Metals Economics Group Reported in 2007 that discovered deposits of more than 2,5 million ounces, enough to attract the interest of major gold producers, were not adequate to replace their production. To make the discrepancy worse, only 52% of the discovered resources had been upgraded to reserves. They expect an average increase in mined gold production of about 3% annually from 2007 to 2010.
World Gold Council Gold Supply and Demand – Year 2006: 2006 demand for gold hits record of US$65bn, despite fall in tonnage and reduced supply-Industrial demand highest ever at 458 tonnes-Jewellery sales at all time record in US$ terms at $44bn -Investment demand 7% higher than 2005 in tonnage terms and 45% higher in dollar terms-Supply fell 13% in tonnage terms including a sharp reduction in net selling by central banks.
GFMS-Precious Metals Research & Consultancy Gold Survey 2007: The gold price will surpass the 1980 record average of $614,50/oz in 2007 and it could also breach 2006's 26-year high of $725. Whether it would get close to the all-time high of $850 is more doubtful, but it is expected that the upward price trend will continue on into 2008.
DRD Gold (South Africa, Nasdaq:DROOY; JSE:DRD) mines in South Africa, Papua New Guinea and Fiji. The Australasian assets represent roughly two million oz of reserves out of the DRDGOLD’s attributable 8,9 million oz of reserves, and seven million oz of its 47,6 million oz resources. DRD Gold subsidiary Emperor Mines entered into an agreement in 2007 to sell its 20% stake in the Porgera gold mine in Papua New Guinea to its partner in the project, Barrick Gold, for $250m, erasing all its debt and leaving it cash positive. Following completion of the transaction, Emperor will have no debt and will have cash resources of approximately A$130 million.
Centerra Gold (Canada, TSX:CG) mines in the Kyrgyz Republic and Mongolia. Centerra was launched on the Toronto Stock Exchange in 2004, when it took over the assets of Cameco Gold Inc., a wholly-owned subsidiary of Canadian uranium producer Cameco Corporation. Cameco, which still holds a 53% stake in Centerra, has stated that it wish to divest its interest in the company. The 2006 production of 586,000 oz was lower than the 2005 production of 787,275 oz and the company expects to increase 2007 gold production by 19 to 23% to about 700,000 - 720,000 oz.
For the full year of 2007, net earnings before unusual items were $39.1 million or $0.18 per common share on revenues of $373.5 million and cash provided by operations amounted to $41.3 million. During the year, the Company recorded unusual items of $131.6 million resulting in a net loss of $92.5 million or $0.43 per share. Consolidated gold production totalled 555,410 ounces in line with the Company's third quarter outlook, at a total cash cost of $442 per ounce. In the comparable period of 2006, Centerra reported net earnings of $60.6 million or $0.28 per common share on revenues of $364.5 million and cash provided by operations of $80.3 million. In 2006, consolidated gold production was 586,384 ounces at a total cash cost of $386 per ounce.
Proven and probable ore reserves total 7.0 million ounces of contained gold at the end of 2007. The 718,000 ounces of contained gold mined in 2007 were replaced. Measured and indicated resources at the end of 2007 total 5.8 million ounces of contained gold on a 100% project basis (Centerra's share is 5.3 million ounces), an increase of 139,000 ounces over 2006.
IAMGOLD Corporation (Canada, TSX:IMG; NYSE:IAG) mines in Mali (Sadiola and Yatela) and Ghana (Tarkwa and Damang); explores in Tanzania
Lihir Gold Limited (Australia, Nasdaq:LIHR) mines in Papua New Guinea. Lihir produced 651,000 oz of gold in 2006. A merger between Lihir Gold Limited and Ballarat Goldfields NL, with gold projects in Australia, was completed on 8 March 2007.
Lihir rattles investors with a production downgrade, and it’s not the first one in 2007.
Author: Barry Sergeant (Mineweb)JOHANNESBURG -
Lihir (LGL AU, A$3.47 a share), which has sometimes topped the 2007 ladder of performance among global Tier I gold stocks, this week dropped a bombshell production downgrade, triggering an 11% decline in its stock price over Thursday and Friday. Initial production guidance of 800,000 to 830,000 ounces for calendar 2007 was already cut, in October, to 750,000 ounces. The latest guidance has lowered 2007 production to 700,000 ounces.
A note from RBC Capital Markets describes the latest production downgrade as a "disappointment within three weeks of an analyst site visit, which we attended". The latest downgrade is seen as underscoring the risk that has emerged in Lihir this year.
