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AngloGold to close two mine shafts
Sherilee Bridge
August 01 2001 at 07:28AM
Johannesburg - AngloGold would close two loss-making Free State shafts, putting almost 5 000 people out of work, it said yesterday.
The world's biggest gold producer said the Matjhabeng Eland shaft would be shut and the Joel South shaft would be wound down and closed unless a buyer was found by year-end.
Bobby Godsell, the chief executive, said AngloGold had changed its mind on the sale of the other Free State mines.
"The offers received for the mines were lower than our projections, so we have decided to hold on to them," Godsell said.
AngloGold confirmed at the weekend that it had received offers from Harmony Gold Mining and African Rainbow Minerals (ARM), a black empowerment company, for its Free State assets. Harmony reportedly submitted an all-cash offer of about R1,5 billion while ARM was thought to have made an offer of close to R1,8 billion.
The value of the assets is estimated at R2 billion.
"We had promised shareholders that (we) would either sell or fix them," Godsell said.
"We have seen a turnaround in Bambanani, and Tshepong had an excellent quarter.
"There is still upside at these operations; why should the assets be more valuable in anyone else's hands?"
AngloGold posted a better-than-expected 22 percent rise in earnings in the June quarter. This was achieved despite slightly reduced gold production and a lower received gold price.
Headline earnings a share were R5,01 from R4,08 in the March quarter. Analysts had forecast headline earnings of up to R4,40 a share.
Gold production decreased by 2 percent, however, to 3,5 million ounces compared with the first six months of 2000.
The group said this was due to the disposal of the Elandsrand and Deelkraal mines, west of Johannesburg, which collectively contributed 277 000 ounces in the first half of 2000.
The lost production was partially offset by production from its Morila operation in Mali and Geita in Tanzania.
AngloGold produced 1,7 million ounces of gold at total cash costs of $185 for the quarter and 3,5 million ounces at total cash costs of $189 for the half year.
"There has been a solid focus on reducing costs and there is still some work to be done," said Godsell.
AngloGold has just settled a wage dispute with the National Union of Mineworkers, averting a strike that threatened to stop gold production. It said its improved offer translated into a net increase of 6,9 percent to its bottom line this year.
Another figure reflected on the bottom line was the group's gold marketing budget. "There is a profound need to develop our product or we may as well stop producing it," Godsell said.
He said AngloGold was examining the opportunities being represented on the other side of the mine door, hinting that the group might become more involved in the retail side of the business.
AngloGold shares closed R2,80, or 0,93 percent, weaker at R297 on the JSE Securities Exchange yesterday as the overall market ended little changed.
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