ANGLOGOLD Ashanti yesterday said that it had prioritised reductions in all costs and the implementation of a new operating model after its latest production forecast saw its share price by 12 percent.
In August, the gold bullion producer reduced its production guidance for 2021 to between 2.45 million ounces and 2.6 million ounces and hiked its cost estimates to a total cash cost of up to $950 (R14 252) an ounce amid safety concerns at its Obuasi mine, in Ghana.
In its market update report for the three-month period ended September 30, 2021, yesterday, AngloGold said production and costs for 2021 were expected to be in line with revised guidance.
The year-on-year performance was impacted by the voluntary suspension of underground mining activities at Obuasi in May, lower grades at certain operations, inflationary effects, and the ongoing impacts of Covid-19.
Newly appointed chief Alberto Calderon said he would prioritise costs reductions, improvements in operating and capital efficiencies and and operational consistency and to enhance the company’s positioning through the cycle.
“We must put in place the right foundation for long-term success, and the most crucial part of that is an operating model which prioritises efficiency, agility and accountability,” Calderon said.
“My immediate aim is to ensure that we have the right people, in the right places, making the right decisions, to provide better outcomes.”
AngloGold production for the third quarter was 5 percent higher to 613 000 ounces at a total cash cost of $927 per ounce, excluding Obuasi, which resumed underground mining activities in mid-October. This was an improvement, compared to 741 000 ounces at a total cash cost of $755 per ounce for the third quarter of 2020.
The group’s adjusted earnings before interest, tax, depreciation and amortisation increased 5 percent quarter-on-quarter to $448 million during the period, up from $427m in the second quarter.
This was underpinned by more gold sold and lower operating costs, partially offset by the lower gold price received and higher exploration costs.
For the third quarter, the company recorded a free cash inflow of $17m, compared to an inflow of $66m in the second quarter as a result of higher capital expenditure recorded in the third quarter as the company progressed its key investments across the portfolio.
For the remainder of the year, Calderon said AngloGold will continue its reinvestment programme as it pursues key growth-driven brownfields projects across the portfolio.
However, Calderon said key risks facing the business included the continued spread of Covid-19, higher-than-normal employee turnover rates and inflationary pressures.
“Measures taken at our operations together with our business continuity plans aim to enable our operations to deliver in line with our production targets,” he said
AngloGold Ashanti shares gained 1.43 percent to close at R285.03 on the JSE yesterday.
BUSINESS REPORT ONLINE