Q3 2003 ASHANTI GOLDFIELDS LTD Earnings Conference Call - US - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Good morning. My name is Sylvia, and I will be your conference facilitator today. At this time I would like to welcome everyone to the Ashanti Goldfields' third quarter results conference call. (OPERATOR INSTRUCTIONS) I would now like to turn the call over to Mr. Sam Jonah, Chief Executive of Ashanti Goldfields.

SAM JONAH, CHIEF EXECUTIVE AND GROUP MANAGING DIRECTOR, ASHANTI GOLDFIELDS: Thank you, Sylvia. And good afternoon, ladies and gentlemen, or good morning wherever you are. I would like to welcome you to our headquarter conference call. You will recall that earlier in the year we informed you about the operational difficulties we were going to face during the first two quarters. We also advised you that it was our expectation to overcome these difficulties during the third and fourth quarters. Now we're pleased to inform you from the results that you've seen that, indeed, we are on the track to meeting these expectations.

Now earnings before exceptional gains were $20.2 million, down $2.3 million on an (indiscernible), but up $12.4 million from the previous quarter. Now a 14 percent increase in gold production, higher average realized gold price, and a reduction in unit cash operating costs relative to the second quarter, all helped improve the earnings.

Earnings for the quarter, after exceptional gains of $4.7 million, amounted to $24.9 million compared to $22.5 million for the same period last year. Earnings per share before exceptional items for the quarter were $0.15, and after exceptional items were $0.19. These items compared with the 2002 figure of $0.18. Our gold production for the quarter was 423,231 ounces, which is of course broadly in line with our 2003 (indiscernible) target of approximately 1.67 ounces, and it is a 4 percent better than the (indiscernible) ounces we achieved in the same period last year.

Now you see there was resolution of the plant expansion difficulties (indiscernible) and Geita achieved record quarterly production of 58,014 ounces and 176,487 ounces. Ashanti's share of course -- this represents Ashanti's share of 50 percent effectively. Obuasi, Bibiani and Siguiri have formed broadly in line with expectations, while operational difficulties continue to impact the Freda-Rebecca mine gold production.

Cash operating costs for the quarter were $212 per ounce, $13 per ounce above the $199 amount achieved last year. However, this represents a $10 per ounce decrease on the previous quarter largely due to higher gold production. The year-to-date cash operating cost of $219 an ounce is in line with the previously announced 10 percent increase on last year's annual cash operating cost of $199 an ounce.

We took advantage of the sustained high gold price and low (indiscernible) to our environment to reduce our (indiscernible) exposure, while adding protection to our hedge book. Venkat, of course, will cover this during his presentation on the financials.

During the quarter we reduced our group net debt by $12.6 million, which was (indiscernible) 206.5. And this is now down to $193.9 million. On the fourth of August, you recall we announced the terms of our recommended merger with AngloGold Limited. Also on the 14th of October, we announced and reaffirmed also that the announcement on the 27th, the Board received an approved (indiscernible) measure over from AngloGold, which stood at the ratio of 29 AngloGold shares for every 100 Ashanti shares, which it has the result to recommend to our shareholders.

The revised merger proposal is conditional on the support of the government of Ghana as a shareholder and representatives of Ashanti. The approval (indiscernible) required to implement the transaction by our shareholders (indiscernible) of Ghana and certain other representative approvals and third party concerns are detailed in our previous announcements.

I'm happy that the Ghana government, in its announcement of the 28th of October, has indicated its decision to support the Board's recommendation of the proposed merger with AngloGold. Ashanti and AngloGold has agreed to extend a time limit for the receipt of formal government approvals, 14th of November, 2003, or such later date as both of us may agreed.

And by way of cautionary note, Ashanti shareholders should be aware that there can be no assurance that a transaction with AngloGold will be completed. And therefore, you are therefore advised to exercise caution when dealing (indiscernible) opportunity.

I will now call on Trevor to give his presentation.

TREVOR STANLEY SCHULTZ, COO, ASHANTI GOLDFIELDS: Thanks, Sam. And good morning everyone. Before I go ahead, could somebody on the line just confirm that I'm coming through clearly because the signal has been fading in and out here? (multiple speakers) Okay, good. I'll go forward.

As we forecast in the last quarter, and as confirmed by Sam, our group production improved significantly compared to the second quarter this year, and also the third quarter of last year. And this puts us on track to make the 1.6 million ounces for the full year, which we forecast earlier in the year.

Sam has given you the highlights, so I will fill in the details around the mines. Obuasi had a reasonable quarter with production of 137,564 ounces, well above the 126,000 ounces achieved in quarter three last year. Cost were $207 an ounce compared to $211 last year.

Processed tons and head grade at the STP were both better than the third quarter last year, and recovery of 82.7 was about the same. The oxide production was lower than last year …