* Output outlook revised down to 2.4-2.6 mln ounce * AngloGold plans to increase mine life to 14-15 years * Aims to increase quality of gold produced in 3 years * Earnings drop on COVID impact, increased costs (Adds comments from interview) JOHANNESBURG, Aug 6 (Reuters) - Shares in AngloGold Ashanti slumped more than 10% on Friday after it trimmed its 2021 production estimate and posted a 10% drop in headline first-half earnings due to the impact of the COVID-19 pandemic and increased bullion mining costs. Africa’s top gold producer revised its full year production guidance to 2.4-2.6 million ounces in 2021 against an earlier target of 2.7-2.9 million ounces, citing the suspension of underground mining activities at the Obuasi Mine in Ghana following a fatal accident in May. However, its interim chief executive officer said it planned to boost the quality of gold it produces and the lifespan of its mines to counter the big discount at which its shares trade versus its estimated real value. Shares in all global gold companies have fallen so far this year after surging on record high gold prices last year, but AngloGold has been the worst performer and lost more than half of its market value since July 2020. Like many other gold producers, South Africa-listed AngloGold has largely focused on mining lower grades of ore as they became viable amid higher gold prices. While this helps companies to mine from difficult terrains, it also hurts them by increasing production cost and lower yield on each tonne of gold sold due to poor quality, Wayne McCurrie, portfolio manager at FNB said. “AngloGold’s costs have increased way more than peers and that is a major reason for its massive fall in shares,” he said, adding that an increase in quality and life of mines will help offset much of the fall. ORE QUALITY Interim CEO Christine Ramon told Reuters in an interview after the company results that it expects to increase the life of its mines to more than 11 years in 2021 on average and to 14-15 years in the “medium term”. AngloGold’s traditional mine life had been an average of seven years compared with 12 to 14 years for peers and an increase in mine life will help to reduce the discount to fair value, she said. It will also focus on producing better quality grades of ore through investments in brown-field projects over the next three years. “I think that is a big chunk of the range of catalysts that we’re focusing on addressing (the discount),” Ramon said. CEO-designate Alberto Calderon told Reuters last month that the discount was roughly 80% relative to rivals. Mining majors Barrick Gold and Newmont Corp are among AngloGold’s main competitors. AngloGold’s headline earnings for the first half declined to $363 million compared with $404 million posted in the same period a year earlier, and it declared an interim dividend of 0.87 rand ($0.0601) per share. Production for the first half was down to 1.2 million ounces against 1.32 million ounces last year partly due to the suspension of underground mining activities at Obuasi. $1 = 14.4705 rand Reporting by Promit Mukherjee; Editing by Stephen Coates and Emelia Sithole-Matarise Our Standards: The Thomson Reuters Trust Principles.