Johannesburg - AngloGold Ashanti, the world’s third-biggest gold producer, will consider selling part or all of its Obuasi mine once it has undertaken a major restructuring of the Ghanaian operation, its chief executive officer said.
AngloGold is working to upgrade the more than 100-year-old mine as the gold price has fallen 23 percent since the start of 2013.
The company wants to restructure the mine’s underground operation, cut jobs and increase reliance on machinery rather than rock drills.
“We are looking for inward investment,” chief executive Srinivasan Venkatakrishnan said in an interview today.
“The problem is everybody who has looked at it has correctly said, ‘Listen, all of this noise around it blurs what is possible in the mine’.”
The cost of mining gold from Obuasi, about 250 kilometres northwest of the capital, Accra, is $1,530 for every ounce of gold, 18 percent more than the current bullion price.
The weakening market for the metal forced AngloGold to withhold its divided last year and cut costs, while peers have also curtailed spending.
If AngloGold “can clear the noise and sort out the true potential of the mine, that opens up a range of strategic alternatives for us,” Venkatakrishnan said.
“Joint venture, partnership, sale -- it opens up a whole range of those options.”
Ghanaian Mining Minister Inusah Fuseini said in February AngloGold had proposed shutting Obuasi, which then employed about 4,800 people, for 18 to 24 months.
While the plan hasn’t been finalised, the company is considering “significant” job cuts.
AngloGold’s first-quarter profit more than doubled to $119 million after capital spending dropped 43 percent, the Johannesburg-based company said today in a statement.
Capital expenditure dropped to $274 million from $477 million.
AngloGold, with 21 operations in 11 countries, has outperformed larger rivals Barrick Gold and Newmont Mining in the past year after reducing costs at its corporate office while increasing production with two new mines in Australia and the Democratic Republic of Congo.
Even so, the company has yet to reinstate the dividend that it cut in August in response to the lower gold price.
The company produced 1.05 million ounces in the quarter, compared with 1.22 million ounces three months earlier.
It received an average gold price of $1,290 an ounce, 1.5 percent more than the previous period.
AngloGold forecast output of 1.02 million ounces to 1.06 million ounces for the quarter ending in June, it said. - Bloomberg News