AGC produces more gold at lower cost

Accra (Greater Accra), 27^th January 2000

Ashanti Goldfields Company says it achieved a record group gold production of 1,561,536 ounces last year, despite the Obuasi illegal strike action and exceptional rains at Siguiri in Guinea.

It produced eight per cent more gold at reduced cost during the fourth quarter of last year compared to 1998.

Group gold production in the fourth quarter of 437,178 ounces was a record and an eight per cent increase on the fourth quarter of 1998.

The fourth quarter cash-operating cost of 190 dollars per ounce, (unaudited) represented a 10 per cent reduction in 12 months.

A release from the Ghana Stock Exchange (GSE) on Wednesday said gold production for the same period in 1998 was 421,573.

The total gold production in 1999 of 1,561,536 ounces exceeded the revised target of 1,545,000 ounces and was slightly higher than 1998's 1,540,751 ounces.

The total gold production in 1999 was at a cash operating cost of 206 dollars per ounce while that of 1998 was produced at a cash operating cost of 218 dollars per ounce.

The release described the 1999 figure "as a significant improvement in terms of cash costs compared to the revised 1999 target produced at a cash operating cost of 220 dollars per ounce.

"This strong production and cost performance was achieved, notwithstanding, an illegal strike action at Obuasi and exceptional rains at Siguiri".

The release noted that during the year, two major production changes occurred in which the Siguiri expansion project was completed. This increased the annualised gold production by around 150,000 ounces from the fourth quarter.

The other was the suspension of the Obuasi oxide treatment plant operations due to the depletion of ore reserves while a rationalisation plan was prepared to optimise the NPV of the Obuasi mine.

The net effect of the suspension and the rationalisation plan will be the reduction in the 1999 target of 729,000 to 700,000 ounces in 2000.

The current production plan for 2000 is expected to be at a lower cash operating cost than that achieved in 1999 even though the impact of the two major changes would "roughly cancel each other out" in terms of ounces produced.

The full year cash operating cost of 206 per ounce recorded in 1999 reduced by six per cent.

Giving details of expectations for the year 2000, the release said, Ashanti's production is targeted to increase from 1.56 million ounces achieved in 1999 to include production from Geita project in Tanzania after it has been commissioned at the end of the second quarter of 2000.

This is in view of a 50 per cent completion of the Geita project which commenced in April last year.

The commissioning date of the project was however, brought forward to the second quarter of 2000 pending the Company's ability to secure a proposed new money facility.

Geita is planned to produce 150,000 ounces in 2000 and a subsequent production of 500,000 ounces per annum.

GRi