Ashanti posts record quarter

West Africa’s largest gold miner, Ashanti Goldfields (ASL-T), achieved record production in the first quarter, while, at the same time, reducing cash costs to below what they were a year ago.

The 402,151 oz. produced represent a 20% increase over output in the first quarter of 1998. Cash costs between the two periods dropped 11%, to US$211 per oz.

The 85%-owned Siguiri mine in Guinea produced 59,806 oz. at a cash cost of US$164 per oz. An expansion project, designed to boost production to 250,000 oz. annually, is planned for year-end.

At the Bibiani mine in Ghana, Ashanti racked up 54,015 oz. for the quarter, with cash costs estimated at US$180 per oz.

More than half of Ashanti’s production in the 3-month period came from the Obuasi complex in Ghana. Higher throughput from underground resulted in a 20% increase in gold output over the first quarter of 1998. The recent quarter saw Obuasi produce 210,171 oz. at a cash cost of US$225 per oz., compared with US$246 a year ago.

The company is on its way toward producing 1.6 million oz. in 1999, with cash operating costs slightly below US$220 per oz.

Meanwhile, construction has begun on Ashanti’s Geita gold project in the Lake Victoria Goldfields region of western Tanzania. The operation is targeted to produce 400,000 oz. per year, with startup scheduled for the end of 2000.

During the quarter, Ashanti disposed of several non-core assets, which will net US$48 million. The sales, which were partly designed to hold down debt, include the following:

• The company sold its half-interest in the Golden Pride mine in central Tanzania to Australia’s Resolute for US$40 million.
• Ashanti disposed of its 50.4% interest in the Prestea Sankofa gold tailings operation in Ghana.
• Also sold was the company’s half-interest in the Saoura exploration project, near the border of Burkina Faso in Niger. Etruscan Resources (EET-T) picked up 100% of the property from Ashanti and its partner, Iamgold (IMG-T), for US$6.75 million in early March.
• Ashanti also sold its majority interest in Ghana’s largest pineapple farm for US$4.7 million.

Ashanti posted earnings of US$21.5 million (or 20 cents per share) for the recent first quarter — 43% higher than a year ago. Hedging realized a gold price of US$380 per oz.