Ashanti profits, costs rise

Ashanti Goldfields (ASL-N) nearly doubled its profits during the recent third quarter paced by the Geita mine and its hedge book, which had seen the company on the edge of extinction about two years ago.

During the three months ended September 30, the company posted earnings of US$14.5 million (or 13 per share) on revenue of US4136.2 million, compared with year-ago earnings of US$ 7.5 million (or 7 per share) on US$146 million.

So far this year, earnings amount to US$37.6 million (33 per share), up from US20.8 million (18 per share) during the corresponding period of 2000. The increase is attributed primarily to lower depreciation and interest charges. Revenue between the two periods slid to US$405.6 million from US$435.8 million.

Cash flow from operations was US$25.1 million during the quarter, and US$66.6 million year-to-date. During the respective periods of 2000, the figures rang in at US$36 million and US$99.8 million.

Total gold production for the latest quarter hit 411,532 oz. (attributable oz. hit 393,958), down from 448, 208 oz. (429,141 oz.) the previous year. Total cash cost increased to US$189 per oz. from US$181 per oz. Production for the year so far amounts to 1.25 million oz. (1.2 million oz.) at US$188 per oz., down from 1.3 million oz. (1.2 million oz.) at US$191 apiece. The company realized an average of US$331 per oz. for recent third-quarter production, and US$325 per oz. so far this year. A year earlier, the figures were US$327 and US$335 per oz., respectively.

Third-quarter gold production at the 50% owned Geita mine jumped to 143,116 oz., from 75,036 oz. during the same period last year. Cash costs also climbed to US$140 per oz., from US$131 per oz. Geita’s year-to-date production tallies to 407,476 oz. at US$139 per oz., both well ahead of target. AngloGold (AU-N) holds the remaining half-interest in Geita.

The Obuasi mine churned out 132,307 oz., at US$196 per oz. during the quarter, on target, but 11.4% behind last year’s pace. So far in 2001, the mine has chipped in 394,028 oz. at US$193 per oz., compared with last year’s 503,849 oz. at US$210 per oz.

During the recent three-month period, exploration drilling at Obuasi cut a high-grade mineralized zone grading 28 grams gold per tonne over a true width of 8 metres on the 62 level, the deepest ore grade ever cut at the mine.

The company attributes lower overall production, in part, to the start of a planned closure of its Ayanfuri mine in Ghana, but still expects to meet its annual production target of 1.6 million oz.

At the end of the quarter, Ashanti’s mark-to-market value of the hedging policy was US$41 million on the plus side, based on the spot gold price of US$291 per oz. The company also lowered its net debt to US$283.4 million, excluding its share of the US$135.0-million, non-recourse Geita project finance loan.