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ANGLOGOLD LIMITED
Registration No. 1944/017354/06
Incorporated in the Republic of South Africa
REPORT TO SHAREHOLDERS FOR THE QUARTER AND YEAR ENDED 31 DECEMBER 2000
Increased production and operating profit with steady earnings
Group results for the quarter
* Gold production up 2% while operating profit increases by 9%.
* Headline earnings increased by 1% to R430 million despite increased interest,
exploration and operating costs.
* Net loss is R131.5 million, as a result of asset impairments.
...and for the year
* Gold production rises 5% to 7.24 million ounces.
* Operating profit increases by 6% to R3.27 billion.
* Headline earnings decrease by 11% to R1.77 billion.
* Final dividend of R6.50 per share declared, giving R14.00 for
the year and a 6.4% yield.
Regional operating results for the quarter
SOUTH AFRICA
* Operating profit is up 3% despite a 4% decrease in gold
production due to reduced shifts in December.
* There is strong production from most operations, led by Great Noligwa,
Kopanang, Tau Lekoa and Savuka.
* Performances from Bambanani, Joel and Mponeng continue to
disappoint.
* Rand cash costs are up 4% to R55,645 per kilogram, but dollar costs are down
4% to $208 per ounce.
* Completion of the sale of Elandsrand and Deelkraal to Harmony is expected
soon.
AFRICA
* Morila comes into production with 57,000 attributable ounces at $88 per ounce
* Production at Sadiola decreases as planned, with movement into sulphide ore.
* Navachab costs and production both improve.
* The Yatela project is on target and the Geita transaction completed.
NORTH AMERICA
* Gold production increases by 22% with the introduction of Cortez ore at
Jerritt Canyon.
* Production costs are up owing to diesel fuel increases and the cost of Cortez
ore.
* Cripple Creek & Victor J.V. production is marginally down and fuel price
increases push costs up by 2%.
SOUTH AMERICA
* Gold production is 14% higher at 122,000 ounces.
* Cash costs are up 11% due to wage increases, Serra Grande maintenance and
increased tonnage at Cerro Vanguardia.
AUSTRALASIA
* Production levels are maintained at 142,000 ounces.
* Sunrise Dam production up 2% but cash costs increase by 2%.
* Brocks Creek operation closes while Pine Creek production improves and costs
reduced by 20%.
* Boddington production is steady, but mining of marginal ore and stockpiles in
the end-of-life ore-body increases costs.
Australasian office will move from Melbourne to Perth in March
2001.
Quarter Quarter Year Year
ended ended ended ended
Dec Sept Dec Dec
2000 2000 2000 1999
Rand/Metric
Gold
Produced
- kg/oz 000 57,906 56,924 225,295 215,166
Revenue
- R/kg/$/oz sold 70,819 67,460 67,158 61,830
Total cash costs
- R/kg/$/oz produced 48,255 46,914 46,404 41,979
Total production costs
- R/kg/$/oz produced 55,454 53,967 53,334 47,842
Operating profit
- R/$ million 889 814 3,272 3,088
Net capital expenditure
- R/$ million 938 438 2,009 1,330
Net (loss) / profit
- R/$ million (132) 394 1,116 2,654
Net (loss) / earnings
- cents per share (123) 369 1,043 2,695
Headline earnings
- cents per share 402 399 1,658 2,485
Headline (loss) / earnings before
deferred taxation rate change
- cents per share 402 399 1,658 2,018
Dividends
- cents per share 1,400 2,000
Quarter Quarter Year Year
ended ended ended ended
Dec Sept Dec Dec
2000 2000 2000 1999
Dollar/Imperial
Gold
Produced
- kg/oz 000 1,862 1,830 7,243 6,918
Revenue
- R/kg/$/oz sold 289 300 308 315
Total cash costs
- R/kg/$/oz produced 197 209 213 213
Total production costs
- R/kg/$/oz produced 226 240 245 244
Operating profit
- R/$ million 116 115 469 505
Net capital expenditure
- R/$ million 138 63 297 218
Net (loss) / profit
- R/$ million (18) 55 166 434
Net (loss) / earnings
- cents per share (16) 52 155 441
Headline earnings
- cents per share 52 56 237 407
Headline (loss) / earnings before
deferred taxation rate change
- cents per share 52 56 237 328
Dividends
- cents per share 196 328
Certain forward-looking statements
Certain statements contained in this document, including without limitation,
those concerning the economic outlook for the gold mining industry,
expectations regarding gold prices and production, the completion and
commencement of commercial operations of certain of AngloGold's exploration and
production projects, and its liquidity and capital resources and expenditure,
contain certain forward-looking statements regarding AngloGold's operations,
economic performance and financial condition. Although AngloGold believes that
the expectations reflected in such forward- looking statements are reasonable,
no assurance can be given that such expectations will prove to have been
correct. Accordingly, results could differ materially from those set out in the
forward- looking statements as a result of, among other factors, changes in
economic and market conditions, success of business and operating initiatives,
changes in the regulatory environment and other government actions,
fluctuations in gold prices and exchange rates, and business and operational
risk management.
