Ashanti Goldfields Company Limited; Second Interim Report 12 months to 30 September 1996.ACCRA Accra (əkrä`, ăk`rə), city (1984 pop. 867,459), capital of Ghana, a port on the Gulf of Guinea. It is Ghana's largest city and its administrative, communications, and economic center. , Ghana--(BUSINESS WIRE)--Dec. 10, 1996-- ASHANTI GOLDFIELDS n. 1. A small slender woolly annual (Lasthenia chrysostoma) with very narrow opposite leaves and branches bearing solitary golden-yellow flower heads; it grows from Southwestern Oregon to Baja California and Arizona; - it is often cultivated. COMPANY LIMITED SECOND INTERIM REPORT 12 MONTHS TO 30 SEPTEMBER 1996 Chief Executive's Review "1996 has been a milestone year for Ashanti, a year in which it has been transformed from a gold producer with a single mine in Ghana to a group with several operating mines, major development projects and an exploration portfolio that includes gold mineralisation belts of sub-Saharan Africa." Sam E Jonah Chief Executive Overview The twelve months ended 30 September 1996 was a period of further corporate development. Three major strategic acquisitions were successfully concluded during or soon after the period. These transactions complete the process which has seen Ashanti transformed from a gold producer with a single mine in Ghana - albeit a spectacular one - to a group with several operating mines, major development projects and an exploration portfolio that includes land positions on each of the most promising gold mineralisation belts of sub-Saharan Africa. As I commented in the first interim report for 1996, this significant broadening of our geographical and operational horizons had its genesis two years ago when the Board determined that, in addition to developing the Obuasi mine in Ghana, Ashanti could also create substantial shareholder value by applying its core skills and financial strengths to other gold mining projects and companies in Africa. We identified Cluff Resources Plc, a UK company, International Gold Resources Corporation (IGR IGR insect growth regulator. ) a Canadian company, and Golden Shamrock shamrock, a plant with leaves composed of three leaflets. According to legend it was used by St. Patrick in explaining the doctrine of the Trinity; it is now used as the emblem of Ireland. An artificial or real shamrock leaf is customarily worn on St. Patrick's Day. Mines Limited (GSM (Global System for Mobile Communications) A digital cellular phone technology based on TDMA that is the predominant system in Europe, but also used worldwide. Developed in the 1980s, GSM was first deployed in seven European countries in 1992. ) of Australia as
We moved rapidly during the last six months to add value to the former Cluff properties that were acquired in January. Increased exploration and development at Freda-Rebecca in Zimbabwe led to a 17% increase in reserves and an 8% increase in the rate of gold production, while the financial health of the Zimbabwe operations was strengthened by a refinancing Refinancing An extension and/or increase in amount of existing debt. of its long term debt. Initiatives to reduce mining costs were launched at Ayanfuri in Ghana, while in Tanzania exploration activity at the Geita prospect has brought its gold resources to 1.3 million ounces, a threefold increase. Through the acquisitions in June of IGR and of Ghana - Libyan Arab Mining Company Limited (GLAMCO), Ashanti acquired 90% of the Bibiani gold project in Ghana where over 2 million ounces of measured and indicated resources have been identified. The remaining 10% is held by the Ghana Government. Additional drilling is being conducted to finalise Verb 1. finalise - make final; put the last touches on; put into final form; "let's finalize the proposal" finalize, nail down, settle terminate, end - bring to an end or halt; "She ended their friendship when she found out that he had once been convicted of the mining plan for this open pit project and project development will commence in early 1997. In October, the shareholders of GSM overwhelmingly approved the merger with Ashanti. This has brought the Iduapriem gold mine in Ghana and the Siguiri open pit gold project in Guinea Guinea, archaic term for Africa's west coast Guinea (gĭn`ē), an archaic term for the west coast of Africa. In its widest sense it has been applied to the region from Angola to Senegal. into the Ashanti Group. Metallurgical met·al·lur·gy n. 1. The science that deals with procedures used in extracting metals from their ores, purifying and alloying metals, and creating useful objects from metals. 