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VENTURES AFRICA – AngloGold Ashanti, Africa’s leading gold producer has seen its profit soar due to lower costs and higher production, which sent its share price surging on Wednesday.
Adjusted headline earnings were $576 million compared with a loss of $135 million in the previous three months, bringing its earnings to 148 US cents per share, far ahead of a Reuters’ 8.2 cents consensus from five analysts.
“AngloGold Ashanti responded swiftly to a sharp drop in the gold price this year, cutting unprofitable ounces from its production base,” the miner said.
The group has also managed to drop its total cash costs by 10 percent to $809/oz ($898/oz), which also beat management guidance that estimated September quarter cash costs at between $860/oz and $890/oz.
“We’ve delivered a decisive response to the lower gold price, with all operating regions showing better production and we’ve seen cost improvements at every level,” said Chief Executive Srinivasan Venkatakrishnan.
“We’ll continue driving hard to build on these early successes,” he added.
While posting the positive figures, Venkatakrishnan said its Ghanaian Obuasi operations was not doing well.
He told Reuters that the cost structure at Obuasi quarry was unsustainable and the company was looking to make over 430 job cuts there.
He was however quick to add that the company would carry out proper consultation with labour unions in Ghana – an important consideration in African operations at a time when proposed job cuts by mining companies have been met with union strikes and government resistance, notably in South Africa and Zambia.
AngloGold’s share price rose 7 percent in early trade, helping drive Johannesburg’s key bourse indices to record highs, before dropping to 4.6 percent.