Mark Cutifani, AngloGold Ashanti, CEO
Send this article to a friend
Print this page

» AngloGold sees its future in other metals
» AngloGold's hedge time bomb
» DRC's mine review holds some surprises
» AngloGold facing crossroads
» AngloGold to shed 400k oz in 2008
» Randgold takes operational control of Morila

> JSE:ANGLOGOLD ASHANTI LIMITED:
29610c 0%
If you want to share this article, simply sign into one of these sites and select your network. It’s that easy Click here to find out more about how to use this button

AngloGold revises up March gold output
Allan Seccombe
Posted: Fri, 04 Apr 2008

[miningmx.com] -- ANGLOGOLD Ashanti forecasts first quarter production of 1.19 million oz, which is eight percent higher than it told the market in February. The increase comes from better-than-expected performance in the South African power crisis, the company said on Friday.

CEO Mark Cutifani said the South African mines were operating at 96% of their normal power consumption, allowing it to achieve 100% production.

During the January period when power utility Eskom declared force majeure, which led to a shutdown of the South African mining industry for at least a week and the subsequent curtailment of 10% of power consumption during February, AngloGold managed to rotate working faces, keeping its mines safe, and build underground stockpiles, he said at a Gordon Institute of Business Science presentation on Thursday night.

In March, an agreement was reached between the mining industry and Eskom to increase the power allotment to some mines to 95% because of concerns of widespread job losses in the sector.
This situation is manageable
This allowed the the world's third-largest gold producer to “kick back” into production once power was restored, he said.

“This situation is manageable,” he said. “This won’t be an issue that stops AngloGold and it won’t cost jobs.”

AngloGold has cut its power consumption by four percent in the crisis and sees the potential to improve this by another five percent over the next 12 months, he said.

AngloGold wants to make 2008 the fourth and last year group production will decline. “In the future we will talk of growth,” he said.

AngloGold had good news on the hedge book front for shareholders too, pointing out on Friday it had delivered fully into maturing hedge contracts during the quarter.

Click Here to subscribe to our daily newsletter
At the end of 2007, the hedge book stood at 10.4 million ounces, the largest in the industry. It has meant AngloGold receives revenue on its gold production below the higher spot market value. This is one of the issues that have held back its share performance.

AngloGold anticipates the price it will receive for its gold will be 20% less than the spot price during 2008, assuming a gold price of $900/oz. This compares to a 13% discount in the fourth quarter of 2007.

Cutifani told Miningmx on Thursday night after the GIBS presentation that AngloGold would reduce its hedge commitments by a minimum of two million ounces by the end of 2008, depending on the gold price.

“I’d like for people to see a significant reduction in the hedge book by the end of 2008,” he said, reiterating a comment he made earlier this year.

AngloGold expects to deliver into 60% of its hedge book over the next three years.

AngloGold releases its March quarter results on 6 May and will provide a revised update for 2008 then. In February, it forecast 2008’s gold output would be 400,000 oz lower and that full year production was seen at between 4.8 million and five million oz.