Throughout this document, $ refers to US dollars, unless otherwise stated.
Published by AngloGold's Corporate Communications Department
PO Box 62117
Marshalltown
2107
South Africa
Telephone: +27 11 637 6147
Fax: +27 11 637 6399/6400
E-mail: investors@anglogold.com
CONTENTS
Letter from the Chairman and Deputy Chairman
Operating and Financial Review
Gold Market Report
Gold Market - Net Delta Open Hedge Position
AngloGold Hedge Position
Notes incorporating Dividend Declaration
Group Operating Results
Group Income Statement
Group Balance Sheet
Group Cash Flow Statement
Key Operating Results
Directorate and Administration
Contacts
LETTER FROM THE CHAIRMAN AND DEPUTY CHAIRMAN
Dear Shareholder
Overview
The year 2000 was a tough one for the gold industry and AngloGold. The gold
price has continued to be at its lowest in two decades and AngloGold
experienced disappointing operational performance in its South African
operations. In contrast, the year also saw a major expansion launched in the
company's key Australian mine, Sunrise Dam; the launching of a new mine,
Yatela, in Mali; and the acquisition of substantial interests in two other
African mines: Morila, also in Mali, and Geita in Tanzania. Together these
expansions and acquisitions will contribute some 20 million ounces of
production, at an average cash cost of $175 per ounce to this company over the
next 15 years.
The quarter
Gold production increased by 2% and the received price by 5%, while total costs
were 3% higher than in the September quarter. Operating profit at R889 million
rose by 9% and headline earnings, at R430 million, showed a 1% improvement.
After a poor start to the year in South Africa, five problem operations were
identified. We committed ourselves to overcoming their shortcomings and
posting improvements in their performance during the year, or closing or
disposing of them. As illustrated once more in this quarter's results, Great
Noligwa and TauTona are now performing at or above expectations. During the
quarter, we announced the sale of Elandsrand and Deelkraal to Harmony in
December for R1 billion - this transaction should be concluded in February
2001. Bambanani is still underperforming because of a lack of access to
higher-grade panels. Similarly, at Joel, significant increases in mining
efficiency have not been rewarded by increased gold production because of
disappointing recovered grade. We will act decisively, as we have with
Elandsrand and Deelkraal, if we are not able to improve the performance of
Bambanani and Joel.
A very pleasing feature of the operating performance in South Africa has
been the continued improvement in safety. Indeed, since the intensive safety
drive began two years ago, fatal accidents decreased by 52%, the fatality rate
by 42%, and lost- time accidents by 33%. This is a tribute to the effort and
commitment of all employees and all managers. Despite these improvements,
however, we remain committed to eliminating accidents.
Elsewhere, the operations in South America, Africa and Australasia continue
to deliver impressive results. The Morila operation has been especially
rewarding, producing 57,000 attributable ounces in its first operating quarter
at a cash cost of $88 per ounce. In North America, increasing costs are a
continuing concern.
This quarter, the regular review of assets in the light of current realities
(in particular our conservative view of future gold price of $270 in 2001,
rising to $310 in 2005) has resulted in the impairment of several assets, the
most significant being Jerritt Canyon, Ergo and Elandsrand which are now
carried on our books at values which realistically reflect their actual cash-
generating capacity at today's gold price. These impairments, amounting to
some R700 million, or 6% of the company's net asset value (or market
capitalisation), are reflected in the income statement with a significant
impact on our net profit line. The review reduced the company's reserve ounces
by 10%.
The year
Headline earnings for the year 2000 at R1.77 billion were 11% lower than in
1999.
In 2000, we produced 5% more gold, some 7.2 million ounces, and increased
operating profit by 6% to R3.3 billion. Given the operating problems at some
of our engine room assets, this is more than a modest achievement. However, we
are acutely aware that our earnings stream has disappointed our shareholders
and the share price reflects this.
