AngloGold Ashanti (AGA) says it will improve efficiency and tighten costs to mitigate the impact of the slide in gold price on its earnings.

The company said it produced 935,000 ounces (oz) in the second quarter of the year at a total cash cost of between US$900/oz and US$920/oz, in line with its market guidance of 900,000 oz to 950,000 oz.

“It’s been a strong performance in a challenging environment from our operators and from the teams developing our two new, high-quality projects. In light of the US$220/oz drop in the average quarterly gold price which will negatively impact our second quarter results, we have moved decisively on all fronts to sharpen our focus on efficiency and to tighten up on costs, overheads and capital,” Chief Executive Srinivasan Venkatakrishnan said.

AGA is the world’s third-largest gold producer, with 21 operations in 10 countries and a portfolio of exploration assets. In addition to its existing portfolio, two new mines -- Tropicana Joint Venture in Australia and Kibali Joint Venture in the Democratic Republic of Congo -- are in development and are scheduled to start production before the end of this year.

Mr. Venkatakrishnan said together these two projects are proceeding to plan and are expected to add attributable production of approximately 550,000oz to 600,000oz in 2014 -- at a combined average total cash cost of less than the company’s current average.

He said AGA continues to focus on safe, sustainable cash flow generation by protecting margins and returns. To this end, work is progressing on an initiative that aims to realise savings in both operating and indirect costs, as well as sustaining capital expenditure over the next 18 months.

In addition, he said in light of lower and more volatile gold prices, capital expenditure is being focused on the group’s highest quality assets while curtailing spending or suspending operations at projects that may yield lower returns. He said exploration spending is being reduced through a move tightly focused on a global drilling programme, and overhead costs are being significantly rationalised.

In line with its commitment to move decisively to remove marginal ounces from its production profile and to optimise free cash flow generation, he said AGA is revising its current mine plans. Given this strategy and prevailing gold price, AGA’s annual guidance for 2013 is now between 4 million ounces and 4.1 million ounces, which compares to previous guidance of 4.1 million ounces to 4.4 million ounces.

“In accordance with the International Financial Reporting Standard (IFRS) -- given a range of indicators that have changed including the sharp drop in gold prices thus far in 2013, reduction in market capitalisation and higher discount rates -- AGA has reviewed its carrying value of its mining assets (including ore stockpiles).

“Over the remainder of 2013, all business plans and associated reserves and resources will be raised and optimised to reflect the lower gold price assumptions, associated mitigation measures and management initiatives to improve margins and cash flow.”