Gold sales for the quarter increased by 72% from the previous quarter due primarily to an increase in production across all the group’s operations as well as the sale of gold on hand at Tongon carried over from the previous quarter. Ounces of gold sold rose by 56% while the average gold price received increased by 10% quarter on quarter to US$1 509/oz. Gold sales rose by 211% compared to the corresponding quarter in 2010, principally due to a 129% increase in ounces sold, largely as a result of the Tongon mine starting production and the sale of all gold on hand, as well as the average gold price received in the current quarter being 36% higher than the same quarter in 2010.
Cash operating costs per ounce reduced significantly from US$677/oz in the first quarter 2011 to US$579/oz in the current quarter. This is also lower than the corresponding quarter in 2010. The decrease in costs per ounce reflects the change in the production mix of the business with the ramp up of production from Tongon, and new production from Gounkoto, where processing of ore started in June. The cost of mining per ounce was lower at Tongon and Gounkoto than at Loulo and Morila which reduced the average group costs per ounce. Total cash costs for the group were 36% higher than the previous quarter and up 120% from the corresponding quarter in 2010 because of the higher production levels and the increase in fuel and reagent prices during the period. Costs relating to the unsold doré at Tongon in the prior quarter are included in the current quarter as these ounces were sold during this quarter.
Profit from mining rose by 116% to US$184.2 million in the current quarter (Q1: US$85.1 million) and by 350% when compared to the corresponding quarter in 2010, principally due to the increased scale of operations at Tongon, including the sale of the previous gold on hand and boosted by the higher gold price received.
Exploration and corporate expenditure of US$12.2 million in the current quarter represented a 19% increase from the previous quarter, mainly as a result of increases in employee costs and additional consultancy charges.
Other expenses of US$5.0 million in the current quarter and other income of US$2.2 million in the previous quarter mainly reflect operational foreign exchange differences as a result of settling invoices in currencies other than the US dollar, as well as the translation of balances denominated in currencies such as the euro, rand and Canadian dollar to the closing US dollar rate.
Income tax for the quarter increased by 64% compared to the prior quarter and by 265% compared to the corresponding quarter of 2010 as a result of increased production, sales and profits at both Loulo and Morila. Tongon benefits from a 5 year corporate tax holiday which will expire at the end of 2015.
Profit for the quarter of US$128.4 million increased by 180% quarter on quarter and by 253% from the corresponding quarter in 2010. Similarly, basic earnings per share rose to US$1.24, a 170% increase on the previous quarter and 226% on the corresponding quarter of 2010. The increases reflect the higher sales and increased margins, as noted above.