Gold sales for the quarter of US$78.3 million were down 18% from the previous quarter and up 11% from the corresponding period in 2007. The movement during the quarter is mainly the result of a decrease in ounces produced, resulting from a reduction in the average grade mined at both Morila and Loulo. The average gold price received also dropped 7% over the quarter from US$825/oz in the second quarter to US$771/oz in the third quarter. The increase over the corresponding quarter in 2007 (US$70.7 million) is mainly attributable to the lower average gold price received in 2007 (US$646/oz).
Total cash costs of US$52 million were slightly below the previous quarter and up from the September 2007 quarter. Costs at both operations have been reasonably well controlled during the quarter despite rising inflation in mining consumables. In particular, the diesel cost per litre increased by 13% from the June 2008 quarter. However, the recent decrease in the price of oil, if maintained, should start to filter down into costs going forward. As planned, Loulo consumed a portion of its ore stockpiles which had been built up in earlier periods to ensure it met its plant throughput in the quarter during the wet season. Consequently, costs deferred to stockpiles were US$2.7 million lower when compared to the previous quarter.
The decreased sales and steady costs resulted in a decrease in profit from mining over the previous quarter and the corresponding period in 2007. Cash costs and total cash costs per ounce increased from the previous quarter due to the decrease in ounces produced as a result of the drop in the average grade of ore mined which was partly anticipated in the Life of Mine plan. At Morila, a fire in the elution plant a week before quarter end resulted in fewer elutions being undertaken than expected and consequently a drop in ounces produced.
Exploration and corporate expenditure decreased by US$4.2 million quarter on quarter, mainly as a result of a decrease in drilling and other exploration costs during the rainy season.
Profit before income tax and finance costs for the September 2008 quarter at US$14.7 million were down from the previous quarter as well as the corresponding period in 2007, mainly as a result of the decrease in gold sales from the June 2008 quarter, and higher operating costs when compared to the same quarter in 2007, as well as the other factors noted above.
The net loss of US$0.7 million for the quarter resulted from an increase in net financing costs following a non cash provision of US$8.84 million being made against investments in auction rate securities, due to the deterioration of the underlying credit ratings of the collateral of certain of these securities. Finance costs for the September 2008 quarter also include exchange losses during the quarter relating to the devaluation of euro denominated cash investments against the dollar. Earnings adjusted to exclude net financing costs would have been US$9.3 million compared to US$16.3 million in the second quarter of 2008, calculated on a similar basis, and adjusted earnings per share (adjusted for net finance costs) at US$0.12 for the quarter compared to US$0.21 for the June 2008 quarter and US$0.15 for the September 2007 quarter.
Total cash costs for the nine months ended 30 September 2008 of US$150.7 million increased from US$111.2 million for the nine months ended 30 September 2007, mainly due to increases in consumable prices, especially oil, steel and plant consumables.