2. testwork conducted by Ashanti has led to the selection of heap leaching Heap leaching is an industrial mining process to extract precious metals and copper compounds from ore. Process The mined ore is crushed into small chunks and heaped on an impermeable plastic and/or clay lined leach pad where it can be irrigated with a leach solution to as the treatment process for Siguiri and project development will commence in early 1997. With the completion of these transactions the focus of the Group is now on the consolidation and delivery of the full potential of the Obuasi mine and each of the new properties. To lead this new phase of operational management, we announced in September the appointment of Trevor Schultz as an Executive Director and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. to succeed Colin Smith who has retired. Trevor Schultz had 15 years senior management experience with BHP BHP blood hydrostatic pressure; the pressure exerted by the blood cells and plasma in the capillaries. Minerals during which he was responsible for the fast track development of the Syama Gold Mine in Mali. The Obuasi management team was already reinforced in June by new senior appointments in general management and mining management. We were also delighted to announce the appointment of Merene Botsio-Phillips, who played an important role in the Group's acquisition activities, as an Executive Director and General Counsel. To maintain our exclusive focus on gold mining in Africa, Ashanti is proceeding with the orderly orderly /or·der·ly/ (or´der-le) an attendant in a hospital who works under the direction of a nurse. or·der·ly n. An attendant in a hospital. disposal of the Group's non-gold investments in Ghana as well as the IGR and GSM investments outside Africa. Ashanti's 20% interest in Ecobank Ghana Limited was sold during the period under review. GSM's interest in Ausdrill Limited was sold in October. The expansion of our gold exploration portfolio in Africa, which was the other major strategic decision of the Board two years ago, has reached a stage which gives Ashanti shareholders an interest in Africa's most promising gold belts. Exploration efforts are now prioritised around four advanced projects, while maintaining activity on several others which are at a more grass roots grass roots pl.n. (used with a sing. or pl. verb) 1. People or society at a local level rather than at the center of major political activity. Often used with the. 2. The groundwork or source of something. stage. Results The earnings for the twelve months to 30 September 1996 were $70.9 million. This was 33% lower than the previous twelve month period. Earnings were depressed, particularly in the most recent six months, by the higher level of cash operating costs operating costs npl → gastos mpl operacionales at the Obuasi mine, notably in the surface mining operations. The rise in costs was partly offset by increased revenue from gold hedging. Other factors accounting for the reduction in earnings were higher charges for exploration expenditure, reflecting the increase in the Group's early stage exploration programmes, increased depreciation charges arising out of capital expenditure, and higher interest charges resulting from the increase in borrowings. Ashanti's financial resources were augmented earlier this year by the issue of US$250 million of 5.5% Exchangeable Guaranteed Notes, and the Group has access to substantial undrawn un·draw tr.v. un·drew , un·drawn , un·draw·ing, un·draws To draw to one side, as a curtain. Adj. 1. undrawn - not represented in a drawing undelineated - not represented accurately or precisely committed facilities Committed Facility A credit facility whereby terms and conditions are clearly defined by the lending institution and imposed upon the borrowing company. Notes: In committed facilities, the borrowing companies must meet specific requirements set forth by the lending under the US$185 million Revolving Credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. Facility. Ashanti's shares were recently listed on the Australian Stock Exchange Australian Stock Exchange (ASX) Australia's major securities market, formed when the six state stock exchanges (Adelaide, Brisbane, Hobart, Melbourne, Perth, and Sydney stock exchanges) were merged in 1987. adding to its existing listings in Accra, Harare, London, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and Toronto. Review of Operations Group gold production for the twelve months ended 30 September 1996 amounted to 993,399 ounces and represented a 6.6% increase over the previous twelve months. This included 35,150 ounces from the Ayanfuri mine in Ghana and 74,396 ounces from the Zimbabwe operations (mainly the Freda-Rebecca mine) for the nine months since their acquisition from Cluff. The successful integration of the new acquisitions has added significant depth to our management team. Operations in Ghana Obuasi Gold production from the Obuasi mine for the twelve months to 30 September 1996 was 883,853 ounces compared to 932,323 ounces for the previous twelve months. The lower gold production to 30 September 1996, as compared to the previous twelve months, reflected the drop in production from the surface mines as well as the treatment of larger tonnages of transition ore. The shift in emphasis from surface to higher grade underground ore has been initiated and continues to be the focus of the new management team as well as our capital expenditure programmes. Over the next five years we are seeking to transform the underground mine into a bulk tonnage TONNAGE, mar. law. The capacity of a ship or vessel. 