AngloGold rides the crest of a soaring gold price wave
JOHANNESBURG - AngloGold Ashanti was in solid shape after generating $177million (R3.12billion) in free cash flow during the six months to the end of June compared with an outflow of $31m for the same period last year as it rode the wave of the higher gold price.
Gold touched a record $2000 an ounce level last week as investors scrambled for safe-haven assets, helping to lift the fortunes of gold producers.
AngloGold Ashanti, the world’s third-biggest gold producer, said on Friday that of the $177m free cash flow generated during the six months under review, $173m was generated in the second quarter of the year in spite of Covid-19-related disruptions to production.
Net debt had decreased by 18percent to $1.428bn, from $1.739bn a year earlier.
The company said that to safeguard its balance sheet during the Covid-19 pandemic, it had taken proactive steps to bolster liquidity and at the end of June its liquidity remained strong, with $2.47bn, including cash and cash equivalents of $1.29bn, available.
Production in the six months to the end of June was 1.46million ounces at a total cash cost of $810 an ounce. The company said 85000 ounces were impacted by the Covid-19 pandemic, of which 63000 ounces related to South African operations.
During a conference call on the group’s financial results for the six months to June, outgoing chief executive Kelvin Dushnisky said: “While the recent rally in the gold price is welcome, tight cost and capital management will continue to be the key focus areas for us as we work to capture this widening margin and increase reserves.”
Asked whether the company would consider declaring a special dividend towards the end of the year given the record gold price environment, Dushnisky said the board had been in discussions around the dividend, which was 10percent of free cash flow before growth capital.
“We would like to be in a position where, all things being equal, we could see an incremental dividend payout, but we do not want to get ahead of ourselves,” he said.
Dushnisky said his resignation as chief executive was a difficult decision. He said that he had decided to step down less than two years into his role for personal reasons. “I want to be clear that my decision to resign was a personal one to be closer to my family, especially in the context of the new Covid-19 operating environment, with constraints on international travelling, border closures, and the like.”
AngloGold’s share price fell 4percent to R22.49 on Friday.