SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of February 2004
ASHANTI GOLDFIELDS COMPANY LIMITED
(Translation of Registrant's Name Into English)
Gold House, Patrice Lumumba Road
Roman Ridge, P.O. Box 2665
Accra, Ghana
(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.)
Form 20-F [X] Form 40-F [ ]
(Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes [ ] No [X]
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-_____.
ASHANTI GOLDFIELDS COMPANY LIMITED
PRESS RELEASE
FOR IMMEDIATE RELEASE 4 FEBRUARY 2004
PRELIMINARY RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2003
HIGHLIGHTS
- Annual earnings before and after exceptional items were US$54.8 million
(2002: US$79.7 million) and US$49.2 million (2002: US$56.2 million)
respectively
- Group meets its annual production target of 1.6 million ounces
- Geita and Iduapriem mines each achieves record production
- Total cash operating costs per ounce increase by 11.5% from US$199 to
US$222
- Safety record improved further to 0.30 injuries per 200,000 hours worked
- Exploration at Obuasi, Geita and Siguiri continues to yield encouraging
results
- Proposed merger with AngloGold expected to complete in April 2004
2003 2002
FINANCIAL (US$)
Total turnover 564.9M 552.2m
Earnings before exceptional items 54.8M 79.7m*
Earnings after exceptional items 49.2M 56.2m
Earnings per share before exceptional items 0.43 0.67*
Earnings per share after exceptional items 0.38 0.47
GOLD PRODUCTION (ounces)
Obuasi 513,163 537,219
Bibiani 212,716 242,432
Iduapriem/Teberebie 243,533 185,199
Siguiri 252,795 269,292
Freda-Rebecca 51,091 98,255
Geita (group share) 330,523 289,522
TOTAL 1,603,821 1,621,919
TOTAL PRODUCTION COSTS BEFORE EXCEPTIONAL ITEMS
(US$ per ounce)
Cash operating costs 222 199
Royalties 11 9
Depreciation and amortisation 49 54
TOTAL 282 262
ORE RESERVES AND MINERAL RESOURCES (million ounces)*
Proved and Probable Ore Reserves 25.7 27.8
Measured, Indicated and Inferred Mineral Resources 64.2 54.0
* Earnings before exceptional items in 2002 excludes refinancing and
restructuring costs of US$23.5 million
** Represents 100% of the mines' Ore Reserves and Mineral Resources
CHIEF EXECUTIVE'S REVIEW
OVERVIEW
At the start of 2003 we announced that Ashanti would be facing a challenging
year at its operations regarding production and cash operating costs. We
targeted production at approximately 1.6 million ounces and estimated that cash
operating costs were expected to increase by approximately 10%. Ashanti achieved
the 1.6 million ounces production target but the increase in cash operating
costs of 11.5% was higher than our expectations.
SAFETY, HEALTH AND ENVIRONMENT
In 2002 we reported a strong safety performance with Lost Time Injury Frequency
Rate (LTIFR) of 0.37 injuries per 200,000 hours worked (2001: 0.58 injuries per
200,000 hours worked). Given the high emphasis that Ashanti places on the safety
and health of its employees, I am pleased to announce that we have further
improved upon our 2002 performance and achieved a LTIFR of 0.30 injuries per
200,000 hours worked in 2003.
OPERATIONS
With the resolution of the plant expansion difficulties at Iduapriem and the
progress achieved at the Nyankanga pit cut back at Geita, Ashanti increased its
production during the second half of the year. Total production of 1.604 million
ounces was marginally lower than the 1.622 million ounces produced in 2002. Both
Iduapriem and Geita mines achieved record annual production of 243,533 ounces
(2002: 185,199 ounces) and 661,045 ounces (2002: 579,043 ounces) respectively.
The Obuasi and Siguiri mines on the other hand performed below expectations due
to lower grades and metallurgical recovery. Operating difficulties continued to
impact on Freda-Rebecca's production.
Total cash operating costs for 2003 at US$222 per ounce were 11.5% higher than
the US$199 per ounce recorded in 2002 due to rising fuel prices, increases in
power costs and wages, rising costs of reagents and the appreciation in
currencies of countries from which we source our major imports.
FINANCIAL PERFORMANCE
The above operating results together in the lower release of deferred hedging
income reduced Ashanti's earnings before exceptional items to US$54.8 million
(2002: US$79.7 million). Earnings per share before and after exceptional items
for the year were US$0.43 (2002: US$0.67) and US$0.38 (2002: US$0.47)
respectively. Earnings after net exceptional charges of US$5.6 million were
US$49.2 million (2002: 56.2 million).
During the year, the Ashanti hedge porfolio was restructured further and the
Group's net debt level as at 31 December 2003 was reduced to US$169.5 million
(2002: US$215.6 million) following the repayment of shareholder loan of US$30.0
million from the Geita mine and the Group's debt repayments.
In view of the delay in effecting the rights issue due to the proposed merger
and the increased capital expenditure of the Siguiri Carbon-in-Pulp (CIP)
project, Ashanti has entered into additional financing arrangements with
AngloGold, details of which are included in the financial review.
EXPLORATION
On the exploration front, Ashanti continued to achieve further encouraging
results from our focused mine site exploration.
At Obuasi, we have opened up a number of drilling sites at the 50 level in order
to gain access for further deep drilling. During the year, we continued to
obtain high grade intercepts along the Obuasi trend.
At Geita, our objective of increasing the resource base was successful with the
mine's total Mineral Resources increasing by 2.3 million ounces to 18.6 million
ounces (50% attributable to Ashanti).
At Siguiri, we are encouraged by the delineation of new saprolite resources
which will be processed more efficiently through the new CIP plant, when
completed.
THE PROPOSED MERGER
On 16 May 2003, AngloGold and Ashanti confirmed that they were in discussions
regarding a proposed merger of the two companies. On 4 August 2003 the companies
announced that terms had been agreed for a recommended merger at an exchange
ratio of 0.26 AngloGold shares for every Ashanti share, and that they had
entered into a transaction agreement. On the same date, AngloGold entered into
the Lonmin Support Deed, pursuant to which Lonmin agreed, amongst other things,
to vote its Ashanti shares in favour of the merger.
Following the announcement of these agreements, Ashanti received a merger
proposal from Randgold Resources Limited ("Randgold"). After further discussions
with AngloGold and detailed, careful consideration of the Randgold proposal, and
following an increase by AngloGold in the offer consideration to 0.29 AngloGold
shares for every Ashanti share, the Ashanti Board announced on 14 October 2003
that it was recommending an improved final merger offer from AngloGold.
Following receipt of a revised proposal from Randgold on 24 October 2003, the
Board announced on 27 October 2003 that it had unanimously resolved to continue
to recommend AngloGold's improved final merger offer. The merger is to be
effected by means of a Ghanaian Scheme of Arrangement under section 231 of the
Companies Code, which requires the approval of Ashanti shareholders and
confirmation of the High Court of Ghana.
On 28 October 2003, the Government announced its support for the merger and the
principal terms of a stability undertaking which the Government intended to
enter into with AngloGold. On 12 December 2003, AngloGold and the
Government entered into the Government Support Deed, pursuant to which the
Government agreed, among other things, to vote its Ashanti shares in favour of
the merger. The Stability Agreement requires the approval of the Parliament of
Ghana and is currently being considered by the Members of Parliament.
On 12 January 2004, the US Securities and Exchange Commission confirmed the
availability of an exemption pursuant to section 3 (a) (10) of the US Securities
Act 1933 (as amended) from the registration requirements under that Act. The EU
Commission granted its clearance to the merger on 29 January 2004. AngloGold has
also obtained the South African Reserve Bank approval. Certain other regulatory
consents are in the process of being obtained.
In the absence of any unforeseen delays, it is expected that the merger will be
completed in April 2004.
COMMUNITY RELATIONS
Ashanti's commitment to the development of communities in and around the sites
of our operations is well known and recognised. Benefits include the provision
of employment, infrastructure, health care, education and micro-finance. In
addition agriculture, sports and recreation are actively promoted in the
communities. Our proposed merger partner, AngloGold, shares the same commitment
in this area and has an excellent track record in community relations. Once the
merger goes ahead, the enlarged entity will continue to take these initiatives
to even higher levels.
EMPLOYEES
The proposed merger with Anglogold is a reflection of the potential of our
dedicated and hard-working employees. I deem it a privilege to have worked with
our employees to record the list of achievements and assure them that the
proposed merger will present them with even more interesting opportunities to
employ the considerable experience and the skills we have developed over the
years, to make for an even better future.
OUTLOOK FOR 2004
The Group expects to achieve in 2004 production broadly in line with the
performance recorded in 2003 and cash operating costs in line with inflation.
CONCLUSION
I have presented this year's report with positive memories of our company's
history from its inception as a single mine company in 1897 to its present stage
of being on the threshold of becoming an integral part of a larger entity, which
will be one of the world's largest gold mining companies.
This could not have been achieved without the unflinching support of all our
stakeholders. Indeed you stood by us through happy, exciting and challenging
times. On behalf of the entire Ashanti team, I take this opportunity, to express
our deep sense of gratitude and reassure you all that the objectives which
attracted you to Ashanti will be pursued further in the next phase of Ashanti's
life.
S E JONAH
CHIEF EXECUTIVE & GROUP MANAGING DIRECTOR
OPERATIONS REVIEW
OVERVIEW
The Group produced 1.604 million ounces (2002: 1.622 million ounces) to meet its
annual gold production target, despite the operational challenges it faced at
several mines during 2003. Geita and Iduapriem achieved record levels of
production following commissioning of the plant capacity upgrade projects at
both mines. At the end of the year, construction of the flash
flotation/concentrate regrind project to improve metallurgical recovery from the
more refractory ore types at Bibiani was also completed. The project is expected
to be commissioned in the first quarter of 2004. At Siguiri, the construction of
the CIP project progressed with commissioning currently scheduled for the fourth
quarter of 2004/first quarter of 2005.
The principal operational challenges were the leaching kinetics at Siguiri,
underground grade control and equipment availability problems at Obuasi, the
difficulties tying in the Carbon-in-Leach (CIL) plant expansion at Iduapriem and
the increasingly difficult operating environment at the Freda-Rebecca mine. The
Group's Proved and Probable Ore Reserves at our mines decreased, after
production depletion, from 27.8 million ounces in 2002 to 25.7 million ounces in
2003.
OBUASI
Obuasi produced a total of 513,163 ounces (2002: 537,219 ounces). Production
came from the Sulphide Treatment Plant (STP) for underground ore, the tailings
re-treatment plant and the Oxide Treatment Plant (OTP) which processed open pit
ore from a number of small low grade deposits and transition ores previously
mined and stock piled. Cash operating costs of US$217 per ounce compared with
US$198 per ounce in 2002. The higher cost resulted from the spread of the fixed
costs over a lower number of ounces produced, higher tonnage of material
processed at lower grade and increases in fuel, power and labour charges.
UNDERGROUND MINING
Underground mining operations produced 2,334,000 tonnes, 6% lower than the
2,423,000 tonnes hoisted in 2002. The grade for the year at 7.04 g/t was 6%
lower than the 7.48 g/t achieved in 2002 as a result of production from lower
grade bulk mining blocks and grade control difficulties. The reduction in
tonnage produced was due to low availability experienced on the loaders and
electro-hydraulic drill rigs in the second half of the year.
Underground projects in 2003 focused on development and civils work on the skip
loading and discharge excavations, installation of the equipping stage and
equipping of the head gear section of the Brown Sub-Vertical Shaft (BSVS).
SURFACE MINING
Surface mining operations continued with the development and extraction of the
Kunka and Adubrem deposits and completion of the Homase open pit, followed by
the commencement of backfilling and land rehabilitation operations.
PROCESSING
A total of 5,218,000 tonnes were processed compared with 4,627,000 tonnes in
2002. The increase resulted from greater use of the OTP which was used to batch
process ores from the Homase, Kunka and Adubrem pits as well as transitional
material from the previous open pit operations which was stockpiled at the Alata
dump and greater throughput at the TTP.
