Ashanti Announces Expansion of Geita Mine Project and Update on Business Plan.

NEW YORK--(BUSINESS WIRE)--Sept. 29, 1999--

Ashanti Goldfields Company Limited ("Ashanti" or "the Company") is pleased to announce a successful drilling campaign at its Geita project in Tanzania which has led to an over 20% increase in resources. As a result the Company is currently revising the mine plan for Geita in order to expand gold production to approximately 500,000 ounces per year at a cash operating cost below US$180 per ounce. The Company's other operations continue to be robust and have benefited from the recent upturn in the gold price.

Geita

At Geita, drilling has continued to expand the resource base to over 8.0 million ounces, 20% above the previously announced resources of 6.7 million ounces. This resource increase has come from the Nyankanga deposit, where high-grade intercepts have been obtained below the presently defined open pit. As a result, the Company is updating the mine plan in order to bring these high-grade zones into production. The new forecast for average gold production is 500,000 ounces per year, 20% higher than previously forecast, at a cash operating cost below US$180 per ounce.

The forecast cash operating costs have been improved by the decision to own and operate a dedicated electric power station, rather than using contractor power. The forecast capital expenditure of US$165 million includes an additional US$26 million for the power station. Project construction is on track with first gold production expected in the third quarter of 2000.

Exploration continues to define additional targets on Ashanti's Geita concessions, with further drilling scheduled during the next quarter. In relation to the total cost to date of the Geita exploration programme of US$13 million, the resource discovery cost is below US$2 per ounce.

Update on Operations

The Company recently released an update on operations confirming 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 per ounce. Third quarter production was expected to be about 5% below that trend, and costs about 5% higher, primarily because of a weather-related production shortfall at Siguiri in Guinea.

Business Plan Outlook

Ashanti is finalising an update of the Business Plan for the Obuasi operation with a view to maximising the efficiency and financial performance of the operation. The Plan will involve the expansion of the underground mine around the efficient high-volume shafts in the south of the mine, and the closure of the high-cost parts of the operation including the surface mining. The update is to be completed by year-end 1999.

At Siguiri, the successful definition of extensions to the Eureka Hill and Sanu Tinti ore bodies has fully replaced this year's mine production, maintaining reserves at the end-1998 level of 2.7 million ounces. With the expansion project on track for completion in fourth quarter 1999, Ashanti now expects that Siguiri will produce approximately 300,000 ounces per year from next year onwards, at a cash operating cost of below US$180 per ounce.

At Iduapriem in Ghana, which was previously scheduled for closure at the end of 1999, a successful drilling campaign has been undertaken in Blocks 4 and 5, which has added an additional 18 months to the mine life. Management has approved an extension to the life of Iduapriem, which is now expected to produce 170,000 ounces next year, at an improved cash operating cost of US$246 per ounce, and to operate profitably.

Bibiani in Ghana and Freda-Rebecca in Zimbabwe continue to perform well, with estimated production for 1999 and 2000 in line with prior forecasts, and costs running below forecast levels.

Gold Market

Ashanti operations have benefited from the increase in the price of gold since the recent announcement of co-ordinated action by central banks to regulate official gold sales.

Ashanti has restructured 80% of its hedge book to remove the sensitivity of the hedge value to further rallies in the gold price. The restructuring was initiated before the recent rally, as part of the Company's contingency planning, and has covered approximately 9 million ounces (out of Ashanti's 11 million ounces book of forwards and put options). It has included converting a substantial component of the forward sale positions into synthetic put options. The Company had already, before the rally, eliminated any exposure to floating lease rates during the rest of 1999 and the first quarter of 2000. Ashanti's hedge book continues to be actively managed, and tightly controlled. Management is satisfied that the hedge portfolio is robust in the current gold market and will generate a realised gold price of US$380 per ounce in 1999 and about US$360 per ounce next year.

Financial Results

The Company's financial results for the quarter ending September 30 will be announced on October 20.