2. The act of congress of March 2, 1799, s. 64, 1 Story's L. U. S. 630, directs that to ascertain the tonnage of any ship or vessel, the surveyor, &c. , mechanised Adj. 1. mechanised - using vehicles; "motorized warfare" mechanized, motorized mobile - moving or capable of moving readily (especially from place to place); "a mobile missile system"; "the tongue is...the most mobile articulator" 2. mining operation, that will double ore production to 3.5 million tonnes a year while maintaining a grade of over 8g/t. This change will be accomplished through major increases in production from open stoping and mechanised cut and fill stopes Stopes , Marie Carmichael 1880-1958. British social reformer who opened England's first birth control clinic (1924) in London and later promoted family planning in east Asia. , as well as investment in the additional underground infrastructure required. A well equipped training facility has been established at the mine site with the capacity to train one thousand operators a year in mechanised mining techniques. Underground Mining In 1996, the phased expansion of the underground operations Underground Operations is a Toronto-based independent punk rock record label. Operated by Mark Spicoluk, former Closet Monster member, this label is one of the most cutting edge independent labels in Canada. through infrastructure development, equipment purchase and training progressed steadily although some delays were experienced. Ore production increased by 24% from 1.47 million tonnes in the previous twelve months to 1.82 million tonnes. The hydrafill and cemented rockfill facilities are in the commissioning phase and are expected to provide operating efficiencies in the cut and fill and open stopes in 1997. Cemented fill together with the grade control measures now in place will consolidate the turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. in the underground grade profile. The grade of 7.81 g/t in the nine months to 30 June 1996 improved to 8.42 g/t in the last three months to 30 September 1996. Gold production from underground increased by 6% to 381,000 ounces. The Stonewall stone·wall v. stone·walled, stone·wall·ing, stone·walls v.intr. 1. Informal a. Shaft shaft (shaft) a long slender part, such as the diaphysis of a long bone. shaft n. 1. An elongated rodlike structure, such as the midsection of a long bone. 2. in the south and the 41 Level Haulage, linking the major mechanised mining blocks to KMS KMS - Knowledge Management System and later ETS ETS Educational Testing Service (nonprofit private educational testing and measurement organization) ETS Emergency Telecommunications Service ETS Electronic Trading System ETS Engineering (&) Technical Services shafts, is on course for commissioning in early 1998. Surface Mining The expected reduction in oxide oxide, chemical compound containing oxygen and one other chemical element. Oxides are widely and abundantly distributed in nature. Water is the oxide of hydrogen. Silicon dioxide is the major component of sand and quartz. ores, with a corresponding switch to sulphides and transition ores caused cost increases and treatment difficulties. Gold production from surface sources fell in line with expectations by 14% to 434,000 ounces. Surface sulphide sulphide: see sulfide. mining operations will be consolidated in 1997 following completion of the major overburden o·ver·bur·den tr.v. o·ver·bur·dened, o·ver·bur·den·ing, o·ver·bur·dens 1. To burden with too much weight; overload. 2. To subject to an excessive burden or strain; overtax. n. 1. cut back for sulphides. The total material mined will reduce from 66.1 million to 33.8 million tonnes. Sansu and Justice will be the main ore producing pits with Anyinam entering the final overburden cut back to the 140 metres level. Recent discoveries arising from exploration drilling and metallurgical testwork have been successful in extending the life of the Oxide Treatment Plant (OTP (1) (One Time Programmable) Refers to programming content or logic into chips such as EPROMs and EEPROMs, which cannot be reversed. See antifuse. (2) (One Time P ) well beyond the end of 1996. The feed to the OTP will comprise a mixture of extensions to existing oxide deposits, the preferential pref·er·en·tial adj. 1. Of, relating to, or giving advantage or preference: preferential treatment. 2. treatment of transition ore through OTP rather than the Sulphide Treatment Plant (STP STP or standard temperature and pressure, standard conditions for measurement of the properties of matter. The standard temperature is the freezing point of pure water, 0°C; or 273.15°K;. ) and, in particular, the treatment of 3.1 million tonnes of free milling primary granitoid gran·ite n. 1. A common, coarse-grained, light-colored, hard igneous rock consisting chiefly of quartz, orthoclase or microcline, and mica, used in monuments and for building. 