AngloGold revises down full-year target again

Allan Seccombe | Mon, 02 Nov 2009 07:56
[miningmx.com] -- ANGLOGOLD Ashanti has for the second quarter running revised downwards its full-year gold output target. Production is now seen some 400,000 oz lower than expected earlier this year.

Tau Tona’s underground operations will be suspended for up to two months to inspect and repair steel work at the mine’s shaft after a steel structure dislodged and fell down the shaft. The mine was forecast to produce 295,000 oz of gold this year.

“To reflect these ongoing safety efforts and the associated production impact, AngloGold’s production outlook for this year is now around 4.55 million to 4.6 million ounces,” the world’s third-largest gold producer said in the release of its third quarter results to end-September.

This comes after it told the market in the June quarter that it had lowered its full-year production estimate to between 4.7 million oz and 4.8 million oz from an original target of between 4.9 million and five million oz because of mill repairs at Geita, its Tanzanian mine and lower recoveries and Cripple Creek & Victor in the United States.

The bulk of the 400,000 oz difference comes from South Africa, which is 250,000 oz below forecast largely because of safety-related stoppages. The balanceis related mainly to Cripple Creek & Victor where heap leaching and mining methods have proved problematic.

AngloGold executives reckon that safety stoppages in South Africa, which related to serious incidents and routine audits, cost the company up to 150,000 oz a year in lost production. Tau Tona and the reduced output at Savuka, where a seismic event has disrupted produciton, are excluded from that figure, said CEO Mark Cutifani.

Cutifani declined to give a production forecast for 2010, saying it wanted to avoid revisions of the figure during the year by giving the market just one figure that it was confident it could achieve.

HEFTY SAFETY LOSSES

AngloGold's improvements at its operations and widescale restructuring of its business would bear fruit from 2011, he said. An audit of the group's South African shafts showed no similar problems to those found at Tau Tona.

AngloGold forecast production in its fourth quarter of 1.16 million oz at a total cash cost of $590/oz, assuming the rand at R7.50 to the dollar.

AngloGold poured $797m into further cutting its hedge book during the September quarter and it now stands at 4.3 million oz, which is below a year’s production. It reiterated it anticipated cutting this position by 800,000 oz a year to be hedge-free by 2015.

Tackling the hedge book meant AngloGold posted an adjusted headline loss of $596m. Excluding the hedge book, it posted headline earnings of $163m, which was flat on the previous quarter’s figure.