Review of the year
Review of operations: Tanzania (PDF - 161 KB)
Review of operations
AngloGold Ashanti has a single operation in Tanzania, the Geita Gold Mine. Prior to May 2004, the mine was managed under a joint venture agreement between Ashanti Goldfields and AngloGold. Since the merger of the two companies, Geita has been a wholly owned subsidiary.
In 2005, the Tanzanian region produced 613,000 ounces of gold at a total cash cost of $298 per ounce.
Description: The Geita mine is located 80 kilometres south-west of the town of Mwanza. It is a multi-pit operation with a CIL plant which has the capacity to treat 6 million tonnes a year.
Geology: Geita is an Archaean mesothermal, mainly Banded Ironstone Formation (BIF)-hosted, deposit. Mineralisation is located where auriferous fluids, which are interpreted to have moved along shears often on BIF-diorite contacts, reacted with the BIF.
Some lower grade mineralisation can occur in the diorite as well (usually in association with BIF-hosted mineralisation), and approximately 20% of the gold is hosted in the diorite.
In 2005, gold production decreased to 613,000 ounces, largely as a result of a 16% decline in yield to 3.14g/t as the high-grade ore in the current cut-back was depleted. The high-grade ore of the next phase of mining in the Nyankanga pit is likely to be accessed by the end of September 2006.
A change from contract to owner-mining was implemented in order to address spiralling contractor mining costs, and this change was successfully completed by the end of July 2005. Benefits began to flow through in the last quarter of the year but as a result of the change over to owner-mining, a contract termination fee of $9 million was incurred and this is reflected in the income statement.
Total cash costs rose by 19% to $298 per ounce as a result of lower production, low contractor efficiencies and increased fuel costs. Gross profit, adjusted for the effect of unrealised non-hedge derivatives, declined to $9 million.
Capital expenditure of $78 million reflected the cost of the ore haulage fleet purchased as a result of the transition to owner mining, ongoing exploration and tailings dam upgrades.
Exploration on the identification and generation of resources to the inferred category, as well as the conversion of resources into reserves, will continue. Current inferred resources are expected to add four years to life of mine reserves but significant further brownfields potential is expected, both surface and underground.
Gold production is set to decline to between 562,000 ounces and 585,000 ounces in 2006, at an expected total cash cost of between $297 per ounce and $309 per ounce. Capital expenditure of between $86 million and $89 million is planned, to be spent mainly on mining equipment, workshop facilities, road construction, grid power studies and ongoing exploration.
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|Annual Report 2005|