Anglogold Shapely Narrows Q2 Loss

Venkatakrishnan PixAngloGold Ashanti reported a narrower secondquarter (Q2) net loss as a rise in gold production, lower operating costs, and the absence of the previous year’s hefty asset and inventory write-downs, nearly offset lower gold prices and higher capital spending.

The mining group, one of the world’s biggest producers of gold, said on Monday that its net loss in the three months to June 30 shrank to $US80 million from $US2.17 billion a year earlier. 

AngloGold’s gold output rose 17 per cent to 1.1 million ounces in the quarter, with higher production at its South African, other African and Australian mines more than offsetting a decline at its operations in Brazil.

The company said production at the two South African mines where it had suspended work after an earthquake last week, is set to resume on Monday.

AngloGold said it had lost output of around 30,000 ounces of gold through the temporary closure of the Great Noligwa and Moab Khotsong mines.

The miner said it is shutting its Obuasi mine in Ghana in a $300m exercise involving laying off hundreds of workers to reconfigure the mine over the next 18 months as a smaller, more profitable operation.

AngloGold would continue driving down costs and looking at its portfolio to ensure there was sustainable free cash flow, CEO Srinivasan Venkatakrishnan said.

Part of this was the closure of Obuasi. AngloGold will update the market in February on progress. A decline shaft system from the surface to working areas will avoid constraints of the vertical shaft.

AngloGold had earmarked $220m to retrench workers and would spend another $80m over the next year.

AngloGold said production this quarter should come in at 1.06 million to 1.09 million ounces at a cash cost of $US850 an ounce to $US890 an ounce of gold produced, below the second-quarter cost of $US898 an ounce.

“We’re on track to meet our targeted savings in operating and overhead costs. all while delivering production growth and a record safety result,” AngloGold chief executive Srinivasan Venkatakrishnan said.

AngloGold said growth in cash flow in the quarter enabled the company to reduce net debt to $US2.99 billion from $US3.11 billion.

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