Mark Cutifani, AngloGold Ashanti, CEO
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AngloGold braces for hedgebook pain
Allan Seccombe
Posted: Thu, 01 Nov 2007

[miningmx.com] -- ANGLOGOLD ASHANTI, which received a price nine percent below the average spot gold price for the September quarter because of its hedge book, expects to receive even less in the coming quarter.

AngloGold said it will earn between 10% and 12% below the spot price in the coming quarter on prices between $700 and $760/oz.

The hedge book stood a negative marked-to-market value of $3.81bn based on the spot price of $783.70.

"I'm not a great fan of hedging," said CEO Mark Cutifani, who has replaced Bobby Godsell. "Our strategy is to manage that position to drive margins in the business."

AngloGold received $621/oz against an average spot price of $680 during the September quarter in which total cash costs climbed seven percent on the back of increased wages, higher power tariffs and input costs.

By the end of the September quarter, the net delta hedge position was 10.58 million oz, up1.83 million oz compared to the end of the June quarter. The increase is primarily due to the closing spot gold price of $745/oz, which was $96/oz higher than the quarters opening price of $649/oz.

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AngloGold forecasts it will produce 1.5 million oz of gold in the December quarter, up from the 1.43 million oz produced in the September quarter. The output in that period was up six percent on the June quarter.

“We have to focus on delivering on our commitments and we have work to do as a company to ensure that our investors see improved performance going forward," said CEO Mark Cutifani, who has replaced Bobby Godsell.

The Obuasi operations in Ghana again failed to fire on all cylinders. Gold output was down nine percent because of an 11-day maintenance shutdown and to develop processes to reduce environmental impacts of ore treatment after a directive from the Ghanaian Environmental Protection Agency.