The latest reduced guidance from Lihir is put down to several unforeseen factors, not least current mining of harder ore, resulting in lower plant throughput. Blending of hard ore with softer ore has produced lower grades of 4.4 grams a ton, against an expected ~6 grams a ton. Equipment failure in Lihir's new oxygen plant has also undermined production. None of the issues are likely to be resolved soon.
Lihir Gold operates one of the world's largest gold mines and processing facilities on the island of Lihir, 900km north-east of Port Moresby in the New Ireland province of Papua New Guinea. The Lihir ore body is substantial and rich by global standards, with an estimated 40m ounces in resource including 23.6m ounces in reserves.
Over the past two months, Newcrest (NCM AU, A$33.25) has generally been favoured above its Australian peer. However, the past two days of turmoil have not only seen the Lihir stock price plunge, but switching into Newcrest has seen it take leadership of global Tier I gold stocks. There is an element of déjà vu here, given the now-historic two years of production downgrades from Newcrest.
| Tier I gold stocks |
|
|
|
|
| Stock | From | Value |
|
| price | high* | US$bn |
| Goldcorp | $32.63 | -14.4% | 23.03 |
| Harmony | $10.15 | -39.2% | 4.06 |
| Lihir | A$3.47 | -22.0% | 5.82 |
| AngloGold Ashanti | $43.64 | -12.5% | 12.11 |
| Barrick | $38.22 | -19.9% | 33.20 |
| Newcrest | A$33.25 | -7.3% | 13.26 |
| Gold Fields | $15.31 | -26.0% | 9.99 |
| Kinross | $17.84 | -16.2% | 10.75 |
| Newmont | $48.82 | -13.4% | 21.14 |
| Street ETF | $78.50 | -6.1% | 15.73 |
| Average |
| -19.0% |
|
| * 12-month high |
Meridian Gold (Canada, TSX:MNG.TO) mines in the USA and Peru. Yamana Gold Inc, a Canadian gold producer with significant gold production, gold development stage properties, exploration properties, and land positions in Brazil, Argentina and Central America, made a takeover bod for Meridian in 2007. Pending completion of the Meridian Gold takeover transaction, the company's portfolio will also include mines and properties in Chile, Mexico and the United States. Yamana is producing gold at intermediate company production levels in addition to significant copper production.
Kinross Gold Corporation (Canada, TSX:K; NYSE:KGC) mines in Canada, USA and Brazil and has projects in Russia. The company plans to produce 1,5 million gold equivalent ounces in 2007 at a cost of $320 to $330/oz. This does not include the impact of the Bema acquisition. In May 2007 the company forecasted its gold output will rise 60 per cent by 2009, with 40 per cent produced for less than $200 (U.S.) an ounce.
The company's Bema Gold Corporation acquisition — which brought with it the open-pit Kupol gold project in northeastern Russia — is powering up its cash flow and will help Kinross with low-cost production.
Kinross, the fourth-largest primary gold producer in North America, expects to produce 1,7 million ounces in 2007, but expects to boost that to about 2,1 million ounces in 2008, and to about 2,6 or 2,7 million in 2009.
As of December 31, 2006, Kinross’s total proven and probable mineral reserves amounted to 27,9 million ounces of gold. Reserves increased at seven properties. Measured and indicated mineral resources at year end increased to 8 million ounces of gold, compared to 6,1 million ounces at year end 2005. Silver reserves at the end of 2006 were reported at 27,8 million ounces, using a price of $7 an ounce. Gold reserves were estimated at a price of $475/oz while resources were estimated at a $525/oz price. Kinross Gold and Goldcorp announced on 26 September, 2007, that they had entered into a binding agreement, which allows Goldcorp to acquire Kinross's 49% share of the Porcupine gold mine in northeastern Ontario, and Kinross's 39% share of the Musselwhite gold mine in northwestern Ontario. The swap increases Goldcorp's reserves by 5.6 million oz at an estimated acquisition cost of $37/oz.
Meanwhile, Kinross will gain Goldcorp's stake in the La Coipa silver-gold mine in Chile and $200 million in cash.
Canadian gold-miner Kinross Gold expects ouput to rise by about 20% this year, to between 1,9-million and 2-million ounces, as production is boosted by new mines in Russia and the US, as well as an expansion in Brazil.
“We expect to bring all three of our new, lower-cost development projects into production on schedule...setting the stage for expected production of 2,5-million to 2,6-million ounces in 2009, a 60% increase over 2007 production," president and CEO Tye Burt said on Friday.
In 2007, Kinross produced some 1,6-million gold-equivalent ounces, in line with its own forecasts. The company includes silver production as gold-equivalent output.
