#MiningIndaba: AngloGold not seeking deals

Published Feb 6, 2017

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Johannesburg – AngloGold

Ashanti will not be seeking deals to improve its portfolio, but rather will be

investing in its mines.

This is

according to a statement issued by CEO Srinivasan Venkatakrishnan ahead of this

week’s Mining Indaba.

Venkatakrishnan,

who will be presenting at the indaba this week, says the miner will “prioritise

investment in low-risk, high-return projects at our existing operations, in

jurisdictions and ore bodies we understand”.

He notes, “rather

than looking first to M&A to improve our portfolio, we will use our much

improved balance sheet to increase reinvestment to extend mine lives and

increase profitability at key assets”.

AngloGold

Ashanti has, since 2013, used ‘self-help’ measures including asset sales and

efficiency improvements to reduce debt and improve balance sheet flexibility

without diluting shareholders, while improving the safety and cash-flow margins

across its 17-mine portfolio. The company, which emphasises margin growth over

volume growth, will continue that philosophy this year as it focuses on both

sustaining and growth projects.

Read also:  AngloGold holds off on job cuts

The company

notes higher sustaining-capital expenditure in 2017 is expected at:

    -  

Cuiaba in Brazil, where a greater rate of ore reserve development will

improve mining flexibility hampered by geotechnical challenges in recent years;

    -  

Iduapriem in Ghana, to strip waste rock from the Teberebie ore body to

extend mine life, and lower cash costs;

    -  

Geita, in Tanzania, to replace the mine’s original 20-year old power

plant to ensure reliable electricity supply, and also continue the ramp-up of

underground production in advance of depletion of open-pit ore in future;

    -  

Sunrise Dam, in Australia, where investment in plant modifications are

expected to improve gold recoveries;

    -  

Kibali, in the DRC, where additional ore reserve development will be

conducted ahead of a ramp-up in underground production.

It is currently

anticipated that sustaining capital will decline in 2018.

There will also

be growth capital invested in the construction of a new plant at Siguiri, in

Guinea, which will process harder ore, extending mine life, lowering cost and

increasing production, while also improving exploration potential in the area

surrounding the mine.

At Sadiola, in

Mali – subject to receiving requisite government approvals, agreements,

consents and permits -- AngloGold Ashanti and joint venture partner IAMGold

anticipate commencing a project to build a sulphide treatment plant that will

also increase output and extend mine life, it says.

At Tropicana, in

Australia, mining and processing is being optimised at minimal additional

capital cost, to increase production and lower costs.

“We have a very

careful process to evaluate and rank all of our capital allocation

opportunities, and this year we have a very compelling slate of projects from

within our portfolio that we believe outranks anything currently available out

there in the market,” Venkatakrishnan says. “We factor in all aspects of risk

and demand a return in the mid- to high-teens before we approve these

investments.”

BUSINESS REPORT ONLINE

 

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