Gold Production Nose Dives

Total gold production of Ashanti Goldfields Company Group (AGC), Ghana's premier gold mining company, fell by eight per cent in the second quarter, putting total production for the period at 370,978 ounces.

Presenting the results in Accra on Friday, the company said it produced 403,734 ounces in the second quarter of last year. It said that was in line with the previously announced lower production profile for the first half of 2003.

Ashanti, however, believed that it has laid the foundation to improve upon its first two quarters operational performance after having successfully replaced the damaged mill pinion at Obuasi, substantially completed the waste stripping in Nyankanga at Geita, and with the progress made on the plant expansion at Iduapriem.

Cash operating costs for the Group rose from 192 dollars to 222 dollars per ounce mainly as a result of lower gold production, the impact of increased wages and fuel prices, higher costs of other inputs and increased costs associated with the Nyankanga pit cut back at Geita. During the quarter, Ashanti completed the sale of its rights in the Mampon concession to Golden Star Resources Limited for 9.5 million dollars consideration.

Ashanti's earnings, including an exceptional gain of 7.0 million dollars after tax of 0.8 million dollars arising from the sale of the Mampon property, were 14.8 million dollars.

Earnings, excluding the exceptional gain and related tax, were 7.8 million dollars, down 11.0 million dollars on the corresponding period last year, but up 1.0 million dollars on the previous quarter.

The reduction in earnings compared with last year was mainly in line with the previously announced lower production profile for the first half of 2003 and higher cash operating costs, offset partially by higher spot prices.

Earnings per share before exceptional items for the quarter were 0.06 dollars (2002: 0.17 dollars) and after exceptional items were 0.12 dollars (2002: loss 0.03 dollars).

During the quarter, Ashanti repaid 10.0 million dollars towards its Revolving Credit Facility reducing the amounts drawn under the facility from 149.0 million dollars to 139.0 million dollars.

On the safety front, the Group maintained its strong safety standard with the Group's Lost Time Injury Frequency Rate (LTIFR) of 0.24 injuries per 200,000 hours worked as compared to 0.38 for the corresponding period in 2002.

Underground exploration at Obuasi continued to yield encouraging results both above and below 50-metre level.

Government has advised Ashanti that it has appointed a consortium led by Soci=E9t=E9-G=E9n=E9rale to act as its adviser and a shareholder to hold the government's golden share in Ashanti and also act as a regulator of the mining industry in Ghana.

It is also to assist the Government in arriving at a decision on the proposed merger of Ashanti and AngloGold.