mining news
6
08.13
Reporting on African Barrick Gold (ABG)’s
half year 2013 results, CEO Greg Hawkins
says the company – which dominates Tan-
zania’s gold mining sector – delivered strong
operational performance, with production
tracking ahead of guidance and cash costs
below the bottom of the guidance range.
“We have taken decisive action at all of
our mines, including the reshaping of the
life of mine at Buzwagi, in order to adapt to
the lower gold price environment,” he says.
“We have a solid base from which to imple-
ment the findings of the Operational Review,
which has identified potential cost savings of
US$185 million across the group. The com-
bination of asset optimisation focused on
cash flow generation and lower gold price
assumptions has contributed to a non-cash
post tax impairment charge of US$727 mil-
lion. Having taken these steps, we remain
AngloGold Ashanti aims to halve corporate costs
Strong operational performance at ABG’s Tanzanian mines
confident in the ability of our asset base to
deliver shareholder value which is reflected in
the decision to continue with our stated divi-
dend policy. We remain on track to achieve
our full year guidance.”
ABG reports adjusted net earnings of
US$39,3 million (US9,6 cents per share), after
one-off adjustments of US$741 million, pri-
marily due to non-cash impairment charges
of US$727 million, post tax related to Buz-
wagi (US$543 million), North Mara (US$128
million), Tulawaka (US$17 million) and Nyan-
zaga (US$39 million). The net loss amounted
to US$701,2 million (a loss of US171,0 cents
per share) and operational cash flow was
US$99,0 million.
Gold production for the half year amounted
to 311 838 ounces at a cash cost of US$903
per ounce sold (US$876 excluding Tulawaka,
where mining operations have now ceased).
ABG’s Buzwagi open-pit mine is located in the Shinyanga region of north-west Tanzania, 6 km south-east of the town of Kahama. The re-engineering of the
Buzwagi mine plan is aimed at ensuring its sustainability at current gold prices (photo: ABG).
The re-engineering of the Buzwagi mine
plan is aimed at further lowering the all-in
sustaining cost of the operation and ensur-
ing its sustainability at current gold prices.
This has involved optimising the Stage 3 cut
back and removing the majority of the Stage
4 cut back from the mine plan which substan-
tially reduces the amount of waste movement
required and optimises the grade as well as
recoveries. As a result, the mine life of the op-
eration has been shortened to six and a half
years, with mining ceasing after three and a
half years and stockpiles on hand being pro-
cessed for a further three years thereafter.
ABG notes that the Bulyanhulu CIL expan-
sion remains on track for first production in
the first quarter of 2014.
Editor’s note: As we were going to press with this
issue, ABG announced that Hawkins had resigned
as CEO.
AngloGold Ashanti has posted a solid operat-
ing result for the second quarter and has pro-
vided an update on potential savings and ef-
ficiency improvements of as much as US$482
million next year that will help improve oper-
ating margins.
New Chief Executive Officer Srinivasan
Venkatakrishnan (Venkat), appointed in May,
is aiming to more than halve corporate costs
next year from their 2012 levels, while nar-
rowing the focus on the group’s expensed ex-
ploration and evaluation programme to three
core regions. Together, these two elements of
overhead expenditure, which accounted for
US$752 million in 2012, are expected to de-
cline to between US$270 million and US$315
million next year. Complementing these cost
improvements is new production from the
Tropicana mine in Australia, expected to start
production shortly, and the Kibali joint ven-
ture in the DRC, which is due to pour its first
ounce of gold in October.
“We have adopted a decisive, two-pronged
response to this weaker gold price environ-
ment, focused on revenue enhancement and
improving efficiencies by addressing costs at
a number of levels,” Venkat said. “Our two im-
portant new mines are expected to contribute
approximately 550 000 oz to 600 000 oz of
new annual production next year at below our
current average cost, improving the group’s
cash cost and cash flow profile.”
Production for the three months to June 30
was 935 000 oz at a total cash cost of US$898/
oz, compared to 899 000 oz at US$894/oz the
previous quarter, and to AngloGold Ashanti’s
guidance of 900 000 oz to 950 000 oz at to-
tal cash costs of US$900/oz to US$950/oz.
The result was aided by improvements from
mines in the Continental Africa region, as well
as from Serra Grande in Brazil.
AngloGold Ashanti posted an adjusted
headline loss of US$135 million during the
quarter, which included the impact of the re-
duced gold price during the quarter and the
consequential write down of ore stockpiles,
necessitated by the lower bullion price, as
well as retrenchment costs.