2001 and beyond
Looking forward to this year and beyond, there are a number of challenges
facing us. The first is to complete the improvement in operating performance
in South Africa. As indicated above, the major focus is on Bambanani and Joel.
The second, given the conservative planning view adopted by the company on the
gold price, is to drive down costs.
Management has set itself the target of reducing overhead costs by at least
10% during 2001, and will report progress on this target on a regular basis.
We will also be seeking to reduce operating costs. In South Africa, our
target is to hold costs neutral in rand terms. If the rand should continue to
devalue against the US dollar, the currency in which this company's revenues
are earned, the financial impact will be one of increased margins. Outside of
South Africa, where mining is mainly open-pit and there is a significant
exposure to costs of petroleum products, these operations have had to contend
with much higher fuel prices. Nevertheless, management in all regions will seek
cost savings.
When AngloGold was established in early 1998, its key objective was to
change the character of the company from a series of South African mines with
finite lives, and no growth opportunities, to a company with a broad portfolio
of geographic and geological gold mining assets. In 2000, 25% of our
production and 33% of our earnings came from outside South Africa and from
open-pit or shallow underground mining.
In 2001, AngloGold will continue to invest strongly in its future, both
inside South Africa, where the new mine, Moab Khotsong, and the shaft-deepening
project at Mponeng are well advanced, and at Sunrise Dam, Yatela, Morila and
Geita.
Dividend
We are pleased to announce the final dividend for 2000 of R6.50 per share,
giving an annual dividend for the year of R14.00 per share, and a yield of 6.4%
at the current share price of R220.
Draft Mineral Development Bill
The South African government has published for comment, draft legislation which
aims to fundamentally redraw mining law. We see the need to restructure the
regulation of mining to free the industry from its Apartheid legacy. We accept
the right and duty of governments to regulate mining in the public interest.
For the industry to continue to thrive, however, it is imperative that:
* regulations be based on clear and objective criteria, spelt out in
legislation;
* present or future investors have a right of appeal to the Courts; and *
investors who believe that the new regulation infringes on their property
rights, should have access to fair compensation as determined by the Courts.
The draft legislation, as we read it, is seriously deficient in this regard.
The Minister of Mineral and Energy Affairs has repeatedly expressed her desire
not to disrupt existing mineral activities, and we are therefore confident that
the draft will be corrected to accommodate these shared concerns.
Nicky Oppenheimer
In December last year, Nicky Oppenheimer announced that he was stepping down as
chairman of AngloGold to allow him to focus his attention on his other business
responsibilities. We record our gratitude to Nicky for his energetic and
dedicated leadership of the board during AngloGold's formative and challenging
years. We are pleased that he has agreed to continue to serve on the board as
a non-executive member.
RUSSELL EDEY
Deputy Chairman
30 January 2001
OPERATING AND FINANCIAL REVIEW
OVERVIEW
Despite the reduction in the number of operating shifts for the South African
operations due to the Christmas and election holidays, AngloGold's operating
profit for the quarter increased by 9% or R75.0 million. Headline earnings
were marginally higher at R430 million or 402 cents per share. The increased
operating profit for the quarter was offset by the cost of the company's growth
strategy, and in particular the acquisition of Morila and Geita, which led, as
anticipated, to higher interest payments. There was also increased spending on
exploration during the quarter.
For planning purposes AngloGold continues to apply conservative views of
future gold prices ($270 in 2001; rising to $310 by 2005). To achieve some
degree of revenue certainty and to enable the company to meet its return
targets, the policy of hedging part of our production will continue. It is a
strategy, which for more than a decade, has allowed AngloGold to achieve higher
prices for its gold than spot. It is expected that this pattern will continue
into the future.
The application of these conservative planning parameters has produced an
impairment in a number of the company's assets. This has resulted in an
accounting loss for the quarter of R131.5 million.
Gold production for the quarter was up 2% to 57,906 kilograms (1.86 million
ounces). Although the received price for gold, in rand terms, rose by 5% to
R70,819 per kilogram, in dollar terms the price decreased by 4% to $289 per
ounce.
