Gold producer AngloGold Ashanti has concluded the gross R3.574-billion sale of its Moab Khotsong gold mine, in the North West, and related assets and liabilities to gold mining company Harmony Gold, as well as the separate sale of the Kopanang gold mine, in Gauteng, and related assets and liabilities to investment company Heaven-Sent SA Sunshine last month.
Harmony Gold CEO Peter Steenkamp notes that the integration of Moab Khotsong will enhance the quality of the miner’s portfolio and boost its cash flows. “I would like to thank the Department of Mineral Resources, other regulatory authorities, unions, Harmony employees and the management of AngloGold Ashanti for ensuring that this transaction has been concluded within four months since the announcement thereof.”
While the Moab Khotsong mine includes a brownfield mine-life extension option (Project Zaaiplaats), of more than 15 years, it has a range of other attractive brownfield and greenfield development options with high returns and relatively short payback periods.
AngloGold Ashanti’s remaining South African assets include Mponeng gold mine, the world’s deepest gold mine and its flagship South African operation. The mine is currently ramping up production from its below 120 level life-extension project.
The mine includes the two surface operations, comprising the Mine Waste Solutions tailings dump retreatment business and the rock dump reclamation and processing business. Together, these South African operating units will account for about 13% of AngloGold Ashanti’s total yearly production.
Mponeng mine exploits the Ventersdorp Contact reef through a twin-shaft system at depths of between 2 800 m and 3 400 m below surface. Ore is treated and smelted at the mine’s gold plant. The Mponeng life-of-mine extension project will be advanced to feasibility stage with the related study scheduled to be completed by mid-2018, Mining Weekly reported last month.
According to AngloGold Ashanti, about $66-million will be spent on investment for Mponeng, $11-million of which is for extension project work and $55-million for nominal reserve development.
The extension provides access to a substantial 12.5-million-ounce gold reserve within the massive 50-million-ounce Mponeng resource.
2017 Full Year Operating Results
AngloGold Ashanti achieved a 4% increase in South African production, progressed the restructuring of its South African portfolio and advanced its brownfield projects according to plan – all while generating $125-million in free cash flow before growth investment.
The company’s outlook for 2018 sees improvements across key metrics and also a decision to move ahead with redevelopment of its Obuasi gold mine, in Ghana, which is subject to Parliamentary ratification.
Production increased to 3.755-million ounces at an all-in sustaining cost (AISC) of $1 054/oz in the 12 months through to December 31, from 3.628-million ounces at $986/oz in the previous year, despite restructuring in South Africa.
Stronger year-on-year operating performance from the international operations helped to more than offset a lower output from South Africa, where an agreement was reached to sell the Moab Khotsong and Kopanang mines, and where the TauTona gold mine is undergoing an orderly closure process.
Anglo Gold Ashanti CEO Srinivasan Venkatakrishnan last month noted that the miner “delivered a strong production and cost performance”, which ultimately funded [its] reinvestment and restructuring programme.
“In ensuring we maintain focus on our long-term strategy, our portfolio improvement projects were again executed on time and on schedule, and we continued to make progress on improving safety.”
The strong operating and financial performance in 2017 has further strengthened the foundation for AngloGold Ashanti’s future. The slate of high-return projects – all with attractive payback periods – is expected to deliver higher-margin production, extend lives and improve predictability at key assets.
Venkatakrishnan is adamant that the company’s production from operations will improve this year, as will AISCs, while capital expenditure is expected to fall, despite the decision to reinvest at Obuasi.