AngloGold reports H1 costs spike, lowers full-year guidance

6th August 2021

By: Marleny Arnoldi

Deputy Editor Online


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Despite an array of challenges experienced in the six months ended June 30, JSE-listed gold miner AngloGold Ashanti managed to lower its adjusted net debt by 41% year-on-year to $850-million and declared an interim dividend of $0.06 apiece.

The company did, however, lower its production guidance for the full-year by 300 000 oz to between 2.45-million ounces and 2.6-milion ounces, interim CEO Christine Ramon confirmed on August 6.

She noted that the company’s interim performance had been negatively impacted by lower grades at various sites, higher stripping ratios and the closure at the Obuasi mine, in Ghana, as a result of a safety incident.

AngloGold has revised its full-year guidance downward to account for zero production from Obuasi in the remainder of the year, while a third-party review is under way to see how the mine plan may need to be amended.

The mine in May experienced a sill pillar collapse incident during which a mineworker was killed. The company had closed the mine down until a comprehensive investigation and plan for the way forward was concluded.

Ramon reiterated that the company was taking the utmost care to ensure safe operations and that the mine would still be developed to its full potential.

AngloGold's share price on the JSE was down 12% on Friday afternoon, trading at R247.26 a share, compared with Thursday's close of R281 a share.

Production for the half year was also impacted by an estimated 42 000 oz owing to Covid-19 impacts.

Nonetheless, the company produced a solid 1.2-million ounces, albeit 9% lower year-on-year, said interim CFO Ian Kramer.

Headline earnings totalled $363-million, or $0.87 apiece, for the six months under review, compared with headline earnings of $404-million, or $0.97 apiece, posted for the six months ended June 30, 2020.

Ramon noted that all-in sustaining costs (AISC) had increased by 33% year-on-year to $1 333/oz in the reporting period, compared with AISC of $1 002/oz in the prior comparable period.

Fortunately, the company reported an average realised gold price of more than $1 800/oz during the six months under review.

She explained that AISC was impacted by stockpile movements and tailings compliance programme impacts, planned reinvestments, lower gold sold and Covid-19 impacts.

The company is transitioning its Brazilian tailings storage facilities to dry stacking operations. This $120-million programme is expected to be concluded early next year.

AISC for the full-year is expected to be between $1 240/oz and $1 340/oz.

The company sold 1.21-million ounces in the six months under review, compared with the 1.36-million ounces sold in the prior comparable six months.

Gross profit totalled $565-million, against gross profit of $658-million in the prior reporting period.

AngloGold’s strategy of improving operating flexibility through investment in ore reserve development and ore reserve expansion at sites with high geological potential remains a key priority and is reflected by the 33% year-on-year increase in total capital expenditure to $461-million (including equity accounted joint ventures) in the first half of this year, compared with $346-million from continuing operations in the first half of 2020.

“This year and next remain transitional ones for the company, with the higher volumes of waste stripping and underground development accompanied by lower grades and the movements of stockpiles,” Ramon said. 

AngoGold expects the mining of lower grades and stockpile utilisation to be transitory in nature as the reinvestment programme provides improved flexibility and access to higher grades. This will happen alongside vaccination drives across the company’s operating jurisdictions.

Ramon noted that a quarter of the company’s global workforce had already been vaccinated.

“Our performance was nowhere near good enough and we are committed to doing better, while creating long-term value and maintaining a strong balance sheet. We are excited about our reinvestment initiatives under way to improve operating flexibility and access higher grades over the remainder of the year,” Ramon stated.

Edited by Creamer Media Reporter


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