New dawn for AngloGold’s Sunrise Dam mine in Western Australia

ANGLOGOLD Ashanti said yesterday that the commissioning of the recovery enhancement project at its Sunrise Dam Gold Mine in Western Australia had been completed on time at the end of June, cementing the next step in the mine’s renaissance.

The group also said the development of the large, high-grade Vogue ore-body at Sunrise Dam Gold Mine was under way, which, along with improved recoveries, increased mining volumes and a range of productivity enhancements, was expected to result in an increase in production of about 25 percent to about 300 000 ounces this year.

AngloGold Ashanti said it would map out the plan to sustain long-term production from the mine at 300 000 to 350 000 ounces a year, with the all-in sustaining cost trending towards $900/oz in coming years, making this one of Australia’s most important gold mines and a cornerstone asset for the group.

Mike Erickson, AngloGold Ashanti’s senior vice-president for Australia, said that, with a combination of innovation, strict capital discipline and incremental investment, they would see a significant rise in production and a reduction in their all-in-sustaining costs over time.

“We are on an exciting improvement pathway at Sunrise Dam Gold Mine which will enable us to optimise the development world-class orebody and achieve sustainable cash margins over the life of mine,” Erickson said.

Sunrise Dam is located 220km north-east of Kalgoorlie

and 55km south of Laverton. The mine produced ore from both an open pit and underground mine during 2013. After more than 17 years of operation, the open pit was completed to a depth of 490 metres below the surface at the end of 2013.

Last year, AngloGold Ashanti pumped $30 million (R407.70m) into Sunrise Dam to bring down costs at the ageing gold mine. However, AngloGold Ashanti said it continued to prize strict capital discipline and high-return projects with relatively low capital expenditure.

In May, the group posted a strong first-quarter performance to the end of March, with lower debt and improvements in production and all-in sustaining costs, driving wider margins and stronger cash flows, the group said.

The group said cash generation from retained operations remained strong despite the smaller asset base, with adjusted earnings before interest, tax, depreciation and amortisation (adjusted Ebitda) rising 21 percent to $382m, up from $316m compared with last year.

The group reduced its net debt to $1.77 billion at the end of March, compared with $2.05bn at the end of March last year, and net debt to adjusted Ebitda improved to 1.14 times, down from 1.35 times at the end of 2017.

Chief executive Srinivasan Venkatakrishnan said the group’s hard work in restructuring the business to focus on portfolio quality was starting to bear fruit, as operations were demonstrating strong results.

“The core portfolio is performing well, the balance sheet is solid, our projects are on schedule, and we see good potential for further efficiencies,” Venkatakrishnan said.

AngloGold Ashanti shares closed 1.32 percent lower on the JSE yesterday at R116.70.