Gold is having a rebirth, says AngloGold, new Kopanang uranium plant planned

AngloGold Ashanti CEO Mark Cutifani sees gold as having a rebirth and was also very bullish on uranium as the company presented a “milestone” set of first-quarter results that recorded an “all-time US dollar earnings high”.

Cutifani says that AngloGold Ashanti is no longer only South Africa’s most competitive gold company, but also South Africa’s most profitable gold company. But as cock-a-hoop as he is about gold, he will not be going headlong into merger and acquisition activity at gold major level, but will be active in the junior space.

Cutifani says that “strong earnings leverage” is beginning to emerge operationally, despite the slow first-quarter production start in South Africa. He also refuses to “put lipstick on the kangaroo” about the Geita gold mine’s “disastrous” first quarter, but makes no bones about a new gold era emerging.

AngloGold Ashanti CFO Srinivasan Venkatakrishnan puts AngloGold Ashanti’s “all-time US dollar earnings high” of $150-million down to mainly a restructuring of the company’s hedge, which Cutifani wants to cut to below four-million ounces by year-end. His bullishness on gold being above $1 000/oz may mean that he cuts a bigger piece out of the hedge book than usual.

Getting to the company guidance of between 4,9-million and 5-million ounces in 2009 is still on the cards, with acknowledgement that the second half of the year is going to need to be much stronger than the first.

Cutifani says that gold is now a logical part of any investment portfolio as inflation becomes difficult to prevent and gold’s inflation hedge comes to the fore. The full story is on Mining Weekly Online and to watch a video on Cutifani’s comments on gold, go to www.miningweekly.com and click on ‘Multimedia’ and then on ‘Video Clips’.

AngloGold Ashanti also saw a 225% increase in income from uranium sales in the quarter and intends building a new R1-billion-plus uranium plant at its Kopanang mine to take its uranium production capacity to more than two- million pounds a year.

AngloGold Ashanti’s uranium business is strengthening 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 says.

Uranium production was up another 5%, to 369 000 lb, in the quarter, in line with the 1,4-million-pound 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 R1 684/kg. The uranium expansion project is expected to be put to the board of AngloGold Ashanti in the third quarter.

The full story is on Mining Weekly Online and to watch a video on Cutifani’s comments on uranium, go to www.miningweekly.com and click on ‘Multimedia’ and then on ‘Video Clips’.