At STP, a total of 2,330,000 tonnes of ore at a grade of 7.00 g/t and a
metallurgical recovery of 83.4% was processed as compared to 2,352,000 tonnes at
a grade of 7.35 g/t and a metallurgical recovery of 84.8% in 2002. Gold
production in 2003 was 437,085 ounces compared with 471,359 ounces in 2002, the
reduction being due to the lower feed grade and tonnage. Plant throughput in the
first half of the year was impacted by high maintenance downtime on the SAG mill
due to a worn out pinion and gearbox. In the second half, the low underground
ore supply was the constraining factor.
OTP was operated on a batch basis throughout the year and processed a total of
903,000 tonnes of ore grading 1.87 g/t to produce 32,295 ounces (2002: 435,000
tonnes at 2.06 g/t to produce 23,390 ounces). As a result of the refractory
nature of the transitional material processed at OTP, metallurgical recovery
reduced to 59.5% from the 81.2% achieved in 2002.
Throughput at the TTP was 1,985,000 tonnes at 2.20 g/t as compared to 1,840,000
tonnes at 2.29 g/t in 2002. Recovery at 31.2% was the same as that achieved in
2002. As a result of the increased throughput, production in 2003 increased to
43,783 ounces from the 42,275 ounces achieved in 2002.
EXPLORATION
Above 50 level, the 2003 exploration effort was largely directed at infill and
perimeter definition drilling of the mature exploration blocks at George
Cappendell Shaft (GCS), Sansu and BSVS areas. Better intersections from these
areas included 16.2 g/t over 4.1 metres, 15.1 g/t over 5.2 metres and 20.6 g/t
over 22.9 metres at GCS; 15.9 g/t over 6.0 metres, 11.9 g/t over 4.0 metres and
33.9g/t over 15.3metres, whilst 11.5g/t over 8.2 metres, 11.2 g/t over 27.3
metres and 7.5g/t over 15.4 metres were obtained from the 41level BSVS area. In
2004, priority will be given to extending the main levels above 50 level
southwards to provide new drill sites to test extensions of the known
mineralised corridors. In the north of the mine, exploratory drilling on the
Ashanti Spur intersected 98 g/t over 4.7 metres and 20 g/t over 3.1 metres
around the 10 level horizon.
The deep level exploration development effort was directed at the establishment
of new sites to the north of the presently drilled areas to allow diamond
drilling to test the extension of high grade ore shoots in the Kwesi Mensah
Shaft (KMS) and Adansi sections of the mine and to target the northward
extension of the mineralisation delineated from the 50S 131 south crosscut. Good
progress was made on 50 level with a new by-pass tunnel developed between the
KMS and Adansi shafts. This tunnel will eventually provide the access further
north to the 50N 87E & W crosscuts for drilling to probe the various oreshoots
between Adansi and Outen. The 50N19E crosscut and drill chamber were developed
and drilling commenced whilst the 50N 39W crosscut was developed and excavation
of the drill chamber is in progress. Accesses will be established at 50S 116E,
104E, 102E & W, 86E and 87W crosscuts respectively as a priority. Better results
from drill intersections from the 50 level deeps project area included 41.9 g/t
over 3.1 metres, 26.9 g/t over 6.6 metres, 30.1 g/t over 11 metres, 32.4 g/t
over 5.8 metres and 16.1 g/t over 3 metres.
Preparations are being made to commence deeper drilling in 2004 from the 50S 42
crosscut, initially targeting mineralisation down to a depth of 2,500 metres and
ultimately to 3,000 metres.
OBUASI DEEPS
In 2003, a decision was made to commit a higher level of funding and to
accelerate the development and exploration activities required to expand and
improve the confidence level in the Mineral Resources that will be included in
the feasibility study for the Obuasi Deeps project. Engineering studies on
ventilation requirements, alternative mining methods and the infrastructure
options for the project were progressed and schedules and capital and operating
cost estimates updated to reflect more detailed levels of engineering.
IDUAPRIEM (80% EQUITY)/TEBEREBIE (90% EQUITY)
Gold production by Iduapriem/Teberebie for 2003 was 243,533 ounces compared to
the 185,199 ounces recorded in 2002. The higher gold production was due to the
increased mill throughput resulting from the upgrade of the processing plant.
Cash operating costs increased to US$240 per ounce from US$232 per ounce in
2002, due to high ROM rehandle costs and increases in labour, power, fuel and
reagents.
At 4,335,000 tonnes, the ore mined in 2003 was slightly lower than the 4,393,000
tonnes produced in the previous year, whilst the mined grade at 1.75 g/t was
higher than the 1.66 g/t achieved in 2002. Waste mined was 16,872,000 tonnes,
compared to 15,019,000 tonnes in 2002.
Gold production from the CIL plant increased to 219,695 ounces from 147,726
ounces produced in 2002 due to the higher throughput, grade and metallurgical
recovery. Recovery was affected in the first half of the year by circuit
instability during the prolonged commissioning difficulties. However, by the end
of the third quarter, the plant had been optimised for its new configuration and
was operating in a stable condition at a capacity of 4.0 million tonnes per
annum.
Mill throughput, feed grade and metallurgical recovery in 2003 were 3,754,000
tonnes, 2.00 g/t and 91.0% respectively as compared to the 2,625,000 tonnes,
1.96 g/t and 89.3% achieved in the previous year.
Heap leach production for the year was 23,838 ounces compared to 37,473 ounces
in 2002. A total of 1,431,000 tonnes at 1.38 g/t were processed at the Teberebie
heap leach plant compared to 1,127,000 tonnes at 1.13 g/t in 2002. Despite the
increase in stacked gold from 40,943 ounces in 2002 to 63,489 ounces in 2003,
heap leach production decreased reflecting the lower metallurgical recovery,
37.5% in 2003 versus 91.3% in 2002, achieved from the harder, less porous ores
being mined and stacked on the leach pads.
BIBIANI
Bibiani produced 212,716 ounces at a cash operating cost of US$216 per ounce
during 2003 as compared to the 242,432 ounces at US$180 per ounce the previous
year. The anticipated lower grade and the higher tonnage of refractory type ore
arising from the pit explain the lower gold production which contributed to the
higher cash operating cost per ounce produced.
Ore mined during the year amounted to 3,108,000 tonnes at a grade of 3.09 g/t
compared to 2,608,000 tonnes at 3.53 g/t the previous year. In November 2003 a
major slip occurred on the west wall immediately to the north of where the
previous slip in October 2002 occurred. Consequently, mining operations in the
main pit was suspended while an optimal method for the recovery of ore remaining
in the pit was undertaken. Work commenced on development of the Russell, Walsh
and Strauss satellite pits which are to be mined during 2004 using internal
resources.
Milled throughput for the year was 2,591,000 tonnes at a feed grade of 3.29 g/t
compared to 2,566,000 tonnes at 3.72 g/t achieved in 2002. The lower than plan
throughput was due to maintenance problems on the ROM/crushing section of the
plant and intermittent power outages during the rainy season. Due to the mining
and processing of more refractory type ore throughout the year, metallurgical
recovery decreased to 77.6% from the 79.0% achieved in 2002.
The underground trackless decline was advanced by a distance of approximately
1,200 metres from the portal to just below the base of the main pit. The ramp
intersected 6.0metres at 7.5 g/t and two recent surface exploration holes
drilled to the south of the ramp returned 12.5 g/t over 4.3 metres and 10.5 g/t
over 4.0 metres. The old 5 level workings are being rehabilitated to allow for
geological mapping and sampling of the mineralised zones to commence in the
first quarter of 2004.
Mining operations continued at Mpasetia throughout the year and is expected to
extend into 2004 following the discovery of additional resources and revaluation
of the deposit using a higher gold price.
SIGUIRI - GUINEA (85% EQUITY)
In 2003, Siguiri produced a total of 252,795 ounces at a cash operating cost of
US$279 per ounce compared with the 269,292 ounces at US$230 per ounce achieved
in 2002. Production and costs were impacted by lower than expected metallurgical
recovery rates from the ore stacked during the year, higher mined and processed
tonnages as well as increases in power, fuel, labour and reagent costs.
A total of 9,608,000 tonnes of ore and 8,154,000 tonnes of waste were mined
compared with the 9,464,000 tonnes and 8,404,000 tonnes respectively in 2002,
whilst the mined grade decreased from 1.19 g/t to 1.15 g/t. The heap leach plant
processed a total of 9,754,000 tonnes at 1.12 g/t compared with 9,462,000 tonnes
at 1.16 g/t in the previous year.
Metallurgical recovery for the year decreased to 72.0% from the 76.3% realised
in 2002 as a result of solution dilution from late rains and slow solution
recovery rates following the recommencement of third layer stacking in the
fourth quarter.
During 2003, the construction work on the CIP project was temporarily suspended
following irreconcilable differences with the contractor. In the third quarter,
the feasibility study was revised and a new contractor engaged. The project
recommenced in the 4th quarter of 2003 at a revised capital cost currently
estimated to be in the region of US$75 - US$80 million, with the commissioning
expected to be in the fourth quarter of 2004/first quarter of 2005.
Following a geological mapping review, exploration drilling was targeted at a
new shear corridor striking approximately North-South through the Kosise and
Soloni pits. Drill results along the zone linking the pits have demonstrated the
continuity of mineralisation along the strike and resulted in an increase in
Mineral Resources in this area. Further drilling is programmed to test the
extensions of this corridor to the north and south in 2004.
FREDA-REBECCA - ZIMBABWE
Full year production in 2003 was 51,091 ounces at a cash operating cost of
US$268 per ounce compared to the 98,255 ounces at US$214 per ounce achieved in
2002. The decline in production was due to a low availability of drill rigs and
drilled reserves occasioned by a challenging environment. The higher cash
operating costs reflect the lower gold production from the operation.
Underground ore production of 630,000 tonnes at a grade of 2.39 g/t in 2003 was
42% lower than the 1,077,000 tonnes at 2.99 g/t achieved in 2002. The decrease
in grade was expected following the depletion of the higher-grade reserves in
blocks 7A and 10 in 2002. Production was impacted by poor equipment availability
and difficulties in obtaining foreign exchange to import spares and essential
equipment.
A total of 1,197,000 tonnes at 1.75 g/t was processed in 2003 compared with
1,155,000 tonnes at 2.92 g/t in 2002. Plant recovery in 2003 was 75.9% compared
to 82.2% in the previous year as a result of the lower feed grades and inability
to maintain stable circuit conditions in the processing plant because of the
irregular supply of ore and fluctuation in feed grade. In order to maximise gold
production, the ore supply from the underground and open pit operations was
supplemented with material from the low grade stockpile.
In September, the mine was re-engineered around a plan to rehabilitate the
mining fleet and re-build the developed and drilled ore reserves to adequate
levels to support a stand alone 80,000 tonnes per month underground operation
producing around 60,000 ounces per annum. Orders for the spares and equipment
were put in place and the rehabilitation process got underway in December 2004.
It is expected that the mine should achieve its target rate of 80,000 tonnes of
ore per month at the end of the second quarter of 2004. In parallel with the
rehabilitation, exploratory drilling is being undertaken on the adjacent
satellite deposits at Promoter, Phoenix Prince and PEN-Kimberly prospects.
GEITA (50% JOINT VENTURE) - TANZANIA
Geita mine produced a record 661,045 ounces (50% Ashanti) at a cash operating
cost of US$170 per ounce in 2003, compared to 579,043 ounces at US$163 per ounce
in 2002. The upgrade to the crushing and leach tank sections of the processing
plant was successfully commissioned in the first quarter of 2003 and the
capacity of the plant was increased from 4,000,000 tonnes per annum to 5,600,000
tonnes per annum.
In the first three quarters of the year good progress was made on the waste
stripping backlog which resulted from the redesign and deepening of the
Nyankanga pit in 2002. This allowed access to larger tonnages of higher-grade
ore in August 2003. Gold production in the fourth quarter increased to a record
233,714 ounces at a cash operating cost of US$126 per ounce compared with the
122,742 ounces at US$202 per ounce achieved in the same period the previous
year.
