Ashanti Goldfields Company Limited Announces a Temporary Unofficial Stoppage At Its Obuasi Mines

03:03 p.m May 17, 1999 Eastern

May 17, 1999--Ashanti Goldfields Company Limited ("Ashanti" or the "Company") announced today that since Friday 14 May 1999, production has been stopped at the Obuasi mine in Ghana due to an unofficial strike by some of the Obuasi workforce. However, essential services have been maintained and no significant damage has occurred to production facilities.

The unofficial action followed the conclusion of an agreement on May 11, between Ashanti and the Ghana Mine workers' Union concerning pay and benefits. The wages of Ashanti's 9,000 employees are indexed to the US dollar and have increased by 25% in local currency terms over the last two years. Ashanti has also paid lump sum payments and other benefits, which have been enhanced further under the latest agreement.

The unofficial strike action is illegal under Ghana's Industrial Relations Act. The leadership of the Mineworkers Union has called on the protest to halt and Ashanti has received co-operation from the police in securing property at Obuasi.

As the largest mine within the Ashanti Group, Obuasi produces about 850,000 ounces of gold per annum.

Trevor Schultz, Ashanti's Chief Operating Officer, said, "we are losing 2,500 ounces of gold production for every day that the stoppage continues at Obuasi. The unofficial action by workers is extremely unfortunate, as Obuasi is already having a particularly tight quarter due to the lack of flexibility in the surface mining operations. Since the premature closure of the Sansu pit five months ago, we have been pushing tonnage hard from Anyinam and Gyabunsu pits and from underground. We are no longer producing ore from the high-grade ETS pillar underground, and we do not have the flexibility to make up for unexpected interruptions to production especially one as serious as this stoppage".

The other gold mines in the Ashanti group are performing at or above targets in the current quarter, and have not been affected by the unofficial action at Obuasi.