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AngloGold needs 'long shot' exploration Posted: Mon, 27 Aug 2007 [miningmx.com] -- GOLD PRODUCTION from South America accounted for around 11% of AngloGold Ashanti’s total output in the six months to June, company data shows. That’s relatively small beer in its annual production of 5.6 million oz. However, AngloGold Ashanti is hoping exploration in Colombia could be the start of something beautiful. Roberto Carvalho Silva, outgoing COO of AngloGold’s South American operations, said: “It’s early stages but it [Colombia] can be a good gold frontier for AngloGold.” There are two main regions under scrutiny: Gramalote and La Colosa, both in Colombia and with a minimum of 2 million oz of inferred gold resources. In the arcane world of gold resource measurement, inferred gold resources are the roughest of approximations and in no way describe the economic viability of a future mine. So Colombia’s a long shot. But hopes are high. “We’re optimistic,” said Carvalho Silva. However, it could take six years to build a mine. The context for Colombia is that new gold reserves are becoming hellishly hard to find, even for large conglomerates with millions of dollars to spend on exploration. Consequently, gold mining companies will now go almost anywhere to find new sources of production. “Good girls go to heaven, bad girls go everywhere else,” said Carvalho Silva. Indelicate though that may sound, finding new gold is about weighing up difficult political, social and economic risks. However, there’s another reason places such as Colombia and the Democratic Republic of Congo are attractive to AngloGold: mining in South Africa isn’t getting cheaper while labour and safety issues abound. Obuasi, a mine in Ghana and a major investment for AngloGold, has also underperformed. Set that against conditions in AngloGold Ashanti’s existing South American gold mines that are, by gold mining standards, roomy, clean and mechanised, quite unlike their South African kin, and also cheap to run. Average cash costs at Cuiabà, a mine in Brazil that’s host to AngloGold’s most ambitious brownfields expansion in the region, averaged $220/oz in the first two quarters of its 2007 financial year. Compare that to average total cash cost of $315/oz in the June quarter incurred at the South Africa mines. The average total cash cost for AngloGold’s South American mines over the same period was $267/oz. Click Here to subscribe to our daily newsletter
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