AngloGold Ashanti: production ups by 1%, earnings up by 72%

AngloGold Ashanti, in its market update report for the quarter ended 30 September 2020, says its free cash flow increased 290% year-on-year to $339m and cash flow from operating activities up 56% year-on-year to $551m.

Production increased 1% year-on-year to 837,000oz, supported by solid performances across the operating asset base. COVID-19 impact on production was limited to South African operations at an estimated 18,000oz in Q3 2020.

All-in sustaining costs of $1,044/oz up 1% year-on-year; AISC margin improved to 45%, up from 30% in Q3 2019, while adjusted EBITDA was up 72% year-on-year to $803m. Adjusted net debt has improved 47% year-on-year to $875m, lowest since 2011.

During the third quarter of 2020, AngloGold Ashanti made strong progress executing on all aspects of its strategy, despite the continuing global spread of COVID-19. Delivery on key objectives continued through the recent leadership change, with meaningful delivery on key objectives to improve the foundation of the business, including:

  • Sale of the South African portfolio to Harmony Gold completed on 30 September 2020 and $200m proceeds received                  
  • Guidance reinstated, providing greater certainty on annual production, costs and capital expenditure                            
  • Obuasi Phase 1 has been completed, while the project remains within budget and Phase 2 construction on track for completion towards the end of the first quarter of 2021
  • Achieved commercial production at Boston Shaker underground at Tropicana, on schedule and on budget                             
  • Sought to maximise benefit of higher gold price through cost management, seeking to limit increases of costs year-on-year       
  • Near quadrupling of free cash flow to $339m helped drive adjusted net debt down to $875m, its lowest since 2011                 
  • Further increasing liquidity through issue of $700m 10-year bond at a record low coupon for AGA of 3.75% per annum              
  • Continued progress towards replacing ore reserves, extending mine lives and improving operating flexibility through exploration 
  • Increased the dividend payout ratio from 10% to 20% of free cash flow generated before growth capital .  


In line with historical trends, AngloGold Ashanti expects a strong finish to the year, especially at Geita, as well as at the operations in Australia and Brazil. As we previously flagged during the year, COVID-19 has resulted in some capital expenditure deferrals across the portfolio. At Obuasi, AngloGold Ashanti expects $70m to $90m of Phase 2 project capital rolling over into 2021.

The group expect a significant step up in sustaining capital expenditure in the fourth quarter of 2020 as it invests in waste stripping at Iduapriem and Tropicana and commence the planned developmental portal of a third underground mining area at the Geita Hill orebody.

The portal will commence from the west and the development will proceed along strike to the eastern extent of the orebody. Geita Hill underground mining is forecast to start in 2021, having received the necessary regulatory approvals. These investments will be made in parallel with the ongoing investments in Ore Reserve Development and Exploration.

In addition to tailings storage facilities (TSF) legislation passed in Brazil in 2019, further legislation specifically addressing the acceleration of the decommissioning of existing TSFs and conversion thereof into dry-stacking structures was promulgated in the third quarter of 2020.

It is anticipated that the additional legislation will result in additional sustaining capital expenditure in 2020 of between $25m and $30m, increasing to between $70m and $85m in 2021.

For the year-end Reserve declaration, AngloGold Ashanti expects that Ore Reserve pricing will increase by $100/oz to $1,200/oz, reflecting the increased long term gold price.


For 2020, in line with the unchanged reinstated guidance, the group is expected to produce between 3.030Moz and 3.100Moz, including nine months of production from the South African-producing assets, or between 2.800Moz and 2.860Moz on a continuing operations basis.

AISC is expected to be between $1,060/oz and $1,120/oz including contributions from South African assets to the end of September 2020, or between $1,050/oz and $1,100/oz on a continuing operations basis.

Sustaining capital expenditure is forecast between $610m and $650m, and non-sustaining capital expenditure between $280m and $300m, or between $570m and $605m and between $280m and $300m on a continuing operations basis, respectively.

Total capital expenditure is expected to be between $890m and $950m, or between $850m and $905m on a continuing operations basis.

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