Gold miner AngloGold Ashanti is implementing cash conservation measures, including focused capital prioritisation and reducing non-essential spending across the business, and is well positioned to weather the current market uncertainty.
At the end of 2019, the company had $463-million of cash, and $2-billion of debt and revolving credit facilities (RCF) with $1.42-billion and R4.65-billion available.
It has drawn down $1.4-billion on its dollar RCF to cater for the $700-million bond redemption due mid-April 2020 and to provide additional liquidity headroom. After the drawdowns, cash on hand is about $1.8-billion.
In response to the global spread of Covid-19, AngloGold Ashanti has undertaken a number of proactive steps to protect employees, host communities and business, in line with the company's values, guidelines and advice provided by the World Health Organisation (WHO) and the requirements of the countries in which it operates.
A cross-functional team, including operations, technical, finance, health, community, government relations and other support disciplines, is helping to guide the response to the crisis.
AngloGold has for some time employed increased screening and surveillance of employees, stopped non-essential travel, instituted mandatory quarantine for arriving travellers and increased hygiene awareness across its operations, in addition to a range of other measures.
It has also worked with local communities to help bolster their responses to the outbreak.
These initiatives have complemented government responses in each of its operating jurisdictions.
As a precaution against the potential effects of the pandemic on AngloGold’s ability to secure spares and consumables, supply chain teams have proactively placed orders to build increased safety stocks on critical items at the company’s operations.
Specific inventories depend on the level of risk identified in each region, lead time considerations, and storage capacity.
In general, Anglo is targeting inventories of three to six months on primary consumables, while recognising that is has the support of strategic partnerships with key suppliers who themselves are maintaining inventories in the respective regions for many critical items.
On March 21, following the Argentinian government’s decision to impose a nationwide lockdown (quarantine) until March 31, including temporary travel restrictions, border closings and suspension of most industries, Cerro Vanguardia was required to temporarily suspend mining activities.
On March 23, the South African government announced a 21-day nationwide lockdown, effective from midnight on March 26, resulting in the temporary suspension of mining activities at the company’s South African operations particularly Mponeng, and the partial suspension of mining activities at Mine Waste Solutions and surface operations.
On March 26, the State of Goiás, in Brazil, extended a set of restrictions on the operation of non-essential business, to include mining. These restrictions are set to run through April 4. Mineração Serra Grande will temporarily suspend its operations.
In each case, the suspension of mining activities will continue for the period during which the respective restrictions remain in force.
The rest of AngloGold’s mines in its diversified portfolio of 14 assets in nine countries, continue to operate.
For the sites where production has been suspended, plans for a safe and smooth ramp-up, and for safely regaining part of the delayed production, are being developed.
AngloGold highlighted that it had a good start to the year, and – notwithstanding an anticipated impact of 30 000 oz to 40 000 oz from operations that are suspended at this stage (less than 2% of yearly production) – it remains on track to meet its yearly guidance.
Nonetheless, given the uncertainties with respect to future developments, including duration, severity and scope of the Covid-19 pandemic and the necessary government responses to limiting its spread, AngloGold has decided to withdraw its market guidance at this time.
AngloGold is implementing cash conservation measures, including focused capital prioritisation and reducing non-essential spending across the business.