AngloGold Ashanti has taken full advantage of the buoyant gold price, with a strong rise in first-half earnings and free cash flow positioning it to pay a bigger full-year dividend. It has also cut adjusted net debt by 18% to $1.43 billion and says it has sufficient liquidity to see it through the Covid-19 crisis.
The gold producer said its global operations withstood disruptions related to the pandemic, with production dipping 5.5% to 1.47 million ounces at a total cash cost per ounce of $810 per ounce. Its Geita mine in Tanzania delivered an outstanding performance and Serra Grande in Brazil posted a strong recovery from the first quarter. The Kibali, Iduapriem, Tropicana and AGA Mineração mines all delivered steady production. The adverse impact of Covid-19 on production was limited to an estimated 85,000 ounces, of which 63,000 ounces related to the SA operations that have since been sold to Harmony Gold Mining.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for the six months increased by 59% to $1.1 billion, helped by a 26% year-on-year increase in the gold price received and weaker local currency impacts. It generated free cash flow of $177 million, up from an outflow of $31 million in the same period last year, with most of it coming in the three months to end-June. Free cash flow before growth capital, the metric on which it calculates its dividends, rose 376% – or nearly fivefold – to $324 million. It pays an annual dividend of 10% of the metric.
The group’s Obuasi Redevelopment Project in Ghana continued to ramp up, delivering 50,000 ounces despite delays in receiving equipment and the arrival of certain critical skills to the site as a result of lockdowns in various jurisdictions, with Phase 2 ramp-up expected by the end of the first quarter of next year.The business is in excellent shape – cash flows are extremely robust, demonstrating the significant operating leverage we have to this strong gold price,” CEO Kelvin Dushnisky said. “While the recent rally in the gold price is welcome, tight cost and capital management will continue to be the key focus areas for us as we work to capture this widening margin and increase reserves.”
Last month, AngloGold said Dushnisky would step down as CEO on 1 September but would be available until the end of next February to help with a smooth handover. Chief financial officer Christine Ramon will act as interim CEO while it looks for a replacement.
Main Image: Anadolu Agency
