JOHANNESBURG (Business Day) -- Global gold producer AngloGold Ashanti [NYSE:AU] plans to increase its capital spending by almost a third to $1.1 billion this year as development accelerates at its Boddington mine in Australia, according to the group's latest annual report.
Chairman Russell Edey and CEO Bobby Godsell said the group's growth strategy had put it in its highest-yet capital investment phase.
The group's capital spend in Australia is forecast to rise to $346 million this year from $86 million last year. AngloGold owns 33.3% of Boddington and Newmont Mining [NYSE:NEM] holds the rest. A $1.35-$1.5 billion expansion project was approved by the mine's owners a year ago. The project is on track to start production late next year or early in 2009, management said.
Other areas where spending will rise are South Africa, with a 16% increase to $364 million, and Ghana, where capex will rise 48% to $133 million.
But capex costs at Geita in Tanzania, where spending was needed last year to change over from contractor to owner and buy larger equipment, is expected to reduce to $53 million this year from $67 million last year.
In South Africa, expansion spending last year was mainly on the completion and commissioning of the Moab Khutsong mine, deepening the Mponeng mine and accelerating the upgrade of the uranium plant at Vaal River.
In Ghana, capital spending at Obuasi is expected to be lower this year, but a plant expansion is under way at Iduapriem. It is due to be completed by the third quarter of this year.
This year AngloGold expects to produce 5.8 million ounces of gold from all of its operations at an average total cash cost of $309/oz, Edey and Godsell said.
They said AngloGold took a positive view of the market for, and price of, its product.
"In this market context, AngloGold Ashanti's strategy of actively managing its hedge book so as to reduce our forward sale commitments and expose more of our production to a rising price will be maintained."
AngloGold's share price is currently 42 cents higher at $45.01 today. On Friday, shares closed up 7 cents, reflecting a marginally firmer gold price of $665/oz.