2. ore from the Anyankyirem deposit. Treatment Plants Tonnage throughput at both the Pompora Treatment Plant (PTP (1) See peer-to-peer. (2) (Picture Transfer Protocol) An ISO standard for transferring photos from a digital camera to a computer or photo printer. ) and the STP was above 1995 levels, however, lower grades resulted in a slight reduction in ounces produced. The OTP produced significantly less than in 1995 because of the falling grade of surface material. Construction of the PTP upgrade from 120,000 to 135,000 tonnes per month will be completed for commissioning in early 1997. The replacement of fourteen small mills by one large semi-autogenous grinding mill Grinding mill A machine that reduces the size of particles of raw material fed into it. The size reduction may be to facilitate removal of valuable constituents from an ore or to prepare the material for industrial use, as in preparing clay for pottery making will contribute to reducing the operating cost, and recovery is expected to be enhanced. The PTP upgrade together with the current STP capacity will provide a combined sulphide treatment capacity of 4.5 million tonnes per annum Per annum Yearly. . The Tailings Tailings (also known as tailings pile, tails, leach residue, or slickens[1]) are the materials left over[2] after the process of separating the valuable fraction from the worthless fraction of an ore. Treatment and Heap Leach Plants operated at similar levels to the previous twelve months. There is sufficient material in the tailings dams to provide continuous feed over the next five years. Ore Reserve Delineation In the twelve months to 30 September 1996, the resources and reserves base increased from 20.96 million ounces to 21.56 million ounces. A new geological ge·ol·o·gy n. pl. ge·ol·o·gies 1. The scientific study of the origin, history, and structure of the earth. 2. The structure of a specific region of the earth's crust. 3. A book on geology. assessment of the Obuasi lease, incorporating aerial photography This article or section may contain original research or unverified claims. Please help Wikipedia by adding references. See the for details. This article has been tagged since September 2007. , airborne and ground geophysics geophysics, study of the structure, composition, and dynamic changes of the earth, its atmosphere, hydrosphere and magnetosphere, based on the principles of physics. , geochemistry geochemistry, study of the chemical changes on the earth. More specifically, it is the study of the absolute and relative abundances of chemical elements in the minerals, soils, ores, rocks, water, and atmosphere of the earth and the distribution and movement of and structural geology structural geology Scientific discipline concerned with rock deformation on both small and large scales. Its scope ranges from submicroscopic lattice defects in crystals to fault structures and fold systems of the Earth's crust. on surface and underground, is being completed. During 1997 key target areas on surface will be explored by trenching and drilling while the accelerated drilling programme will continue underground. This will include completing the 10,000 metre metre In poetry, the rhythmic pattern of a poetic line. Various principles have been devised to organize poetic lines into rhythmic units. Quantitative verse, the metre of Classical Greek and Latin poetry, measures the length of time required to pronounce syllables, deep surface drilling in the south and 40,000 metres of underground drilling to extend known ore zones. Ayanfuri Ayanfuri contributed 35,150 ounces towards Group gold production over the nine months to 30 September 1996. The surface mining and heap leach operations continued at the level of 1.3 million tonnes per annum. In addition the higher grade Fetish fetish (fĕt`ĭsh), inanimate object believed to possess some magical power. The fetish may be a natural thing, such as a stone, a feather, a shell, or the claw of an animal, or it may be artificial, such as carvings in wood. Main ore, identified earlier in the year, was directed to the OTP at Obuasi where higher recoveries can be achieved than at the Ayanfuri heap leach plant. The accelerated exploration programme at Ayanfuri has reached the drilling stage and should increase the current reserve base. Operations in Zimbabwe Zimbabwe operations contributed a total of 74,396 ounces towards Group gold production, over the nine months to 30 September 1996. Freda-Rebecca The Freda-Rebecca mine produced 860,611 tonnes of ore at a grade of 3.1 g/t during the nine months to 30 September 1996. The average metallurgical recovery was 86.1%. As planned, production from the underground operations increased to an annualised rate of 780,000 tonnes during the last quarter to offset the diminishing di·min·ish v. di·min·ished, di·min·ish·ing, di·min·ish·es v.tr. 1. a. To make smaller or less or to cause to appear so. b. open pit production. Plans to upgrade the processing plant are at an advanced stage. Exploration of the Freda-Rebecca mineralised shears shears