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AngloGold posts lower FY earnings on lay-off costs, silicosis provision
[JOHANNESBURG] Africa's top bullion producer AngloGold Ashanti posted lower annual earnings on Tuesday, hit by restructuring costs and US$46 million in provisions for an expected settlement in a class-action suit related to a fatal lung disease.
"Adjusted headline earnings for 2017 include the impact of retrenchment provisions in the South Africa region of US$71 million (post-tax) and the provision for the settlement of the silicosis class action claims and related expenditure of US$46m (post-tax)," the company said.
As a result, adjusted headline earnings amounted to US$9 million versus $143 million last year.
A class action suit brought against gold producers in South Africa is likely to be settled "within months" with 9 billion rand (S$992.8) million going to miners suffering from fatal lung disease, the chair of an industry group said earlier this month.
The suit was launched almost six years ago on behalf of miners suffering from silicosis, a fatal lung disease contacted by inhaling silica dust in gold mines.
Almost all of the claimants are black miners from South Africa and neighbouring countries such as Lesotho, whom critics say were not provided with adequate protection during and even after apartheid rule ended in 1994.
Gold mining companies have made provisions amounting to about 5 billion rand while close to 4 billion rand is available from a compensation fund which bullion producers have been contributing to for years.
AngloGold also said it had signed an agreement with the government of Ghana to "provide the framework for the redevelopment of the Obuasi Gold Mine into a modern, productive mining operation." "The redevelopment will establish Obuasi as a mechanised underground mining operation. The approach to redeveloping the Obuasi mine is a fundamental departure from how the mine was operated in the past." AngloGold Ashanti last year lifted a force majeure on Obuasi mine after the removal of thousands of illegal miners who had invaded the operation.
The invasion by illegal miners, who at one stage numbered 12,000, had made Obuasi a toxic asset and underscored the social and political risks of Africa mining.