AngloGold builds buffers against the future
John Feary, 14th May 2012
JOHANNESBURG, May 14 – South Africa’s global gold miner AngloGold Ashanti is taking advantage of bumper gold prices to build buffers against the future, approving $US1.9B in new mine investment aimed at boosting its gold production by half a million ounces a year.
The world’s third largest gold producer says the three projects will be internally funded.
News of the development approvals came as AngloGold more than doubled its March 2012 quarter adjusted headline earnings to $429M (Q1 2011: $203M) despite a 6% fall in production and a 12% increase in total cash costs.
The company blamed Section 54 and other safety-related stoppages at its South African operations for the production decline. Despite recording the lowest accident frequency rate in its history, four employees were killed in separate incidents at the Moab Khotsong, Mponeng and Savuka mines in South Africa and at Cerro Vanguardia in Argentina.
AngloGold retains its production guidance at 4.3-4.4Moz for the full year 2012, and plans still to reach 5.4-5.6Moz by about 2014 from a combination of new projects in Africa, Australia and South America and expansion of some existing operations.
“The first quarter has shown that we continue to deliver the earnings and cash flow we need to drive our growth plans and further diversify our portfolio,’’ CEO Mark Cutifani said. “We’re now able to invest in our portfolio to deliver growth from an attractive suite of projects which are each of manageable size and carry relatively low technical execution risk.”
The three new major development projects, to be implemented over the next five years, are the expansion of the Cripple Creek & Victor mine in the USA and the development of the Mongbwalu and Kibali projects in the Democratic Republic of Congo. The projects are expected collectively to contribute additional attributable production of more than 500,000oz pa.
AngloGold will invest $982M in the development of the Kibali mine in the DR Congo. The mine joint venture (AngloGold 45%, Randgold Resources 45%, Sokimo 10%) is due to pour its first gold at the end of 2013 and produce 600,000oz pa for its first decade.
At the 86.22%-held Mongbwalu joint venture in the DRC, AngloGold has made an initial investment of $345M which will deliver average production of 130,000oz pa in each of its first three years from start-up late next year. The operation will expand quickly as more gold resources are added.
At Cripple Creek, in the US state of Colorado, the $557M expansion is expected to help boost the mine’s production to more than 400,000oz pa. With a further mine-life extension project targeted for the end of the decade, AngloGold expects the mine to produce at that level until at least 2025, after which it will generate at least 350,000oz pa for another decade.
The three new projects complement the Tropicana project in Australia, which is expected to start production at the end of next year, as well as the Córrego do Sítio mine now being commissioned in Brazil.
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