Mark Cutifani, AngloGold Ashanti, CEO
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» AngloGold to substantially reduce hedge by end-2008
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» AngloGold may sell mines
» AngloGold cautious on Colombia 'gold frontier'

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Colombian gold deposit mystery resolved
Allan Seccombe
Posted: Tue, 06 May 2008

[miningmx.com] -- IN what has been the worst-kept secret in mining, AngloGold Ashanti unveiled a 12.9 million ounce resource at its wholly owned La Colosa project in Colombia.

Colombian government officials, President Alvaro Uribe in particular, could not contain their excitement. In late December 2007, Uribe let spill the news of the find, but not the name of the company which had discovered it.

It was widely speculated in Colombian media and abroad that it was AngloGold Ashanti, but the company remained tight lipped.
a major greenfields find
AngloGold did say in August it had found two gold deposits with inferred resources of more than two million oz in Colombia, but that it could take six years to develop them if they were found to be economically feasible.

The company came clean at its March quarter results presentation on Tuesday, a day filled with interesting news from the world’s third-largest gold producer, including the surprise announcement of a rights issue of nearly 70 million shares to raise R11.9bn to reduce its large and unfavourable hedge position.

At a $1,000/oz gold price and a 0.3 grams/tonne cut off grade, La Colosa deposit has an inferred resource of 12.9 million ounces. Using a $700 price and a 0.5 g/t cut off, the resource is 9.7 million oz.

“La Colosa represents a major greenfields find, with further upside to increase its resource potential,” said AngloGold CEO Mark Cutifani.

It is a significant addition in value for AngloGold.

Bear in mind, explorer Banro Corp., which has an 11.8 million oz resource in Democratic Republic of Congo, has a market capitalisation of $330m.

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The Banro figure most likely contains a discount to account for the capital the company has to raise to develop gold projects in a relatively remote part of the Congo in fairly difficult terrain.

La Colosa is the second sizeable gold deposit found by AngloGold in Colombia. It already has the Gramelote deposit, which hosts an inferred resource of 2.12 million oz of gold.

AngloGold is sitting back on Gramelote as regards the funding of the feasibility study to be completed by June 2010 by its joint venture partner B2Gold, which will earn up to 51% of the project.

La Colosa is 150km west of Bogota and was discovered 18 months ago. It has an open-pittable porphyry style of mineralisation over a strike length topping 1,500 metres and a 600 metre width.

There is another area of mineralisation thought to contain 500,000 oz of gold, but this has not yet been drilled and is not yet featured in the resources. It has been included in the mining plan though.

Over the next few months an environmental permit should be issued by the government, which will allow drilling at La Colosa to continue, Cutifani said.

He pointed out AngloGold had grown its greenfield resources by 20 million ounces over the past 15 months, including La Colosa. “With these strong exploration results, our next step will be to continue to refine our processes, convert these resources to reserves and then to bring them to economic account."