Johannesburg - AngloGold Ashanti’s Tropicana gold mine in Western Australia went on line yesterday ahead of schedule and on budget, the JSE-listed gold producer announced.
Tropicana, a low-cost operation, is expected to boost the group’s portfolio. It follows the first gold poured earlier this week at the low-cost Kibali mine in the Democratic Republic of Congo (DRC), a joint venture with Randgold Resources.
AngloGold, South Africa’s biggest gold producer, said production at Tropicana would average between 470 000 ounces and 490 000 ounces a year in the first three years at cash costs of between A$590 (R5 470) and A$630 an ounce. Tropicana has a life of more than 10 years.
Tropicana beat the original forecast date of first production, which was the start of the fourth quarter of this year.
Estimated capital expenditure remained at between A$820 million and A$845m, the company said.
AngloGold is the project manager and operator of Tropicana and owns a 70 percent stake. The Independence Group owns the rest.
“What we’ve found and now built is a tier-one asset, which we believe only scratches the surface of a new gold district,” AngloGold chief executive Srinivasan Venkatakrishnan said, adding that the initial focus would be to find extra mineralisation close to the plant.
Graham Ehm, AngloGold’s executive vice-president for Australasia, said: “We’ve taken Tropicana all the way from discovery through development and now into production.”
AngloGold shares closed 1.49 percent higher at R134.12 as investors warmed to the news. The JSE’s gold mining index gained 0.9 percent.
“I would’ve expected the price to firm on the announcement of the commissioning of the mines,” David Davids, a mining investment analyst at SBG Securities, said yesterday.
On Wednesday the Kibali mine was commissioned by Randgold Resources, the developer and operator of the joint venture. London-listed Randgold and AngloGold each hold 45 percent and DRC parastatal Sokimo holds the balance.
The combined production of Kibali and Tropicana is likely to be about 600 000 ounces a year from next year.
AngloGold’s production in the quarter to June increased 4 percent from the previous quarter to 935 000 ounces at a total cash cost of $898 an ounce (about R8 900 at current rates).
Like many local gold producers, AngloGold has been grappling with rising costs of electricity and labour, and the softening price of the precious metal. In response, it plans to more than halve its costs from 2014 and to narrow its exploration focus to Tropicana, Colombia and the Siguiri region in Guinea.
It has also said it would advance its underground technology in South Africa.
AngloGold has said previously that exploration and evaluation costs would be lowered to $327m from $377m. Next year these costs would drop to between $150m and $175m.
In addition, AngloGold would cut 40 percent of its 2 000 corporate-level jobs in the next 18 months. - Business Report