Review of operations: Mali (PDF - 401 KB)

Review of operations

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Mali

AngloGold Ashanti has interests in three operations in the West African country of Mali – Sadiola (38%), Yatela (40%) and Morila (40%). All three operations are managed by AngloGold Ashanti.

In 2005, the Malian operations produced 528,000 ounces of attributable gold production, at a total cash cost of $220 per ounce.

Sadiola

Description: AngloGold Ashanti has a 38% interest in and manages the Sadiola mine which is situated within the Sadiola exploitation area in western Mali. The joint venture partners are IAMGOLD, a Canadian-listed company (38%), the government of Mali (18%) and the International Finance Corporation (6%). The mine is situated 77 kilometres south of the regional capital of Kayes.

Geology: The Sadiola deposit occurs within an inlier of greenschist facies metamorphosed Birimian rocks known as the Kenieba Window. The specific rocks which host the mineralisation are marbles and greywackes which have been intensely weathered to a maximum depth of 200 metres. A series of northsouth trending faults occurs which feeds the Sadiola mineralisation. As a result of an east-west regional compression event, deformation occurs along a northsouth striking marble-greywacke contact, increasing the porosity of this zone. North-east striking structures, which intersect the north-south contact, have introduced mineralisation, mainly with the marble where the porosity was greatest.

The Sadiola Hill deposit generally consists of two zones, an upper oxidised cap and an underlying sulphide zone. From 1996 until 2002, shallow saprolite oxide ore was the primary ore source. Since 2002, the deeper saprolitic sulphide ore has been mined and will progressively replace the depleting oxide reserves.

Operating performance

Attributable gold production declined by 3% year-on-year as tonnage throughput decreased. A mill breakdown in the second quarter had an impact on production. The yield, at 2.73g/t, was maintained despite the processing of lower grade oxides in the latter half of the year.

Total cash costs rose by 10% to $265 per ounce, mainly due to the significant increase in fuel costs during the year.

Gross profit, adjusted for the effect of unrealised non-hedge derivatives, increased to $20 million, with the decline in production and increase in costs being offset by an 11% increase in the gold price received.

Capital expenditure increased by 17% to $7 million. The main areas of expenditure were cyanide recovery and plant modifications, exploration, grid power studies and mining infrastructure.

Sadiola 2005 2004 2003 Pay limit (oz/t) 0.05 0.06 0.05 Pay limit (g/t) 1.80 1.76 1.68 Recovered grade (oz/t) 0.080 0.081 0.081 Recovered grade (g/t) 2.73 2.77 2.77 Gold production (000oz) – 100% 442 459 452 Gold production (000oz) – 38% 168 174 172 Total cash costs ($/oz) 265 242 210 Total production costs ($/oz) 336 301 275 Capital expenditure ($ million 100% 18 16 10 Capital expenditure ($ million) 38% 7 6 4 Total number of employees 1,245 1,159 1,041    Employees 584 550 492    Contractors 661 609 549

Gold production (000oz) Sadiola (attributable)

Total cash costs ($/oz) Sadiola

Capital expenditure ($m) Sadiola (attributable)

Growth prospects

A pre-feasibility study into mining of the hard sulphide ore was completed and showed that this would be uneconomical at current levels of metallurgical recoveries. Further metallurgical test work will be conducted during 2006 on improving recoveries. A feasibility study and infill drilling will continue once that has been successfully achieved.

Outlook

In 2006, attributable production at Sadiola is expected to increase to between 185,000 ounces and 193,000 ounces, at a total cash cost of between $302 per ounce to $314 per ounce. Planned attributable capital expenditure of $7 million will be spent mainly on housing, contractor camp relocation, gravity concentration test work, exploration and the deep sulphide feasibility study.

Yatela

Description: Yatela mine is owned by Soci?t? d'Exploitation des Mines d'Or de Yatela SA, in which AngloGold Ashanti and IAMGOLD each hold an effective 40% interest, and the government of Mali 20%. Yatela is located some 25 kilometres north of Sadiola and approximately 50 kilometres south-southwest of Kayes, the regional capital.

Geology: Yatela mineralisation occurs as a keelshaped body in Birimian metacarbonates. The keel is centred on a fault which was the feeder for the original mesothermal mineralisation, with an associated weakly mineralised diorite intrusion. Mineralisation occurs as a layer along the sides and in the bottom of the keel. The ore dips almost vertically on the west limb and more gently towards the west on the east limb, with tight closure to the south.