While dollar-denominated cash costs fell by 6% to $197 per ounce due to the
declining exchange rate, rand-denominated costs increased by 3% to R48,255 per
kilogram for the company as a whole. Increasing local currency costs are
driven by fixed costs which do not reduce in line with fewer working shifts, as
was the case during this quarter. However, management is committed to
achieving very significant cost savings during the course of 2001, by
significantly reducing overheads, corporate and operating costs across the
group.
The quarterly return on capital employed is 11%, while return on shareholder
equity is unchanged at 11%. These returns remain competitive in relation to
other senior gold producers, but they are below management's target for the
company of 10% and 15% respectively.
The sale of the Elandsrand and Deelkraal operations to Harmony was announced
during the quarter and this transaction should be completed during February.
For the year, gold production went up 5% to 225 tonnes (7.24 million ounces)
while operating profit rose by 6% to R3.27 billion. As has been stated on
several recent occasions, AngloGold is in a vigorous growth mode, and
approximately R2 billion was directed to growth projects in 2000 - the Morila
and Yatela mines in Mali, Geita in Tanzania, Sunrise Dam in Australia and Moab
Khotsong and Mponeng in South Africa. This reduced headline earnings by 11% to
R1.77 billion year-on-year.
SOUTH AFRICA
Overall performance
At the end of the first quarter, management identified five South African mines
as performing poorly. Of those, Great Noligwa and TauTona now have performance
levels at or above management's expectations. Elandsrand (along with
Deelkraal) is being sold. Bambanani has continued to produce unsatisfactory
results throughout 2000 and significant improvements are expected in its
performance. Similarly, Joel's grade problems must be resolved. If the
performance of these two mines cannot be corrected, decisive action will be
taken as was the case with Elandsrand and Deelkraal.
Overall, during the fourth quarter operating profit increased by 3% to R525
million, despite a 4% reduction in gold production to 41,098 kilograms (1.32
million ounces).
Although dollar-denominated total cash costs declined to $208 per ounce with
the falling value of the rand, total rand cash costs rose by 4% to R55,645 per
kilogram. These rand costs are the greatest challenge for the South African
operations in 2001.
It is with regret that the company reports the death of ten employees in
work-related accidents during the quarter.
The year 2000 saw the South Africa operations achieve their best safety
performance ever. In every measure - fatal accidents, fatal frequency rates,
lost-time injury, and lost-time injury frequency rates - the company produced
the lowest numbers in its history. Matjhabeng and Tshepong won prestigious
Mine Health and Safety Council awards for extended fatality-free performances.
Indeed since the major drive on safety commenced at the end of 1998, fatal
accidents have been reduced by 52%, the fatal frequency rate by 42% and the
lost-time injury frequency rate by 21%.
Management realises that much remains to be done, but is enormously
encouraged by the improvements achieved so far.
Mine performance for the quarter
While Great Noligwa was unable to sustain the excellent results of the previous
quarter, its results showed improved performance over the first half of the
year. Kopanang returned to the production levels of previous quarters by
focusing some crews on higher-grade areas with a resultant increase in
recovered grade (16%) and gold produced (10%). At Tau Lekoa, excellent
performance was sustained on the production front, but the exceptional
productivity results of the previous quarter were not repeated.
Lockup of gold resulted in a poor performance at Bambanani, despite
increased ore production and improved grade. Here, measures have been put in
place to improve mining efficiency and these are already showing positive
results. At Tshepong, the volume mined improved, but gold production dropped
by 17% following a fall in recovered grade in October. However, the mine
finished stronger in December and is expected to maintain output at this level.
The scaling down of operations at Matjhabeng, prior to shaft closure, is
reflected in its results. Despite record mining volumes achieved at Joel, a
disappointing lower grade resulted in gold production falling by 16%. Plans
are in place to improve Joel's profitability through stopping extra overtime
shifts and reviewing the premium paid for continuous operations, thus
downscaling towards more selective mining.
Gold production at TauTona was down by 4% as a result of power failures in
both the Lower and Upper Carbon Leader sections. At Mponeng, suspension of
mining operations in some areas due to seismic risk, as well as lack of
flexibility in production following the loss of multi-blast conditions in 1999,
were the main contributors to the drop in production of 17%. Multi-blast
permission was restored in August, and reef development in the fourth quarter
has increased 45% above the third quarter, and will ensure acceptable levels of
flexibility during the second half of 2001. At Savuka, production continued to
improve with an increased focus on quality factors and a reduction in stoping
width. The loss of face length owing to production being stopped in some
panels for safety reasons, resulted in a 9% decline in gold production at
Deelkraal. Gold output remained at the lower level of the previous quarter at
Elandsrand, despite improved grade and an increased focus on vamping.