In 2003, a total of 5,685,000 tonnes of ore grading 3.22 g/t were mined at a
strip ratio of 9.5:1. This compares to 5,399,000 million tonnes at 3.52 g/t at a
strip ratio of 7.4:1 achieved in 2002. Waste mined for the year was 54,232,000
tonnes, a 37% increase on the 39,729,00 tonnes excavated in 2002.
During the year, a total of 5,704,000 tonnes were processed at a grade of 3.90
g/t and a metallurgical recovery of 92.4% compared to the 4,979,000 tonnes at
3.92 g/t and a recovery of 92.3% processed in 2002.
EXPLORATION
Ashanti's exploration effort continued to focus on and around its existing
mining operations.
In summary at year end 2003, the Proved and Probable Ore Reserves of Ashanti's
operations (including 100% Geita) were 25.7 million ounces contained in 247.7
million tonnes of ore grading at an average of 3.23 g/t. Ashanti's equity
position in these reserves amounts to 20.7 million ounces (2002: 22.0 million
ounces).
The Measured and Indicated Mineral Resources of Ashanti's operations at year end
2003 were 45.7 million ounces contained in 428.2 million tonnes of material
grading at an average of 3.32 g/t. Ashanti's equity position in these Mineral
Resources amounts to 37.2 million ounces (2002: 37.8 million ounces).
The Inferred Mineral Resources of Ashanti's reputation at year end 2003 were
18.5 million ounces contained in 119.9 million tonnes of ore grading 4.80 g/t.
Ashanti's equity position on these Inferred Mineral Resources amounts to 16.3
million ounces (2002: 7.7 million ounces).
The most significant changes in the Group's Ore Reserves and Mineral Resources,
which are summarised on pages 10 and 11, relative to the position as of 31
December 2002 are:
- The decrease in Obuasi underground Ore Reserves is due to higher mining
depletion than additions.
- The decrease in Geita's Ore Reserves after allowing for mining depletion
and additions due largely to the redesign of the Nyankanga pit to take
account of the limitations involved in the river diversion.
- The disposal of the Youga property.
- The Inferred Mineral Resource increased significantly due to the increases
associated with the inclusion of the Inferred Mineral Resources
underground at Obuasi between the 50 level and 78 level horizons as well
as increased at Geita and Siguiri due to positive exploration results.
The Ore Reserves were calculated on the basis of a gold price of US$350 per
ounce. Ashanti is reporting Inferred Mineral Resources in its annual statement
for the first time to be in line with the reporting practice adopted by other
major gold producers.
EAST AFRICA
TANZANIA - At Geita, the exploration objective during 2003 was to increase
Mineral Resources by delineating the strike and depth extent of the known
deposits, especially along the Nyankanga-Lone Cone-Geita Hill mineralised trend.
This was achieved with total Mineral Resources including Inferred increasing by
14% to 18.6 million ounces. The 5.3 kilometre long mineralised trend from
Nyankanga to Geita Hill now has a total Mineral Resource of 13.4 million ounces.
Over 57,000 metres of drilling was undertaken during the year, targeting mainly
the western strike extent of Nyankanga and the strike and depth extent of Geita
Hill.
During the fourth quarter, drilling at Geita Hill intersected broader and higher
grade mineralisation at depth. Better drilling results included:
GHDD0142 - 36 metres @ 3.6g/t from 141metres and 12metres @ 5.1 g/t from198
metres GHDD0181 - 44 metres @ 3.6 g/t from 139 metres incl. 18 metres @ 6.7 g/t
from 142 metres GHDD0135 - 10 metres @ 18.64 g/t from 188.5 metres and 5.5
metres @ 6.46 g/t from 200.5 metres GHDD0138 - 14 metres @ 7.45g/t from 221
metres and 5.5 metres @ 23.1g/t from 254 metres.
Results from this deeper drilling indicate that the mineralisation consists of a
series of higher grade, plunging shoots that should have the effect of deepening
the current pits as well as opening up the potential for future underground
mining at Geita Hill.
At 31 December 2003, Measured, Indicated and Inferred Resources at Geita
totalled 167.4 million tonnes grading 3.5g/t Au, equivalent to 18.6 million
ounces. The main exploration objective for 2004 is to convert this large
resource base into reserves.
Elsewhere in Tanzania, Ashanti continued its regional assessment of the Lake
Victoria Goldfields. During the year, Ashanti finalised a royalty option
agreement with Tan Range on nine prospecting licences covering 1,095 square
kilometres southwest of the Ushirombo belt in the Lake Victoria Goldfields of
Tanzania. Exploration will commence once permitting has been completed.
WEST AFRICA
GUINEA - Resource definition drilling was completed on the new Sorofe and
Kalamagna deposits that resulted in Measured and Indicated Mineral Resources of
300,000 ounces being delineated on these two deposits. During the fourth
quarter, a new area of bedrock mineralisation was discovered at Kosise North,
associated with structures linking the Kosise and Soloni pits. By year end,
total Mineral Resources including Inferred of 370,000 ounces had been outlined.
Drilling is continuing to fully delineate this new deposit.
At year-end, Measured, Indicated and Inferred Mineral Resources at Siguiri
totalled 113.7 million tonnes grading 1.16 g/t, equivalent to 4.3 million
ounces.
GHANA - Exploration continued on the Subriso concession, 50 kilometres north of
Bibiani where shallow gold mineralisation over a strike length of 700 metres had
been intersected on the Pokukrom prospect. Additional deeper follow-up drilling
will be undertaken in 2004.
MALI - Exploration continued during the year on a number of exploration
properties in the prospective southeast part of the country. No significant
mineralisation was located.
SIERRA LEONE - A number of properties were investigated during the second half
of the year but none were worthy of further follow up.
COTE D'IVOIRE - The uncertain environment precluded exploration being undertaken
during the year.
CENTRAL AFRICA
DEMOCRATIC REPUBLIC OF CONGO - The stationing of United Nations (MONUC) troops
at Bunia in Ituri Province during the second half of the year was a positive
step towards peace and stability in the area covered by Ashanti Kilo's
Concession 40 in the Kilo-Moto gold mining district of northeastern D.R.Congo.
Of the total reported historical gold production from the Kilo and Moto
greenstone belts of 9.4 million ounces, 5.7 million ounces has come from the
Kilo greenstone belt within Concession 40. At year end, personnel returned to
the Mongbwalu mine site within Concession 40 with a view to commencing
exploration activities. Office and accommodation buildings are being renovated
prior to the initiation of exploration activities, currently scheduled for the
second quarter of 2004.
SOUTH AFRICA - During the fourth quarter, Tameng Mining & Exploration (Pty)
Limited in which Ashanti has a 40% equity interest, was awarded the prospecting
licence to commence exploration activities for Platinum Group Metals (PGM) on
the farm M'phatlele's Location 457KS in the northeastern limb of the Bushveld
Igneous Complex. The sub-outcrop of the Merensky and UG2 Reefs which are the
principal mineralised horizons for PGMs in the Bushveld Complex, have been
mapped on M'phatlele's Location over a strike length of 8 kilometres.
SUMMARY OF PRODUCTION AND CASH OPERATING
COSTS PER OUNCE
OBUASI IDUAPRIEM BIBIANI SIGUIRI
TWELVE MONTHS TO 31 DEC 2003
Production (ounces) 513,163 243,533 212,716 252,795
Cost per ounce (US$) 217 240 216 279
TWELVE MONTHS TO 31 DEC 2002
Production (ounces) 537,219 185,199 242,432 269,292
Cost per ounce (US$) 198 232 180 230
SUMMARY OF PRODUCTION AND CASH
OPERATING COSTS PER OUNCE
FREDA- TOTAL/
REBECCA GEITA AVERAGE
TWELVE MONTHS TO 31 DEC 2003
Production (ounces) 51,091 330,523 1,603,821
Cost per ounce (US$) 268 170 222
TWELVE MONTHS TO 31 DEC 2002
Production (ounces) 98,255 289,522 1,621,919
Cost per ounce (US$) 214 163 199
GOLD PRODUCTION SUMMARY 2003
12 12
MONTHS Months
4TH 4th TO to
QUARTER Quarter 31 DEC 31 Dec
2003 2002 2003 2002
OBUASI
UNDERGROUND MINING
Ore production ('000 tonnes) 561 596 2,334 2,423
Ore grade (g/t) 6.40 7.35 7.04 7.48
SURFACE MINING
Ore production ('000 tonnes) 31 176 476 368
Ore grade (g/t) 1.43 2.69 2.31 2.71
Waste mined ('000 tonnes) 138 1,029 1,677 2,165
Strip ratio 4.5 5.8 3.5 5.8
SULPHIDE TREATMENT PLANT
Ore processed ('000 tonnes) 548 594 2,330 2,352
Head grade (g/t) 6.93 7.70 7.00 7.35
Recovery (%) 83.0 84.9 83.4 84.8
Gold produced (ounces) 101,339 124,830 437,085 471,359
POMPORA TREATMENT PLANT
Ore processed ('000 tonnes) -- -- -- --
Head grade (g/t) -- -- -- --
Recovery (%) -- -- -- --
Gold produced (ounces) -- -- -- 195
OXIDE TREATMENT PLANT
Ore processed ('000 tonnes) 284 251 903 435
Head grade (g/t) 1.64 2.11 1.87 2.06
Recovery (%) 42.1 82.2 59.5 81.2
Gold produced (ounces) 6,300 13,991 32,295 23,390
TAILINGS TREATMENT PLANT
Ore processed ('000 tonnes) 512 514 1,985 1,840
Head grade (g/t) 2.09 2.29 2.20 2.29
Recovery (%) 30.8 31.7 31.2 31.2
Gold produced (ounces) 10,596 12,000 43,783 42,275
OBUASI TOTAL PROCESSED
Ore processed ('000 tonnes) 1,344 1,359 5,218 4,627
Head grade (g/t) 3.97 4.62 4.28 4.84
Recovery (%) 69.0 75.1 71.5 74.8
Total Gold produced (ounces) 118,234 150,821 513,163 537,219
DISTRIBUTION OF OBUASI
PRODUCTION (OUNCES)
