First Quarter Report 2002
|Wednesday, May 08, 2002
|Opening Statement by the Chief Executive
Good Morning Ladies and Gentlemen
Once more, I am delighted to be leading the Ashanti team to present the results of a very good quarter for the Company. Having ended 2001 on a very strong note, it is particularly pleasing that we are reporting significant progress on all fronts at the end of the first quarter of this year. These achievements include:
· An 83% increase in earnings
· Higher gold production
· Lower cash operating costs
· World class safety standards
· Consecutive reduction in gross debt levels
· Continued restructuring and simplification of
Ashanti’s hedge book, and
· A substantial progress in our restructuring efforts.
For this morning’s event, I have with me here in Ghana, Trevor Schultz, the COO, Peter Cowley, MD Exploration, K.A & JKA and calling in are Venkat the CFO and Mark Arnesen, Managing Director, International Treasury.
As I indicated earlier, Ashanti’s earnings for the first quarter amounted to US$16.5 million, an 83% increase when compared with the US$9.0 million recorded in the first quarter of 2001. The increased earnings is primarily the result of higher gold production and spot price levels.
Total gold production of 409,384 ounces was 3% higher than the 398,992 ounces produced in the first quarter of last year. All operations produced above annualised targets and apart from Siguiri and Freda Rebecca, all operations also improved on First Quarter 2001. We recorded very good production from Obuasi and Geita as well as solid performances from Iduapriem and Bibiani.
Cash operating costs for the quarter were US$190 per ounce, an improvement on the US$195 per ounce recorded last year.
Additional operational highlights in the quarter included:
· High recovery at 87% from the Sulphide Treatment
Plant (STP) at Obuasi;
· The lowest quarterly cost at US$193 per ounce to be
achieved at Iduapriem and
· Encouraging exploration results from Obuasi, Geita
Other developments in the first quarter of 2002 were the commencement of mining at the Mpesetia deposit for processing at the Bibiani plant, the Iduapriem carbon-in-leach (CIL) plant expansion project to increase processing capacity by 50% to 4.0 million tonnes per annum (Mtpa) and the installation of a secondary crushing plant at Geita as part of a longer term expansion programme.
We also continued to maintain our world-class safety standard with a Lost Time Injury Frequency Rate (LTIFR) of 0.37 for the quarter compared with 0.43 in the first quarter of 2001.
Turning to debt levels, Ashanti reduced its Group’s gross debt level by US$11.8 million, including a US$7.0 million repayment towards the Revolving Credit Facility thereby reducing it to its lowest level of US$48 million. Ashanti also effected certain restructurings to further improve and simplify its hedge book.
Some of the measures taken resulted in a reduction in tenor and simplification of a lease rate swap with a counterparty, elimination of the convertible structures in its portfolio, a modest increase in protection levels and the removal of the sold puts. Mark Arnesen will be reporting on this in greater detail later on during his presentation.
Finally Ashanti also reached conditional agreements with an ad hoc Committee of Note holders to a proposed restructuring of the Existing Notes, with all of Ashanti’s active hedge counterparties to margin-free arrangements, and with a syndicate of four banks to arrange and underwrite a new US$100 million Revolving Credit Facility. These represented some of the important refinancing milestones, which have been accomplished so far.
I will now hand over to Trevor to report further details from the Operations front.