Ergo maintained a steady performance with all productivity parameters
showing improvements over the previous period.
AFRICA
Overall performance
The Africa region had an excellent quarter with the Morila mine in Mali coming
into production and recording a creditable 57,000 attributable ounces for the
quarter. Attributable gold production for the quarter thus increased by 58% to
132,000 ounces at a total cash cost of $105 per ounce, an improvement of 18% on
the previous quarter.
The region also had an outstanding year with gold production of 366,000
attributable ounces, an increase of 40% compared with 1999. Total cash costs
for the region for the year of $124 per ounce were 17% lower than for the
previous year.
Mine performance for the quarter
At Sadiola (38% attributable), despite mill throughput rising by 3%,
attributable production for the quarter decreased by 14% to 54,000 ounces
largely as a result of treating lower-grade ore as mining moves into the
sulphide ores, as expected and planned. However, attributable production for
the year increased by 13%. High-grade stockpile ore was treated during the
third quarter to circumvent the effects of the rainy season. As a result of
the decrease in production, total cash costs increased by 12% to $121 per
ounce. The mine achieved a 5 Star NOSA rating during the quarter.
Morila (40% attributable) had its first gold pour on 18 October and the
current quarter is its first reportable production quarter. The commissioning
of the mine exceeded expectations with the oxide circuit producing 57,000
attributable ounces at a total cash cost of $88 per ounce. Commissioning of
the sulphide metallurgical plant began in January 2001.
The Geita transaction, in which AngloGold acquired a 50% interest in the
Geita mine from Ashanti, became unconditional on 30 November and was completed
on 15 December 2000. Geita results will be included with effect from the first
quarter of 2001.
Over this quarter, production at Navachab rose by 5% to 22,000 ounces at a
cash cost of $163 per ounce, an improvement of 8%. The mine was declared a
continuous operation by the Namibian Minister of Labour, and agreements were
finalised with the Mineworkers' Union of Namibia on payment for work on Sundays
and public holidays and on the election of a permanent union representative.
Construction at the Yatela mine is on schedule with the first gold pour
planned for June 2001. Mining in the pit began in December, while construction
of the heap leach plant and general infrastructure is at an advanced stage.
The safety performance target set for 2000 was achieved. An environmental
audit confirmed that the mine had satisfied the requirements of the
Environmental Impact Assessment for mine construction.
NORTH AMERICA
Overall performance
North American gold production increased by 23% in the fourth quarter compared
with the third quarter, although operating profit decreased during the same
period due to higher cash production costs. These costs rose primarily as a
result of increases in the price of petroleum products and the cost of
purchasing ore from Cortez Gold Mines for custom processing at the Jerritt
Canyon operation. In accordance with contract terms, the cost of the ore is
reduced by a portion of the gold recovered being allocated to Jerritt Canyon.
Mine performance for the quarter
At Jerritt Canyon (70% attributable), the fourth quarter's production at 80,000
ounces, was 54% up on the third quarter as a result of processing of Cortez
Gold Mines ore, at grades significantly higher than stockpile ore grades.
Tonnage processed in the fourth quarter was approximately 11% lower than the
third quarter, but higher ore grades resulted in increased gold production for
the quarter. Total cash costs for the fourth quarter were $243 per ounce, 8%
higher than the third quarter.
Production at Cripple Creek & Victor J.V. (67% attributable, with a 100%
interest in production ounces, subject to contractual obligations by the joint
venture partners) was 64,000 ounces, 2% lower than the exceptional third
quarter levels. Total cash costs were $186 per ounce, some 2% up on the third
quarter as a result of higher diesel fuel prices.
SOUTH AMERICA
Overall performance
Gold production at the South American operations totalled 122,000 ounces, an
increase of 14%, compared with the previous quarter. Total cash costs for the
quarter were 9% higher at $160 per ounce.
For the year, gold production increased 3% to 439,000 ounces.
Total cash costs of $139 per ounce were 5% higher than in the
previous year, as a result of higher labour costs at Morro Velho
and Serra Grande after a two-year wage freeze deal, and
unanticipated costs arising from excessive rains.
Compared with 1999, there was an increase of some $1.9 million
in capital expenditure, which was focused on mine development and
improvements to maintain capacity; and the raising of quality and
safety standards at the operations.
