For the fifth consecutive quarter,
During the three months ended Sept. 30, the company also completed the acquisition of Samax Gold, thereby consolidating a package of near-producing properties in the Lake Victoria gold belt of Tanzania.
Ashanti turned out a record 420,162 oz. gold in the third quarter, a 12% increase over the previous quarter and an impressive 45% increase from a year earlier. Operating costs were reduced to an average of US$209 per oz., a 6% reduction from the previous quarter.
Over the past year, overall cash costs fell 19%, owing to productivity improvements at the Obuasi mine in Ghana, and the successful development of the Bibiani mine in Ghana and the Siguiri mine in Guinea.
Siguiri, Ashanti’s lowest-cost mine, is being expanded to an annual production rate of 250,000 oz. by the end of next year. This US$27-million expansion will offset the closure of the high-cost Iduapriem mine in Ghana.
Obuasi remains the company’s production cornerstone, as it has been for decades. The historic mine generated 230,709 oz. in the latest quarter at a cash cost of US$230 per oz, compared with 215,148 oz. at US$270 per oz. a year earlier. The cost reduction was attributed to improvements in underground tonnage and grade, and tight controls on spending.
Obuasi is a combined open-pit/underground operation. At the end of July, a new shaft was commissioned that will provide, at full capacity, an additional 1 million tonnes per year of hoisting capacity at the southern end of the mine.
Production from underground deposits at Obuasi totalled 576,000 tonnes in the latest quarter, 14% higher than the previous quarter. The grade held steady at an average of 8.6 grams, while costs fell 22% from the previous quarter to US$193 per oz.
Surface production at Obuasi in the latest quarter was on target at 1.1 million tonnes. The operating cost of production was US$307 per oz., which included an accounting charge of US$27 per oz. for the cost of previously deferred waste stripping and stockpiling.
Ashanti expects that its 1998 production will reach 1.5 million oz. gold at a cash operating cost near this year’s average (to date) of US$222 per oz.
In Tanzania, Ashanti has generated resources containing 3.7 million oz. gold at the Geita property. The Samax acquisition gave the company control of the adjacent Geita-Kukuluma property, which will be developed as part of a larger Geita project. Production here is slated to start in late 2000.
On the financial front, Ashanti reported net earnings of US$20.3 million (or 19 cents per share) before exceptional items, more than 30% higher than both the preceding quarter and the comparable period in 1997. However, a US$30-million writedown of the Iduapriem mine resulted in a net loss of US$9.7 million (US9 cents per share) for the quarter.
The company says its hedging portfolio increased to 7.6 million oz. at an average price of US$391 per oz. during the third quarter.
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