Underground 101,338 124,830 435,439 471,554
Surface 6,300 13,991 33,941 23,390
Tailings 10,596 12,000 43,783 42,275
Total 118,234 150,821 513,163 537,219
IDUAPRIEM
MINING
Ore production ('000 tonnes) 1,133 1,054 4,335 4,393
Ore grade (g/t) 1.69 1.76 1.75 1.66
Waste mined ('000 tonnes) 4,315 3,098 16,872 15,019
Strip ratio 3.8 2.9 3.9 3.4
CIL PLANT
Ore production ('000 tonnes) 1,008 660 3,754 2,625
Head grade (g/t) 2.10 1.98 2.00 1.96
Recovery (%) 96.1 87.5 91.0 89.3
Gold produced (ounces) 65,381 36,781 219,695 147,726
HEAP LEACH
Ore stacked ('000 tonnes) 372 427 1,431 1,127
Head grade (g/t) 1.40 1.18 1.38 1.13
Recovery (%) 34.7 55.3 37.5 91.3
Gold produced (ounces) 5,802 8,962 23,838 37,473
IDUAPRIEM TOTAL (ounces) 71,183 45,743 243,533 185,199
12 12
MONTHS Months
4TH 4th TO to
QUARTER Quarter 31 DEC 31 Dec
2003 2002 2003 2002
BIBIANI
MINING
Ore production ('000 tonnes) 586 735 3,108 2,608
Ore grade (g/t) 3.26 3.40 3.09 3.53
Waste mined ('000 tonnes) 859 2,334 5,482 11,054
Strip ratio 1.5 3.2 1.8 4.2
CIL PLANT
Ore processed ('000 tonnes) 637 675 2,591 2,566
Head grade (g/t) 3.16 3.64 3.29 3.72
Recovery (%) 82.0 76.2 77.6 79.0
Gold produced (ounces) 53,059 60,215 212,716 242,432
SIGUIRI
MINING
Ore production ('000 tonnes) 2,593 2,854 9,608 9,464
Ore grade (g/t) 1.12 1.21 1.15 1.19
Waste mined ('000 tonnes) 2,738 2,325 8,154 8,404
Strip ratio 1.1 0.8 0.8 0.9
HEAP LEACH
Ore stacked ('000 tonnes) 2,556 2,506 9,754 9,462
Head Grade (g/t) 1.13 1.19 1.12 1.16
Recovery (%) 62.7 62.7 72.0 76.3
Gold produced (ounces) 58,217 60,133 252,795 269,292
FREDA-REBECCA
UNDERGROUND MINING
Ore production ('000 tonnes) 172 244 630 1,077
Ore grade (g/t) 2.31 2.92 2.39 2.99
SURFACE MINING
Ore production ('000 tonnes) 23 -- 75 110
Ore grade (g/t) 3.20 -- 2.33 2.26
PROCESSING
Ore processed ('000 tonnes) 222 311 1,197 1,155
Head grade (g/t) 1.93 2.87 1.75 3.22
Recovery (%) 80.8 80.8 85.9 82.2
Gold produced (ounces) 11,133 23,190 51,091 98,255
GEITA JV (ASHANTI 50%)
MINING
Ore production ('000 tonnes) 1,629 1,093 5,685 5,399
Ore grade (g/t) 4.53 3.20 3.22 3.52
Waste mined ('000 tonnes) 13,886 12,226 54,232 39,729
Strip Ratio 8.5 11.2 9.5 7.4
CIL PLANT
Ore processed ('000 tonnes) 1,382 1,261 5,704 4,979
Head grade (g/t) 5.62 3.36 3.90 3.92
Recovery (%) 93.6 90.1 92.4 92.3
Gold Produced (ounces) 233,714 122,742 661,045 579,043
Ashanti's share (ounces) 116,857 61,371 330,523 289,522
GROUP SUMMARY (OUNCES)
Managed gold production (ounces) 311,826 340,102 1,273,298 1,332,397
Geita JV 50% (ounces) 116,857 61,371 330,523 289,522
Sub-total (ounces) 428,683 401,473 1,603,821 1,621,919
Less minority interests (ounces) 19,410 15,881 74,449 68,174
GROUP ATTRIBUTABLE TOTAL (OUNCES) 409,273 385,592 1,529,372 1,553,745
ORE RESERVES AND MINERAL RESOURCES
MEASURED, INDICATED AND INFERRED MINERAL RESOURCES AS AT 31 DECEMBER 2003
MEASURED INDICATED SUB-TOTAL
TONNES GRADE TONNES GRADE TONNES
LOCATION (MILLION) (G/T) (MILLION) (G/T) (MILLION)
OBUASI
Underground 20.6 11.20 35.4 9.70 56.0
Surface 14.3 3.04 -- -- 14.3
Tailings 12.7 1.91 3.8 1.97 16.5
Sub-total 47.6 6.27 39.2 8.95 86.8
BIBIANI
Underground -- -- 2.2 5.43 2.2
Surface 2.6 1.89 1.6 2.74 4.2
Tailings 4.4 1.07 15.4 0.58 19.8
Sub-total 7.0 1.36 19.2 1.32 26.2
OTHER LOCATIONS
Teberebie (90%)/
Iduapriem (80%) 55.7 1.67 30.2 1.65 85.9
Siguiri (85%) 31.6 1.10 54.6 1.11 86.2
Freda-Rebecca 12.0 2.53 3.6 2.44 15.6
Geita (50%) 40.9 3.13 86.6 3.80 127.5
Sub-total 140.2 2.04 175.0 2.56 315.2
TOTAL 194.8 3.05 233.4 3.53 428.2
2002 Total 188.5 3.30 217.7 3.80 406.2
MEASURED, INDICATED AND INFERRED MINERAL RESOURCES AS AT 31 DECEMBER 2003
SUB-TOTAL INFERRED
GRADE OUNCES TONNES GRADE
LOCATION (G/T) (MILLION) (MILLION) (G/T)
OBUASI
Underground 10.25 18.5 30.3 12.20
Surface 3.04 1.4 -- --
Tailings 1.92 1.0 -- --
Sub-total 7.48 20.9 30.3 12.20
BIBIANI
Underground 5.43 0.4 3.1 6.10
Surface 2.17 0.3 -- --
Tailings 0.69 0.4 -- --
Sub-total 1.33 1.1 3.1 6.10
OTHER LOCATIONS
Teberebie (90%)/
Iduapriem (80%) 1.66 4.6 19.1 1.48
Siguiri (85%) 1.11 3.1 27.5 1.33
Freda-Rebecca 2.51 1.3 -- --
Geita (50%) 3.59 14.7 39.9 3.03
Sub-total 2.34 23.7 86.5 2.15
TOTAL 3.32 45.7 119.9 4.80
2002 Total 3.57 46.4 82.4 2.90
MEASURED, INDICATED AND INFERRED MINERAL RESOURCES AS AT 31 DECEMBER 2003
TOTAL GOLD EQUITY
OUNCES TONNES GRADE OUNCES OUNCES
LOCATION (MILLION) (MILLION) (G/T) (MILLION) (MILLION)
OBUASI
Underground 11.9 86.3 10.96 30.4 30.4
Surface -- 14.3 3.04 1.4 1.4
Tailings -- 16.5 1.92 1.0 1.0
Sub-total 11.9 117.1 8.71 32.8 32.8
BIBIANI
Underground 0.6 5.3 5.82 1.0 1.0
Surface -- 4.2 2.17 0.3 0.3
Tailings -- 19.8 0.69 0.4 0.4
Sub-total 0.6 29.3 1.84 1.7 1.7
OTHER LOCATIONS
Teberebie (90%)/
Iduapriem (80%) 0.9 105.0 1.63 5.5 4.7
Siguiri (85%) 1.2 113.7 1.19 4.3 3.7
Freda-Rebecca -- 15.6 2.51 1.3 1.3
Geita (50%) 3.9 167.4 3.45 18.6 9.3
Sub-total 6.0 401.7 2.30 29.7 19.0
TOTAL 18.5 548.1 3.64 64.2 53.5
2002 Total 7.7 488.6 3.44 54.0 43.5
PROVED AND PROBABLE ORE RESERVES AS AT 31 DECEMBER 2003
PROVED PROBABLE
TONNES GRADE TONNES GRADE
LOCATION (MILLION) (G/T) (MILLION) (G/T)
OBUASI
Underground 4.2 7.50 33.5 8.40
Surface 2.6 2.71 -- --
Tailings 12.7 1.90 3.8 2.00
Sub Total 19.5 3.22 37.3 7.75
BIBIANI
Underground -- -- 1.2 4.6
Surface 2.6 1.89 1.3 2.9
Tailings 4.4 1.07 0.4 1.0
Sub Total 7.0 1.36 2.9 3.4
OTHER LOCATIONS
Teberebie 43.0 1.60 11.6 1.70
(90%)/Iduapriem (80%)
Siguiri (85%) 12.4 1.22 39.3 1.15
Freda-Rebecca 3.1 2.50 1.0 2.47
Geita (50%) 28.4 3.30 42.2 4.17
Sub Total 86.9 2.13 94.1 2.59
TOTAL 113.4 2.27 134.3 4.01
2002 Total 115.1 2.40 141.5 4.10
PROVED AND PROBABLE ORE RESERVES AS AT 31 DECEMBER 2003
TOTAL GOLD EQUITY
TONNES GRADE OUNCES OUNCES
LOCATION (MILLION) (G/T) (MILLION) (MILLION)
OBUASI
Underground 37.7 8.30 10.1 10.1
Surface 2.6 2.71 0.2 0.2
Tailings 16.4 1.90 1.0 1.0
Sub Total 56.8 6.19 11.3 11.3
BIBIANI
Underground 1.2 4.57 0.2 0.2
Surface 3.9 2.22 0.3 0.3
Tailings 4.8 1.06 0.1 0.1
Sub Total 9.9 1.94 0.6 0.6
OTHER LOCATIONS
Teberebie 54.6 1.65 2.9 2.6
(90%)/Iduapriem (80%)
Siguiri (85%) 51.7 1.17 1.9 1.6
Freda-Rebecca 4.1 2.50 0.3 0.3
Geita (50%) 70.6 3.82 8.7 4.3
Sub Total 181.0 2.38 13.8 8.8
TOTAL 247.7 3.23 25.7 20.7
2002 Total 256.6 3.40 27.8 22.0
ORE RESERVES AND MINERAL RESOURCES
RECONCILIATION FOR THE YEAR ENDING 31 DECEMBER 2003
MEASURED, INDICATED AND
INFERRED MINERAL RESOURCES
(OUNCES MILLION)
LOCATION OPENING ADDITIONS DEPLETION CLOSING
Obuasi 24.0 10.9 2.1 32.8
Iduapriem 5.3 0.5 0.3 5.5
(80%)/Teberebie (90%)
Bibiani 1.7 0.3 0.3 1.7
Siguiri (85%) 4.0 0.7 0.4 4.3
Freda-Rebecca 1.5 -- 0.2 1.3
Geita (50%) 16.3 3.0 0.7 18.6
Youga (45%) 1.2 -- 1.2 --
TOTAL 54.0 15.4 5.2 64.2
RECONCILIATION FOR THE YEAR ENDING 31 DECEMBER 2003
PROVED AND PROBABLE
ORE RESERVES
(OUNCES MILLION)
LOCATION OPENING ADDITIONS DEPLETION CLOSING
Obuasi 11.9 0.4 1.0 11.3
Iduapriem 2.7 0.5 0.3 2.9
(80%)/Teberebie (90%)
Bibiani 0.8 0.1 0.3 0.6
Siguiri (85%) 2.1 0.2 0.4 1.9
Freda-Rebecca 0.4 -- 0.1 0.3
Geita (50%) 9.4 -- 0.7 8.7
Youga (45%) 0.5 -- 0.5 --
TOTAL 27.8 1.1 3.2 25.7
Notes on the Ore Reserves and Mineral Resources Statement
1. This Ore Reserve and Mineral Resource statement is classified according to
the Australasian Code for the Reporting of Identified Mineral Resources and Ore
Reserves issued by the Joint Committee for the Australasian Institute of
Geoscientists and the Australian Mining Industry Council (JORC).
2. All Identified Mineral Resources are reported as in situ or contained
resources utilising JORC guidelines and are inclusive of the stated Ore Reserve.
3. The Proved and Probable Ore Reserves contained within the Identified Mineral
Resources has been estimated using guidelines of the JORC code and are reported
as recoverable ore reserves to which appropriate factors have been applied to
allow for mining loss and dilution.
4. For economic studies and the determination of cut-off grades, a gold price of
US$350 per ounce was assumed.
5. At a gold price of US$325 per ounce, it is estimated that the ore reserves
will decrease by approximately 5 per cent and at a gold price of US$375 per
ounce, it is estimated that the ore reserves will increase by approximately 4
per cent.
6. The Ore Reserves and Mineral Resources reported represent 100 per cent of the
Ore Reserves and Mineral Resources at the respective properties and no allowance
has been made for minority interests. Ashanti's percentage interest is shown in
brackets for properties where Ashanti has less than 100 per cent ownership.
7. Inferred Mineral Resources for 2003 are reported in the statement for the
first time.
8. Inferred Mineral Resources for 2002 are reported for comparative purposes
only.
9. The Youga property was sold during the year.
10. The competent persons who have overseen the estimation of the Ore Reserves
and Identified Mineral Resources are listed as follows:
MINE RESOURCES RESERVES
Obuasi J Amanor, MSc J Chamberland, BSc
(Mineral Expl), BSc, (Mining Engineering),
BSc (Hons) (Geology), MAusIMM,
MAusIMM, FGhIG, 23 years experience
32 years experience
Iduapriem K Osei, BSc (Geological E Boakye,
Engineering), PhD (Applied Science),
MAusIMM, BSc (Mining Eng.),
13 years experience 22 years experience
Bibiani E Acheampong MSc S Ndede, MSc, BSc
(Mineral Resources), (Mining Eng.),
BSc (Geological Eng.), MAusIMM,
MAusIMM, 13 years 15 years Experience
Experience A. Amoah, MBA, Dip
(Mining Eng.)
