AngloGold Ashanti stages second half cash flow turnaround

Alberto Calderon, CEO, AngloGold Ashanti SHARES in AngloGold Ashanti rose…

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Alberto Calderon, CEO, AngloGold Ashanti

SHARES in AngloGold Ashanti rose 6% in Johannesburg on Friday after it staged a turnaround in cash flow for the second half of its financial year ended December 31.

An absence of operational problems in the second half of the financial year resulted in an inflow of $314m to give a net positive cash flow of $109m for the year.

This underpinned a 19 US cent per share final dividend declaration which exceeded market expectations, according to a report by RMB Morgan Stanley.

AngloGold didn’t publish earnings numbers for the 12 months owing to the (non-cash) impact of a possible restatement relating due to a potential error in the calculation of a deferred tax asset at Obuasi. CEO Alberto Calderon said the matter was the subject of discussions with the firm’s current and former auditors.

Production metrics are unaffected by the potential restatement, however. Following mishaps in the first half, especially in the first quarter, full year gold output came in at 2.593 million oz, 2% lower than in 2022 and [within the guidance range, which has been adjusted for the closure of the Cordero do Siri mine in Brazil in August.]

Cash costs of $1,108/oz were within guidance but 8% higher year-on-year. All-in sustaining costs (AISC) of $1,538/oz were higher than guidance of $1,400 to $1,450/oz, however – as capex exceeded expectations.

Calderon, who joined AngloGold with cash cost reductions high on his agenda, said in a presentation to analysts today the company expected to keep costs relatively static over the next two financial years with AISC within a $1,500 to $1,555/oz band.

Getting Obuasi production to reflect the scale of the resource would be a definite move in the right direction. Calderon said it was getting there. Production totalled 224,000 oz for the year but there are ambitions to increase to between 275,000 to 320,000 oz for 2024 and 400,000 oz/year from 2026.

It is one of several projects AngloGold has outlined as it continues to reshape the portfolio having finally dispensed with its deep underground South African mines in 2020. The other major growth prospect is in Beatty district of southern Nevada.

AngloGold announced an increase in the Merlin prospect to 9.1 million [ounce] mineral resource taking the district’s total mineral resource to 16.6 million oz. AngloGold forecasts annual production of about 500,000 oz from the area once developed.

First production from [North] Bullfrog, northwest of Merlin and its neighbouring Silicon deposit, is expected a year after permitting which is in process.

Asked if AngloGold was weighing up potential joint ventures in order to expand its footprint and derisk its investment, Calderon said the company wasn’t yet focused on this. “It’s not on our ‘to-do’ list,” he said. “There are companies in the region and we’re not against making something bigger but we’re now just busy on understanding this massive resource.”

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