Denver — Despite higher revenue and record gold production,
The low gold price forced the Ghana-based company to reduce the carrying value of its mining assets, including the giant Obuasi complex, resulting in an after-tax writedown of US$171.6 million.
For the year, Ashanti reported a net loss of US$141.1 million (or $1.25 per share), compared with a loss of US$183.9 million ($1.64 per share) in 1999 after a charge of US$233 million.
Gold production increased 11% to 1.7 million oz. in 2000, while attributable production hit 1.65 million oz. This resulted in earnings (before exceptional items) of US$30.5 million (27 per share). Cash operating costs declined to US$187 per oz., while operating revenue edged up to US$582.2 million.
During the year, Ashanti completed the sale of half of the Geita mine in Tanzania for US$335 million, resulting in a gain of US$51.2 million. Ashanti used the proceeds to retire a bridge loan that was used to complete Geita’s construction and pay down two tranches of a revolving credit. Overall, Ashanti’s debt is down 47% to US$365.7 million.
The open-pit mine poured its first gold in June 2000 and contributed 176,836 oz. to Ashanti’s account in the year. Reserves increased 41% to 7.8 million oz. within 63.6 million tonnes grading 3.8 grams per tonne.
During the year, the company also completed its acquisition of the Teberebie mine, which adds life to the Iduapriem operation in Ghana.
Proven and probable reserves increased to 25.3 million oz. gold, though that includes a 100% interest in Geita. Mineralized material not in reserves stands at 43.3 million oz.
During the year, Ashanti adopted a hedging policy that would reduce its exposure to lease rates and decrease its level of commitments while maintaining price protection and minimizing margin call exposure. At year-end, it had 5.4 million oz. hedged at an average price of US$364 per oz., representing 44% of the forecast production over the life of the hedgebook. Its market-to-market value stood at US$29 million, based on a spot price of US$273 per oz. In 1999, the company reported a negative US$231 million as a result of a strong spike in the gold price during the third quarter.
The current year has not begun auspiciously. Ashanti’s mines, excluding Geita, have experienced temporary production difficulties, which are expected to result in a shortfall for the first quarter. Ashanti hopes to have production back on-track by the end of 2001.
First-quarter production could be down by as much as 20,000 oz. below the original estimate of 380,000 oz. However, the company has not lowered its forecast of 1.6 million oz. of attributable production.
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