MAusIMM,
15 years experience
Siguiri A Pardey, BSc A Pardey, BSc
(Geology), MAusIMM, (Geology), MAusIMM,
10 years experience 10 years experience
Freda- S Hlabangana, BSc, G. Chitumbura, BSc
Rebecca BSc Hons(Geology) (Mining Engineering)
MAusIMM, MAusIMM,
17 years experience 8 years experience
Geita R Adofo, MSc D Purdey, BEng
(Mineral Expl.), (Mining), MAusIMM,
BSc (Geol. Eng.), 8 years experience
MAusIMM
10 years experience
11. Data may not compute exactly due to rounding.
FINANCIAL REVIEW
EARNINGS
Ashanti's 2003 earnings before exceptional items were US$24.9 million lower at
US$54.8 million (2002: US$79.7 million). The reduction in earnings is primarily
due to the following factors, partially mitigated by higher spot prices:
- 18,098 ounces reduction in production as compared to 2002
- 11.5% increase in annual cash operating cost per ounce
- US$21.4 million reduction in the release of deferred hedging income.
Earnings after net exceptional charges of US$5.6 million were US$49.2 million
(2002: US$56.2 million).
Earnings per share before and after exceptional items for the year were US$0.43
(2002: US$0.67) and US$0.38 (2002: US$0.47) respectively.
REVENUE
Higher spot prices enabled Ashanti to achieve total revenue of US$564.9 million
(2002: US$552.2 million) despite the anticipated fall in the release of deferred
hedging income and marginally lower production. The average gold price realised
during the year was higher at US$352 per ounce (2002: US$340 per ounce).
Spot revenue amounted to US$586.8 million (2002: US$506.4 million). Hedging
income was negative US$21.9 million (2002: positive US$45.8 million) due both to
higher spot prices and a reduction in deferred hedging income released. Cash
paid during 2003 on close-outs of maturing hedge contracts amounted to US$34.8
million (2002: cash received US$11.5 million) and US$12.9 million (2002: US$34.3
million) was released from previously closed-out hedging contracts (deferred
hedging income).
As at 31 December 2003 the deferred hedging income balance stood at US$11.3
million, which will be credited to the profit and loss account during 2004.
HEDGING
During the year, high spot levels, gold volatility and low lease rate levels
allowed Ashanti to effect the following restructurings:
- 660,000 ounces of bought call options with strike prices greater than
US$430 per ounce were re-struck lower to 232,652 ounces of bought call
options with strike prices of US$320 per ounce and US$330 per ounce;
- 401,000 ounces of sold call options were re-struck lower to match 682,300
ounces of bought put options, thereby converting the put and call options
into forward sales. Value generated through this restructure was used to
purchase a further 232,666 ounces of call options with a strike of US$330
per ounce;
- Notional lease rate exposure was reduced by 1.08 million ounces to 1.68
million ounces as at year end. Value generated from this restructure was
used to purchase 176,063 ounces of put options with an average strike of
US$358, with maturities ranging from 2004 to 2012.
As a result of these restructures and maturing contracts from the hedge book, as
at 31 December 2003, Ashanti's hedge book had 4.4 million ounces of protection
and 5.8 million ounces of commitments. Lease rate notional ounces stood at 1.68
million ounces with a maximum of 1.27 million ounces floating at any one time.
As at 31 December 2003, over the life of its hedge book, Ashanti had
approximately 45% and 35% of its forecast production committed and protected
respectively, (excluding production for Geita for the period 2004-2007 of the
project financing). There were no significant changes to the Geita hedge book,
apart from maturing contracts.
As at 31 December 2003, Ashanti's hedge book had a negative mark-to-market of
US$532.1 million based on a spot price of US$417 per ounce (2002: US$150.0
million negative based on a spot price of US$345 per ounce). As at 31 December
2003, Ashanti's share of the Geita hedge book had a negative mark-to-market of
US$77.4 million (2002: negative US$44.3 million). The increase in the negative
mark-to-market for both Ashanti and Geita was due to the increase in the spot
price. Neither Ashanti nor Geita hedge books are subject to margin calls.
The table below summarises the changes to the Ashanti hedge book during the
year:
31 DECEMBER 31 DECEMBER REDUCTION
2002 2003 ACHIEVED
OZ M OZ M OZ M
Protection 5.0 4.4 0.6
(Average price: (Average price:
US$358/oz) US$362/oz)
Commitments 6.5 5.8 0.7
(Average price: (Average price:
US$346/oz) US$360/oz)
Lease rates 2.8 1.7 1.1
Mark-to-market US$150.0m US$532.1m
Negative Negative
Spot price US$345/oz US$417/oz
Details of the Ashanti and Geita hedge portfolios are set out below.
CASH OPERATING COSTS
In the first quarter of 2003, Ashanti announced that its annual cash operating
costs would increase by approximately 10% in 2003 as compared to the US$199 per
ounce recorded in 2002.
Cash operating costs for 2003 were 11.5% higher at US$222 per ounce due to
rising fuel prices, increases in power costs and wages, rising costs of reagents
and the appreciation in currencies of countries from which we source our major
imports.
EXPLORATION AND CORPORATE ADMINISTRATION
Exploration expenditure written off during the year was US$4.5 million (2002:
US$3.8 million). Corporate administration expenditure for the year was higher at
US$22.0 million as compared to US$16.5 million in 2002.
DEPRECIATION
Total depreciation and amortisation charges before exceptional items were
US$79.8 million, lower than the US$88.4 million recorded in 2002 primarily due
to the increase in reserves at the end of 2002.
TOTAL COSTS
Total costs before exceptional items, but including depreciation and
amortisation, amounted to US$487.9 million (2002: US$457.7 million). Total costs
per ounce increased by US$22 per ounce, from US$282 per ounce in 2002 to
US$304per ounce in 2003 mainly due to the increase in cash operating costs
referred to above.
EXCEPTIONAL ITEMS
Exceptional items, which have been identified separately in the profit and loss
account, comprised the following:
Exceptional gains:
- Ashanti sold its interest in the Mampon property near Obuasi to Bogoso
Gold Limited and Golden Star Resources Limited for a cash consideration of
US$9.5million and realised a further US$0.5 million from the debenture
held in Birim Goldfields. These resulted in a gain before taxes of US$8.3
million.
- The investment held in the joint venture in respect of the Youga property
in Burkina Faso was sold for US$3.3million resulting in a gain of US$2.7
million
- Ashanti received insurance proceeds of US$3.0million for the Company's
damaged aircraft, which has since been scrapped. This resulted in an
exceptional gain of US$2.0 million.
- The Company re-negotiated the terms of the Kimin loans. In consideration
for Ashanti extending the terms of the guarantee currently in place in
favour of the lender, it secured a reduction in the amounts owed from
US$7.7 million to US$5.0 million. This reduction of US$2.7 million has
been recognised as an exceptional gain within interest payable.
Exceptional charges:
- During the fourth quarter, 358 workers at the Obuasi mine were made
redundant at a cost of US$5.4 million.
- Having reviewed the challenging environment in which the Freda-Rebecca
mine operates, Ashanti has recognised an impairment charge of US$15.1
million.
FINANCING COSTS
Total interest charges before exceptional items fell by 25% from US$22.6 million
in 2002 to US$16.9 million due to reduced debt levels principally following the
refinancing which was implemented in 2002 and lower borrowing costs.
TAXATION
Taxation charge for the year before exceptional items was US$4.1 million. This
comprised of a tax credit for the Group of US$0.5 million and a tax charge of
US$4.6 million in respect of the Geita joint venture. An exceptional taxation
charge of US$0.8 million was recognised on the sale of the Mampon property.
DIVIDENDS
The Group continues to strengthen its financial position. However both the Group
and the Company had significant negative profit and loss account reserves at 31
December 2003.
The Ghana Companies Code, 1963, prohibits the payment of dividends where there
are no positive balances in distributable reserves. In the light of the above,
no dividend is proposed for 2003.
CASHFLOW
Net cash inflow from operations was US$86.3 million (2002: US$95.2 million).
In December 2003, Geita made a US$30.0 million distribution to the joint venture
partners after making an accelerated debt repayment of US$15.0 million to its
project finance banks. With the agreement of AngloGold, this US$30.0 million
distribution was paid in full to Ashanti. AngloGold also agreed to provide an
additional US$14.1 million to Ashanti, by purchasing at face value the residual
inter-company loans, provided by the Ashanti Group in respect of the Geita joint
venture. In consideration for the above, Ashanti will not participate in future
distributions of Geita, until such time as the equivalent amounts owed to
AngloGold have been repaid in full.
Other principal items in the cashflow statement include net interest paid of
US$8.3 million (2002: US$18.8 million), capital expenditure of US$83.0 million
(2002: US$64.5 million), proceeds from the sale of the Mampon and Youga
properties of US$13.3 million, proceeds from the exercise of warrants of US$10.8
million (2002: US$41.8 million) and repayment of borrowings of US$19.4million
(2002: US$61.0million)
As at 31 December 2003, stated capital stood at 131.0 million shares and 2.3
million warrants remained outstanding.
CAPITAL EXPENDITURE
Ashanti's capital investment in its operations increased from US$64.5 million in
2002 to US$83.0 million in 2003. The principal expenditure in 2003 included:
- US$37.6 million in respect of the underground development and plant at the
Obuasi mine
- US$12.5 million on the Iduapriem/Teberebie mine, primarily in respect of
the completion of CIL plant expansion
- US$24.6 million on the existing heap leach operations and the new CIP
project at the Siguiri mine
- US$6.4 million on the Bibiani mine, primarily in respect of the
underground development.
BORROWINGS
During the year, the Group reduced its gross debt level by US$14.6 million, from
US$256.9 million to US$242.3 million. This reduction is after consolidating
interest accrued of US$7.2 million into the Iduapriem/Teberebie project finance
loans.
The Group's gross debt analysis as at 31 December 2003, was as follows:
US$
MILLION
US$200 million Revolving Credit Facility ("RCF") 139.0
Iduapriem/Teberebie project finance loans 24.3
Other loans and overdrafts 7.5
Less: deferred loan fees (3.5)
167.3
Mandatorily Exchangeable Notes ("MENs") 75.0
Ashanti Group's gross debt as at
31 December 2003 242.3
The above schedule excludes Ashanti's 50% share of the Geita project finance
loan which fell from US$102.8 million (Ashanti's share US$51.4 million) as at 31
December 2002 to US$66.2 million (Ashanti's share US$33.1 million) following
Geita's strong performance during the second half of the year.
The Group's net debt level as at 31 December 2003 was also lower at US$169.5
million (2002: US$215.6 million) following the distribution of US$30.0 million
received from Geita and the Group's debt repayments.
As at 31 December 2003, Ashanti had headroom of US$21.0 million under its US$200
million Revolving Credit Facility.
LIQUIDITY AND GOING CONCERN
In June 2002, Ashanti issued US$75 million of Mandatorily Exchangeable Notes
("MENs"). The MENs will mandatorily exchange into ordinary shares of Ashanti
when Ashanti effects a rights issue. Ashanti agreed with its banks and the
holders of the MENs to complete the rights issue prior to 28 December 2003. It
was intended that as a part of the rights issue that Ashanti would raise
additional funds to fund completion of the Siguiri CIP project.
During the course of 2003, Ashanti entered into merger discussions with
AngloGold and subsequently entered into a transaction agreement to effect a
merger ("the Merger") of Ashanti and AngloGold. As a consequence of entering
into the transaction agreement, Ashanti had to delay completing the rights
issue. Since the MENs will become repayable on the Merger being completed,
Ashanti has secured agreement of its banks and the holders of the MENs to delay
the timeframe for completion of the rights issue until 28 December 2004.
Given the delay in the rights issue, the postponement/cancellation of the
Siguiri CIP project was considered. However, following discussions with
AngloGold, Ashanti decided to continue with the Siguiri CIP project,
notwithstanding the substantial increase in the anticipated capital cost of this
project. The increased capital expenditure required for this project, together
with the reduced cash inflows received by the Ashanti Group due to poorer
operating performance in 2003 as compared to 2002, has led to Ashanti seeking
alternative sources of financing to fund its cash requirements until the
consummation of the Merger.
