Business News of 2014-07-28

Obuasi mine’s restructuring drags earnings

Gold producer, AngloGold Ashanti’s ongoing restructuring at its Obuasi mine is likely to drag down the company’s second quarter earnings.

AngloGold embarked on the implementation of a range of interventions to deal with the historic underperformance of Obuasi and close the Yatela mine following a sharp decline in gold price.

“Over the past 18 months, AngloGold has taken decisive steps to adapt [and] reduce costs, [as well as] improve the overall quality of its portfolio to improve cash flow and returns,” the company said in a statement on Friday.

Overage equipment, illegal mining, poor security and inadequate power supply are major challenges impeding AngloGold Ashanti’s (AGA) Obuasi mine operations.

Once the biggest gold mine in the country and the leading employer in the industry, Obuasi has never produced beyond 400,000 ounces since the merger between the former AngloGold of South Africa and Ashanti Goldfields Company of Ghana.

AngloGold plans to invest approximately US$200 million in the coming years in the mine which still has more than 20 years of mine-life with 9 million ounces of gold reserves.

The mine also needs massive capital injection to renew its antiquated infrastructure, improve underground transport and sharpen the skills of its employees.

About 430 Obuasi employees have already been retrenched this year, and it is likel hat number could go up in coming years.

Source: B&FT
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