SOURCE: AngloGold Ashanti Limited

April 29, 2005 02:22 ET

AngloGold Ashanti Results -- Quarter Ended March 31, 2005

JOHANNESBURG, SOUTH AFRICA -- (MARKET WIRE) -- April 29, 2005 -- AngloGold Ashanti Limited (NYSE: AU) is pleased to announce its results for the quarter ended March 31, 2005.

Key features:

--  Price received improved $29/oz (7%) quarter-on-quarter to $424/oz,
    following the hedge restructure.
--  Production reduced by 5% to 1.569Moz (after adjusting for the closure
    of Ergo), predominantly due to lower South African production and after
    strong performances at Morila and Cerro Vanguardia in the prior quarter.
--  Former Ashanti assets Obuasi, Iduapriem and Geita delivered improved
    production, while Sunrise Dam in Australia reported record production.
--  Total cash costs increased by 4% to $284/oz, due to lower gold
    produced, stronger operating currencies and inflationary pressures in most
    operating regions.
--  Headline earnings adjusted for the effect of unrealized non-hedge
    derivatives were $77m.
Commenting on AngloGold Ashanti's performance, CEO, Bobby Godsell said the restructuring of the hedge announced in January had "delivered the intended positive impact on our received price, which more closely matched the average spot price for the quarter."

He explained that, following its long planned closure, Ergo was being treated as a discontinued operation. Last quarter's numbers had been restated to exclude Ergo and on this basis production was down 5% to 1.569Moz while total cash costs increased by 4% to $284/oz due to lower gold produced, stronger operating currencies and inflationary pressures in most operating regions.

In respect of the former Ashanti assets, he noted that this quarter had seen improvements in many areas. After five quarters of decline, gold production at Obuasi increased by 2% to 92,000 ounces with tonnage treated up 10% on the previous quarter. "I'm pleased to say that during April, underground grades at Obuasi have improved by 1g/t and management expects production to show progressive increases in each of this year's remaining quarters," he said.

While production at Siguiri was constant quarter-on-quarter, total cash costs improved 9%. At Iduapriem, production improved 10% with cash costs down 19%. Similarly, Geita saw production up slightly with total cash costs down 19%. "These improving trends across the Ashanti assets are important and give me much encouragement about what these assets can contribute to this company as the year progresses," Godsell commented.

Referring to margins, he observed that it was undoubtedly a great frustration for investors that as the gold price had risen over the past year, margins in gold companies had shrunk. One of the drivers of the higher gold price was the weaker US dollar, which in turn meant stronger operating currencies in almost all of AngloGold Ashanti's producing regions including Australia, Argentina, Brazil, Namibia and South Africa. Added to this, significantly higher oil prices and the growth demands of China had translated into price inflation in many of the company's consumables such as cement, tyres and steel. Quantum increases in the cost of contract mining were also being seen.

"The net impact for this company is higher total cash costs expressed in US dollar terms and reduced margins. This is the challenge that we have to take head on as we seek to improve our returns to investors," he said. "This year we have budgeted for a further $50 million in cost savings, following the $50 million in savings we achieved last year. In light of the continuous cost pressure evident this quarter, additional measures are being implemented to ensure that the company reaches its published total cash cost target for the year of $273/oz."

Contact Information

  • Contact:
    Clement Mamathuba
    Manager - Investor Relations