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AngloGold to shed 400k oz in 2008 Posted: Thu, 07 Feb 2008 [miningmx.com] -- ANGLOGOLD Ashanti will suffer a production shortfall of about 400,000 oz of gold in 2008 owing to power supply shortages, the company said in comments to its December quarter results announcement. "In respect of the 2008 outlook the company is expecting to produce between 4.8 million and 5.0 million ounces," it said. Mark Cutifani, AngloGold Ashanti CEO, said the company had "a great deal of work to do". The company also reported lower profits for its 2007 financial year. The production shortfall is based on the assumption that the company will operate at 90% normal power capacity. However, a number of mining industry sources are already questioning whether state-owned power company, Eskom will be able to maintain this level of supply ahead of the South African winter, starting about June, when electricity demand will peak. Cash costs would range between $425/oz to $435/oz, based on currency assumptions to the US dollar of R7.35/$, A$/$0.88, BRL1.81/$ and Argentinean peso 3.10/$," AngloGold said. Gold output in 2007 fell 3% to 5.48 million ounces in the 2007 financial year when total cash cost rose 16% to $357/oz. Headline earnings for the company's financial 2007 were $278m. "We have a great deal of work to do on our operational and cost performance. We are focused on putting specific plans in place to improve performance throughout our assets, in particular where recent performance has been unacceptable," said Cutifani who has been AngloGold's CEO for about four months. Like many mining companies in South Africa, AngloGold highlighted the difficulties that the country's power crisis is causing. The outages mean lower production and higher costs. Cash costs in the final quarter were $404/oz mainly because of lower production but the AngloGold said it also had to buy uranium to fulfil contracts. "The uncertainty around Eskom power supply is having a significant impact on our operations in South Africa," said Cutifani. "This uncertainty means that our South African business faces very particular challenges right now and we're working constructively with organized labour, Eskom and the government to ensure that we find sustainable solutions that protect the reserve integrity and potential of these operations," he said. In the final quarter of the year the company recorded a headline loss of 1,099 South African cents/share, offering no improvement on the previous quarter. Adjusted headline earnings were $82 million. This comes at a time when it was receiving a rand gold price of R149,312.oz. Gold output in the quarter fell 5 % to 1.37 million ounces after safety stoppages and operating problems at Geita, said AngloGold. Click Here to subscribe to our daily newsletter
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