AngloGold Ashanti

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

[] -- 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


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.


Posted: Tue, 15 Jan 2008

[] -- 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.

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