The miner said that it expected to report 2007 costs at the high end of, or slightly above, forecasts of between $355/oz and $365/oz.
Costs were expected to average between $365 and $375 in 2008, but would decrease over the year, to between $325/oz and $335/oz in the fourth quarter.
"We expect our costs to decrease significantly over the course of 2008, especially in the fourth quarter, as the new projects reach full production,” Burt said.
Kinross said that production from the new projects in 2008 would more than compensate for a slight decline in output from existing operations, which it attributed to a recent asset swap with fellow Canadian Goldcorp and lower grades being milled at its Fort Knox and Round Mountain operations.
Gold miners around the world are racing to bring development projects into production to capitalise on record gold prices.
Kinross plans to start commissioning the Kupol (Russia) and Buckhorn (US) mines this year, and is also on track to complete an expansion project at its Paracatu mine, in Brazil.Newcrest Mining Ltd (Australia, NCMGF.PK) mines in Australia and Indonesia.
The rumour machine cranked up in the holiday lull today to claim that Newcrest, the only surviving Australian-controlled gold producer of size, was in the gunsights of one or all of the three big international producers already operating in the country.
Author: Ross Louthean (Mineweb)PERTH -
Australian listed gold companies generally appreciated today on thin post New Years Day share trading and a buoyant start to the gold price. Newcrest Mining (ASX: NCM) was no exception starting the day at $A33.10/share ($US29.13) and, after a significant rise, finished at an easing $A33.80 ($US28,74) - with added rocket fuel from speculation about it being a takeover target.
Takeover talk is not new but it had some unlikely armour plate when the international gold miners were picking up big miners like Normandy Mining (Newmont Mining Corp) Acacia Resources (AngloGold Ashanti), and Plutonic Resources (Homestake then taken over by Barrick Gold, which also picked up big Australian-Canadian miner Placer Dome.
That armour plate at the time of these takeovers was a toxic hedge book for more than a decade, which Newcrest has now disposed of after a massive capital raising last year that allowed it to close out 2.3 million ounces of hedging and gold loan contracts, as well as $A-denominated gold bullion sales for 507,000 oz at an average $A824/oz ($US725.12/oz). Remaining hedge positions of 1.15 M oz will be closed over this year.
Newcrest was seen as the survivor of the great Australian gold industry takeover by internationals because they saw Australian assets as undervalued, largely because of the lower price/earning ratios on the Australian, as compared to the North American and London bourses.
If Newcrest does fall in 2008, as the News Ltd daily The Australian suggested today was possible, then that would leave Australian owned gold production in the 15% range, taking into account some other Australian listed companies moving into production this year.
The Australian named as potential predators Barrick Gold, Newmont and AngloGold Ashanti.
Newcrest also listed in New York as American Depository Receipts (NCMGY), currently has a market capitalisation of over $A14 billion ($US12.32 B), has six operating mines that are either long life, low to medium cost producers or high grade operations where relatively short lives have already been extended.
Gold reserves total 33.2 M oz while copper reserves at the Cadia gold, New South Wales operations and Telfer gold operations in Western Australia's Pilbara hinterland total about 2.7 Mt contained.
Production in 2006/-07 was 1.62 M oz gold and 88.9 kt of copper and the forecast output for 2007/08 has been put at between 1.81-1.89 M oz gold and 86.6-90 kt of copper.
The company mines gold and gold-copper in Australia and gold in Indonesia and had an aggressive exploration budget of $A85 M ($US74.8 M), exploring on 25 Australian properties, eight in the American State of Nevada, four in Peru, and one in each of Chile and Indonesia.
Big mine developments or expansions were the Ridgeway Deeps development in the Cadia Valley, advancing a pre-feasibility on the next big Cadia open cut, the Cadia East project, and a pre-feasibility on the new 82.5% owned Kencana K2 epithermal gold project on Gosowong in the Indonesian Halmahera island group.
