AngloGold 4Q Loss Widens On Charge Against Assets

AngloGold Ashanti Ltd. (AU), the world's third-largest producer of the metal, Monday posted a sharply wider loss for the final quarter of 2008 and the year as it took a $1.25 billion charge on former Ashanti assets.

The Johannesburg-based company's production was also lower, although ahead of earlier guidance for the fourth quarter.

AngloGold has been selling assets, cutting spending and getting out of forward sales contracts priced below the current spot price of gold since Mark Cutifani took over as Chief Executive from Bobby Godsell in October 2007.

The company said it net loss for the final three months of the year widened to 11.87 billion rand ($1.22 billion), or 3,336s, from ZAR3.2 billion, or 1,150 cents a year earlier. The loss for the year widened to ZAR16.11 billion from ZAR4.27 billion.

The fourth-quarter figure included asset impairment charges on the Obuasi, Geita and Iduapriem operations added to the company's portfolio when it completed the acquisition of Ghana-based Ashanti Goldfields Company Limited in 2004. The charges relate to assumptions about market conditions, such as higher power tariffs in Ghana and reduced reserves at Geita.

Cutifani described 2008 as a year of restructuring that repositioned AngloGold for growth. He said the hedge book had been reduced by some 5.29 million ounces, or about 47% of committed ounces, and the company's capital structure was strengthened through the refinancing of a convertible bond with more recently the sale of a one-third stake in Western Australia's Boddington gold mine.

"After this transformational year we now have much improved gold price leverage and balance sheet flexibility," he said.

Cutifani told reporters during a conference call the company was still considering the sale of assets in Mali, although following a turnaround over the last six months it was no longer looking to exit assets in Argentina. He also said the company would continue to "chip away" at its hedge book.

Production in the fourth quarter was 1.27 million ounces, down on 1.37 million a year earlier but ahead of the 1.25 million ounces forecast in AngloGold's third-quarter statement Oct. 30. Output for the year was down 9% at 4.98 million ounces, including a drop of 230,000 ounces in South Africa due to power shortages and safety-related work stoppages.

AngloGold said it expected output of 1.13 million ounces in the first quarter of 2009 and production of between 4.9 million ounces and five million ounces for the year.

AngloGold on Jan. 28 said it was selling its indirect stake in Boddington to Newmont Mining Corp. (NEM) for as much as $1.1 billion, tightening its asset portfolio and strengthening its balance sheet following the early repayment of a $1 billion bridging loan. The loan was secured in November to repay a convertible bond due Feb. 27. that if not covered would have meant the possible firesale of assets.

At 0740 GMT, AngloGold's shares were trading 2.47% at ZAR267.95.

Canada's Barrick Gold Corp. (ABX) is the world's biggest gold producer.

Company Web Site: http://www.anglogoldashanti.com

-By Robb M. Stewart, Dow Jones Newswires; [phone]; [e-mail]