AngloGold Ashanti, the world's third-largest gold producer, on Tuesday reported a widening of its quarterly loss from 10.99 rand in the December quarter to 13.76 rand in the March Quarter.

The company recorded a gross loss of R3.4-billion for the three months to end March, which represents a 30 percent widening of the gross loss of R2.4-billion reported for the three months to end December 2007.

Gold production came in at 1.2 million ounces, nine percent higher than the guidance provided by the company in February.

This is, however, 14 percent lower than the 1.4 million ounces produced in the quarter before.

The decline in production was attributed to the South African power shortage, year-end holiday breaks at the South African operations and planned lower production from Sunrise Dam in Australia as mining grades normalised following the completion of mining in the high-grade zone during 2007.

South Africa's power supply problems peaked in January when mines were forced to close for up to five days.

Mines have since been forced to work at between 90 percent and 95 percent of their normal electricity needs.

Total cash costs for the quarter were six percent higher at US$430/oz since weaker local currencies and an improved by-products contribution were not enough to mitigate inflationary pressures and the cost of reduced production.

Despite the strong rise in the gold price, AngloGold Ashanti received only $755/oz for its gold.

This is 18 percent lower than the average spot price of $925/oz for 2008 because of its hedge position, and the company warned that this gap was likely to widen by up to 22 percent going forward, provided that gold traded in a price range of approximately $900/oz and $950/oz.

But despite the higher gold price, the company reduced its total net delta hedge by 1.13 million ounces to 9.26 million ounces during the quarter, which reduces its total hedge commitments from 11.28 million ounces to 10.03 million ounces.

Looking ahead, the company said production in the quarter to end June is estimated to be 1.22 million ounces, if it receives 96.5 percent of its power requirements and power supplies are stabilised.

Total cash costs are expected to rise by 7.9 percent to $464/oz.

Capital expenditure is estimated at US$328-million, up 28 percent on the March quarter's $257-million spend.

I-Net Bridge