Geita fortifies Ashanti’s quarter

Contributions from the recently opened Geita mine in Tanzania helped Ashanti Goldfields (ASL-N) post a profit in the second quarter.

Gold production at the 50%-owned mine began in June and amounted to 16,530 oz. during the quarter. Cash operating costs were US$120 per oz.

Overall, the company earned US$6.4 million (or 6 per share) during the recent 3-month period, while cranking out 433,050 oz. gold.

Production at the end of the second quarter of 1999 was substantially lower, at 342,621 oz., owing to a strike at the Obuasi mine in Ghana. Nonetheless, Ashanti managed to post a profit of US$16.4 million (15 per share) for that period.

Earnings were lower in the recent second quarter mainly because of a US$44-per-oz. decrease in the realized gold price. Ashanti received US$336 per oz., compared with US$380 a year ago.

The company lowered cash operating costs 7% to US$196 per oz., resulting in higher operating cash flow of US$50.1 million.

Obuasi, the company’s largest operation, led the way with a strong performance in the second quarter. Production improved to 173,322 oz. gold, up 17% over the strike-shortened second quarter of 1999.

Exploration below the 50 level at Obuasi enabled Ashanti to delineate a resource of 198,000 tonnes grading 20.9 grams gold per tonne, equivalent to 133,000 oz. Drilling has intercepted mineralization 244 metres below the 50 level, over a strike length of 1,100 metres.

Ashanti recently acquired a 90% stake in the Teberebie mine in Ghana for US$18.8 million and the assumption of US$8.2 million in debt. The transaction adds 1.6 million oz. to reserves and enables the company to continue using the mill at the nearby Iduapriem mine. The heap-leach pads at Teberebie produced 13,245 oz. at US$188 per oz., while the 80%-owned Iduapriem mine contributed 43,285 oz. at US$225 per oz.

At the Bibiani mine, production increased to 68,304 oz. at US$148 per oz., compared with 63,000 oz. at US$183 per oz. in the second quarter of 1999.

Ashanti saw a 32% improvement in production from its 85%-owned Siguiri mine in Guinea. Production reached 80,277 oz., up from 54,578 oz. a year ago. Cash costs were up to US$188 per oz., from US$176 per oz. in the corresponding period in 1999.

In Zimbabwe, the Freda-Rebecca mine was 14% above target with 29,016 oz., though cash costs were up as well, to US$223 per oz. from US$176 a year ago.

In June, Ashanti completed the sale of half of the Geita mine to AngloGold (AU-N) for US$335 million in cash and financial assistance. Ashanti’s total operating costs declined 4% in the quarter to US$271 per oz. It continues to explore 20 prospects in six countries across Africa.