With all the focus on the World Cup Rugby it has been hard for Isabel not to focus on South Africa in recent weeks. Isabel’s uncle got his Springbok colours back in the 1980s, so she has a bit of a soft spot for the place. Are we finished talking about South Africa? Not quite. With all her contacts down there, things keep coming up that are interesting.
Let’s take AngloGold Ashanti as an example. It is, after all, the biggest producer in South Africa and the third biggest in the world! But if you need proof that not all South Africans are parochial, here it is. AngloGold is certainly doing some interesting things away from its home turf!
Admittedly, not all the operations are managed from Johannesburg, but this miner has 21 operations in ten countries on four continents. More than half this miner’s gold production and earnings come from abroad. This broader spread of assets reduces some of the risk. It also counters the negative sentiment that many South African miners are subject to.
Good news expected from other southern hemisphere assets
So what is AngloGold up to? What’s really interesting right now, says one of Isabel’s contacts, is AngloGold Ashanti’s exploration projects in Columbia and Australia. He’s been listening to Richard Duffy, the company’s head of greenfield operations. He reckons Duffy, is being very, very bullish about Columbia. Good news is expected from this neck of the woods soon!
Then there is Tropicana in West Australia, a joint venture between AngloGold Ashanti (70%) and the Independence Group NL (30%). Tropicana moved up to pre-feasibility study phase in June and that is expected to complete by mid-2008. This open-caste mine has passed the Australian code of practice (JORC), and is expected to complete before the year is out.
JORC, or in full the Australasian Joint Ore Reserves Committee, is sponsored by the Aussie mining industry. It is widely accepted as an industry standard for reporting purposes.
Tropicana may sound more like a fruity cocktail than gold mine but there may be reason to drink to this operation, too! In this neck of Oz, a little bird tells us, the company is already delivering some very good grades from a shallow pit mining operation. And exploration has gone only halfway through the property.
...but uncertainty hangs over future ownership
No doubt Mark Cutifani, AngloGold’s new CEO, will be breathing a sigh of relief to hear there is some good news on the near horizon. An Aussie with Italian blood, Mr Cutifani was parachuted in to take the reins from Bobby Godsell a few weeks ago.
It’s a golden parachute too! Going to live in the crime-ridden suburbs of Joburg is a brave thing to do. No wonder he insisted on a contract that would let him escape should the new job lose its shine.
Good insurance! His first month hasn’t been the easiest! They’ve not only had safety issues to contend with. Right now, there are ownership uncertainties at South Africa’s biggest gold producer. AngloGold’s high profile parent, Anglo American, is selling more than 41% of its stake.
Some of the gossip out there suggests that AngloGold may want to get rid of its troublesome South African operations. Of course, it wants to hang onto the international assets. But it seems more than likely that the Anglo American shares will be sold off — although slowly.
First of all, that 41% is worth a staggering $5bn - quite a sum for any one player to come up with! Secondly, it seems unlikely that Anglo American would want to rock the boat too much. After all, Mr Cutifani has only just arrived and is setting sail into unchartered waters.
From out-back to down-deeper
So what can be said about this 49-year old Australian who has been mining since 1976? Well he started his career on an Australian coal mine at the tender age of 18. That excited him enough to embark on a degree in mining engineering.
He has mined coal, gold and base metals, most recently in Ontario, Canada. Here he was chief operating officer for CVRD, Inc. There he was responsible for the global nickel business. And he was boss of its digging-deeper programme (to 2500m)! This was something he achieved safely and with excellent productivity! A track record like that must have been what got him the job in South Africa!
Apparently Mr Cutifani has strong views on the technically challenging area of deep mining. Technical obstacles, he reckons, can be addressed if researched properly. Just as well - the South Africans are looking to get at high-grade gold deposits at 3500 metres and deeper. After all, if demand for the yellow metal continues apace, that’s the only place it’s going to come from!
Given that AngloGold has three feasibility studies underway for deep mining, it must make this work. In the coming months Mr Cutifani and his team will be scrutinising these feasibility studies. Then they’ll decide where to go next.
In the short term, though, it will be interesting to see the results from those two exploration projects in Columbia and Australia. Isabel’s mate says that a new resource statement is expected out soon. With AngloGold’s broad spread of good assets they are pretty well placed. Who knows, there may just be scope for a shine on the share price.
Keep digging!
Erin and Isabel
