JOHANNESBURG (miningweekly.com) – Gold mining company AngloGold Ashanti beat cost and overall production guidance in the three months to September 30, but fatalities and safety stoppages lowered South African output.

“We had a very bad quarter on safety in South Africa,” AngloGold CEO Srinivasan Venkatakrishnan (Venkat) told journalists at an early morning roundtable.

Falls of ground caused most of the five third-quarter operating South African fatalities and netting and bolting is being intensified to prevent these.

Overall production from the multi-country company with 19 operations was 974 000 oz at a total cash cost of $735/oz, compared with 1.128-million ounces at $820/oz in the third quarter of last year.

In recent years, AngloGold has responded to the sharp gold price drop by slashing two-thirds off overhead expenditure, introducing two new, low-cost mines, selling its Cripple Creek & Victor (CC&V) mine in the US and deploying the proceeds to reduce its interest bill by more than a quarter.

The JSE- and NYSE-listed company has used self-help steps to lower debt and improve cash-flow generation capacity.

The operating performance was assisted by especially strong showings from the company's mines in South America, the Geita operation in Tanzania, and Tropicana in Australia.

The cost improvement was a result of the P500 cost-saving initiative, which continues to show particular benefit across AngloGold Ashanti's international mines, and also lower oil prices and weaker currencies in South Africa, South America and Australia.

Improved efficiencies reported in previous quarters have allowed AngloGold Ashanti to improve its cost guidance for the year, with the forecast for all-in sustaining costs (AISC) lowered to $950/oz to $980/oz, from $1 000/oz to $1 050/oz previously.

Capital expenditure for the year is now expected to be about $900-million, from up to $1-billion previously forecast.

The tightened anticipated price range is now 3.8-million ounces to 4-million ounces, from up to 4.1-million ounces previously.

AngloGold's international operations reduced third-quarter costs to an all-in sustaining level 14% lower year-on-year at $826/oz, helping to offset lower output and higher costs from South Africa, which continued to face safety-related stoppages, and lower production from the Obuasi gold mine, in Ghana, which moved to limited operations mode at the end of last year.

Conditional agreement has been reached to partner Randgold Resources to redevelop Obuasi as a mechanised long-life operation.

The adjusted third-quarter headline loss of $52-million, or $0.13 a share, compared with adjusted headline earnings of $2-million in the third quarter of last year.

Adjusted headline earnings were $18-million, or $0.04 a share, after normalising for deferred taxation translation, indirect tax and environmental rehabilitation and other provisions, and inventory movements and write-offs.

The overall levels of borrowing have also been reduced by a quarter, with net debt at $2.319-billion compared with $3.076-billion at June 30 on the repurchase of $779-million of the 8.5% 2020-maturing high-yield bonds, which had an original $1.25-billion outstanding amount.

Using cash from the sale of CC&V, this tender for the company's highest-cost debt will lower the overall interest burden by about $66-million a year.

Earnings before interest, tax, depreciation and amortisation (Ebitda) were $291-million, well down on the $383-million in the third quarter of 2014.

Net debt to Ebitda was 1.56 times at the end of the quarter, well below the banking covenant limit of 3.5 times, and close to the company's targeted level of 1.5 times through the cycle.

Gold production for the fourth quarter is guided at between 900 000 oz and 950 000 oz to provide yearly production of potentially up to four-million ounces.

Total cash costs for the fourth quarter are estimated at from $720/oz to $770/oz.

Total cash costs guided for the year have been bettered to a potential $720/oz with AISC at a possible $950/oz.