Harmony Gold Mining (South Africa, NYSE:HMY; JSE:HAR) is the fifth largest gold producer in the world, with operations and projects in South Africa, Senegal, Australia and Papua New Guinea. The Hidden Valley Project in PGN comprises the Hidden Valley/Kaveroi and Hamata open pits, a 43 million tonne tailings facility and associated infrastructure, the mine will produce approximately 300,000 oz of gold and 4 million oz of silver over a 10-year life.The Golpu copper gold project in the Morobe Province of Papua New Guinea, resource stands at 163 million tonnes at 1,1% Cu, 0,6 g/t Au and 132 parts per million molybdenum containing 3,9 billion pounds of copper, 2,96 million oz of gold and 47 million pounds of molybdenum. Harmony has announced plans to dispose of less profitable mines and assets for sale include its South African Kalgold open pit mine and its Australian mines. Harmony aggregates its Free State operations into total resources of 94,5-million oz and the mines in its Freegold operation have total resources of 111,5-million oz, including surface stockpiles. Harmony's Target mine has total gold resources of 92-million oz. Harmony’s gold output fell to 2.334 million oz in 2007 from 2.387 million oz the year before. Cash operating costs shot up by 27% because of increased input costs and decreased production. Exploration activities at Evander South and Target North were slowed down, and activities in Senegal and West Africa suspended in October, 2007. Harmony spent R1.17bn on its five growth projects, half of which went on Hidden Valley in Papa New Guinea. The projects are designed to lift Harmony’s output to 3.1 million oz by 2011.
Harmony Gold announced in November, 2007, that it had agreed to sell its Australian Mount Magnet operations to ASX-listed junior Monarch Gold for A$65-million, or nearly R400-million, as part of its 2007 rationalisation strategy.
Harmony sells uranium asset stake for $252m (Mining Weekly)
By: Reuters
Published: 19 Dec 07 - 13:47
Harmony Gold has sold a 60% stake of a new company it formed to house uranium assets for $252-million to Africa's biggest private equity fund, Pamodzi Resources Fund, Harmony said on Wednesday.
Harmony said it had launched the venture to take advantage of buoyant uranium prices and would retain a 40% stake in the new company, which it said may be listed in the future.
The world's fifth biggest gold producer said cash from the sale would be used for capital expenditure and to pay off debt.
South Africa's Harmony wants to revive production of uranium -- which is used to fuel nuclear reactors -- as a by-product of gold mining and valued the new, unnamed firm at $420 million.
Graham Briggs, Harmony's acting chief executive, said the new company would seek funds to build a uranium plant with an output of 500,000 tonnes of ore a month and a new gold waste site at a cost of about 1.7 billion rand.
The plant would produce 185,000 pounds of uranium yellow-cake a month or 2.2 million pounds a year, at a cash cost estimated at $30-35 per pound. The yellow-cake would be exported, and there were no immediate plans for it to be enriched in South Africa, Briggs said.
"It (the deal) crystallises out uranium assets and puts money into Harmony's pockets to support its existing capital projects," Briggs told a teleconference.
Harmony said the new uranium company's output would be 2 percent of the world's total uranium production.
Using 2006 output figures, the new firm would rank ninth in global output after Canadian miner Uranium One, Harmony said on its Web site.
The new company would also eclipse the world's third largest gold producer AngloGold Ashanti's uranium output, and become the largest black-owned South African uranium producer.
Pamodzi, which has U.S.-based backers and a war chest of $1.3 billion in funds available for investment, is a prominent black-owned investment group focused on the resource sector. The uranium deal is its first since its creation in August.
"We are confident that energy demand will multiply in the next few years, and we see a number of nuclear plants coming up in South Africa, China, Russia and elsewhere," Gerard Kemp, Pamodzi's chief investment officer, told Reuters.
He said Pamodzi was keen to invest in coal, iron ore and platinum ventures in the future. Pamodzi is supported by a consortium of U.S. investors including affiliates of American Metals & Coal International, Inc. (AMCI) -- a leading international energy and resources sector investor.
The new uranium firm will operate the Cooke Section of Harmony's Randfontein mine, 35 km (22 miles) south-west of Johannesburg.
The deal would also give a new lease of life to the uranium and gold assets at Cooke, Harmony said, noting a sharp increase in the uranium spot price over the past four years from about $10 per pound to a spot price around $90 per pound.
Harmony's gold resources of 30 million ounces would rise to 40 million ounces, including its uranium resources of about 108 million pounds, which were 10 million ounces of gold equivalent resources, he said.
Harmony's rivals, AngloGold and Gold Fields, are also seeking ways to cash in on a bull market for uranium.
Edited by: Creamer Media Reporter
New Harmony CEO plots future
Allan Seccombe (MiningMx)
Posted: Wed, 02 Jan 2008
[miningmx.com] -- HARMONY Gold is charting a new course as it looks to cut costs, restructure its assets, bring in a partner on its Papua New Guinea projects and repay two large debts over the next couple of years, newly appointed CEO Graham Briggs said on Wednesday.
Briggs was appointed caretaker CEO of the world’s fifth-largest gold producer in August after the sudden resignation of Bernard Swanepoel, the man largely seen by the market as the driving force behind the creation of the company from a single mine.
