AngloGold in solid cash flow growth and profit

By Dineo Faku Time of article published May 12, 2020

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JOHANNESBURG - AngloGold Ashanti joined its peers in announcing solid growth in cash flows and profit during the March 2020 quarter due to the rally of gold, but lost 11000 ounces due to the Covid-19 disruptions. 

The JSE-listed gold producer yesterday reported a 231percent increase in free cash flow before growth capital to $94million (R1.72billion) during the period under review versus an outflow of $72m during the same period a year earlier.

Chief executive Kelvin Dushnisky said: “Cash flow is strong, leverage is down, and all operations are running. We’re making good progress on achieving our core strategic objectives - including asset sales and the redevelopment of Obuasi - and have worked hard to ensure we have the liquidity to weather potential disruptions.”

AngloGold said it had received a strong tailwind from bullion prices, which averaged $1506 an ounce during the first quarter of 2020, and had continued to rise as investors sought a safe haven in the face of the Covid-19 pandemic. It reported adjusted earnings before interest, tax, depreciation and amortisation up by 54percent to $473m in the first quarter of 2020, from $307m in the first quarter of 2019.

Anglogold’s peers JSE-listed peers DRDGold and Harmony Gold also reported robust financial results for the March quarter on the strong gold price last week. However, the group said 11 000 ounces of production due to stoppages at the Mponeng mine in South Africa, Serra Grande in Brazil and Cerro Vanguardia in Argentina.

Group production declined to 716000 ounces at a total cash cost of $814 an ounce for the quarter under review, from 752 000 ounces at $791 an ounce in the same period last year, the company said.

“All of AngloGold Ashanti’s mines are now operating normally, other than the Mponeng mine in South Africa, which started its ramp-up to 50percent capacity on April 22, 2020. It will continue to produce at around that level until current restrictions are lifted,” said Dushnisky. Given the prevailing uncertainty caused by the Covid-19 pandemic, the company withdrew its annual guidance last month.

The Competition Tribunal approved the sale of Mponeng, the company's only remaining South African mine to Harmony Gold last month. The company said it would no longer be selling its Cerro Vanguardia mine in Argentina after concluding it can derive more value for shareholders by developing the remaining potential in the ore body.

AngloGold Ashanti's share price closed 3.32percent lower at R471.46 on the JSE yesterday.


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