Anglogold Ashanti says that the Company has reasonable certainty that headline earnings for the period are expected to be between $392 million and $416 million, with headline earnings per share of between US 94 cents and US 99 cents. Headline earnings and HEPS for the comparative period in 2019 were $120 million and US 29 cents, respectively.
The total basic earnings from continuing and discontinued operations (“basic earnings”) for the Period are expected to be between $410 million and $432 million, resulting in total basic earnings per share from continuing and discontinued operations (“EPS”) of between US 97 cents and US 102 cents. The basic earnings and EPS for the comparative period were $114 million and US 27 cents, respectively.
The expected overall increases in headline earnings and basic earnings for the Period compared to the comparative period were primarily due to the following reasons:
• The gold price received increased by more than 25%;
• Weaker local currencies mitigated increases in cost of sales;
• Higher foreign exchange gains of $19 million;
• Income from joint ventures, mainly Kibali, increased by $41 million (post-tax) or US 10 cents per share; and
• Care & maintenance costs of $21 million (post-tax) or US 5 cents per share incurred at Obuasi in the prior year were not repeated in the current Period.
The increases in earnings were partly offset by:
• Higher taxes, withholding taxes and royalties paid in most jurisdictions and deferred taxes raised in Brazil on foreign exchange movements relating to non-monetary assets;
• Negative movements on realised and unrealised oil and gold derivatives of $18 million (post-tax) of US 4 cents per share;
• Discounting of the Argentine export duties receivable resulted in a decrease in earnings of $11 million (post-tax) or US 3 cents per share; and
• A Brazilian power utility legal settlement received in April 2019 of $11 million (post-tax) or US 3 cents per share not repeated in the current period.
In addition to the above, earnings were favourably impacted in the current Period by $17 million (post-tax) relating to the non-cash impairment reversal on the South African producing assets and related liabilities classified as held for sale as a result of the agreement to sell these assets to Harmony Gold Mining Company Limited.
For headline earnings purposes, the impairment reversal is excluded.
SOUTH AFRICAN ASSET SALE AND IMPACT OF IFRS 5
On 12 February 2020, the Company announced an agreement to sell its remaining South African producing assets and related liabilities to Harmony Gold Mining Company Limited for consideration in cash and deferred payments with expected proceeds of $300 million, subject to subsequent performance, and with additional proceeds if the West Wits assets are developed below current infrastructure.
OPERATIONAL PERFORMANCE – CONTINUING AND DISCONTINUED OPERATIONS
Production for the six months ended 30 June 2020 is expected to be 1.469Moz, compared to 1.554Moz for the first six months of 2019. AngloGold Ashanti delivered a solid production performance for the first half of the year, especially given the challenges created by the COVID-19 pandemic.
This performance was supported by strong second-quarter performances from Geita, Iduapriem and Serra Grande, as well as steady production from Kibali and AGA Mineração. Notable production improvements quarter-on-quarter were recorded at Sunrise Dam, Siguiri and Cerro Vanguardia (CVSA).
The Obuasi Redevelopment Project continues to ramp up and was impacted by the delays in receiving equipment and in the arrival of certain critical skills to site due to Covid-19.