AngloGold hopeful of 2014 production

AngloGold Ashanti says it anticipates a further improvements in its production in 2014. 

“Production is expected to rise to between 4.2million ounces (Moz) and 4.5 million ounces at a total cash cost of US$750 per ounce to US$790 per ounce.

According to the mining giant, s costs improved in2013, and annual production rose for the first time in almost a decade after it successfully cut spending and commissioned two new mines.

 Production in 2013 was 4.105M oz, exceeding guidance, compared to 3.944M oz in 2012 -- and the first time yearly production increased since 2005. 

Additionally, profitable production growth is anticipated in 2014. All-in sustaining costs (AISC) for the year were US$1,174/oz, down from US$1,251/oz the previous year. 

By the fourth quarter, AISC had fallen sharply to US$1,015/oz as cost saving, efficiency improvements and capital reductions bore fruit.

Tropicana and Kibali, both commissioned ahead of time and on budget in September, delivered 106,000oz of attributable production in the fourth quarter, at an average cash cost of US$532/oz.

This provides the flexibility to further rationalise marginal production while the group continues to focus on overhead and operating costs.

“Thanks to our investment made in prior years, we are starting to reverse nearly a decade of shrinking production,” Venkat said. “This gives us the flexibility to remove marginal production without compromising our base, which sets us apart in a sector that generally continues to shrink.”

AngloGold Ashanti took decisive action to counter the sharp drop in the gold price in 2013, with key initiatives to enhance revenue and reduce overhead and operating costs while maintaining the long-term optionality of the business. 

The company has more than halved corporate costs and cut exploration spending by focusing on three core regions, while the completion of its two flagship projects are expected to result in a drop in capital investment.

“We continue to refocus the entire business to give us sustainable free cash flow,” Venkat said.

Commenting on the fourth quarter data, AngloGold Ashanti saw strong quarterly improvements throughout the year across almost every metric with earnings before interest, tax, depreciation and amortization up to US$544million in the three months to December 31, a 66% improvement on the third quarter’s US$327million. 

Adjusted headline earnings normalised for various items, rose to US$164million, from US$110million in the third quarter.

 Production for the fourth quarter rose 18% to 1.229M oz compared to the third quarter, while total cash costs improved 8% to US$748/oz. AISC were US$1,015/oz in the fourth quarter, down 12% from US$1,155/oz in the third quarter. 

The strong cost reduction reflects better-than-anticipated outcomes from the companies Project 500 initiative to realiseUS$500million of operating cost savings between mid-2013 and the end of 2014.

“We’re ahead of plan on our cost savings,” Ron Largent, Chief Operating Officer: International, said. “We’re intensifying our drive to achieve additional efficiencies this year.  

“The fourth-quarter and annual production improvement was achieved alongside a record safety performance for the group, which saw 80% of the operations setting new safety records, and overall safety trends reaching their best levels in the company’s history. Tragically, eight fatalities were recorded during the year, compared with 18 in 2012,” Largent said.