AngloGold’s JSE share price falls on earnings warning

1st August 2023

By: Darren Parker

Creamer Media Contributing Editor Online


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Gold mining company AngloGold Ashanti has advised its shareholders to expect a considerable decrease in earnings for the six months ended June 30.

The company, which is set to publish its interim results on August 4, expects to report an 82% to 92% year-on-year decrease in basic earnings, compared with the $298-million reported for the first half of 2022.

Similarly, headline earnings are expected to be between $125-million and $155-million, representing a 48% to 58% decrease compared with the $300-million reported for the prior comparable period.

The significant decrease in earnings is attributed to various factors, including non-cash impairments and derecognitions at the company's Brazilian operations, amounting to $103-million net of tax.

These impairments are linked to operational underperformance at the Córrego do Sítio and Cuiabá’s Queiroz metallurgical plant, which suspended operating activities during the design and completion of the buttress at the Calcinados tailings storage facility (TSF).

Additionally, legacy TSFs no longer in use were derecognised.

Furthermore, both basic and headline earnings were adversely affected by higher non-cash environmental provisions of $38-million net of tax. These provisions were implemented following new legislation in Brazil relating to emergency response and safety management for TSFs.

Other contributing factors to the decline in earnings include industry-wide inflation, increased operating costs, higher investment in exploration and evaluation costs, the transition to third-party gold concentrate sales at the Cuiabá mine complex, and the Siguiri carbon-in-leach (CIL) tank failure that occurred in May this year.

On the operational front, AngloGold expects to report gold production of about 1.24-million ounces, a slight increase on the 1.23-million ounces reported in the same period last year.

The growth in gold production was attributed to a stronger second quarter, with higher contributions from Obuasi, Sunrise Dam, Geita, Iduapriem and Tropicana.

However, this increase was partially offset by lower tonnes processed at AGA Mineração following the transition to gold concentrate sales and planned mill shutdowns at Geita.

Additionally, the CIL tank failure at Siguiri temporarily affected production, but it has since been repaired.

AngloGold’s share price on the JSE fell by more than 8% on the afternoon of August 1, following the announcement of the company’s trading statement.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online



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