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Anglogold Australian gold projects need to hold their own

Published: 03:33 03 Aug 2010 EDT

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Heavy soil cover for exploration, the existing taxation regime, tightly held ground and the potential compared to emerging projects in Africa and in South America, all all factors that detract from possible projects in Australia, AngloGold Ashanti says.

CEO Mark Cutifani told the Diggers and Dealers Forum that Australia's status as a model for other countries for resource development took a jolt recently with the now scuttled resource super profits tax put up without industry consultation.

Despite these issues the big Sunrise Dam mine in Western Australia's North Eastern Goldfields is now moving underground and showing enormous potential - having already produced 7.6 M oz, now having resource potential of 11 M oz more and indications of scope for another 7-10 M oz.

The huge Tropicana project in a remote sector of the eastern goldfields is now looking a more positive project than when Cutifani presented at an earlier Diggers & Dealers.  He explained to Mineweb that a factor for this was that about A$8 million was put into exploration that showed the structures had greater depth and was thus less vulnerable to potential carbon and other new taxes.

The AngloGold board could make a decision on Tropicana at the end of this year.

Tropicana is owned 70% by AngloGold and 30% by Perth miner Independence Group Ltd and the blueprint for a 2013 mining start would be to mill at 6 million tonnes per annum for between 330-410,000 oz pa.

 AngloGold is excited about its exploration success in Colombia where the La Colosa project has shown 12 M oz and is in area where five mineralised porphyry and epithermal targets have potential for up to 50 M oz.

In the past year AngloGold has reduced net debt from US$2.4 billion to US$868 million and the hedge book was reduced form 12 m oz to 3.55 M oz. Cutifani said that by eliminating 800,000 oz pa of hedges - averaging between $US500-550/oz - the company would be dehedged by 2013.

Factors that have also seen an improved company performance include new disclipines placed on individual mine project managers to sharpen the pencil to improve costs. An example was Geita in Tanzania where huge capital savings were achieved by reducing the truck fleet but achieving the same tonnage movement, better use of drills and better ore blending.

Cutifani said when he joined the company he specified three objectives - reducing debt, reducing gold hedging and getting Anglo American off the books.

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