cutting instruments for the removal of wool—sheep shears, or for trimming the hooves of sheep and goats—hoof shears. hoof shears a rugged pair of shears like secateurs but with sharp-pointed blades. was accelerated. During the period, 51,310 metres were drilled adding approximately 400,000 ounces to the mine resource base. Mine evaluation work is presently being undertaken to determine the optimum production rate from the underground mine. Acquisitions Bibiani Project The acquisitions of IGR and GLAMCO brought Ashanti a 90% interest in the Bibiani gold project, located at a disused disused Adjective no longer used Adj. 1. disused - no longer in use; "obsolete words" obsolete noncurrent - not current or belonging to the present time disused adj gold mine about 80 km west of Obuasi. Evaluation work by IGR had delineated de·lin·e·ate tr.v. de·lin·e·at·ed, de·lin·e·at·ing, de·lin·e·ates 1. To draw or trace the outline of; sketch out. 2. To represent pictorially; depict. 3. resources of about 20 million tonnes grading 2.9 g/t of non-refractory surface material. Together with tailings the resource base is over 2 million ounces. Ashanti is finalising a programme of drilling and testwork with a view to commencing development in early 1997 of a shallow open pit mine. Iduapriem Gold Mine The acquisition of GSM in October brought Ashanti 70% ownership of the Iduapriem open pit gold mine at Tarkwa in the Western Region of Ghana. In the quarter ending 30 September 1996, Iduapriem produced at an annualised rate of 125,000 ounces. The production rate is expected to increase in 1997 as a result of the recent completion of an upgrade in the treatment plant and a heap leach expansion. Siguiri Project The GSM acquisition also brought Ashanti 70% ownership of the Siguiri gold project in north-eastern Guinea. Exploration and feasibility work by GSM had established about 55 million tonnes of surface reserves grading 1.55 g/t, comprising about 2.7 million ounces of gold. Ashanti will commence project development in early 1997 of a heap leach operation in Siguiri. Exploration Tanzania At the Geita property in the Lake Victoria goldfields, 8,500 metres of underground adit sampling and geological mapping of the potentially open pittable Geita and Northeast Extension deposits have been completed. Results from this underground sampling and previous drilling delineated an indicated and inferred resource of 11.95 million tonnes grading 3.44 grammes per tonne tonne measure of weight or mass; 1 tonne=1000 kg. See also ton. along the 4 km long mineralised trend. This threefold increase in resource, since Ashanti's acquisition of the property, brings the resource to 1.3 million ounces of gold. Good potential exists for a further significant increase in this resource base with drilling having now commenced in adjacent areas along strike. Guinea Significant mineralised drill intercepts were obtained from the Koulekoun prospect within the 3,500 square kilometre Square kilometre (U.S. spelling: square kilometer), symbol km², is a decimal multiple of the SI unit of surface area, the square metre, one of the SI derived units. 1 km² is equal to:
Porphyry (pôr`fĭrē), c.232–c.304, Greek scholar and Neoplatonic philosopher. He studied rhetoric under Cassius Longinus and philosophy under Plotinus. intrusive in·tru·sive adj. 1. Intruding or tending to intrude. 2. Geology Of or relating to igneous rock that is forced while molten into cracks or between other layers of rock. 3. Linguistics Epenthetic. . Niger In southwestern Niger, an initial reverse circulation drilling programme was completed at the Libiri prospect within the Saoura project (Ashanti/AGEM) area. Broad zones of near surface mineralisation up to 50 metres in width have been intersected over a potential strike length of 1.2 km. Exploration also continues elsewhere on the Saoura concession as well as the Tera and Nassile concessions. Elsewhere in Africa Initial core drilling programmes were completed on two prospects within the Bambadji project in eastern Senegal. Regional surveys and more detailed geochemical and geophysical surveys Geophysical survey refers to the systematic collection of geophysical data for spatial studies. Geophysical surveys may use a great variety of sensing instruments, and data may be collected from above or below the Earth's surface or from aerial or marine platforms. continued in Burkina Faso Burkina Faso (burkē`nə fä`sō), republic (2005 est. pop. 13,925,000), 105,869 sq mi (274,200 sq km), W Africa. It borders on Mali in the west and north, on Niger in the northeast, on Benin in the southeast, and on Togo, Ghana, and , Eritrea, Ethiopia, Ghana, Mozambique and Zimbabwe. Financial Performance Group profit after tax and minority interests was US$70.9 million, 33% lower than the previous financial year. Earnings per share amounted to US$0.79 (1995: US$1.22). Revenue The Group's revenue is derived principally from gold bullion Gold bullion Investment-grade, pure gold, which may be smelted into gold coins or gold bars. sales. Ashanti's