With the agreement of AngloGold, a US$30.0 million distribution paid by the
Geita mine on 31 December 2003 has been paid in full to Ashanti. AngloGold has
also agreed to provide an additional US$14.1 million to Ashanti by purchasing at
face value the residual intercompany loan provided by the Ashanti Group in
respect of the Geita joint venture. In addition, AngloGold has agreed to provide
an unsecured loan facility of up to US$20.0 million to Ashanti. These
arrangements are not conditional on the Merger completing.
The Ashanti Board considers that these arrangements, together with the undrawn
amounts under its revolving credit facility, are sufficient to enable it to meet
its cash requirements in the period prior to the Merger becoming effective,
currently anticipated to be around April 2004. If the Merger is not completed,
or if there is a substantial delay in completing the Merger, Ashanti will need
to proceed with its rights issue or review alternative forms of financing. If
the Merger is not completed and alternative forms of financing cannot be
implemented, then there will be uncertainty as to whether the Ashanti Group will
be able to continue as a going concern.
Having taken into account the progress which AngloGold and Ashanti have achieved
in relation to the Merger, the financial support being provided by AngloGold and
other relevant factors, the Directors of Ashanti have formed the judgement that,
at the time of approving these financial statements, it is appropriate to use
the going concern basis in preparing these financial statements.
GROUP PROFIT AND LOSS ACCOUNT
For the year ended 31 December
Unaudited
2003
GROUP
BEFORE AFTER INTEREST
EXCEPTIONAL EXCEPTIONAL EXCEPTIONAL IN JOINT
ITEMS ITEMS ITEMS VENTURE TOTAL
Note US$M US$M US$M US$M US$M
TURNOVER 2 456.9 - 456.9 108.0 564.9
Cash operating costs 3 (300.0) - (300.0) (56.3) (356.3)
Other costs (30.3) (5.4) (35.7) (3.9) (39.6)
Royalties (14.0) - (14.0) (3.6) (17.6)
Depreciation and amortisation (66.9) (15.1) (82.0) (12.9) (94.9)
Refinancing and restructuring costs - - - - -
TOTAL COSTS 4 (411.2) (20.5) (431.7) (76.7) (508.4)
Other income - - - - -
OPERATING PROFIT 3 45.7 (20.5) 25.2 31.3 56.5
Share of operating profit of
joint venture 31.3 - 31.3
TOTAL OPERATING PROFIT 3 77.0 (20.5) 56.5
PROFIT ON SALE OF INVESTMENTS - 8.3 8.3
PROFIT ON SALE OF FIXED ASSETS - 4.7 4.7
PROFIT BEFORE INTEREST AND TAXATION 77.0 (7.5) 69.5
Net interest payable: group (12.4) 2.7 (9.7)
Taxation joint venture (4.5) - (4.5)
PROFIT BEFORE TAXATION 5 60.1 (4.8) 55.3
Tax: group 0.5 (0.8) (0.3)
joint venture (4.6) - (4.6)
PROFIT AFTER TAXATION 56.0 (5.6) 50.4
MINORITY INTEREST (1.2) - (1.2)
PROFIT ATTRIBUTABLE TO SHAREHOLDERS 54.8 (5.6) 49.2
DIVIDENDS - - -
RETAINED PROFIT FOR THE YEAR 54.8 (5.6) 49.2
EARNINGS PER SHARE (US$) 7 0.43 (0.5) 0.38
2002
Interest
in joint
Group venture Total
Note US$m US$m US$m
TURNOVER 2 467.5 84.7 552.2
Cash operating costs 3 (275.9) (47.2) (323.1)
Other costs (26.8) (4.8) (31.6)
Royalties (11.9) (2.7) (14.6)
Depreciation and amortisation (75.1) (13.3) (88.4)
Refinancing and restructuring costs (23.5) (8.8) (32.3)
TOTAL COSTS 4 (413.2) (76.8) (490.0)
Other income 12.1 - 12.1
OPERATING PROFIT 3 66.4 7.9 74.3
Share of operating profit of
joint venture 7.9
TOTAL OPERATING PROFIT 3 74.3
PROFIT ON SALE OF INVESTMENTS -
PROFIT ON SALE OF FIXED ASSETS -
PROFIT BEFORE INTEREST AND TAXATION 74.3
Net interest payable: group (17.5)
Taxation joint venture (5.1)
PROFIT BEFORE TAXATION 5 51.7
Tax: group (3.0)
joint venture 6.7
PROFIT AFTER TAXATION 55.4
MINORITY INTEREST 0.8
PROFIT ATTRIBUTABLE TO SHAREHOLDERS 56.2
DIVIDENDS -
RETAINED PROFIT FOR THE YEAR 56.2
EARNINGS PER SHARE (US$) 7 0.47
GROUP BALANCE SHEET
As at 31 December
Unaudited
2003
INTEREST
IN JOINT
GROUP VENTURE TOTAL
US$M US$M US$M
FIXED ASSETS
Intangible assets 15.4 50.9 66.3
Tangible assets 603.4 110.4 713.8
Investments
Investments - Geita joint venture 113.4 (113.4) -
Investments - Loans to joint venture and other investments
1.1 - 1.1
733.3 781.2
CURRENT ASSETS
Stocks 68.4 13.6 82.0
Debtors due within one year 39.2 14.7 53.9
Debtors due after more than one year - - -
Cash 72.8 3.6 76.4
180.4 31.9 212.3
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Creditors (131.3) (17.5) (148.8)
Borrowings (24.9) (10.8) (35.7)
(156.2) (28.3) (184.5)
NET CURRENT ASSETS 24.2 3.6 27.8
TOTAL ASSETS LESS CURRENT LIABILITIES 757.5 809.0
CREDITORS: AMOUNTS FALLING DUE OVER ONE YEAR
Creditors (3.6) (24.9) (28.5)
Borrowings (217.4) (22.3) (239.7)
PROVISIONS FOR LIABILITIES AND CHARGES (27.8) (4.3) (32.1)
508.7 508.7
CAPITAL AND RESERVES
Stated capital 599.0
Reserves (92.7)
EQUITY SHAREHOLDERS' FUNDS 506.3
Equity minority interests 2.4
508.7
2002
Interest
in joint
Group venture Total
US$m US$m US$m
FIXED ASSETS
Intangible assets 17.3 54.8 72.1
Tangible assets 602.7 103.5 706.2
Investments
Investments - Geita joint venture 91.2 (91.2) -
Investments - Loans to joint venture and other
investments 32.6 - 32.6
743.8 810.9
CURRENT ASSETS
Stocks 76.6 11.2 87.8
Debtors due within one year 14.0 21.2 35.2
Debtors due after more than one year 8.8 - 8.8
Cash 41.3 14.4 55.7
140.7 46.8 187.5
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Creditors (131.1) (19.7) (150.8)
Borrowings (2.7) (10.8) (13.5)
(133.8) (30.5) (164.3)
NET CURRENT ASSETS 6.9 16.3 23.2
TOTAL ASSETS LESS CURRENT LIABILITIES 750.7 834.1
CREDITORS: AMOUNTS FALLING DUE OVER ONE YEAR
Creditors (24.0) (39.9) (63.9)
Borrowings (254.2) (40.6) (294.8)
PROVISIONS FOR LIABILITIES AND CHARGES (25.0) (2.9) (27.9)
447.5 447.5
CAPITAL AND RESERVES
Stated capital 588.2
Reserves (141.9)
EQUITY SHAREHOLDERS' FUNDS 446.3
Equity minority interests 1.2
447.5
GROUP CASH FLOW STATEMENT
For the year ended 31 December
Unaudited
2003 2002
US$M US$m
CASH INFLOW FROM OPERATING ACTIVITIES 86.3 95.2
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 0.8 0.8
Interest paid (9.1) (19.6)
NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE (8.3) (18.8)
TAXATION
Tax paid (1.2) (2.0)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets (83.0) (64.5)
Proceeds from sale of fixed assets 3.0 -
Proceeds from sale of investment 13.3 -
Loans repaid by joint venture 30.0 -
NET CASH OUTFLOW FROM CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (36.7) (64.5)
CASH INFLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING 40.1 9.9
MANAGEMENT OF LIQUID RESOURCES 3.1 6.0
CASH INFLOW BEFORE FINANCING 43.2 15.9
FINANCING
Issue of ordinary shares 10.8 41.8
Decrease in debt (19.4) (61.0)
NET CASH OUTFLOW FROM FINANCING (8.6) (19.2)
INCREASE/(DECREASE) IN CASH 34.6 (3.3)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Increase/(decrease) in cash 34.6 (3.3)
Decrease in liquid resources (3.1) (6.0)
31.5 (9.3)
Cash outflow from decrease in debt 19.4 61.0
Other (4.8) 3.4
MOVEMENT IN NET DEBT 46.1 55.1
Net debt at 1 January (215.6) (270.7)
NET DEBT AT 31 DECEMBER (169.5) (215.6)
GROUP PROFIT AND LOSS ACCOUNT
For the 3 months to 31 December
Unaudited
2003
GROUP
BEFORE AFTER INTEREST
EXCEPTIONAL EXCEPTIONAL EXCEPTIONAL IN JOINT
ITEMS ITEMS ITEMS VENTURE TOTAL
Note US$M US$M US$M US$M US$M
TURNOVER 6 117.9 - 117.9 39.7 157.6
Cash operating costs 6 (83.9) - (83.9) (14.8) (98.7)
Other costs (6.8) (5.4) (12.2) (1.2) (13.4)
Royalties (3.5) - (3.5) (1.3) (4.8)
Depreciation and amortisation (15.1) (15.1) (30.2) (4.2) (34.4)
TOTAL COSTS (109.3) (20.5) (129.8) (21.5) (151.3)
Other income - - - - -
OPERATING PROFIT 8.6 (20.5) (11.9) 18.2 6.3
Share of operating profit of joint venture 18.2 - 18.2
TOTAL OPERATING PROFIT 6 26.8 (20.5) 6.3
PROFIT ON SALE OF INVESTMENT - 0.5 0.5
PROFIT ON SALE OF FIXED ASSETS - 2.7 2.7
PROFIT BEFORE INTEREST AND TAXATION 26.8 (17.3) 9.5
NET INTEREST PAYABLE: group (2.4) - (2.4)
NET INTEREST PAYABLE: joint venture (1.2) - (1.2)
PROFIT BEFORE TAXATION 23.2 (17.3) 5.9
Tax: group 0.7 - 0.7
Tax: joint venture (3.4) - (3.4)
PROFIT AFTER TAXATION 20.5 (17.3) 3.2
Minority interests (0.5) - (0.5)
PROFIT ATTRIBUTABLE TO SHAREHOLDERS 20.0 (17.3) 2.7
DIVIDENDS - - -
RETAINED PROFIT FOR THE PERIOD 20.0 (17.3) 2.7
EARNINGS PER SHARE (US$) 0.16 (0.14) 0.02
2002
Interest
in joint
Group venture Total
Note US$m US$m US$m
TURNOVER 6 123.8 17.7 141.5
Cash operating costs 6 (74.3) (12.4) (86.7)
Other costs (4.4) (2.4) (6.8)
Royalties (3.2) (0.6) (3.8)
Depreciation and amortisation (21.0) (3.4) (24.4)
TOTAL COSTS (102.9) (18.8) (121.7)
Other income 1.1 -- 1.1
OPERATING PROFIT 6 22.9 (1.1) 20.9
Share of operating profit of joint venture (1.1)
TOTAL OPERATING PROFIT 20.9
PROFIT ON SALE OF INVESTMENT --
PROFIT ON SALE OF FIXED ASSETS --
PROFIT BEFORE INTEREST AND TAXATION 20.9
NET INTEREST PAYABLE: group (3.4)
NET INTEREST PAYABLE: joint venture (1.5)
PROFIT BEFORE TAXATION 16.0
Tax: group (3.0)
Tax: joint venture 6.7
PROFIT AFTER TAXATION 19.7
Minority interests 1.2
PROFIT ATTRIBUTABLE TO SHAREHOLDERS 20.9
DIVIDENDS --
RETAINED PROFIT FOR THE PERIOD 20.9
EARNINGS PER SHARE (US$) 0.18
GROUP CASH FLOW STATEMENT
For the 3 months to 31 December
Unaudited
2003 2002
US$M US$m
CASH INFLOW FROM OPERATING ACTIVITIES 25.1 37.0
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 0.2 0.3
Interest paid (1.5) (1.6)
NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE (1.3) (1.3)
TAXATION
Tax paid (0.1) (0.3)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets (26.3) (18.4)
Proceeds from sale of investments 3.8 --
Loans repaid by joint venture 30.0 --
NET CASH INFLOW/(OUTFLOW) FROM CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT 7.5 (18.4)
CASH INFLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING 31.2 17.0
MANAGEMENT OF LIQUID RESOURCES (3.5) (7.4)
CASH INFLOW BEFORE FINANCING 27.7 9.6
FINANCING
Decrease in debt (3.8) (9.0)
NET CASH OUTFLOW FROM FINANCING (3.8) (9.0)
INCREASE IN CASH 23.9 0.6
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Increase in cash 23.9 0.6
Increase in liquid resources 3.5 7.4
27.4 8.0
Cash outflow from decrease in debt 3.8 9.0
Other (6.8) (0.3)
MOVEMENT IN NET DEBT 24.4 16.7
Net debt at 1 October (193.9) (232.3)
NET DEBT AT 31 DECEMBER (169.5) (215.6)
NOTES
Unaudited
1 BASIS OF PREPARATION
The unaudited results for the year ended 31 December 2003 have been prepared in
accordance with the accounting policies used in preparing the financial
statements and are consistent with those used by the Group in its financial
statements for the year ended 31 December 2002.
