AngloGold Ashanti today said it generated $71m of free cash flow in the second quarter with production and costs beating guidance on the back of another strong performance from its international mines and a recovery from its South African operations.
Production was 1.007Moz at a total cash cost of $718/oz* in the three months to June 30, 2015, compared with 1.098Moz at a total cash cost of $833/oz in the second quarter of 2014. The result compared with guidance of 960,000oz to 1Moz at $770/oz to $820/oz.
AngloGold Ashanti Chief Executive Officer Srinivasan Venkatakrishnan and his Executive team continue to lead an effort across the company’s 19 mines to improve margins, despite a depressed gold price environment, through a focus on tight cost control, portfolio improvements and relentless operational excellence.
In Ghana, the company owns and operate the Iduapriem mine, 10km south of Tarkwa, and the Obuasi Gold Mine which is located in the Obuasi town.
Iduapriem’s production for the quarter climbed 20% to 48,000oz at a total cash cost of $1,029/oz compared to the previous quarter’s gold output of 40,0000oz at a total cash cost of $1,046/oz. Tonnage throughput in the current quarter has stabilised following the SAG mill upgrade towards the end of last quarter.
“We intend to build on this important milestone as we evolve our plan to extract further operational efficiencies, in keeping with the group effort towards a leaner, more efficient company able to weather the current low gold price environment and thrive if the price recovers,” said Sicelo Ntuli, Managing Director of the Iduapriem Mine.
Obuasi mine is currently in the Limited Operating Phase (LOP) after halting its primary and core underground operations at the end of 2014, in line with the government approved Amendment to the Programme of Mining Operations (APMO).
The advent of the LOP in December 2014 resulted in the difficult decision of laying off 4,762 employees at a total cost of $240m. The core elements of this phase include legacy environmental clean-up works, which during the quarter produced 14,000oz from
retreatment of old tailings. In addition, the Obuasi deeps decline development and the resource enhancement drilling programme are on track, while the feasibility study remains on course and is currently being optimised to inform the investment case for a simpler, modern underground mechanised mine.
“This is about ensuring that we have a sustainable and profitable operation that benefits all of its stakeholders,” said Mark Morcombe, the Senior Vice President of Obuasi Operations. “Obuasi has a world-class ore body, but we need to reconfigure the entire mine which comes at a significant capital reinvestment cost and establish a new operating culture to make it a sustainable business for the long-term.”