hedging programme ensured an average realised gold price equivalent to US$449 per ounce. This was US$59 per ounce higher than the spot price, which averaged US$390 per ounce over the twelve month period. The Group's hedging programme aims to provide a high floor price for gold production, while maximising the possibility for the Group to benefit from movements in the gold price. Consistent with these objectives, Ashanti adjusts its overall hedge position to respond to market developments. In the course of 1995/96, the gold market experienced periods of backwardation Backwardation The theory that says futures prices will tend to rise over the life of a contract. Therefore the near-term contracts trade at a higher price than the longer-term contracts. Notes: This is the opposite of "contango. and fluctuations in the gold price which caused several of Ashanti's long-dated forward positions to move substantially into profit. The Group realised profits by closing out these positions, which contributed towards the high realised gold price during the period under review, with total hedging income of US$52.2 million. Ashanti has protected about 85% of anticipated 1997 production at a gold price of US$429 per ounce, and has further hedges in place for future years. Costs Operating costs for the Group (excluding royalties) averaged US$248 per ounce, up from US$208 per ounce in the previous year. The operating costs of the Obuasi operations were adversely affected by external economic factors during the period. World-wide increases in the costs of reagents used in the treatment plants, especially cyanide cyanide (sī`ənīd'), chemical compound containing the cyano group, -CN. Cyanides are salts or esters of hydrogen cyanide (hydrocyanic acid, HCN) formed by replacing the hydrogen with a metal (e.g., sodium or potassium) or a radical (e.g. , increased operating costs by about US$8 per ounce. In addition, the negotiated wage increase in the Ghanaian mining industry in 1996 resulted in a substantial wage increase of 100% in local currency terms (about 40% in US$ terms), equivalent to an increase of approximately US$20 per ounce produced on an annualised basis. To contain the effect of these increases, measures have been taken at Obuasi to improve productivity, to reduce manning levels through retirements, to phase out casual labour, to restrict overtime and to reduce the number of sub-contractors. The operating costs of the Obuasi underground operations, which were US$240 per ounce, up from US$202 per ounce in the previous twelve months, were also affected by grade. There was a 14% reduction in underground head grade, due to delays in bringing mechanised blocks into production, which led to plant feed being supplemented by lower grade material from sub-level and reclamation Reclamation A claim for the right to return or the right to demand the return of a security that has been previously accepted as a result of bad delivery or other irregularities in the delivery and settlement process. stopes. As mentioned earlier, actions taken in the September quarter to curtail cur·tail tr.v. cur·tailed, cur·tail·ing, cur·tails To cut short or reduce. See Synonyms at shorten. [Middle English curtailen, to restrict this lower grade feed succeeded in raising the underground head grade to over 8 g/t. As a result of these initiatives, underground cash costs have stabilised Adj. 1. stabilised - made stable or firm stabilized stable - resistant to change of position or condition; "a stable ladder"; "a stable peace"; "a stable relationship"; "stable prices" at around the current level. Obuasi's surface mining operations registered a sharp rise in operating costs, from US$224 per ounce in the previous full year to US$279 per ounce. In addition to the increases in wages and reagent reagent /re·a·gent/ (re-a´jent) a substance used to produce a chemical reaction so as to detect, measure, produce, etc., other substances. re·a·gent n. prices, costs have been pushed up by changes in the composition of surface mining operations. The low-cost oxide ores, which represented over half of the surface mining output in the previous two years, have largely been displaced displaced see displacement. by transition material (with lower grades and recoveries) and harder and refractory refractory Material that is not deformed or damaged by high temperatures, used to make crucibles, incinerators, insulation, and furnaces, particularly metallurgical furnaces. sulphide ores which are more expensive to mine and to treat. The tailings retreatment operation at Obuasi had cash costs of US$121 per ounce. The average operating costs of the Freda-Rebecca and Ayanfuri mines were US$234 per ounce. Depreciation Depreciation increased to US$67.1 million (1995: US$50 million), mainly because of the increase in fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → at Obuasi and the inclusion of depreciation on the former Cluff properties. Profit Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. of US$83.4 million (1995: US$112.6 million) is