Ashanti triumphs over power crunch

Despite being pinched for power, Ashanti Goldfields (ASL-N) posted record production and lower costs during the second quarter.

An ongoing drought in Ghana severely limited power for the company’s mines there, but, with help from the government, additional sources were arranged.

Normally, power is supplied by a hydro station at Volta Lake, where recent low water levels triggered major power outages. The government of Ghana responded by increasing the power supply from non-hydro sources, including the Takoradi thermal plant and diesel and liquid fuel generators. The government also purchased some power from neighboring Ivory Coast and is building a 220-MW plant designed to supply all Ashanti’s power needs in the country.

Power rationing notwithstanding, the company produced a record 374,461 oz.

gold at US$222 per oz. in the three-month period — 13% higher than a year ago, when cash costs were US$269 per oz.

The period marks the fourth consecutive quarter of higher production and lower costs.

Earnings totalled US$15.5 million (or 14 cents per share), compared with US$7.7 million (7 cents per share) in the second quarter of 1997.

At the Obuasi complex, 214,049 oz. were produced (mostly from underground) at a cash cost of US$241 per oz., while at the Bibiani mine, power disruptions restricted throughput by 50%. However, six diesel generators, producing 4 MW, were installed, enabling the plant to crank out 32,784 oz.

during the quarter at US$168 per oz.

Power rationing at the Iduapriem mine caused output to slip 19%, though cash costs were held steady at US$268 per oz. The company is considering closing the mine at the end of 1999.

In Guinea, the Siguiri mine exceeded the production target by more than 10,000 oz., turning out 59,529 oz. gold at a cash operating cost of US$158 per oz. The company plans to expand the mine to 250,000 oz. gold by the end of 1999.

At the Geita project in Tanzania, Ashanti still expects the final feasibility study to be completed in the third quarter. A production decision could be made at that time, with construction planned for early in the next year and gold production expected by 2000.

The company continues to explore projects across West Africa, including Burkina Faso, Niger and Senegal.