AngloGold's Production Up 5%

Mark Cutifani

ANGLOGOLD ASHANTI's third quarter production rose by 5 percent as a result of continued improvements at its Geita mine in Tanzania and fewer safety related interruptions at its Vaal River operations in South Africa.

Production rose to 1.187 million ounces in the three months through to the end of September and was broadly in line with the company's guidance for the period.

Total cash costs were within the guided range at $534 per ounce, despite the impact of higher wages and power prices in South Africa and stronger operating currencies.

During the quarter, AngloGold Ashanti invested $797 million to complete a restructuring of its hedge book as prices significantly went below current market prices.

The company now has hedge commitments of 4.3 million ounces, which is less than a year's production.

It anticipates a decline in this position of 800,000 ounces per year between next year and 2015 when it will be hedge free.

AngloGold Ashanti's adjusted headline earnings, excluding the cost of these hedge buybacks were $163 million in line with last quarter's record of $167 million.

The company reported an adjusted headline loss of $596 million or $1.65 a share, including the cost of the hedge buyback, which was reflected in a lower gold price.

, Chief Executive Officer (CEO) of AngloGold Ashanti said, “Our decision to move on the hedge book in July has been vindicated by the rise of the price of gold to record levels.

“We have slashed the book by almost two thirds in the past two years against the backdrop of a rising price that has generated enormous value for the company and its owners.”

The Geita mines continued its recovery under its new management team, delivering a 32 percent rise in production to 83,000 ounces for the quarter; with the Vaal River mines increasing output by 20 percent.

The company's wholly owned Brazilian operations delivered a 23 percent increase in production to 90,000 ounces, despite the stronger currency that are now the lowest-cost assets in the group with cash costs of $333 per ounce.

In Argentina, Cerro Vanguardia was the next best performer with production of 47,000 ounces at cash cost of $336 per ounce.

Four members of the company's South African workforce tragically lost their lives during the quarter. Intensive efforts are ongoing at all levels of the organisation to eliminate workplace injuries.

The success of these interventions is evident in various safety measures including track lost time injuries and medical treatment injuries, which have all improved so far this year.

The management of the company and South Africa's government mine inspectors to aggressively policed safety regulations.

Pre-emptive measures had impacted positively on production of the company and the broader industry as efforts were made to improve safety.

The management of AngloGold Ashanti suspended underground operations at the TauTona mines in order to conduct an inspection of the steelwork along the mine's shaft system; a task that will potentially take two months to complete.

The decision was a pre-emptive safety measure, following an incident where a length of steel dislodged and fell down the shaft.

To reflect on these ongoing safety efforts and the associated production impact, AngloGold's production outlook for this year is now around 4.55 million to 4.6 million ounces.

Total cash costs for the year are expected to be between $515 per ounce and $530 per ounce, assuming an average exchange rate of between R7.00 and R7.50 per dollar during the fourth quarter.

Production in the fourth quarter is estimated at 1.16 million ounces at a total cash cost of $590 per ounce, assuming an exchange rate of R7.50 per dollar.