AngloGold Ashanti blames lower gold sales and higher costs

AngloGold Ashanti has reasonable certainty that headline earnings for the year ended 31 December 2021 are expected be between $572 million and $642 million, a decrease of 36% to 42% from the comparative period. Headline earnings for the comparative period in 2020 were $1,000 million.

The total basic earnings for the Period are expected to be between $584 million and $650 million, a decrease of 32% to 39% from the comparative period. The basic earnings for the comparative period were $953 million.

The expected overall decrease in earnings for the Period is primarily due to the following reasons:

• Lower gold sales volumes;
• Higher operating costs resulting in an increase in the cost of sales mainly due to lower grades achieved and higher level of stockpile drawdowns – exacerbated by inflationary pressures and the continued impact of the COVID-19 pandemic on costs;
• Unfavourable foreign exchange movements of $43 million or US 10 cents per share;
• Increased exploration and evaluation costs of $40 million or US 10 cents per share, as previously guided;
• Lower income from joint ventures mainly due to the once-off profit of $19 million or US 5 cents per share achieved through the disposal of the Mali operations in 2020; and
• Increased once-off other expenses.

OPERATIONAL PERFORMANCE

AngloGold Ashanti experienced a challenging 2021. Production for the year ended 31 December 2021 is expected to be 2.472Moz, compared to 3.047Moz (which included 241koz from its previously owned South African operations) for the year ended 31 December 2020. This production is within the revised guidance issued on 6 August 2021.

Production for 2021 was lower than the prior year mainly due to the sale of the South African operations, the Company undertaking significant reinvestments across key assets, lower realised grades across certain operations, the temporary suspension of underground mining activities at Obuasi, as well as the continued impact of the COVID-19 pandemic on production and costs.

COVID-19 impacts were excluded from the revised guidance issued on 6 August 2021. The impact on production from COVID-19 in 2021 was estimated at 47koz for 2021, mainly affecting our operations in Ghana, Brazil and Argentina.