News of Swanepoel’s departure knocked billions of rands off Harmony’s market capitalisation within the hour.
we have got caught in big capital expenditure
Briggs, who headed Harmony’s Australian operations and appointed group CEO with effect from 1 January 2008, says it is going to take time to complete the restructuring of the company’s mines and restore them to profitability.
Part of the restructuring is the decision on what to do with the marginal mines, which have generally underperformed in a record rand gold price environment.
“The first and biggest challenge is to put in place a strategy for the company going forward. We have a mixture of assets and some great challenges, like costs,” Briggs told Miningmx in an interview.
“The marginal assets should, with these gold prices, be generating good profits, but because of our lack of cost controls, that’s not happening,” he said.
The marginal assets could either be farmed out to other smaller producers or sold, as Harmony has done with the Orkney mines in a deal with Pamodzi Gold, separately list them or keep them within the group to turn them back into cash generators.
“A lot of those assets have great potential going forward, but we have got caught in big capital expenditure in the last couple of years and in the future. We therefore cannot afford to spend capital on the poorer assets,” Briggs said.
Harmony spent R1.2bn on five growth projects in financial 2007 and foresees group capital expenditure of R3.8bn in financial 2008.
“Those assets are by no mean no-hopers. In the right hands -- and those could be our hands -- they can be good money spinners. It’s just the timing of when we spend capital on them is not great.”
Speculation has run rife in recent years that Harmony will house its marginal mines in a separate company and list it, giving shareholders the choice of investing in high-quality mines or the more marginal plays, which should be strong cash generators in a high gold price environment.
Asked specifically about the separate listing option, Briggs said, “It could certainly happen and it’s one of the options. But where do you call the split? A lot of these are interdependent locally, so that’s something you’d have to look at.”
Harmony’s five growth projects will lift gold production to 3.1 million oz by 2011. Harmony expects gold output in 2008 to be less than the 2.334 million ounces generated in 2007.
The strategy will have to take into account the timeframe to bring production to account from the growth assets because some of the marginal, short- to medium-life mines are supporting those projects.
In Papua New Guinea, Harmony has drawn up a shortlist of five potential partners for the Hidden Valley and Wafi/Golpu projects, whittling the list down from more than 20 before the year-end.
“We hope to introduce the partner by the end of the first quarter of 2008,” Briggs said.
“We are not going to sell our Papua New Guinea assets. The strategy behind the partnering is that we want to grow in that region but we can’t afford all the capital to get the full benefit from all these projects.”
The undeveloped Wafi/Golpu copper porphyry faces expenditure of $100m on a feasibility study and a further $1bn to build a mine. Harmony is looking for a partner that could reduce capital expenditure and possibly revisit the planned mining methods.
While Harmony doesn’t need to come to the market this year for its capital expenditure, the picture is likely to change. Harmony needs to repay a bank loan of R2bn at the end of calendar 2008 and in May 2009 there is a convertible issue for about R1.7bn.
“These are crunch years and we need to get our act right before then,” Briggs said. One of the options to settle this heavy demand on its cash could be a rights issue.
Harmony is realising some R1.6bn from vending its Randfontein uranium assets into a new company in which it will hold 40%. The money will go towards the growth projects as well as repaying debt.
“We are at the moment focussing more on properly structuring our operations. It takes a long time to turn these ships around,” he said. Harmony is decentralising services and it has asked for voluntary retrenchments.
Harmony switches offshore strategy
Allan Seccombe
Posted: Tue, 15 Jan 2008
[miningmx.com] -- HARMONY GOLD will actively hunt for acquisitions in South East Asia once it has fully disposed of its Australian mines, the newly appointed MD of Harmony’s international arm, Johannes van Heerden, said on Tuesday.
As part of portfolio restructure, it must find a partner for its multi-billion rand Papua New Guinea (PNG) projects, he said.
Harmony plans to produce 500,000 oz of gold from its international division, which so far, includes just PNG, by 2012. Van Heerden said bringing in a partner to equally share the Hidden Valley and Wafi/Golpu projects in PNG would still leave it on track for that target.
“Buying in reserves will help us get to our target of 500,000 oz,” Van Heerden said during a visit to Harmony’s PNG projects.
Harmony will soon be hosting site visits to the remote and geographically challenging sites after it whittled down a list of potential partners to five.
The gold, copper, silver, molybdenum and zinc deposits lie on the same mineralised belt that stretches southeast from neighbouring Indonesia, home of the Grasberg mine, and includes the Ok Tedi, Porgera and Tolukuma gold mines.
