AngloGold’s earnings shoot through the roof in quarter to March
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JOHANNESBURG - ANGLOGOLD Ashanti’s earnings shot through the roof during the quarter ended March 2021 on the higher gold price, despite production taking a hit on the Covid-19 pandemic and concerns of a higher-than-normal employee turnover rate.
AngloGold said yesterday that headline earnings for the quarter rose 42 percent to $203 million (R2.85 billion, or 48 US cents a share, compared with $143m, or 34 US cents a share, a year earlier after benefiting from the higher gold price and lower finance costs, partially offset by lower gold production and higher costs.
AngloGold, which sold Mponeng, its remaining South African mine, said production from continuing operations declined to 588 000 ounces at a total cash cost of $999 an ounce during the March quarter, down from 630 000 ounces at a total cash cost of $773 an ounce a year earlier.
The Covid-19 pandemic accounted for an estimated 4 000 ounces of lost production and an estimated $29 an ounce of all-in sustaining costs, said the group, citing lower production at Brazilian operations and the Obuasi mine in Ghana.
“During the first quarter of 2021, our Brazilian operations and the Obuasi mine were most affected, as new variants of the virus caused greater community infections, leading to an increase in general absenteeism and the number of employees in quarantine and isolation, with a consequent impact on productivity at those operations,” said the group.
While infection rates in Brazil and Ghana had since declined from those recent peaks, the number of cases in Brazil – and in several other countries in South America – remained high, the company said. AngloGold also said that in addition the Cerro Vanguardia mine in Argentina continued to operate at between 60 to 80 percent mining capacity due to ongoing inter-provincial travel restrictions in that country, which continued to prevent certain employees from travelling to the site.
The company flagged that the continued spread of Covid-19, higherthan-normal employee turnover rates and inflationary pressures stemming from competition for scarce skills in certain operations arising from higher iron ore prices, were some of the risks facing the business.
“Brazil is a high-risk region for AngloGold Ashanti as the spread of Covid-19 has negatively impacted operational efficiencies, while the elevated iron ore price has led to critical skills shortages, as the iron ore industry seeks to bolster its employee base,” said AngloGold.
The company also said that record iron ore prices as well as border closures in Australia had increased employee turnover – and scarcity of certain skills – across that country’s mining sector.
“AngloGold Ashanti is working closely with its employees on retention of critical skills, as well as putting in place the necessary training and graduate programmes for succession planning,” said AngloGold.
Iron ore, an ingredient in steel making, has rallied in the past year amid higher demand from China.
The group kept its 2021 production, costs and capital guidance unchanged.
AngloGold’s share price closed 1.56 percent lower at R319.29 on the JSE yesterday.