AngloGold Ashantis underground gold mines looking to extensive mechanisation

first_imgAngloGold Ashanti surged back to profit in the September, third, quarter on lower costs and higher production. Reuters reports the company saying it is planning to bring its “cash-burning Obuasi operation in Ghana” back into profit by mechanising operations and cutting over 400 jobs. “It’s a necessity, let’s put it bluntly,” CEO Srinivasan Venkatakrishnan said. He says modernising the mine, which is over 100 years old, will allow “access to grades which you would not otherwise get.”The union has backed the move. “The union is very pro about this because what they want to see here in terms of mechanisation is that it improves the wage structure of the skilled Ghanian employees.” AngloGold Ashanti says the first stage of mechanisation at Obuasi yielded a 17% increase in output in the Sept quarter over the previous quarter.Overall, adjusted headline earnings (EBITDA) were $576 million, compared with a loss of $135 million the previous quarter, with production up 12% to just over 1 Moz at total cash costs of $809/oz, 10% better than the preceding quarter.Furthmore, Bloomberg reports the company will expand its use of “reef-boring technology in the first quarter of 2014 as the third-biggest producer of the metal seeks to halt a terminal decline of the industry in South Africa.“AngloGold aims to derive 10% to 20% of its South African gold using the technique within the next five years, Chief Executive Officer Srinivasan Venkatakrishnan said in a phone interview today. The Johannesburg-based company has produced 35 kg of gold using the new machines in testing at its TauTona mine, he said.”“This is a game changer, or a paradigm shift,” said Venkatakrishnan, who became CEO in May. “If we do nothing, the gold industry is in terminal decline.”Bloomberg further notes that “after more than a century as the world’s biggest gold producer, South Africa has now slumped to sixth position. Production fell by a third to 167,236 kg in the five years to 2012, according to the Chamber of Mines. China, Australia, the US, Russia and Peru have all overtaken the country.”The reef boring machines, which AngloGold has developed with its suppliers, are able to remove just the gold-bearing ore from the reef, and then backfill the void to stabilise the mining infrastructure. That means the company will have to treat less rock and can operate 24 hours a day, Venkatakrishnan said.“This opens up areas that we cannot otherwise mine,” he said. “It also opens up areas which we have left behind for infrastructure support.”The company, with 21 operations in 10 countries, is cutting jobs, spending and exploration and slowing production at higher- cost mines as it responds to a 22% decline in the gold price this year. AngloGold reduced all-in sustaining costs 11% to $1,155/oz.“People are starting to realise that this company has come $300 down the cost curve on an all-in basis,” Richard Hart, a Johannesburg-based analyst at Macquarie First South Securities, said in a Bloomberg telephone interview.last_img read more