Operating performance

Tonnages processed at Yatela increased during the year while the recovered grade decreased by 12% to 2.99g/t. Attributable production rose marginally to 98,000 ounces.

Total cash costs rose by only 3% to $263 per ounce as fuel and mining contractor costs increased. This was offset by improved cost performance in other areas, including the significant benefit realised from reduced cement consumption and costs by the move from bottom-lift stacking of the heap-leach pad to top-lift stacking.

Gross profit of $11 million, adjusted for the effect of unrealised non-hedge derivatives, was 38% higher than in 2004 due to a 9% increase in the gold price.

Capital expenditure of $2 million was 33% lower than the previous year and was incurred mainly on heapleach pad construction.

Yatela 2005 2004 2003 Pay limit (oz/t) 0.05 0.06 0.06 Pay limit (g/t) 1.66 1.96 2.04 Recovered grade (oz/t) 0.087 0.099 0.083 Recovered grade (g/t) 2.99 3.41 2.84 Gold production (000oz) 100% 246 242 218 Gold production (000oz) 40% 98 97 87 Total cash costs ($/oz) 263 255 235 Total production costs ($/oz) 340 323 334 Capital expenditure ($ million) (100%) 5 7 14 Capital expenditure ($ million) (40%) 2 3 6 Total number of employees 910 1,033 926    Employees 210 208 190    Contractors 700 825 736

Gold production (000oz) Yatela (attributable)

Total cash costs ($/oz) Yatela

Capital expenditure ($m) Yatela (attributable)

Growth prospects

Mining of heap leachable ore will cease in mid-2007 after which leaching and rinsing of the heaps will continue for some months. The potential for a small amount of sulphide ore below the existing Alamoutala deposit to be treated at Sadiola is being investigated.

Outlook

In 2006, Yatela’s attributable production is expected to rise to between 118,000 ounces and 122,000 ounces, at a total cash cost of $249 per ounce to $259 per ounce. Capital expenditure attributable to AngloGold Ashanti is planned at $0.2 million, to be spent mainly on the final extension of the overland conveyor.

Morila

Description: AngloGold Ashanti and Randgold Resources Limited each hold a 40% interest in the Morila Joint Venture, with the other 20% being held by the Malian government. Morila is situated some 180 kilometres by road south-east of the capital of Mali, Bamako, which is 600 kilometres south-east of Sadiola.

Geology: Morila is a mesothermal, shear-zone-hosted deposit, which, apart from rising to the east against steep faulting, lies flat. The deposit occurs within a sequence Birimian metal-arkoses of amphibolite metamorphic grade. Mineralisation is characterised by silica-feldspar alteration and sulphide mineralisation consists of arsenopyrite, pyrrhotite, pyrite and chalocopyrite.

Operating performance

Morila made a good recovery during the year with production rising to 262,000 attributable ounces. This was as a result of higher tonnages and an increase in the overall grade of 22% to 5.41g/t.

A strike by mining contractor employees in the third quarter affected both tonnages and costs. Overall, however, total cash costs were contained and, at $191 per ounce, are amongst the best in the industry.

Gross profit adjusted for the effect of non-hedge derivatives rose by 56% to $39 million.

Capital expenditure of $2 million was at similar levels to that of 2004, and was incurred mainly on plant modifications, infill drilling and the purchase of a tower crane.

Morila 2005 2004 2003 Pay limit (oz/t) 0.07 0.09 0.06 Pay limit (g/t) 2.27 2.81 2.14 Recovered grade (oz/t) 0.158 0.130 0.221 Recovered grade (g/t) 5.41 4.44 7.56 Gold production (000oz) – 100% 655 510 794 Gold production (000oz) – 40% 262 204 318 Total cash costs ($/oz) 191 184 108 Total production costs ($/oz) 293 263 179 Capital expenditure ($ million) 100% 5 4 12 Capital expenditure ($ million) 40% 2 2 4 Total number of employees 1,183 1,398 1,327    Employees 478 479 453    Contractors 705 919 874

Gold production (000oz) Morila (attributable)

Total cash costs ($/oz) Morila

Capital expenditure ($m) Morila (attributable)

Growth prospects

A regional drilling programme, with a view to finding another significant orebody, is being conducted over the next two years at a cost of $6 million.

Outlook

In 2006, gold production is expected to decrease to between 215,000 ounces and 223,000 ounces, at a total cash cost of $274 per ounce to $286 per ounce. Capital expenditure of about $0.8 million is anticipated.