[miningmx.com] — ANGLOGOLD Ashanti has seen its earnings gobbled up by the elimination of its hedge book one last time, reporting a $764m headline loss for the quarter to end-December on Thursday, with $1.06bn attributed to the closure of the book during the period.
Excluding the hedge closure costs, the group posted headline earnings of $294m, marginally down from the September quarter’s $303m.
The final tranche of the accelerated buy-back of the company’s outstanding hedge positions was completed in early October, with $2.64bn spent at an average price of $1,300 per ounce. About $1.58bn was accounted for during the September quarter.
“As long as the hedge book was in place, we were fighting with one hand tied behind our backs,’ said CEO Mark Cutifani. “Now that we’re selling our gold at spot prices and entrenching business improvements across the organisation, we’re spinning off significant cash flow.’
Cash generated from the company’s operating activities during the period, excluding hedge buy-back costs, were up 60% to $679m.
Cutifani said the additional cash available following the closure of the hedge book would go towards improving the group’s debt position, investing in growth projects as well as improving capacity at existing operations.
Net debt currently amounts to about $1.3bn.
Operationally, AngloGold produced 1.148 million ounces (moz) of gold at a total cash cost of $672/oz during the period, compared with 1.162moz at $643/oz the previous quarter, and guidance of 1.14moz at $675/oz assuming an exchange rate of R6.75 to the dollar.
South African operations contributed 476,000 oz to the total figure, at a total cash cost of $616/oz.
“We met guidance on all three fronts,’ said Cutifani. “We also achieved a fatality-free quarter, which is testimony to our belief that zero harm is possible, especially at our South African operations.’
Production in 2011 is anticipated at between 4.55moz and 4.75moz at a total cash cost of between $660/oz and $685/oz, assuming an exchange rate of R7.11 to the dollar.
“This represents a return to growth after six years of declining production,’ Cutifani said.