GOING CONCERN
In June 2002, Ashanti issued US$75 million of Mandatorily Exchangeable Notes
("MENs"). The MENs will mandatorily exchange into ordinary shares of Ashanti
when Ashanti effects a rights issue. Ashanti agreed with its banks and the
holders of the MENs to complete the rights issue prior to 28 December 2003. It
was intended that as a part of the rights issue that Ashanti would raise
additional funds to fund completion of the Siguiri CIP project.
During the course of the 2003, Ashanti entered into merger discussions with
AngloGold and subsequently entered into a transaction agreement to effect a
merger ("the Merger") of Ashanti and AngloGold. As a consequence of entering
into the transaction agreement, Ashanti had to delay completing the rights
issue. Since the MENs will become repayable on the Merger being completed,
Ashanti has secured agreement of its banks and the holders of the MENs to delay
the timeframe for completion of the rights issue until 28 December 2004.
Given the delay in the rights issue, the postponement/cancellation of the
Siguiri CIP project was considered. However following discussions with
AngloGold, Ashanti decided to continue with the Siguiri CIP project,
notwithstanding the substantial increase in the anticipated capital cost of this
project. The increased capital expenditure required for this project, together
with the reduced cash inflows received by the Ashanti Group due to poorer
operating performance in 2003 compared to 2002, has led to Ashanti seeking
alternative sources of financing to fund its cash requirements until the
consummation of the Merger.
With the agreement of AngloGold, a US$30million distribution paid by the Geita
mine on 31December 2003 has been paid in full to Ashanti. AngloGold has also
agreed to provide an additional US$14.1 million to Ashanti by purchasing at face
value the residual inter-company loan provided by the Ashanti Group in respect
of the Geita joint venture. In addition, AngloGold has agreed to provide an
unsecured facility of up to US$20 million to Ashanti. These arrangements are not
conditional on the Merger completing.
The Ashanti Board considers that these arrangements, together with the undrawn
amounts under its revolving credit facility, are sufficient to enable it to meet
its cash requirements in the period prior to the Merger becoming effective,
currently anticipated to be around April 2004. If the Merger is not completed,
or if there is a substantial delay in completing the Merger, Ashanti will need
to proceed with its rights issue or review alternative forms of financing. If
the Merger is not completed and alternative forms of financing cannot be
implemented, then there will be uncertainty as to whether the Ashanti Group will
be able to continue as a going concern.
Having taken into account the progress which AngloGold and Ashanti have achieved
in relation to the Merger, the financial support being provided by AngloGold and
other relevant factors, the Directors of Ashanti have formed the judgement that,
at the time of approving these financial statements, it is appropriate to use
the going concern basis in preparing these financial statements.
2 TURNOVER 2003 2002
US$M US$m
GROUP
Bullion revenue 464.8 416.3
Cash (paid)/realised on maturing hedging contracts (20.8) 16.9
Deferred hedging income 12.9 34.3
456.9 467.5
JOINT VENTURE
Bullion revenue 122.0 90.1
Cash paid on maturing hedging contracts (14.0) (5.4)
564.9 552.2
3 OPERATING PROFIT ANALYSIS BY BUSINESS AREA BEFORE EXCEPTIONAL ITEMS
12 months to 31 December 2003
OBUASI IDUAPRIEM BIBIANI SIGUIRI
Production ozs 513,163 243,533 212,716 252,795
US$ million
Revenue - spot 187.1 89.8 77.6 91.7
- hedging -- -- -- --
187.1 89.8 77.6 91.7
Operating costs (111.2) (58.5) (46.0) (70.6)
Other costs -- (1.2) (0.3) (2.3)
Royalties (6.0) (2.7) (2.3) (3.0)
EBITDA* 69.9 27.4 29.0 15.8
Depreciation and amortisation (30.8) (6.0) (11.2) (12.6)
OPERATING PROFIT/(LOSS)
2003 39.1 21.4 17.8 3.2
2002 22.9 4.6 18.2 (3.4)
12 months to 31 December 2003
FREDA- HEDGING EXPLOR- CORP.
REBECCA INCOME ATION ADMIN.
Production ozs 51,091 -- -- --
US$ million
Revenue - spot 18.6 -- -- --
- hedging -- (7.9) -- --
18.6 (7.9) -- --
Operating costs (13.7) -- -- --
Other costs -- -- (4.5) (22.0)
Royalties -- -- -- --
EBITDA* 4.9 (7.9) (4.5) (22.0)
Depreciation and amortisation (5.6) -- -- (0.7)
OPERATING PROFIT/(LOSS)
2003 (0.7) (7.9) (4.5) (22.7)
2002 6.0 51.2 (3.9) (14.5)
12 months to 31 December 2003
GEITA
GROUP (50%) TOTAL
Production ozs 1,273,298 330,523 1,603,821
US$ million
Revenue - spot 464.8 122.0 586.8
- hedging (7.9) (14.0) (21.9)
456.9 108.0 564.9
Operating costs (300.0) (56.3) (356.3)
Other costs (30.3) (3.9) (34.2)
Royalties (14.0) (3.6) (17.6)
EBITDA* 112.6 44.2 156.8
Depreciation and amortisation (66.9) (12.9) (79.8)
OPERATING PROFIT/(LOSS)
2003 45.7 31.3 77.0
2002 81.1 16.7 97.8
*EBITDA - Earnings before interest, tax, depreciation and amortisation.
12 months to 31 December 2002
OBUASI IDUAPRIEM BIBIANI SIGUIRI
Production ozs 537,219 185,199 242,432 269,292
US$ million
Revenue - spot 167.8 57.8 76.1 83.9
- hedging -- -- -- --
167.8 57.8 76.1 83.9
Cash operating costs (106.4) (43.0) (43.6) (61.9)
Other costs (0.5) (0.9) (0.3) (4.8)
Royalties (5.0) (1.7) (2.3) (2.9)
Other income -- -- -- --
EBITDA* 55.9 12.2 29.9 14.3
Depreciation and amortisation (33.0) (7.6) (11.7) (17.7)
OPERATING PROFIT/(LOSS)
2002 22.9 4.6 18.2 (3.4)
2001 0.3 4.4 7.5 (6.8)
*EBITDA - Earnings before interest, tax, depreciation and amortisation.
12 months to 31 December 2002
FREDA- HEDGING EXPLOR- CORP.
REBECCA INCOME ATION ADMIN.
Production ozs 98,255 -- -- --
US$ million
Revenue - spot 30.7 -- -- --
- hedging -- 51.2 -- --
30.7 51.2 -- --
Cash operating costs (21.0) -- -- --
Other costs -- -- (3.8) (16.5)
Royalties -- -- -- --
Other income -- -- -- 3.3
EBITDA* 9.7 51.2 (3.8) (13.2)
Depreciation and amortisation (3.7) -- (0.1) (1.3)
OPERATING PROFIT/(LOSS)
2002 6.0 51.2 (3.9) (14.5)
2001 7.3 96.0 (8.4) (22.4)
*EBITDA - Earnings before interest, tax, depreciation and amortisation.
12 months to 31 December 2002
GEITA
GROUP (50%) TOTAL
Production ozs 1,332,397 289,522 1,621,919
US$ million
Revenue - spot 416.3 90.1 506.4
- hedging 51.2 (5.4) 45.8
467.5 84.7 552.2
Cash operating costs (275.9) (47.2) (323.1)
Other costs (26.8) (4.8) (31.6)
Royalties (11.9) (2.7) (14.6)
Other income 3.3 -- 3.3
EBITDA* 156.2 30.0 186.2
Depreciation and amortisation (75.1) (13.3) (88.4)
OPERATING PROFIT/(LOSS)
2002 81.1 16.7 97.8
2001 76.6 20.2 96.8
4 RECONCILIATION OF TOTAL COSTS 2003 2002
US$M US$m
CASH OPERATING COSTS
Obuasi 111.2 106.4
Iduapriem 58.5 43.0
Bibiani 46.0 43.6
Siguiri 70.6 61.9
Freda-Rebecca 13.7 21.0
Geita (50%) 56.3 47.2
TOTAL CASH OPERATING COSTS 356.3 323.1
Corporate administration costs 22.0 16.5
Exploration costs 4.5 3.8
Other costs 7.7 11.3
Royalties 17.6 14.6
Depreciation and amortisation 79.8 88.4
Exceptional costs 20.5 32.3
TOTAL COSTS 508.4 490.0
5 EXCEPTIONAL ITEMS BEFORE TAXATION 2003 2002
US$M US$m
Profit on sale of investments (note a.) 8.3 --
Profit on sale of fixed assets (note b.) 4.7 --
Interest payable (note c.) 2.7 --
Other costs (note d.) (5.4) --
Depreciation and amortisation (note e.) (15.1) --
Refinancing and restructuring costs (note f.) -- (23.5)
Share of operating loss of joint venture (note g.) -- (8.8)
Other income (note g.) -- 8.8
(4.8) (23.5)
a. Ashanti sold its interest in the Mampon property near Obuasi to Bogoso
Gold Limited and Golden Star Resources Limited for a cash consideration of
US$9.5 million and realised a further US$0.5 million from the debenture
held in Birim Goldfields. These resulted in a gain before taxes of US$8.3
million.
b. The investment held in the joint venture in respect of the Youga property
in Burkina Faso was sold for US$3.3 million resulting in a gain of US$2.7
million. Ashanti received insurance proceeds of US$3.0 million for the
Company's damaged aircraft, which has since been scrapped. This resulted
in a gain of US$2.0 million.
c. The Company re-negotiated the terms of the Kimin loans. In consideration
for Ashanti extending the terms of the guarantee currently in place in
favour of the lender, it secured a reduction in the amounts owed from
US$7.7 million to US$5.0 million. This reduction of US$2.7 million has
been recognised as an exceptional gain within interest payable.
d. During the fourth quarter, 358 workers at the Obuasi mine were made
redundant at a cost of US$5.4 million.
e. Having reviewed the challenging environment in which the Freda-Rebecca
mine operates, Ashanti has recognised an impairment charge of US$15.1
million.
f. Costs incurred in refinancing the Group's debt during 2002.
g. As provided for in the sale and purchase agreement entered into in 2000 in
respect of the Geita mine, AngloGold transferred the neighbouring Ridge 8
property to Geita during 2002. The consideration of US$17.6 million will
be left outstanding until the project finance loans are fully repaid by
Geita. AngloGold has transferred to Ashanti for no consideration, its 50%
share of the receivable which resulted in an exceptional gain of
US$8.8million. In line with Ashanti's accounting policy on exploration
costs, the cost of this property was expensed.
