AngloGold Ashanti reports 7% reduction in gold production

AngloGold Ashanti, in its preliminary results announcement for the six months ended 31 December 2020, reports that its production was 3.047Moz at a total cash cost of $819/oz in the twelve months to 31 December 2020, from 3.281Moz at a total cash cost of $776/oz in 2019.

The 7% reduction in production was due mainly to the sale of its remaining South African producing assets, the cessation of mining activities at Sadiola and Morila in Mali, and the impact of the COVID-19 pandemic.

The Company’s all-in sustaining costs (AISC) came in at $1,059/oz in 2020, compared with $998/oz in 2019. The COVID-19 impact on production in 2020 was estimated at 140koz or 5% and its impact on AISC was estimated at $55/oz or 5%.

The Company also met guidance for the eighth consecutive year on production and cost.

The performance for the year was underpinned by a strong year at Geita, whilst steady performances at Kibali, Iduapriem, Siguiri, Sunrise Dam, and AGA Mineração helped offset declines in production at Tropicana, Cerro Vanguardia (CVSA) and Serra Grande.

The Obuasi Redevelopment Project continued its ramp-up, delivering a 127,000oz in production despite delays in receiving equipment and in the arrival of skilled personnel, critical to the project as a result of COVID-19 related lockdowns in various jurisdictions during the year.

Basic earnings for the period ended 31 December 2020 were $953m, compared with a $12m loss in 2019. Headline earnings for the period ended 31 December 2020 were $1,000m, compared with $379m in 2019.

Earnings benefitted from the higher gold price net of increased profit-related taxes. Free cash flow before growth capital – the metric on which dividends are calculated – increased by 124% to $1,003m in 2020 versus $448m in the prior year.

The balance sheet continues to improve as stronger cash flows helped with the continued reduction in adjusted net debt. Adjusted net debt for continuing operations declined by 62% to $597m at 31 December 2020, from $1.581bn at 31 December 2019. Adjusted EBITDA for continuing operations increased by 56% year-on-year to $2,470m in 2020, from $1,580m in 2019.

GUIDANCE AND INDICATIVE OUTLOOK

Production guidance for the 2021 year is estimated to be between 2.7Moz and 2.9Moz. Total cash costs are estimated to be between $790/oz and $850/oz and AISC between $1,130/oz and $1,230/oz at average exchange rates against the US Dollar of 5.00 (Brazilian Real), 0.72 (Australian Dollar), 98.00 (Argentinian Peso), and 16.95 (South African Rand), with Brent oil at $50/bbl average for the year.

Sustaining capital expenditure is anticipated to be between $720m and $820m, including investments in Ore Reserve Development and Exploration ($330m to $380m) and Brazil tailings compliance capital for 2021 ($70m to $80m).

AngloGold Ashanti expects to see an average 2.0% compound annual growth rate (CAGR) in gold production over the next two years relative to 2020 production from continuing operations. The primary driver of production growth is related to Obuasi operating at steady-state, Tropicana reverting to normalised production levels following the reinvestment in its life extension, and AGA Mineração, Siguiri and Sunrise Dam expected to increase production to higher levels.

On a five-year indicative outlook, the Company expects to see an average of 5.0% CAGR in gold production between 2021 and 2025. This is underpinned by the Company’s ten operating assets, as well as the Company potentially moving forward with investments in the Quebradona and Gramalote projects.

As a result of these investments, total capital expenditure is expected to increase in 2022 to 2024, before declining.

Following the completion of these projects, as well the expected return of sustaining capital to normalised levels following the intensive brownfield investment campaign, the Company is expected to be well positioned to operate at an AISC between $900 – 1,150/oz – in nominal terms – in 2025.

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