Ashanti triumphs in quarter

Denver — Overcoming a possible production shortfall, Ashanti Goldfields (ASL-N) posted strong results for the first quarter.

Earnings totalled US$9 million (or 8 per share), compared with US$6.9 million (6 per share) in the first three months of 2000.

Gold production in the recent period reached 398,992 oz., of which 381,547 oz. is attributable to Ashanti’s account. Cash operating costs averaged US$195 per oz., while total production costs were US$264 per oz., still well below the US$325 per oz. that the company realized as a result of its hedging policy.

Earlier in the year, Ashanti warned that production could be as much as 20,000 oz. below the original 380,000-oz. target. However, strong operating performances at the Obuasi complex in Ghana and the 50%-held Geita joint venture in Tanzania helped ward off the shortfall.

Gold production at Obuasi was on target at 131,622, though down from 181,164 oz. in the corresponding period last year. The decline resulted from the expected shutdown of surface mining. Underground production, in turn, improved to 615,000 tonnes, up from 587,000 tonnes, while the average head grade rose to 7.9 grams per tonne. Grades in the sulphide treatment plant also improved, to 7.4 grams per tonne, without the lower-grade surface mineralization to depress the grade.

In Tanzania, Geita produced a record 120,540 oz. gold, of which 60,270 oz. went to Ashanti’s account. Cash operating costs were US$141 per oz. This is the first time the company has reported joint production since AngloGold (AU-N) took control of a half-interest in the open-pit operation, at the beginning of the year. In 2000, AngloGold spent US$205 million in cash and US$130 million in financing to help Ashanti complete construction. The company’s other operations, in Ghana, Guinea and Zimbabwe, all performed strongly.

At the end of the quarter, Ashanti’s mark-to-market value of the hedging policy was US$143 million, based on the spot gold price of US$259 per oz. The company also lowered debt levels to US$352 million, as a result of the Geita transaction.