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AngloGold weighs into hedge Posted: Thu, 27 Jul 2006 [miningmx.com] -- ANGLOGOLD Ashanti reported a 63% increase in headline earnings in the June quarter owing to the positive combination of increased output and a higher gold price. However, the mines absorbed in the group’s $1.5bn takeover of Ashanti Goldfields in 2004 continued to struggle. In other developments, AngloGold Ashanti restructured its forward gold sales again reporting an overall 1.37 million oz reduction in its hedge book. However, the mark-to-market value of the hedge book stood at a negative 3.3bn. It received a gold price of $600/oz against a spot price of $629/oz in the June quarter and said it would seek to manage its forward sales further. Production was 6% higher at 1.4 million oz for the three months, and cash costs down marginally, but the mines bought from Ashanti Goldfields suffered the effects of adverse weather conditions. Obuasi, the Ghanaian mine which was the flagship of Ashanti Goldfields reported a 61% decline in cash gross profit to $7m quarter-on-quarter. There was also evidence that AngloGold Ashanti continued to adjust its assessment of the Ashanti mines. Geita, another mine bought with Ashanti Goldfields, had its output adjusted down to 350,000 oz in line with lower grade estimates for the Tanzanian mine’s orebody. AngloGold Ashanti said that this did not affect the long-life nature of the mine. Production could be doubled next year as a “pit push-back” was completed. Production in the current (September) quarter would be maintained at about 1.4 million ounces, the company said. Commenting on adjustments to the hedge book, AngloGold Ashanti said that as of end-June, its net delta hedge position was 10.14 million ounces (315 tons) at a spot gold price of $620/oz. “This net delta position reflects a decrease of some 1.1 million oz,” it said. The decrease in the net delta position was due to maturing positions and “hedge reducing strategies” that resulted in the hedge reducing by some 1.37 million ounces. “The company continues to manage its hedge position actively, and to reduce overall levels of pricing commitments in respect of future gold production,” it said.Free news alerts: click here to subscribe
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