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
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