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AngloGold Ashanti says it’s on track, steering towards firmer footing

ANGLOGOLD Ashanti says gold production is 588 000 ounces, unchanged from the first quarter of 2021. Picture: Simphiwe Mbokazi.

ANGLOGOLD Ashanti says gold production is 588 000 ounces, unchanged from the first quarter of 2021. Picture: Simphiwe Mbokazi.

Published May 10, 2022


ANGLOGOLD Ashanti yesterday reported a solid performance for the first quarter of 2022, saying it remains on track to achieve full-year guidance as it steers towards a firmer footing.

The group said gold production was 588 000 ounces, unchanged from the first quarter of 2021. It said the first-quarter production of 2022 was flat on year.

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Total cash costs rose 4 percent to $1 041 (R16 414) an ounce, with a strong improvement in cash flow. Adjusted earnings before interest, taxes, depreciation and amortisation fell 2 percent to $438 million in the quarter.

The increase in total costs was driven largely by uncontrollable factors, including rising inflation across several categories of input costs and higher royalties due to the higher gold price received.

"Inflationary pressure was partly offset by operating improvements and an 8 percent increase in underground grades," it said.

Free cash flow increased to $268m from an outflow of $92m in the first quarter of 2021, ensuring the balance sheet remained flexible during an ongoing period of reinvestment in improving its portfolio.

"The increase in free cash flow was aided by $326m received from the Kibali gold mine in the Democratic Republic of Congo," it said.

The Australian operations showed a strong improvement from the reported period, offsetting lower production from Kibali, Geita and also Obuasi, which resumed its underground production ramp-up in January 2022 according to plan. Output from the Americas region was flat, the group said.

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Chief executive Alberto Calderon said: "We're starting to achieve our main catalysts. There's still a long way to go, but we're starting to see an improving operational performance across the portfolio, underpinned by a more focused operating culture and a better grade profile."

In February, AngloGold Ashanti announced it was reviewing its assets after its annual profits slid amid rising costs and the temporary halt of operations at a key mine.

In an interview with Bloomberg, Calderon said he was also re-jigging top management, with the aim of turning the company around by 2024.

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AngloGold Ashanti said it was embedding a new operating model after completing the implementation of its organisation-wide restructuring.

"The company has introduced new leadership and removed duplicate roles and unnecessary expenditure to reduce costs and improve operating results. A programme of increased investment is underway to improve mining flexibility and extend the lives of its key assets," it said.

The company commenced its Full Asset Potential Review process at the Sunrise Dam mine in Australia and Siguiri mine in Guinea, the first move in achieving a step-change improvement in operating performance and competitiveness, with an additional four sites to undergo the process over the remainder of 2022.

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"The $365m cash acquisition of Corvus Gold Inc. was completed in January 2022, creating a strong foothold in the prospective Beatty district in Southern Nevada, which it planned to bring into production in about three years," it said.

The balance sheet remained in a solid position after funding the Corvus acquisition and paying the 2021 year-end dividend, with approximately $2.5bn in liquidity, including cash of $1bn at the end of March 2022.

Last month, ratings agency S&P changed its positive outlook for AngloGold Ashanti to stable, saying the mining firm would have to boost its production to even-out its higher operating costs compared to its competitors, and increased exposure to higher-risk countries.

AngloGold’s share price in late afternoon was down 5.22 percent at R294.09.

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