6 OPERATING PROFIT ANALYSIS BY BUSINESS AREA BEFORE EXCEPTIONAL ITEMS
3 months to 31 December 2003
OBUASI IDUAPRIEM BIBIANI SIGUIRI
Production ozs 118,234 71,183 53,059 58,217
Revenue - spot 46.8 28.4 20.9 22.6
- hedging -- -- -- --
46.8 28.4 20.9 22.6
Cash operating costs (30.4) (17.6) (11.7) (20.4)
Other costs -- (0.3) (0.1) (0.3)
Royalties (1.3) (0.9) (0.6) (0.7)
EBITDA 15.1 9.6 8.5 1.2
Depreciation and amortisation (6.9) (1.1) (3.8) (2.2)
OPERATING PROFIT
2003 8.2 8.5 4.7 (1.0)
2002 12.5 (4.4) 7.4 (4.9)
FREDA- HEDGING EXPLOR- CORP.
REBECCA INCOME ATION ADMIN.
Production ozs 11,133 -- -- --
Revenue - spot 4.4 -- -- --
- hedging -- (5.2) -- --
4.4 (5.2) -- --
Cash operating costs (3.8) -- -- --
Other costs -- -- (2.1) (4.0)
Royalties -- -- -- --
EBITDA 0.6 (5.2) (2.1) (4.0)
Depreciation and amortisation (1.1) -- -- --
OPERATING PROFIT
2003 (0.5) (5.2) (2.1) (4.0)
2002 0.3 12.6 (0.5) (1.0)
GROUP GEITA TOTAL
Production ozs 311,826 116,857 428,683
Revenue - spot 123.1 45.8 168.9
- hedging (5.2) (6.1) (11.3)
117.9 39.7 157.6
Cash operating costs (83.9) (14.8) (98.7)
Other costs (6.8) (1.2) (8.0)
Royalties (3.5) (1.3) (4.8)
EBITDA 23.7 22.4 46.1
Depreciation and amortisation (15.1) (4.2) (19.3)
OPERATING PROFIT
2003 8.6 18.2 26.8
2002 22.0 (1.1) 20.9
7 EARNINGS PER SHARE
The calculation of earnings per share is based on earnings after tax and
minority interests and the weighted average number of shares outstanding during
the year of 128.5 million (2002: 119.1 million). Earnings per share has been
shown before and after exceptional items in order to show the impact of the
exceptional items on the underlying results of the business.
8 HEDGING
The following table sets out Ashanti's hedge portfolio as at 31 December 2003.
2004 2005 2006 2007
Forward Sales (ounces) 655,764 677,246 566,250 507,450
(US$/ounce) 357 352 358 360
CALLS:
Sold (ounces) 496,180 470,478 182,006 173,826
(US$/ounce) 341 350 368 357
Bought (ounces) 101,880 134,000 49,432 64,396
(US$/ounce) 359 352 370 361
Subtotal (ounces) 394,300 336,478 132,574 109,430
SUMMARY:
PROTECTED (ounces) 655,764 677,246 566,250 507,450
COMMITTED (ounces) 1,050,064 1,013,724 698,824 616,880
Lease Rate Swap (ounces) 546,000 468,000 1,245,000 1,267,000
Total committed ounces as a percentage of total forecast production (excluding
Geita for the period of the project financing ie 2003 - 2007)
Deferred
Hedging Income (US$m) 11 -- -- --
2008 2009 2010 2011
Forward Sales (ounces) 400,450 413,450 383,450 324,250
(US$/ounce) 369 362 366 373
CALLS:
Sold (ounces) 218,410 70,970 28,250 28,250
(US$/ounce) 365 368 350 350
Bought (ounces) -- -- -- --
(US$/ounce) -- -- -- --
Subtotal (ounces) 218,410 70,970 28,250 28,250
SUMMARY:
PROTECTED (ounces) 400,450 413,450 383,450 324,250
COMMITTED (ounces) 618,860 484,420 411,700 352,500
Lease Rate Swap (ounces) 1,084,000 826,000 568,000 310,000
Total committed ounces as a percentage of total forecast production (excluding
Geita for the period of the project financing ie 2003 - 2007)
Deferred
Hedging Income (US$m) -- -- -- --
2012 2013 TOTAL
Forward Sales (ounces) 292,500 214,500 4,435,310
(US$/ounce) 378 369 362
CALLS:
Sold (ounces) -- -- 1,668,370
(US$/ounce) -- -- 353
Bought (ounces) -- -- 349,708
(US$/ounce) -- -- 359
Subtotal (ounces) -- -- 1,318,662
SUMMARY:
PROTECTED (ounces) 292,500 214,500 4,435,310
COMMITTED (ounces) 292,500 5,753,972
Lease Rate Swap (ounces) 130,000
--
Total committed ounces as a percentage of total forecast production (excluding
Geita for the period of the project financing ie 2003 - 2007)
Deferred
Hedging Income (US$m) -- -- 11
DETAILS OF HEDGING CONTRACTS OUTSTANDING AT 31 DECEMBER 2003
FORWARD SALES:
A total of 4.44 million ounces have been sold forward at an average price of
US$362 per ounce.
CALL OPTIONS:
Ashanti has sold 1.67 million ounces of call options at an average strike price
of US$353 per ounce. As a partial offset, Ashanti has bought 0.35 million ounces
of call options at an average strike price of US$359 per ounce.
GOLD LEASE RATE SWAPS:
As of 31 December 2003, a maximum of 1.27 million ounces of Ashanti's hedged
production will be exposed to the floating 3 month lease rate at any one time.
The lease rate swaps can be broken down into the following types (under all of
these contracts Ashanti receives a certain lease rate income, which can be
regarded as compensation for the lease rate exposure that Ashanti takes on).
FIXED RATE VOLUME
DESCRIPTION (%) (OUNCES)
Ashanti pays a quarterly floating rate and receives a weighted average quarterly fixed rate of 1.80% 1.80 1,361,000
Ashanti pays a quarterly floating rate and receives a fixed amount of dollars at maturity
The quarterly amount is rolled until maturity of each forward contract. The fixed amount for each
contract is calculated using the formula: Volume*YearsToMaturity*302*2.00%
The next rate set is in 2006 2.00 320,000
TOTAL 1,681,000
MARK-TO-MARKET VALUATIONS
On 31 December 2003, the portfolio had a negative mark-to-market value of
US$532.14 million. This valuation was based on a spot price of US$417 per ounce
and the then prevailing applicable US interest rates, gold forward rates,
volatilities and guidelines provided by the Risk Management Committee of the
Board. The delta at that time was 5.3 million ounces. This implies that a US$1
increase in the price of gold would have a US$5.3 million negative impact
(approximate) on the mark-to-market valuation of the hedge book. Movements in US
interest rates, gold lease rates, volatilities and time will also have a
sizeable impact on the mark-to-market. All these variables can change
significantly over short time periods and can consequently materially affect the
mark-to-market valuation.
The approximate breakdown by type of the mark-to-market valuation at 31 December
2003, was as follows:
US$M
Forward contracts (400.82)
European Call options (net sold) (124.76)
Lease rate swaps (6.56)
(532.14)
GEITA HEDGING
The table below shows Ashanti's portion of hedging commitments for Geita as at
31 December 2003. This represents half of Geita's hedge commitments.
2004 2005 2006 2007 TOTAL
Forward Sales (ounces) 195,299 174,828 94,576 120,938 585,641
(US$/ounce) 289 294 296 298 293
PUTS:
Bought (ounces) 25,586 24,350 18,115 23,390 91,441
(US$/ounce) 291 291 291 292 291
SUMMARY:
PROTECTED (ounces) 220,885 199,178 112,691 144,328 677,082
COMMITTED (ounces) 195,299 174,828 94,576 120,938 585,641
Lease Rate Swap (ounces) 116,774 76,301 41,420 -- --
MARK-TO-MARKET VALUATION
On 31 December 2003, the Geita portfolio had a negative mark-to-market value of
US$154.9 million, (Ashanti's portion: negative US$77.45 million). This valuation
was based on a spot price of US$417 per ounce and the then prevailing US
interest rates, gold forward rates, volatilities and guidelines provided by the
Risk Management Committee of the Board.
9 ACCOUNTS
The preliminary results are unaudited. The financial information for the twelve
months to 31 December 2002 is derived from the statutory accounts for that year.
FORWARD LOOKING STATEMENTS
This report contains a number of statements relating to plans, forecasts and
future results of Ashanti Goldfields Company Limited ("Ashanti") that are
considered "forward looking statements" as defined in the Private Securities
Litigation Reform Act 1995 of the United States of America including but not
limited to those related to future working capital, future production levels,
operating costs and plans for diversification. Ashanti may also make written or
oral forward-looking statements in its presentations, periodic reports and
filings with the various regulatory authorities, in its annual report to
shareholders, in its offering circulars and prospectuses, in press releases and
other written materials and in oral statements made by its officers, directors
or employees to third parties. These forward looking statements include
statements about our beliefs, hopes, projections and expectations, and may
include statements regarding future plans, objectives or goals, anticipated
production or construction commencement dates, construction completion dates,
working capital, expected costs, production output, the anticipated productive
life of mines, projected cashflows, debt levels, and mark-to-market values of
and cashflows from the hedgebook.
Such statements are based on current plans, information, intentions, estimates
and projections and certain external factors which may be beyond the control of
Ashanti and, therefore, undue reliance should not be placed on them. These
statements are subject to risks and uncertainties that could cause actual
occurrences to differ materially from the forward looking statements, such as
the risks that Ashanti may not be able to achieve the levels of production and
operating costs it has projected. Additional risk factors affecting Ashanti are
set out in Ashanti's filing with the US Securities and Exchange Commission.
Ashanti can give no assurances that such results, including the actual
production or commencement dates, construction completion dates, costs or
production output or anticipated life of the projects and mines, projected
cashflows, debt levels, and marked-to-market values of and cashflows from the
hedgebook, will not differ materially from the forward seeking statements
contained in this report. Such forward looking statements are not guarantees of
future performance and involve known and unknown risks, uncertainties and other
factors collectively referred to as "Risk Factors", many of which are beyond the
control of Ashanti, which may cause actual results to differ materially from
those expressed in the statements contained in this report. These Risk Factors
include leverage, gold price volatility, changes in interest rates, hedging
operations, reserves estimates, exploration and development, mining, yearly
output, power supply, Ghanaian political risks, environmental regulation, labour
relations, general political risks, control by principal shareholders, Ghanaian
statutory provisions, dividend flows and litigation. For example, future
revenues from projects or mines described herein will be based in part upon the
market price of gold, which may vary significantly from current levels. Such
variations, if materially adverse, may impact the timing or feasibility of the
developments of a particular project or the expansion of specified mines.
Other factors that may affect the actual construction or production commencement
dates, costs or production output and anticipated lives of mines include the
ability to produce profitably and transport gold extracted therefrom to
applicable markets, the impact of foreign currency exchange rates, the impact of
any increase in the costs of inputs, and activities by governmental authorities
where such projects or mines are being explored or developed, including
increases in taxes, changes in environmental and other regulations and political
uncertainty. Likewise the cashflows from and marked-to-market values of the
hedgebook can be affected by, inter alia, gold price volatility, US interest
rates, gold lease rates and active management of the hedgebook.
Forward looking statements speak only as of the date they are made, and except
as required by law, or unless required to do so by the Listing Rules of the UK
Listing Authority, Ashanti undertakes no obligation to update publicly any of
them in light of new information or future events.
ENQUIRIES
ASHANTI GOLDFIELDS COMPANY LIMITED
GHANA CONTACT
JAMES ANAMAN
Managing Director, Public Affairs
Telephone: (+233-21) 778 178
ERNEST ABANKROH
Company Secretary
Telephone: (+44) 20 7256 9938
UK CONTACT
CORINNE GAISIE
Telephone: (+44) 20 7256 9938
NORTH AMERICAN CONTACT
ALLAN JORDAN
The Global Consulting Group
Telephone: (+1-646) 284 9452
Website: www.ashantigold.com
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: February 4, 2004 ASHANTI GOLDFIELDS COMPANY LIMITED
By: /s/ Ernest Abankroh
---------------------
Name: Ernest Abankroh
Title: Company Secretary