analysed by business areas in Note 3 to the accounts. Obuasi operations generated operating profit of US$104 million, a 21% fall compared to the previous twelve months. The increase in the realised gold price helped offset the increase in cash costs and depreciation. The former Cluff operations contributed US$8.4 million to operating profit in the nine months after their acquisition. US$6.5 million (1995: US$2.8 million) was charged to profits in respect of early stage exploration programmes being undertaken by Ashanti in Ghana and other countries, mainly Guinea, Niger, Senegal and Tanzania. Corporate administration expenses rose to US$23 million (1995: US$18 million) with the increased cost of running the international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. of the Group. Non-gold operations generated US$0.9 million (1995: US$1.5 million). A gain of US$1.7 million over book value was made on the disposal of Ashanti's interest in Ecobank Ghana Limited. The Company continues to benefit from capital allowances arising out of its capital expenditure programmes, which minimised any tax charges. Cash Flows and Balance Sheet The net cash inflow in·flow n. 1. The act or process of flowing in or into: an inflow of water; an inflow of information. 2. from operating activities was US$152.3 million, up from US$145.4 million in the previous twelve months, due to the contribution of the former Cluff operations and improved working capital management. Capital expenditure of US$169.6 million focused mainly on Obuasi, where US$146.6 million was spent principally on underground expansion. Outside Obuasi exploration expenditure of US$6.2 million was capitalised on advanced projects mainly in Tanzania and Guinea. During the period, Ashanti raised US$250 million through an issue by a subsidiary of seven year 51/2% Exchangeable Notes which are convertible into ordinary shares of the Company at an exercise price of US$27 per share. The proceeds were used to repay borrowings incurred for the Cluff acquisition, finance the cash element of the IGR acquisition and to replenish re·plen·ish v. re·plen·ished, re·plen·ish·ing, re·plen·ish·es v.tr. 1. To fill or make complete again; add a new stock or supply to: replenish the larder. 2. liquid assets Cash, or property immediately convertible to cash, such as Securities, notes, life insurance policies with cash surrender values, U.S. savings bonds, or an account receivable. . Of the US$185 million Revolving Credit Facility, US$38.1 million was drawn at 30 September 1996, leaving almost US$147 million available for drawing. This facility will provide funding for the development of new gold mine projects in the Group. A US$40 million gold denominated facility was committed (and half of it was drawn down) to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. the debt and finance expansion of the Zimbabwe operations. As at 30 September 1996 cash and liquid balances stood at US$71.1 million. Net gearing was equivalent to 46% of shareholders' funds, which were reduced because of the write off of goodwill totalling US$229 million associated with the acquisitions of Cluff, IGR and GLAMCO. Change of Financial Year End Following the Board's decision to change the Group's financial year end to 31 December, the results for the 15 months to 31 December 1996 will be announced in March 1997. Dividends An interim dividend of US$0.125 per share (1995: US$0.125) was paid on 11 September 1996 to shareholders on the register on 28 August 1996. It is intended to pay the final dividend for the 15 months to 31 December 1996 at the end of April 1997 to shareholders on the register in mid April 1997. Outlook For the immediate future the Group will focus on delivering the full potential of the Obuasi mine and consolidating the acquisitions of Cluff, IGR, GLAMCO and GSM to enhance shareholder value. Sam E Jonah, Chief Executive 9 December 1996 -0-
Consolidated Profit and Loss Account
12 months 12 months
ended ended
30 Sept 1996 30 Sept 1995
US$ million US$ million
Note (unaudited)
Revenue 1 442.1 387.7
_______ _______
Operating costs 2 (280.7) (213.6)
_______ _______
Royalties (10.9) (11.5)
Depreciation, amortisation
and depletion (67.1) (50.0)
_______ _______
Total costs (358.7) (275.1)
_______ _______
Operating profit 3 83.4 112.6
Gain on sale of investments 1.7 -
Share of earnings of
associated undertakings 1.9 2.0
_______ _______
Profit on ordinary
activities before interest 87.0 114.6
_______ _______
Commissions on issue of shares -
(2.0)
Deferred loan fees written off (1.9)
(2.8)
Interest receivable 7.3 4.9
Interest payable (21.0) (8.5)
_______ _______
Profit on ordinary
activities before taxation 71.4 106.2
Taxation (0.3) (0.4)
_______ _______
Profit on ordinary
activities after taxation 71.1 105.8
Minority interests (0.2) 0.1
_______ _______
Profit attributable
to shareholders 70.9 105.9
Dividends 4 (12.0) (32.6)
_______ _______
Retained profit for the period 58.9 73.3
_______ _______
Earnings per share (US$) 0.79 1.22
Dividends per share (US$) 0.125 0.375
