(Updates with closing share price in final paragraph.)
Jan. 31 (Bloomberg) -- AngloGold Ashanti Ltd., Africa’s largest producer of the metal, said the cost to develop its Tropicana gold project in Western Australia will be as much as 13 percent more than its previous estimate.
The mine will cost A$820 million ($852 million) to A$845 million to build, the Johannesburg-based company said in a statement today. Gold production, estimated at 470,000 ounces to 490,000 ounces in the first three years, is planned to start during the quarter through December, said AngloGold, which owns 70 percent of the project. Independence Group NL has the rest.
“The West Australian construction market is overheated and this, along with extreme skills shortages, has impacted labor productivity and subsequently costs,” Chief Executive Officer Mark Cutifani, who will leave the company on March 31 to take the helm at Anglo American Plc, said in the statement.
Gold producers in South Africa, where mines are getting deeper and more difficult to operate as orebodies are depleted, are exploring outside the country for new projects. A wave of work stoppages since a wildcat strike at Lonmin Plc’s Marikana operation in August spread to other platinum, gold, coal and iron-ore mines, have cut output from South African mines.
AngloGold approved the Tropicana project in November 2010 and estimated it will cost as much as A$775 million, with production costs of A$600 per ounce. By the end of December, the mine was 56 percent complete, the company said.
The stock fell for the first time in three days, losing 1.2 percent to close at 249 rand in Johannesburg, making it the worst performer in the five-member FTSE/JSE Africa Gold Mining Index after Harmony Gold Mining Co., the continent’s third- largest producer of the metal. More than 826,000 shares changed hands, or 73 percent of the daily average over the last three months.
--Editors: Ana Monteiro, Amanda Jordan