The smaller South African footprint of gold mining company AngloGold Ashanti, consisting of one underground mine and one tailings treatment operation on surface, delivered impressive first-quarter results, with rising production and reduced rand-denominated costs.

Production rocketed 29% at Mponeng, the world’s deepest mine, where all-in sustaining costs (AISCs) in rands fell by 14%, and production at surface material treatment operation Mine Waste Solutions jumped 17% and AISCs declined by 5%.

Speaking to journalists in an early morning media conference, outgoing AngloGold Ashanti CEO Srinivasan (Venkat) Venkatakrishnan said debt is down 14% to $1.77-billion and cash flow from operating activities up 26% to $117-million.

With margins rising to 23% from 13%, Venkat, who leaves AngloGold on August 30 to head the London-listed Vedanta Resources as CEO, was able to report what he described as “ a very good set of numbers” in what is his penultimate presentation.

Cash generation from retained operations remained strong, despite the smaller asset base, with adjusted earnings rising 21% to$382-million. Asset sale proceeds were used to lower debt in South Africa, where restructuring is still under way to match costs to the smaller base that now represents only 13% of the global portfolio. Eighty-seven per cent of production is now from international mines.

The ongoing South African restructuring involves a proportional all-round shrinking to match the smaller two-operation footprint.

“We’ll have to renegotiate some of the contracts, which were originally designed for five mines,” Venkat said in response to Mining Weekly, adding that it could mean fewer people but assuring that “any job reduction will be a matter of last resort, after we’ve looked at all efficiencies”.

Overall, global production was 824 000 oz of gold at an AISC of $1 029/oz in the three months to March 31, compared with 830 000 oz at an AISC of $1 060/oz in the first quarter of last year.

Production was little changed, despite TauTona being closed and the South African Moab Khotsong and Kopanang gold mines being sold a month before the end of the quarter.

Production at operations, excluding closed and sold operations, rose 6% to 773 000 oz at an AISC of $1 002/oz, representing a margin of 25% to the gold price received for the period.

“The core portfolio is performing well, projects are on schedule and we see good potential for further efficiencies for international and South African operations,” Venkat said in a media release.

The company’s focus is on higher-margin, longer-life assets and brownfield project investments. Even the Geita mine, in troubled Tanzania, which was mining through lower grades during the first quarter, will enter higher-grade areas as the year progresses. The rise in first-quarter Geita costs stems from new Tanzania royalties and levies and the failure of the Tanzanian government to return value- added tax (VAT) inputs. The VAT nonreturn is locking up $3-million to $4-million a month. International arbitration is under way to arrive at an all-round beneficial solution to Tanzania’s regulatory challenges.

Standout performers were Australia’s Sunrise Dam, which recorded a 54% increase in production, as well as Kibali, in the Democratic Republic of Congo, where production was up 22%, Iduapriem, in Ghana, and Serra Grande, in Brazil. In Ghana, AngloGold has presented its redevelopment plans for the Obuasi mine to a joint sitting of the Parliamentary select committees for mines and finance, which will make the roster for ratification in the next Parliamentary sitting, scheduled to begin later this month.

“In South Africa, the focus has to be on safety. We can’t take the foot off the pedal, especially with only a single underground mine,” said Venkat.

The company regularly uses monitors that forewarn of impending seismic events, but, at the end of the day, some of the seismic events cannot be predicted by the monitors.

COO for South Africa Chris Sheppard emphasised to Mining Weekly that, even though the company’s monitoring system was comprehensive, seismicity remained unpredictable across the world.

“What we seek to do is to ameliorate the impact of any residual seismicity that we have to deal with,” he added.

With roughly a quarter of the full year’s guided production delivered in the seasonally weak first quarter, AngloGold Ashanti remains on track to meet its yearly production, cost and capital guidance.

Production at the International Operations increased 5% year-on-year to 666 000 oz, with AISCs improving to $950/oz, as the continued focus on operating efficiencies gained momentum.

Regrettably, a tramming accident in South Africa killed an employee at Moab before it was sold to Harmony Gold and an electricity-related fatality took place in Brazil. The injury frequency rate improved by 28% to 6.35 injuries for every million hours worked.

AngloGold is guiding a production of 3.325-million ounces to 3.40-million ounces for the full year at an AISC of between $990/oz and $1 060/oz.