Harmony isn’t naming companies courting Harmony for a role in the PNG projects but analysts speculate they could include Barrick Gold, Newmont, AngloGold Ashanti and possibly even one of the major diversified resources companies.
“No partner has been selected yet and we won’t have selected someone in the next week or month. By June 2008 we will have concluded the transaction in its entirety,” van Heerden said.
Hidden Valley
Harmony is constructing the Hidden Valley project, which is expected to pour gold in March 2009 and ramp up to full production of 280,000 oz by June.
The capital cost to build a mine and plant at the predominantly copper deposit at Golpu is estimated at $1.3bn, the Wafi gold project will add another $500m, while a bankable feasibility study on the two neighbouring prospects will cost $120m. It’s the kind of money Harmony just doesn’t have and can’t raise, Briggs said.
The reason for the large capital spend at Golpu is the current mine plan to use the block cave method, which requires capital to be spent up front, as well as the need to sink a decline shaft as part of the feasibility study.
Harmony has already spent R1.3bn in PNG over the past two years and needs a further R1.2bn between January and June of this year.
Harmony wants Wafi to be a 350,000 equivalent oz mine by 2012, something van Heerden admits is a “very tight target”.
By bringing in a partner, Harmony’s capital expenditure on the projects could come to nil depending on the financing arrangements to bring in the other company.
“If, for example, the partner farms into the projects, they’d have to put in, say, $450m over a few years for 50%. Then our capex would drop to zero,” said Harmony CEO Graham Briggs.
Harmony finances
Harmony’s financial models from the June 2008 year end are modelled on the company not paying any more towards PNG, he added.
Money will be diverted into further exploration of the eight tenements, outside the one mining lease, and more land coming in from five more exploration applications in the Morobe province of PNG. “We have more exploration targets here than we can fund,” van Heerden said.
Free cash will also go towards three South African growth projects, which have their highest capital demand this year and next, Briggs said.
In the 2008 financial year to end-June, the capital budget is R3.8bn, dropping to R1.8bn in the next and then down to R800m a year after that, said acting financial director Frank Abbott.
Harmony has agreed to sell its Mount Magnet and South Kal mines in Australia, and the ownership transfer of the mines has yet to be completely finalised.
Harmony needs to clear the decks of these two transactions before it can look from its regional offices in Brisbane for further growth in South East Asia, pushing its output higher with the acquisition of a project that can produce 200,000 oz or more.
It is unlikely to be a large acquisition, given the current gold price making such a transaction too expensive. Harmony is looking at a possible joint venture with a junior company, for example.
Harmony mine passes milestones
Posted: Fri, 18 Jan 2008
[miningmx.com] -- HARMONY Gold is creating a number of firsts at its Hidden Valley mining project in the deep jungle of Papua New Guinea (PNG).
The project, which begins production in March 2009 and is set to reach full production in June, will be the first major opencast mine in PNG for at least 15 years and it is the first to pass the new environmental act. Unlike its peers in PNG, Harmony is the first since the failed attempt by Ok Tedi, more than a decade ago, to build major tailings dams. Other miners dump their tailings into rivers or into the sea, aggravating communities and environmentalists. The A$489m mine will produce 3.4 million oz of gold and 49 million oz of silver over its 13 year life according to the feasibility study based on current reserves as well as expectations that the Karevoi ore body will generate between 800,000 and one million oz of reserves from the latest drilling programme. At current prices, the payback is expected to be three years.AngloGold Ashanti (South Africa, NYSE:AU; JSE:ANG) mines in Argentina, Australia, Brazil, Ghana, Guinea, Mali, Namibia, South Africa, Tanzania and the USA. AngloGold Ashanti's gold production fell to 5,6 million oz in 2006 from 6,2 million oz in 2005. The seven underground mines in South Africa produced 2,554 million oz in 2006, five percent less than the previous year, at a total cash cost of $285/oz. AngloGold Ashanti had 181,6-million oz of gold resources globally at the end of December, 2006. About 83-million of AngloGold's gold resource oz are in South Africa. Anglo American said on I October, 2007, it would sell about half of its stake in gold miner AngloGold Ashanti as part of its strategy to focus on core commodities.
Anglo holds a 41.8% stake in South Africa's AngloGold, the world's third-biggest gold producer. Anglo said it plans to sell 61 million ordinary shares, worth about R18.8bn, and that its remaining representatives on AngloGold's board would resign once its stake falls below 20%.