_______ _______
There were no discontinued
operations during the period
Weighted average number of issued
shares outstanding (millions) 90.3 86.9
-0-
Consolidated Balance Sheet
As at As at
30 Sept 1996 30 Sept 1995
US$ million US$ million
Note (unaudited)
Fixed assets
Fixed property, plant and
equipment 826.9 638.1
Investments 17.1 6.1
_______ _______
844.0 644.2
_______ _______
Current assets
Stocks/inventories 87.4 81.2
Debtors/receivables 43.6 27.5
Cash 71.1 128.3
_______ _______
202.1 237.0
_______ _______
Creditors: amounts falling due within one year
Current portion of
long term loans (22.7) (2.4)
Trade and other
creditors/payables (51.3) (50.4)
Dividends - (22.5)
Accruals and deferred income (51.9) (21.7)
_______ _______
(125.9) (97.0)
_______ _______
Net current assets 76.2 140.0
Total assets less
current liabilities 920.2 784.2
Creditors: amounts falling
due over one year
Other long term loans (84.8) (193.3)
Convertible debt (244.3) -
Provision for liabilities
and charges (5.2) (5.2)
_______ _______
585.9 585.7
_______ _______
Capital and reserves
Stated capital 5 316.9 150.3
Profit and loss account
(income surplus account) 5 265.8 435.4
_______ _______
Shareholders' funds 582.7 585.7
Minority interests 3.2 -
_______ _______
585.9 585.7
_______ _______
-0-
Consolidated Cash Flow Statement
12 months to 12 months to
30 Sept 1996 30 Sept 1995
US$ million US$ million
(unaudited)
_______ _______
Net cash inflow from
operating activities 152.3 145.4
_______ _______
Returns on investments
and servicing of finance
Interest received 7.3 4.9
Interest paid (19.3) (7.1)
Interest paid on finance leases (1.6)
-
Dividends from associated
undertakings 0.6 0.3
Dividends paid (30.5) (31.1)
_______ _______
Net cash outflow from
returns on investments and
servicing of finance (43.5) (33.0)
_______ _______
Taxation
Corporate tax paid - (2.5)
_______ _______
Investing activities
Purchase of property,
plant and equipment (169.6) (176.9)
Proceeds from sale
of fixed assets 3.9 2.5
Net cash outflow on
purchase of subsidiary and
associated undertakings (107.8) -
_______ _______
Net cash outflow from
investing activities (273.5) (174.4)
_______ _______
Net cash outflow
before financing (164.7) (64.5)
_______ _______
Financing activities
Proceeds from share issue 1.5 62.3
Proceeds of 5.5%
convertible debt 243.8 -
Expenses on listing
and issue of shares - (2.0)
Loans drawn down 252.7 193.0
Loan repayments (390.2) (167.0)
Repayment of principal
under finance leases (0.3) -
_______ _______
Net cash inflow from
financing activities 107.5 86.3
_______ _______
(Decrease)/increase in
cash and cash equivalents (57.2) 21.8
_______ _______
-0-
Notes to the Financial Statements
1 Revenue
12 months to 12 months to
30 Sept 1996 30 Sept 1995
US$ million US$ million
Bullion revenue 386.8 357.8
Gain on hedging transactions 52.2 26.7
Silver 0.4 0.3
Other 0.2 0.3
Non-gold mining activities
(net of intra Group sales) 2.5 2.6
______ ______
442.1 387.7
______ ______
2 Operating costs
a) Analysis by business group
12 mths to 12 mths to 12 mths 12 mths
30 Sept 30 Sept 30 Sept 30 Sept
US$ million US$/Oz US$ million US$/Oz
Gold mining
- cash
operating
costs 246.4 248 194.2 208
Gold mining
- corporate
admin. 23.0 23 18.0 19
Adjustments 3.2 - - -
________________________________________
Sub-total 272.6 271 212.2 227
Exploration
expenses
written off 6.5 - 2.8 -
Non-gold mining
activities 1.6 - 1.4 -
Environmental
provision - - (2.8) -
________________________________________
Total 280.7 271 213.6 227
The adjustments of US$3.2 million comprise: 1) An adjustment in
respect of an overstatement of foreign exchange gains recorded in
1994/95 and 2) Write offs in respect of insurance claims which had
been credited to the 1994/95 Group Profit and Loss account.
b) Analysis by ore source
Underground Obuasi Surface Cluff Total
Tailings
Ounces 380,932 69,228 433,693 109,546 993,399
Weighted
Cost Average
breakdown
(US$ per
ounce)
Mining 140 - 132 124 125
Treatment 69 90 116 70 91
Production
overheads 31 31 31 40 32
Total cash
operating _____________________________________________
costs 240 121 279 234 248
_____________________________________________
3 Operating profit analysis by business area
Obuasi Cluff Explo- Corp Non Total
ration admin gold
Production ozs 883,853 109,546 - - - 993,399
________________________________________________
Revenue US$m
- spot 344.7 42.5 - - - 387.2
Revenue US$m
- hedging 52.2 - - - - 52.2
Revenue US$m
- other 0.2 - - - 2.5 2.7
________________________________________________
397.1 42.5 - - 2.5 442.1
Operating
costs (224.0) (25.6) (6.5) (23.0) (1.6) (280.7)
Royalties (10.4) (0.5) - - - (10.9)
Depreciation (59.1) (8.0) - - - (67.1)
________________________________________________
Operating profit
Sept 1996 103.6 8.4 (6.5) (23.0) 0.9 83.4
Operating profit
Sept 1995 131.9 - (2.8) (18.0) 1.5 112.6
4 Dividend The interim dividend for 1996 was paid on 95,250,302 ordinary shares in issue on the record date of 28 August 1996. 5 Capital and reserves |
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