GOLD bullion producer AngloGold Ashanti’s shares plummeted 12 percent on the JSE on Friday after reducing its production guidance, and hiking its cost estimates for 2021 amid safety concerns at its Obuasi mine, in Ghana.
Johannesburg head-quartered AngloGold fell 12.04 percent to R247.18 a share at the close on Friday after lowering its annual guidance for 2021 to between 2.45 million ounces and 2.60 million ounces of production at a total cash cost of up to $950 (R13 903) an ounce.
In its financial and production report for the half-year ended June 2021, released on Friday, the group raised its all-sustaining costs (AISC) to up to $1 340 an ounce and capital expenditure of between $1.03 billion to $1.19bn.
“Production has been revised to mainly remove the contribution of Obuasi for the second half of 2021,” said the company. AngloGold suspended all underground operations at Obuasi following a ground accident, which claimed the life of a mineworker in May.
“Mining activities at Obuasi will remain suspended pending the conclusion of a third-party review of the mining and ground management plans,” said the group on Friday.
In February, AngloGold had estimated that its production guidance for the 2021 year would be between 2.7 million ounces and 2.9 million ounces.
It said, its total cash costs would be between $790 an ounce and $850 an ounce and AISC between $1 130 an ounce and $1 230 an ounce.
The company also previously announced plans to grow annual production to between 3.2 million ounces and 3.6 million ounces, by 2025 mainly on the ramp-up of the Obuasi mine.
The group, which sold Mponeng, its sole South African asset to Harmony Gold Mining, told investors that production for the first six months of 2021 was 1.2 million ounces at a total cash cost of $1 003 an ounce, compared to 1.323 million ounces at $770 an ounce from continuing operations a year.
Interim chief executive Christine Ramon said the group remained focused on its strategy to create long-term value, while maintaining a strong balance sheet and mitigating any financial or operating risks to the business.
“Our reinvestment projects remain on track to improve operating flexibility and access to higher grades. We are also pursuing operating and capital efficiencies over the remainder of the year,” Ramon said.
AngloGold last month appointed Alberto Calderon, an industry veteran, as chief executive following a ten month search. Calderon’s will take the helm at the beginning of next month at which time Ramon will resume her duties as chief financial officer.
AngloGold said, second quarter output had declined to 613 000 ounces at a total cash cost of $1 006 an ounce, compared to 693 000 ounces at a total cash cost of $767 an ounce from continuing operations a year earlier.
The company recorded a free cash outflow of $25m in the half year under review, compared to an inflow of $177m, which included cash flow from the discontinued South African assets of $35m, in the same period, last year.
“Free cash flow was impacted by lower gold sold, higher costs, and higher taxes paid,” said the group.
AngloGold said its balance sheet remained in a solid position, with debt falling and “ample liquidity” of about $2.5bn.
BUSINESS REPORT ONLINE