AngloGold has great Geita gold mine by the throat

AngloGold Ashanti's (JSE: ANG) focus in the next quarter is on turning around the....

AngloGold Ashanti's (JSE: ANG) focus in the next quarter is on turning around the Geita gold mine, which has already started the road to sustainable recovery, and coming up with a plan for troubled Obuasi in Ghana.New AngloGold CEO Mark Cutifani said at the company's results presentation today the company was focusing on the key issues at Geita in north-western Tanzania to ensure it delivered good numbers in every quarter and not only in the next one. Geita opened in 2000 and was once one of the largest gold mines in sub-Saharan Africa.The Geita mine has suffered a series of technical knocks since 2005 which has seen production fall from a record 618,571 ounces of gold in that year to 326,852 ounces last year, which also contributed to a drop in the company's overall 2007 gold production.Cutifani said Geita's new management has identified technical issues at the mine which included poor mill use and was taking action such as grade control, rebuilding mine control and strengthening the operations team to address the issues.As a result, the mine has improved gold recoveries from 75% to 90% in the last quarter ending 30 June. Geita Gold mine also succeeded in increasing gold production by 16% to 74, 000 ounces in the last quarter after grades stabilised. In addition, total cash cost reduced 12% to $630/ounce on the back of higher gold production and ore stock-pile credits.AngloGold expects the mine to produce more than 430,000 ounces next year and 500,000 ounces in the year after next."Geita will once again deliver 600,000 ounces over the medium term, but we will ensure that when we reach this milestone, it is sustainable and at the right cost," said Cutifani.He said company executives recently presented its turnaround strategy for the mine to its board and the board felt that it was the first time that AngloGold had Geita "by the throat". The company's short term target for Geita was to optimise mill utilization, a 5% improvement in throughput, a 5% increase in mineable grades through improved grade control and a further 3% increase in recoveries from better managed ore blending and management.Cutifani said there was renewed enthusiasm around the mine evident in the fact that former staff of the operation wanted to return to it.But although AngloGold is starting to see "encouraging trends" in Africa such as "solid gold production" in Mali up 13% on the previous quarter to 106,000 ounces, while total cash costs here were "under control" at $432/ounce, the company will also focus on drafting an effective turnaround plan for Obuasi in Ghana. Obuasi saw a 9% drop in production and an 18% increase in total cash costs to $612/ounce.The Australian CEO said he was not confident that they had the right turnaround plan for Geita yet, but they would deliver on it as an executive in the next quarter.