JOHANNESBURG (miningweekly.com) – AngloGold Ashanti is constantly coming up with the same answer during its continual assessment of where this 40 000-employee gold mining major can generate the most value.  

“The answer is clear,” AngloGold Ashanti CEO Alberto Calderon emphasised during this week’s third-quarter results presentation. “The best opportunities remain within.”

Firstly, AngloGold Ashanti is committed to lifting performance from its core assets, driving margin growth through cost discipline, which it continues to do well since beginning its new journey under Calderon in 2021.

The Full Asset Potential initiative he put in place has been valuable in keeping the cost-per-ounce measure in real terms. The site-led programme sets out to improve operational performance and ensure that assets operate at their full potential through step-change improvements in mine planning, productivity, and costs. It involves detailed analysis, benchmarking, and advanced analytics to identify opportunities, reduce dilution, increase ore tonnes mined, and lower costs.

It has helped to improve AngloGold’s position on the cost curve and to deliver on its guidance as well as to unearth the organic growth options.

Having helped the Obuasi mine in Ghana to begin to develop a consistent operating cadence as it ramps up, it has also spotlighted the scalability and life-extension potential of other assets amenable to relatively low-risk, low-capital leverage within the framework of existing footprints, infrastructure and knowledge.

“The returns, as you can imagine, are more than competitive,” Calderon commented during his elevation into the spotlight of the Geita mine in north-western Tanzania, near the shores of Lake Victoria, which impressed visiting media, including Mining Weekly, during our visit there several years ago.

“We’re committed to bringing some of our most exciting internal opportunities to life and we'll start today with Geita, our Tier-1 asset,” Calderon reported. (Also watch attached Creamer Media video.)

“For years, Geita has been viewed as a world-class mine with a relatively short reserve life. That’s completely changing. This is a Tier-1 operation by every measure – consistent delivery, strong margins and exceptional operational stability. What's often overlooked is the geological quality. Geita is located in the Lake Victoria greenstone belt on the Tanzanian craton, part of the same gold province that holds Kibali and North Mara.

“After two decades of mining, large parts of the concession remain under-explored with compelling structural and geotechnical targets pointing to significant potential,” Calderon pointed out.

Geita, with opencast and underground mines producing around 500 000 oz/y, is underpinned by 3.5-million reserve ounces and seven-million-plus resource ounces.

“We're now showcasing the next chapter for Geita, a mine positioned to remain a Tier-1 asset for at least the next 20 years, but in reality, it going to be much longer than that,” Calderon forecast, while displaying a slide depicting the plan to unlock further value.

“We're allocating a total $50-million, an additional $15-million a year, to exploration. With that investment, we expect to grow reserves by about 60%, to increase life from around 7.5 years today to about 10 years or more.”

One opencast and three underground production fronts will be maintained, as a conceptual study proceeds to evaluate increasing processing capacity by one-million tons a year through upgrading, and maintaining a tailings storage facility (TSF) capacity by incremental extension. This will be followed by the construction of a new TSF in the mid-2030s.

The focus is on near-mine drilling, with the mill expansion conservatively forecast to require capital expenditure of about $100-million.

Production is expected to grow by 20% to 600 000 oz/y. Importantly, we focus on maintaining knowledge here and not simply creating an expansion to push through lower grade material.

At a proposed capital intensity of only $1 000/oz “this is an extraordinarily profitable project”, Calderon remarked.

“We're looking to put this additional investment to work in an area with the geological quality and longevity.

“Since we started tidying up exploration investment in 2021, reserve life has more or less doubled the current levels around seven years.

“When we zoom out a little further, we’ve added two-million assets of reserves between 2017 and 2024, over and above the 4.3-million ounces of depletion during that period.

“That comes at a cost of $39/oz an ounce, which is exceptional value by any measure and we’ve enhanced the quality of the geology and our exploration team. The pipeline of targets is exceptionally rich.”

The 40-odd prospects already identified are poised to easily improve reserve life to an initial target of ten years or more.

“We aim to achieve the first milestone by 2028. The first-round marker for us is to increase Geita’s reserve to around four-million ounces by next year, and then five-million ounces by the end of 2028.

“We have set clear initial priority areas for this drilling campaign. When it comes to exploration, Geita has been somewhat underdone in the last decade or more. There’s a lot of low-hanging fruit.”

Displayed on a slide were underground mining areas where a solid track record of predictable production has been established and an excellent understanding of the geology established.

“Importantly, these deposits remain open at depth and development and drilling over the next years will let us more clearly define the extent of the deposits,” Calderon commented, while displaying a slide of Geita’s Star and Comet underground operation and the Nyamulilima opencast mine.

“At Star and Comet, there’s very much the same approach” – exploration drilling targeting mineral resource definition and extensions.

Exploration drilling at the Nyamulilima openpit has confirmed the potential for a larger openpit and the deposit open at depth with good potential to transition to underground mining in time.

“We have additional high confidence exploration targets with striking distance of the pit where we've already intercepted mineralisation, including some high-grade areas.

So, where does this place Geita?

“We have a world class orebody supporting a compelling investment case; with the incremental exploration spend we expect to leverage the large business resource base, growing reserve life for ten years or more, and keeping it at that level for many, many years.

“The mine has maintained a resource-to-reserve conversion rate of more than 30%.

“This will underpin the base reproduction of plus-500 000 oz over a reserve life of ten years.

“Over the medium term, we will continue to progress the mine’s opportunities, which will step up production to 600 000 oz.

“We will update you on the feasibility process. That means Geita is well positioned to unlock significant value to sustain its Tier-1 status for decades to come,” Calderon emphasised, amid the company reporting another record quarter for cash generation and another healthy dividend declaration.

In the three months to September 30, free cash flow rose 141% year-on-year to a record $920-million as continued cost discipline helped to capture the benefits of a higher gold price.

A quarterly dividend of $460-million was declared by this secondary-listed Johannesburg Stock Exchange company, which has taken dividends declared this year to $927-million.