Ashanti produces more, earns less

Higher gold production was not sufficient to offset the effect of low gold prices for Ashanti Goldfields (ASL-N) during the first quarter.

The Ghana-based company posted earnings of US$6.9 million (or 6 per share), compared with earnings of US$21.5 million (20 per share) in the first three months of 1999.

An estimated 417,849 oz. of the yellow metal were produced during the recent period, 4% higher than a year ago, while cash operating costs fell to US$197 from US$211 per oz. On the other hand, the company’s realized gold price shrunk to US$345 from US$380 per oz.

At the Geita property in Tanzania, mine construction is 90% complete, thanks largely to a US$100-million bridge loan. AngloGold (AU-N) has a half-interest in the project, which, at full production, should produce 500,000 oz. gold annually at a cash operating cost of US$180 per oz.

The Obuasi gold mine in Ghana produced 181,164 oz. in the recent quarter, compared with 210,171 oz. in the year-ago period. Cash costs there fell to US$222 from US$225 per oz.

Ashanti is evaluating extensions to mineralization north of the Brown sub-vertical shaft, below level 50. The program is designed to follow up on encouraging intersections, including 14.7 metres grading 23.2 grams per tonne on level 54, and 6.1 metres of 21.1 grams on level 55.

Ashanti’s other operations reported strong performances.

At the Bibiani mine, in Ghana, production exceeded target, reaching 70,240 oz., while cash costs fell to US$148 per oz. Mining was focused on the Main and Big Mug pits.

The Ayanfuri mine, in the same country, contributed 10,774 oz. at US$213 per oz., while another Ghanian operation, Iduapriem, in which Ashanti has an 80% interest, produced 38,057 oz. at US$248 per oz.

In Guinea, Ashanti’s 85%-held Siguiri mine cranked out a record 95,996 oz. at a cash cost of US$157 per oz.

Meanwhile, a week-long strike at the Freda-Rebecca mine in Zimbabwe, combined with a failure at the mill, caused production between the two first quarters to slip to 21,618 oz. at US$224 per oz. from 26,742 oz. at US$153. In an attempt to expand the operation, exploration drilling will be carried out on the nearby Mazowe and RAN claims.

Ashanti will also explore the Youga property in Burkina Faso, a joint venture with Echo Bay Mines (ECO-T). The government is expected to issue an exploitation permit in the second quarter.

At the Mampon project, in Ghana, Ashanti has put off further drilling and metallurgical testwork until it receives environmental and governmental approvals to begin mining. The company sees Mampon mineralization as potential feed material for the Obuasi oxide and sulphide plants and the Ayanfuri mine.

At the end of the quarter, Ashanti had sold forward 4 million oz. gold at an average price of US$353 per oz.