AngloGold Ashanti Remains On Track To Meet Production

JOHANNESBURG (Reuters) – AngloGold Ashanti remains on track to meet its production targets for 2018 and is in talks with the Tanzanian government regarding policy moves to boost government stakes in mining assets and tax hikes, it said on Tuesday.

Tanzania, Africa’s fourth-largest gold producer, is seeking to reap more profits from its vast mineral resources by overhauling the fiscal and regulatory regime of its mining sector but the moves have alarmed companies and investors.

“AngloGold Ashanti has … sought constructive dialogue with the government of Tanzania, which has indicated its willingness to engage. The parties will work toward a mutually agreeable time for those discussions to take place,” the company said in a quarterly market update.

Under new regulations the mining ministry passed in January, Tanzania will now make it compulsory for foreign-owned mining groups to offer shares to the government and local companies.

Chief Executive Srinivasan Venkatakrishnan, known as Venkat, told a media conference call that AngloGold was also having problems getting VAT refunds from the Tanzanian government which he said was “locking up close to $3 to $4 million a month.”

He also said the company was affected by a 2 percent hike in royalties and a 1 percent increase in levies, which had lifted costs on its Geita mine there.

Geita’s cash costs rose 31 percent to $892 an ounce in the March quarter from the same period last year, underscoring the scale of the additional burden on the company.

The company said it is on track to meet its annual production forecast of between 3.325 and 3.450 million ounces for 2018 after producing 824,000 ounces in the quarter to the end of March, down slightly from 830,000 ounces in the same period last year.

Full financial results are done every six months.

(Reporting by Ed Stoddard, editing by Louise Heavens)