Anglo Gold to up African output

AngloGold to up Africa output, keen on Congo

The world's third-largest gold miner, AngloGold Ashanti, aims to expand output from its key Africa mines to 5 million ounces a year in the next five to six years from around 4 million, a top official said. AngloGold's Africa operations currently contribute about 75-80 percent of the South African group's output. Even though the company wants to expand its footprint outside of Africa, the continent will still remain its key playground. The company sees growth in Africa despite challenges including a power crunch in South Africa, high electricity tariffs in Ghana, and plans by a number of countries to revise taxes in order to cash in on the commodities boom.
"This is a continent where we see future growth," Richard Duffy, the group's executive vice president for Africa, told Reuters in an interview on Tuesday.
"From our current output of about 4 million ounces from our Africa operations, we target to produce 5 million ounces in the next five to six years." Duffy said AngloGold was also keen to bed down a deal with the Democratic Republic of Congo on its Kilo exploration joint venture to the north east of the vast African country. Congo has said it wants its state mining company OKIMO to sign a new deal with AngloGold, and increase its stake in the project.
"The government is looking for a larger stake, and this is part of ongoing discussions," Duffy said. "We want to conclude this sooner rather than later, but we can't put a timeframe." The review commission has recommended OKIMO increase its stake in the joint venture to 45 percent from around 14 percent, and that AngloGold increase the annual fee it pays to OKIMO. Congo which is reviewing of all its mining contracts, said last week said it would finish the process this month. The review, which started last year, covers 61 contracts signed with mining firms including majors such as AngloGold, BHP Billiton and Freeport-McMoRan. Companies who have signed deals in the copper, tin and cobalt-rich central African country may have to cede much greater ownership to state-owned miners. On the gold price, Duffy said AngloGold was upbeat.
"We still see support for gold at current prices, fundamentals are still positive for gold and although we expect a lot of volatility, there is upside potential," Duffy said. Gold has lost more than 20 percent in value since spiking to all-time high of $1,030.80 in March, mainly driven by profit taking, oil's falls from record highs and a rebounding dollar.
AFRICA REVAMP Duffy said the expected jump in output from the group's Africa mines would come partly from revamped mines in Ghana and Tanzania, as well as the Siguiri mine in north east Guinea.
"We are quite excited by Siguiri's growth potential," Duffy said. The mine produces some 300,000 ounces a year and is projected to produce 500,000 ounces a year in five to six years. AngloGold sees more ounces from Geita in Tanzania, as well as Obuasi, the firm's struggling century-old mine in Ghana, both of which will add output after being revamped, Duffy added. AngloGold, which has 21 operations across four continents, in 10 countries including Argentina, the United States and Australia, hopes to maintain output in South Africa in the next five to seven years to around 2 million ounces a year. South African gold mines are faced with dwindling gold deposits, and the country has been knocked off its pedestal as the world's top producer by fast-rising China.