Mark Cutifani, CEO, AngloGold Ashanti
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AngloGold sees its future in other metals
Allan Seccombe
Posted: Thu, 03 Apr 2008

[miningmx.com] -- ANGLOGOLD Ashanti will move more heavily into uranium and base metals, becoming more diversified to add value to the company once it has reached to top echelons of gold producers in terms of market capitalisation, said CEO Mark Cutifani.

While AngloGold is number three in gold production, it is languishing at number 11 in terms of market capitalisation, which can be interpreted as the value investors have placed on the company.

Cutifani, a charming Australian who took over the reins of the company in October 2007, is shaking up AngloGold, implementing a review of all its assets in the search for driving up cash flows and value.
look beyond gold
“Will we look beyond gold? Yes, we would,” Cutifani told attendees at the Gordon Institute of Business Science (GIBS) during a lecture on AngloGold’s strategy.

He argued that with the limited potential for growth in gold and to retain enthusiastic and ambitious workers, there had to be a plan for expansion of the company and this was likely to come outside gold.

“But our focus is gold, gold, gold,” he later told Miningmx.

As part of the review, management sees some $500m in cash flow that could be generated in eight of its mines, including the most troublesome three of Obuasi in Ghana, Siguiri and Geita, but changing the way they are planned, mined and operated, he said.

There are uranium opportunities within AngloGold that will allow it to double production to two million pounds/year with capital expenditure of around $100m over the next five years, he said.

There are also untapped copper resources the company could tap into, he said.

He raised the prospect of a Johannesburg-based diversified mining company to rival to big five resources groups by way of example.

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But gold is the focus. While Australian production will dip to 400,000 oz in 2008 from last year’s 600,000 oz, the plan is to lift that to 800,000 oz in five years.

In Brazil, output is forecast to lift to 600,000 oz over three to five years from the current 400,000 oz.

South Africa’s gold production base is seen steady at between 2.1 and 2.5 million oz for the next 15 years, something few gold miners can boast of, he said.

Cutifani reckons AngloGold has some 2.5 million oz coming from its project pipeline.

In South America, Cutifani visited Colombia and met the president there a month ago. He termed the country as one of the most exciting gold prospects.

The market is anticipating an announcement on a gold project when the company unveils its March quarter results early in May.

Colombia’s government has been talking up a gold find it reckons could be one of the top ten in the world and a newspaper there called El Tiempo says AngloGold Ashanti found the deposit, which will take $2bn to bring into production from 2011.

AngloGold declined to comment on the story when it broke late in 2007. AngloGold said in August of that year it had found two gold prospects at Gramalote and La Colosa, with inferred resources of more than two million oz in Colombia, but it could take six years to develop them if they were found to be economically feasible. These are hardly projects to become too excited about.

The dark cloud hanging over the company, and which one analyst called a “time bomb” is the 10.4 million oz hedge book as at end-2007, which is underwater and is the largest in the sector.

Cutifani said AngloGold would reduce that position by a “minimum of two million oz by the end of 2008”. “You’ll have to wait for the quarterly presentation to see how we’re getting on with that,” he said.

He also suggested that the power crisis in South Africa might not have had the deleterious effect widely anticipated by the market. Again, more details would be available in the quarterly results release.