa chief operating officer Mike O’Hare told Mining Weekly Online during a media roundtable that it would probably take another week before a clearer picture emerged. (Also watch attached video).

One of the issues is the inability of the company to test its ore-passes, which are often affected by seismic events.

“We will only know whether they are back to normal once we start to move rock through them again,” O’Hare added to Mining Weekly Online.

While major infrastructure has stood up to the event, support at every working place is having to be checked.

“Until we are finished and receive feedback from the crews who are doing that work right now, we’ll not know when we are back to normal production at the area closest to this earthquake at Moab Khotsong,” O’Hare added.

Venkat said that he would not like to relive receiving the news that the epicentre of the quake was closer to AngloGold mines, which had 3 300 of its employees trapped inside them, than any other mines.

“It was a terrifying day until we got the call at 7.30 that night saying everyone accounted for. That was a relief, I can tell you,” he commented to Mining Weekly Online.

The surface operations of Mine Waste Solutions were back on track within a day, thanks to quick restoration of power by the State electricity utility, and the Kopanang mine is also completely back to normal after its infrastructure was given the thumbs up.

Investec mining analysts said in a note that AngloGold exceeded second-quarter (Q2) guidance by producing 1.098-million ounces, which was 17% up year-on-year.

The good performance led to a 140% year-on-year improvement in operating cash flow to $336-million, which allowed debt to fall from $3.11-billion to $2.99-billion.

The company has agreed to new five-year revolving credit facilities totalling $1.5-billion to replace existing facilities, extend maturities and carry more favourable terms.

AngloGold appeared to be well on the path of recovery, Investec analysts said, adding that all-in sustaining costs (AISC) of $1 060/oz for one of the world’s major gold companies, before any interest charges, taxes or returns to shareholders, provided an indication of the minimum price needed for companies to deliver a return on investment.

AngloGold reported a 17% increase in production for the second quarter compared with the same period a year earlier, as its two new mines continued to contribute lower-cost ounces, and a strong safety performance helped its South Africa operations improve their contribution.

The overall result for the company showed significant improvement in all key areas.

Q2 production rose 17%, AISC fell 19%, corporate and marketing costs were down 65%, exploration dropped 58% and capital expenditure (capex) fell 44%.

All-in costs were down 29% and earnings before interest, tax, depreciation and amortisation were up 33%.

The results helped turn around a cash burn of $488-million to a positive cash flow of $34-million, despite a $132/oz gold price drop.

“It’s the continued improvement in safety that we’re most proud of, and where we intend to do better still,” said Venkat, who visits injured employees every Saturday in between prayer sessions at two Hindu temples.

When Venkat called at the Milpark Hospital in Johannesburg this Saturday he was delighted to find no injured employees.

AngloGold also reported no quarterly fatalities for only the third time in its history and the first time since 2010.

In all, 11 of AngloGold Ashanti’s operations reported no lost-time injuries during the quarter, while eight kept a clean record for the year.

The all-injury frequency rate for the quarter improved 10% from a year earlier to the best-ever level of 6.79 per million hours worked. Records were set on all other key safety metrics.

Production for the three months to June 30 was ahead of guidance, while costs were at the lower end of the indicated range. Gold production for the quarter was 1.098-million ounces at a total cash cost of $836/oz, compared with 935 000 oz at a total cash cost of $898/oz in the corresponding three-month period of 2013.

The company plans to grow production this year for the first time in almost a decade after cutting overheads, and is taking steps to improve free cash flow and returns.

The company is investing in a targeted exploration programme and technologies to improve underground productivity on its South African mines, which account for roughly 28% of total production.

The South African technology and innovation project is continuing to make progress.

“We’re now increasing the number of production sites and number of holes drilled to extract, as we say, ‘safely, all of the gold, only the gold, all the time,” Venkat said.

The adjusted headline loss of $4-million took in redundancy costs at the troubled Obuasi mine in Ghana, which totalled $27-million, and closure costs of assets including the Yatela mine in Mali, which absorbed another $27-million, without which normalised adjusted headline earnings would have been $76-million, or 19c a share.

The South Africa region posted production at 319 000 oz, 4% higher year-on-year, at an AISC of $1 064/oz, which was 12% lower than a year earlier.

The AISC measurement includes total cash costs, plus corporate and exploration costs and capex required to sustain operations.

AngloGold’s international operations posted a 24% rise in gold production to 779 000 oz at AISC of $1 033/oz, which was 19% lower year-on-year.

The strong operating result helped drive a 140% improvement in cash inflow from operating activities to $336-million for the quarter compared to the year-earlier period, despite a 9% decline in the gold price.

AngloGold has 20 gold mining operations in ten countries, as well as several exploration programmes in both the established and new gold producing regions of the world.

Last year it produced 4.1-million ounces of gold, which generated $5.5-billion in gold income and used up $1.62-billion capex.

It has an ore reserve of 67.9-million ounces and a mineral resource of 233-million ounces of gold

Edited by Creamer Media Reporter

Comments

Showroom

Actom image
Actom

Your one-stop global energy-solution partner

VISIT SHOWROOM 
Willard
Willard

Rooted in the hearts of South Africans, combining technology and a quest for perfection to bring you a battery of peerless standing. Willard...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Hyphen, Eva mine, ferrochrome price make headlines
Hyphen, Eva mine, ferrochrome price make headlines
27th March 2024
Resources Watch
Resources Watch
27th March 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.246 0.282s - 90pq - 2rq
Subscribe Now