AngloGold to shed 400k oz in 2008
Julie Bain
Posted: Thu, 07 Feb 2008
[miningmx.com] -- ANGLOGOLD Ashanti will suffer a production shortfall of about 400,000 oz of gold in 2008 owing to power supply shortages, the company said in comments to its December quarter results announcement.
"In respect of the 2008 outlook the company is expecting to produce between 4.8 million and 5.0 million ounces," it said. Mark Cutifani, AngloGold Ashanti CEO, said the company had "a great deal of work to do". The company also reported lower profits for its 2007 financial year.
The production shortfall is based on the assumption that the company will operate at 90% normal power capacity. However, a number of mining industry sources are already questioning whether state-owned power company, Eskom will be able to maintain this level of supply ahead of the South African winter, starting about June, when electricity demand will peak.
Cash costs would range between $425/oz to $435/oz, based on currency assumptions to the US dollar of R7.35/$, A$/$0.88, BRL1.81/$ and Argentinean peso 3.10/$," AngloGold said.
Gold output in 2007 fell 3% to 5.48 million ounces in the 2007 financial year when total cash cost rose 16% to $357/oz. Headline earnings for the company's financial 2007 were $278m.
"We have a great deal of work to do on our operational and cost performance. We are focused on putting specific plans in place to improve performance throughout our assets, in particular where recent performance has been unacceptable," said Cutifani who has been AngloGold's CEO for about four months.
Like many mining companies in South Africa, AngloGold highlighted the difficulties that the country's power crisis is causing. The outages mean lower production and higher costs. Cash costs in the final quarter were $404/oz mainly because of lower production but the AngloGold said it also had to buy uranium to fulfil contracts.
"The uncertainty around Eskom power supply is having a significant impact on our operations in South Africa," said Cutifani.
"This uncertainty means that our South African business faces very particular challenges right now and we're working constructively with organized labour, Eskom and the government to ensure that we find sustainable solutions that protect the reserve integrity and potential of these operations," he said.
In the final quarter of the year the company recorded a headline loss of 1,099 South African cents/share, offering no improvement on the previous quarter.
Adjusted headline earnings were $82 million. This comes at a time when it was receiving a rand gold price of R149,312.oz. Gold output in the quarter fell 5 % to 1.37 million ounces after safety stoppages and operating problems at Geita, said AngloGold.
The company had, however, reduced its hedged gold position – metal bought forward at a pre-determined price often a price lower than the current gold price. The total net hedge 10.39 million ounces at the end of December, down from 10.58 million ounces at the end of the third quarter last year.
The company its mineral resources increased by 34.1 million ounces to 207.6 million ounces, based on a resource planning assumption of $700/oz. Greenfields explorations activities at Tropicana in Western Australia, Mongwalu in the DRC and at Gramalote in Columbia contributed 6.95 millino ounces attributable inferred resource.
A dividend of 53 South African cents per share (or 7 US cents per share) was declared for the six months ended 31 December 2007, resulting in a total dividend of 143 cents per share (or 20 US cents per share) for the year, said AngloGold.
AngloGold Ashanti has seized leadership of global Tier I gold stocks, with promises of more to come.
Author: Barry Sergeant (Mineweb)
Posted: Tuesday , 04 Dec 2007
JOHANNESBURG -
A few weeks after 31 July, when AngloGold Ashanti (AU, $48.39 a share) chairman Russell Edey announced that Bobby Godsell would be retiring on 30 September, the Tier I gold producer's stock price started to re-rate. In the past few weeks, AngloGold Ashanti has seized leadership of Tier I gold stocks, in terms of stock price performance.
AngloGold Ashanti's outperformance has not come without pain, including the increasingly dark clouds hanging over deep level mining in South Africa. On that score, however, the group is less exposed than its South African-based Tier I peers, Gold Fields (GFI, $16.52), and Harmony (HMY, $10.60). During 2006, AngloGold Ashanti produced 5.6m ounces of gold, of which 2.6m (45%) were dug out from deep-level hard-rock operations in South Africa; the balance of 2.5m ounces (45%) was sourced from shallow and surface operations, and 0.5m ounces (10%) from underground operations around the world.
Today, AngloGold Ashanti maintains 21 operations located in 10 countries on four continents, along with an attractive project pipeline and a focused, global exploration program that is increasingly attracting investor interest. It's no secret that all this, and more, is now carefully marketed to key investors by Mark Cutifani, AngloGold Ashanti's new CEO.
On the operational front, Cutifani shows a strong appetite for change. On 12 November, AngloGold Ashanti announced that its chief operating officer structure was being made redundant with immediate effect with Neville Nicolau resigning the COO post.
