Johannesburg - AngloGold Ashanti, which has agreed to buy a Brazilian gold project for $70m, expects to produce between 4.9 million and 5.1 million ounces of gold in 2008.

The company said this in its June quarterly results in which it recorded an adjusted headline loss of $946m.

AngloGold has agreed to buy an Eldorado Gold Corporation subsidiary for $70m in shares. The subsidiary called Sao Bento Minera is close to AngloGold's Corrego do Sitio project, which the company expected to produce 100 000 oz/year from mid-2011.

"The acquisition of Sao Bento provides AngloGold Ashanti with the potential to double the scale, and considerably enhance the potential, of the Corrego do Sitio project," the company said. Brazilian gold output could rise to 200 000 oz/year.

Sao Bento was placed on care and maintenance in 2007 after 20 years of production. The deal should be concluded in the fourth quarter of 2008.

"The acquisition of Sao Bento further enhances AngloGold Ashanti's dominant position as a gold producer within Brazil's Iron Quadrangle with the possibility of being a further consolidator within this region."

AngloGold's third quarter production is seen at 1.27 million oz against 1.25 million oz in the second quarter at a total cash cost of $434/oz. Output in the company's second quarter was 5% higher than the previous period.

"Eskom has also undertaken to continue to provide consistent power throughout the winter period and subject to this stable power supply, production for 2008 is expected to be between 4.9 million oz to 5.1 million oz," the company said.

Costs are expected to jump to $490/oz because of South African winter power tariffs, lower grade stockpiles at the Geita, Siguiri and Sunrise Dams. The average total cash cost for 2008 is seen at $450-460/oz.

AngloGold declared an interim dividend of R0.50/share or 6.7 US cents.

AngloGold has raised $1.7bn in a rights issue. The money was raised towards decreasing the size of the company's hedge book.

During the June quarter, AngloGold reduced the size of its hedge book by 3.15 million oz to 6.88 million oz and cancelled a million pounds of uranium contracts. The financial impact of these actions resulted in an adjusted headline loss of $946m.

- Miningmx.com

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