AngloGold international mines slashing costs, upping margins

JOHANNESBURG (miningweekly.com) – The international operations of AngloGold Ashanti have virtually halved their all-in sustaining costs (AISC) over three years.

The Johannesburg- and New York-listed gold mining company’s international mines in eight countries began in the fourth quarter of 2012 with an AISC of $1 542/oz and ended in the fourth quarter of 2015 with AISC of $786/oz. (Also watch attached Creamer Media video).

During this week’s financial results presentation attended by Creamer Media’s Mining Weekly Online, AngloGold COO International Ron Largent used three years of data to illustrate the sustainable effectiveness of the process the company implemented.

The Geita mine in Tanzania was a fourth-quarter standout with a production of 139 000 oz at a cash cost of $465/oz.

Overall, the international operations, which account for three-quarters of total production, have also managed to improve profit margins on reduced gold prices.

There has been a transformational move by the company from being in the highest cost quartile in 2013 to below industry average in 2015.

For the international operations, AISC fell from $1 141/oz in 2013 to $822/oz in 2015, compared with an industry average of $938/oz.

Cost management has been focused at individual mine sites on strategic planning, mining contract renegotiation, personnel levels, capital allocation and operating efficiencies.

AISC were reduced by some $300/oz since 2013 with cost management and efficiency improvement net of inflation contributing 55%, currency benefits 30% and lower fuel and power prices 15%.

From 2013 to 2014, when the entire gold mining industry reduced AISC costs by $92/oz, AngloGold lowered them by $175/oz.

From 2014 to 2015, the industry reduced by $52/oz and AngloGold by $110/oz.

The international group’s fourth-quarter output was 745 000 oz at an AISC of $786/oz and a cash cost of $690/oz.

In 2015, the Americas region produced 831 000 oz at a 19%-lower AISC of $792/oz.

At Geita, early self-funded exploration has allowed for quick access to a self-funding underground project, which is the beginning of a significant underground mine-life extension at Nyankanga. (also watch attached Creamer Media video).

In Argentina, an agreement has been struck with a neighbouring ground owner to explore the known structures next to the company’s existing Cerro Vanguardia gold and silver mine in Patagonia.

In Brazil, high-grade expansions are also under way at the Serra Grande and Mineracao mines.

“We have many options, opportunities and potential outcomes within our suite of assets in the international operations,” Largent told Mining Weekly Online.