Update On Ashanti Goldfield Operations

08:43 a.m. Sep 16, 1999 Eastern

LONDON--(BUSINESS WIRE)--Sept. 16, 1999--Ashanti Goldfields Company (Ashanti) is providing an update on the production outlook for the current quarter (the third quarter of 1999), and on progress at the Obuasi and Siguiri operations. Overall, Ashanti expects that production and costs for the second half of 1999 will be broadly in line with the mid-year forecast of 800,000 ounces at a cash operating cost of US$214/oz. In the third quarter, production will be about 5% below this trend, and cost per ounce about 5% higher. This is as a result of a production shortfall at Siguiri which is mainly weather-related and which is partly offset by above-forecast production at Bibiani and Iduapriem. OBUASI

The Obuasi mine is operating in line with the forecast second half gold production of 375,000 ounces at a cash operating cost of US$235/oz. The grade of underground ore deliveries to the Pompora Treatment Plant (PTP) which ran at an average of 7.9 g/t during July, picked up to 8.3 g/t for the month of August, and this improved trend has continued into September.

The second half forecast takes account of the impending closure of the Oxide Treatment Plant (OTP) as the surface mining operations at Obuasi come to an end. This closure is the result of the ongoing reassessment at the mine which has indicated that the mining and processing costs of oxide ore from the Anyankyirem pit make the ore uneconomic at the current gold price. Consequently, mining at the pit, the major source of oxide ore for the OTP, will cease at the end of September, and the plant will be closed at the same time. These two measures will lead to the redundancy of 400 workers, within the total figure of 2,155 workers due to be retrenched at Obuasi, as previously announced.

The Obuasi production forecast also includes production from the Kubi oxide deposit which was recently acquired from Nevsun Resources. The portion of the deposit which lies outside a Forest Reserve contains 233,000 tonnes of oxide/transition ore at an average grade of 3.5g/t which will provide approximately 22,000 recoverable ounces. Mining has commenced, and to ensure optimal economics, the ore will be stockpiled and processed through the OTP in December with staff seconded from the PTP and the Sulphide Treatment Plant (STP). Up to 100,000 tonnes of the Kubi ore is expected to be treated in that month and the balance early in 2000.

The retrenchment programme in Obuasi is proceeding with the departure of 300 employees in early September and an additional 260 have been given notice. It is expected that by the end of October a further 1000 will have been retrenched, including the 400 at Anyankyirem and OTP. This will bring the cumulative total of redundancies to 1,560, equal to over 70% of the program agreed with the Ghana Mine Workers Union and the Ministry of Employment. The balance of the agreed redundancies will be carried out during the subsequent four months.

The Company has worked in close co-operation with the Ministry of Employment and Social Welfare to develop programmes which provide counselling, training, re-training and re-integration of the retrenched workers into their communities. Representatives of various banks in Obuasi have also made themselves available to advise on investment opportunities and savings procedures. These initiatives have been positively accepted by the first batch of retrenched employees. SIGUIRI MINE

Third quarter production from Siguiri is expected to be about 44,000 ounces at a cash cost of about US$200/ounce. This compares to our previous (mid-year) forecast of 70,000 ounces at $170/ounce for this quarter. Production in the fourth quarter is anticipated to be broadly in line with the mid-year forecast of 70,000 ounces at a cash cost of US$170/ounce. Two factors for the shortfall during this quarter.

First, in June and July, the newly-opened Wolo pit contributed most of the ore for the leach pads. Unlike the ore from the other pits at the mine, the ore at Wolo pit has shown slower leaching kinetics, although it is expected that overall recovery of around 80% will eventually be achieved. To correct the short term production situation, better leaching ore from Eureka Hill and Kosise is being blended into the plant feed.

At the same time the record rainfall experienced in recent weeks in the West African sub-region has severely impacted on Siguiri's production. At close to 600 mm, rainfall in August was 20 percent above the previous 25-year record. Although a reasonable amount of heavy rainfall was anticipated, the record levels of rain recorded in the area exceeded expectations. The rainfall had the following effect on Siguiri's production during July and August:

Pregnant solution grades were extremely diluted; Pond cyanide addition was curtailed for environmental reasons; Mining was limited; Workers were unable to report for work on several days due to impassable access roads; and Supply routes from Conakry to Bamako were blocked on many occasions.

To improve the operation's robustness during extreme rainfall conditions, management has installed additional Wet Plant capacity, which became available this month and has increased the Plant's ability to compensate for weaker solution strength associated with the rainy season. The new capacity, together with a lessening of the rainfall, has resulted in September production being back on target.

The Siguiri Expansion Project to 8 million tonnes per annum is on track for completion next quarter. A recent failure of adhesive resins for the hot splices on the conveyor belts required installation of mechanical splices in some critical areas. The replacement of all the splices is scheduled to be completed by mid-October by which time throughput to the new plant is expected to attain design levels. OTHER OPERATIONS

Production at the Bibiani, Iduapriem and Ayanfuri mines in Ghana, and Freda-Rebecca in Zimbabwe, has been running slightly higher than the levels forecast at mid-year.

Construction of the Geita project in Tanzania has continued on track for first gold production in the third quarter of 2000. Excellent drilling results continue to be recorded at Nyankanga as reported. The Company is evaluating the feasibility of enhancing the mine plan to access this additional high-grade material over the first five years of the project life. NEXT RESULTS ANNOUCEMENTS AND PRESENTATIONS

Ashanti will announce its financial and operating results for the third quarter on October 20. The Company will also hold a series of presentations during that week to brief investors and analysts on the updated Business Plan for Obuasi and on the progress of Geita project.