Mine performance for the quarter
Increased gold production in the region can be explained by the higher volumes
of ore and some 14,300 ounces of gold resulting from a clean-up at the Nova
Lima plant at Morro Velho. Production was stable at Cerro Vanguardia (46.25%
attributable), where higher volumes compensated for a lower grade. The
improvement at Morro Velho excluding the additional gold from clean-up, made up
for reduced production at Serra Grande (50% attributable), which resulted from
an unexpected, temporary decline in grade at Mina III.
Increased costs for the region were mainly due to higher labour costs at
Serra Grande, following a union agreement signed in November; to corrective
maintenance on the Serra Grande tailings wall necessitated by heavier than
usual rain in December; and to the higher tonnage treated at Cerro Vanguardia.
At Cerro Vanguardia, the improving safety trend noted in previous quarters
continues. The mine has been awarded a 4 Star NOSA rating. Serra Grande
remains below the Ontario benchmark, and Morro Velho statistics were adversely
affected by a fatality in November at the Raposos mine, which is on care and
maintenance.
The exploration programme in South America continues, with encouraging
results in Peru and in Brazil where the Corrego do Sitio project progresses
with new resources being confirmed.
AUSTRALASIA
Overall performance
The December quarter consolidated the improvements achieved in the previous
quarter in the region, by maintaining production at 142,000 ounces.
During the quarter actions were initiated to realise significant corporate
cost savings by the rationalisation and relocation of the corporate office.
This office will relocate from Melbourne to Perth during the first quarter of
2001, so as to be situated closer to the mining operations.
AngloGold Australasia staged a recovery in the second half of 2000 after
cyclonic rains in northern and western Australia reduced production in the
first half of the year. Total production for the year was 524,000 ounces, due
to an excellent performance from the Sunrise Dam mine and the unexpected
six-month extension of treatment at the Brocks Creek mine. In April, the
AngloGold board approved a $63 million expansion of Sunrise Dam. Work on the
pit cutback and the plant upgrade began in the second half of the year. The
expansion will take the life of the operation to 2007 and lift production from
the mine to above 260,000 ounces per year. A major feasibility study was
completed in December at Boddington, based on expansion of the operation to a
throughput capacity of more than 25 million tonnes per annum, with annual
production of around 600,000 ounces. A decision is expected later in 2001.
Mine performance for the quarter
Sunrise Dam has continued to perform strongly, with production rising to 65,000
ounces for the quarter, an increase of 2% on the previous quarter. Although
cash costs increased to $152 (A$287) per ounce, up by 2% relative to the
previous period, the mine remains amongst the lowest cost producers in
Australia. The major cut-back of the pit is now well under way, resulting in a
27% increase in material moved at the mine from 4.1 million bank cubic metres
(bcm) in the previous quarter to 5.2 million bcm in the current period. The
expansion of the processing plant is proceeding on schedule and within budget.
Production from the Pine Creek operations of 46,000 ounces was the same as
that achieved in the previous quarter, notwithstanding the closure of the
Brocks Creek mine during the period. The operations were successful in
reducing cash costs by 20% to $198 (A$374) per ounce. At Union Reefs, ore has
been stockpiled to allow the suspension of mining in the main Crosscourse pit
until the end of the current wet season. Mill feed will be sourced from
stockpiles and smaller satellite pits during this period. Future activity at
Brocks Creek will be limited to the completion of site rehabilitation.
Boddington (33.3% attributable) also matched the performance of the previous
quarter with gold production of 19,000 ounces. Despite the marginal nature of
the remnant ore and stockpiles that are currently being processed at the mine,
cash costs decreased slightly to $208 (A$392) per ounce. The Final Feasibility
Study for the expansion project has now been completed. The project
participants are currently appraising both the final study documentation and
the results.
Problems arising from the remote and difficult operating environment at the
Tanami mine again depressed production in the fourth quarter. At 12,000
ounces, production was down by 14% compared with the previous period. Weather
conditions were the primary cause of the difficulties, with access to areas of
higher- grade ore severely restricted. Although a slight reduction in cash
costs was achieved (down 10% from the previous quarter), they remain
unacceptably high at $267 (A$504) per ounce.
With the onset of the wet season, exploration activities started to wind
down towards the end of the quarter. Encouraging results have been received
from the Sickle Prospect, north of the Sunrise Dam mine. A new high-grade zone
has been identified in the footwall of the Western Shear zone at Sunrise Dam,
providin
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