AngloGold Ashanti holds off on Mali mine's expansion

DAKAR Wed Feb 13, 2013 1:02pm EST

DAKAR Feb 13 (Reuters) - AngloGold Ashanti is to hold off on a $500 million expansion plan for its Sadiola joint venture mine in western Mali until the security situation becomes clearer, a company executive said on Wednesday.

Richard Duffy, executive vice-president of continental Africa, said the world's third-largest gold producer was simply waiting on developments in the French-led war to oust Islamist rebels from the country's northern desert.

"We are waiting for a little more certainty in terms of how the security situation in Mali pans out," Duffy told Reuters in an interview in Dakar. "We are not scaling back, we are waiting for some clarity."

Duffy said the expansion of the Sadiola mine in the Kayes region, far from the fighting in the north, was ready for the company's board approval. AngloGold operates in partnership with Canada's Iamgold and the government.

"It is more about how quickly things settle. We don't expect any immediate resolution: it is more about determining safety for our people and any possible impact in the major centres like Bamako and Kayes," Duffy said.

A four-week campaign by French and Malian forces since Jan. 11, backed by warplanes and helicopters, has driven the Islamist militants out of the main towns of northern Mali into the mountains and desert.

But the slow deployment of other African forces to help secure urban centres and surrounding areas has raised security concerns after insurgents carried out a surprise attack in the northern city of Gao last weekend.

SEEKING TO CUT COSTS

Though AngloGold's operations in Mali are far from the conflict zone, Duffy said the firm had reviewed its security and asked for more support from Malian state security around sites.

"We have also put in place some restrictions and reviewed emergency evacuation plans as a precautionary measure," Duffy said, adding that the measures did not significantly increase its operating costs.

AngloGold's Continental Africa operation - which excludes South Africa - groups its mining sites in Ghana, Mali, Guinea, the Democratic Republic of Congo, Namibia and Tanzania.

Its Malian operations, including the Morila joint venture with Randgold Resources, and the Sadiola and Yatela ventures with Iamgold, accounted for 5.8 percent of AngloGold's annual production in 2011.

The Johannesburg-listed firm will report its fourth quarter 2012 results on February 20.

In the third quarter Continental Africa produced 357,000 ounces of gold at a cost of $916 per ounce, compared with 411,000 ounces at $739 per ounce in the same period in 2011.

Duffy said gold production from its Africa business for the whole of 2012 would be broadly stable but there was a challenge across the industry to keep production costs in line with consumer price inflation (CPI).

"I certainly don't, in the short-term, see a reversal in the cost trend. It is much more about managing costs to do better than CPI," he said.

Duffy said lower ore grade had also impacted output but new projects, such as its Kibali joint venture with Randgold Resources in the Democratic Republic of Congo, would help offset that trend.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.