AngloGold sees output rise

In a surprisingly strong third quarter, South Africa’s AngloGold (AU-N) managed to boost both its gold production and earnings while keeping a lid on costs.

For the period ended Sept. 30, AngloGold posted net earnings of US$81 million (or US73 per share) on gold income of US$481 million, compared with a US$79-million (US71) profit on gold income of US$406 million during the corresponding period of 2001.

The company’s attributable gold production during the recent quarter was 1.6 million oz., up from 1.4 million a year earlier. Total production costs remained virtually unchanged at US$202 per oz.

AngloGold realized an average of US$305 per oz. of production, unchanged from a year earlier. (Despite aggressively reducing its hedge book earlier this year through deliveries and buybacks, the company remains one of the industry’s most heavily hedged producers, with 10.4 million oz. of forward-pricing commitments, at Sept. 30., for a mark-to-market on the hedge book of negative US$442 million.)

AngloGold attributes the strong quarter to two factors: a substantial rise in production at its 40%-owned Morila mine in Mali, owing to a short-term improvement in grades, and a doubling to 96.5% of its stake in the Cerro Vanguardia mine in southern Argentina.

For the first nine months of 2002, AngloGold earned US$231 million (US$2.08) on US$1.26 billion in gold sales, up from US$159 million (US$1.59) in the comparable period last year. Earnings increased even as the company reduced its gold output between the two periods to 4.4 million oz. from 5.3 million oz. A contributing factor was a 10% fall in production costs to US$197 per oz.

In its quarterly report, AngloGold gives a run-down on five of its development projects, which, over their combined mine lives, will add a projected 15 million oz. of gold production at cash costs below US$200 per oz.

Two of these projects (Sunrise Dam in Australia and Mponeng in South Africa) are complete, while the remainder (Tau Tona and Moab Khotsong in South Africa, and Cripple Creek and Victor in the U.S.) are reportedly on-track.

The company is also studying the feasibility of expanding its Cuiaba mine in Brazil, as well as its Boddington mine in Australia.

At the Geita mine in Tanzania, brownfields drilling over the past year has expanded reserves by 24% to 72 million tonnes grading 4.13 million, or 9.6 million contained ounces. The open-pit mine, owned equally by AngloGold and Ashanti Goldfields (ASL-N), will soon be expanded to treat 5.6 million tonnes per year.

Regarding the South African government’s Socio-Economic Empowerment Charter, which calls for 26% of every mine in the country to be under black ownership within 10 years, AngloGold states that it “succeeded in establishing the right balance between this country’s political imperatives and the need for a growing, profitable mining industry to capitalize on South Africa’s wealth potential,” adding that it is “well-placed to meet the charter’s targets.”