Free State turnaround halts Gold No 1's disposal plan?

20th June 2001 By: Unknown

The world’s leading gold company, Anglogold, which many expected would leave the Free State during the course of this year in line with its policy of disposing of high-cost, low-margin mines, could well delay its decision on speculation of a significant turnaround. Anglogold executive director: South African region and technology Dave Hodgson has been credited with leading the Free State revival.

Deutsche Securities analyst Greg Hunter tells Mining Weekly Online that Hodgson visited individual Free State mines to investigate problems and then implemented various initiatives to improve production, while decreasing costs.

Hunter expects to see the effect of these initiatives reflected in the company’s quarterly results.

He adds that the pressure to dispose of these mines appears to be easing and that the company is now in a position to plan its future strategy without being concerned about attacks from shareholders.

It also allows the company to be choosy about the timeframe, buyer and price.

However, many still feel that Harmony, led by Bernard Swanepoel, is still best positioned to mop-up Anglogold’s Free State mines should occasion arise to do so.

In the meantime, Anglogold is pursuing its disposal strategy elsewhere, highlighted this week when it announced the possible sale of its Pine Creek assets in Australia.

Operating GM Barrie Parker explained that Anglogold Australia has undergone a reorganisation and, as part of this, it has been analysing each of its operations with a view to extracting maximum value.

The company has appointed SMP group to seek expressions of interest in the assets, which comprise the operating Union Reefs mine and treatment plant, the Brocks Creek treatment plant, service facilities associated with these operations and mining and exploration leases held by the company in the Pine Creek area.

Anglogold acquired the Pine Creek operations through the successful takeover of Acacia Resources at the end of 1999.

“The Union Reefs and Brocks Creek operations presented a strategic fit when they were held by Acacia Resources, and they could present a similar fit in the portfolios of the companies we will be talking to,” reports Parker.

Processing of ore at Brocks Creek ended late last year and the 1,5-m tons a year plant is on care and maintenance.

Union Reefs, which can treat up to three-million tons of ore a year, produced 127 000 oz in 2000 at a cash cost of $274/oz.

If the assets are not sold, Union Reefs, 160 km south-east of Darwin, will continue to operate under Anglogold management for the duration of the life-of-mine plan.