There have been other resignations. On 9 October, Cynthia Carroll, the relatively new CEO of Anglo American (AAL.L, £31.21) resigned, along with Réne Médori (Anglo American financial director) and Peter Whitcutt (head of finance at Anglo American). This followed the 2 October disclosure that Anglo American had sold 67.1m AngloGold Ashanti shares, cutting Anglo American's stake in AngloGold Ashanti from 41% to 17.3%. While Anglo American's intention to exit its holding in AngloGold Ashanti has long been in the public domain, it was AngloGold Ashanti that arranged this substantial secondary placement, one of the largest in the history of mining.
While the Anglo American overhang in AngloGold Ashanti remains, the magnitude of the overhang has dimmed to the point where serious investors essentially disregard it as a potential negative for the AngloGold Ashanti stock price. The stock's free float is now at least 83%.
Then there is the matter of making profits, which is no laughing matter among gold stocks. In the 2007 third quarter, AngloGold Ashanti posted a 6% increase in gold output to 1.43m ounces, with cash costs at $357 an ounce (7% up on annual wage increases, higher power tariffs and consumable costs, plus increased royalty payments). The group's adjusted headline earnings were at $81m, in line with the previous quarter.
While the general mining environment in South Africa continues to be a cause of concern, AngloGold Ashanti owns and operates some of the best quality gold mines known in South African history, having disposed of more marginal units in recent years. Cash costs on the South African operations (during 2006) ranged from $237 an ounce, at Mponeng, to $440 an ounce at Tau Lekoa, one of the less large operations. Recovered grades range from 3.76 grams a ton at Tau Lekoa to an industry-superior 10.18 grams a ton, at TauTona, one of the bigger producers.
On the issue of unmined gold, AngloGold Ashanti holds one of the world's leading positions, with reserves of some 67m ounces, and resources of more than 181m ounces. However, the pressure to find new gold ounces remains; during 2006, the group spent $103m on exploration, with $52m going to brownfields, and the balance mainly to three key greenfields areas, viz., the Tropicana joint venture in Western Australia, in Colombia, and in the Democratic Republic of the Congo. Exploration is also underway in Russia, China, the Philippines and Laos. Exploration expenditure is expected to increase to $163m this year.
AngloGold
Posted: Tue, 15 Jan 2008
[miningmx.com] -- ANGLOGOLD ASHANTI was offering to buy Golden Cycle Corporation, its co-shareholder in the Cripple Creek & Victor Gold Mining Company in the US for $149m in shares, said Business Day citing the company.
The transaction would increase AngloGold's ownership to 100% of Cripple Creek from 67% previously, the newspaper said.
"Successful completion of this transaction will enable us to consolidate the full mineral endowment at CC&V over the remainder of the mine's life, while simplifying the ownership of this long-life North American asset," AngloGold executive vice-president Richard Duffy said.
Newmont Mining Corporation (United States, NYSE: NEM) mines in the USA, Peru, Bolivia, Australia, New Zealand, Uzbekistan and with projects in Ghana. The company has reserves of 95 million oz. Newmont was the world's largest gold producer before Barrick's $US10 billion purchase of Placer Dome in 2006. In 2006, Newmont's gold sales fell to 5,87 million oz from 6,49 million oz in 2005 as the company mined less ore at its Peruvian, Australian and New Zealand mines. Newmont expects gold sales in 2007 to fall further, to between 5,2 million oz and 5,6 million oz, as it plans to mine less ore at Yanacocha in Peru and existing mines in Australia. However, that trend will reverse in 2008 as newer mines go into full production. The company will spend millions of dollars on its Phoenix and Leeville mines in Nevada and its Ahafo mine in Ghana to get them to full production. The three mines could produce close to 1 million ounces of gold in 2007.
The Boddington mine in Australia is scheduled to become one of Newmont's most important assets in the coming years. The mine, expected to go online in late 2008 or early 2009, could produce up to 700,000 ounces per year. Newmont Mining agreed in October, 2007, to buy Miramar Mining of Vancouver, British Columbia, for about 1.5 billion Canadian dollars ($1.52 billion) in cash to gain access to the target's reserves in the Canadian Arctic. The proposed acquisition of Miramar gives Newmont the chance to establish a new, core gold mining district in the largely underdeveloped and still prospective territory of Nunavut. The Hope Bay Project alone extends over 1,000 square kilometers and encompasses one of the most prospective undeveloped greenstone belts in North America. The project alone is believed to contain a resource of 10.7 million oz of gold.
