Home Business Cash-rich AngloGold Ashanti caught up in JSE rout despite stronger quarter

Cash-rich AngloGold Ashanti caught up in JSE rout despite stronger quarter

Cash-rich AngloGold Ashanti caught up in JSE rout despite stronger quarter

Higher ore grade across AngloGold Ashanti’s gold mining operations helped lift bullion production for the quarter period to the end of September, the company reported yesterday, with cash flows and Ebitda earnings also spiking.

AngloGold Ashanti has gold producing operations across Africa – in Ghana, Tanzania, Republic of Guinea and the Democratic Republic of the Congo – where its production jumped from 348 000 ounces in the same quarter in 2021 to 443 000 ounces for the quarter under review.

In the Americas, production from Brazil and Argentina was higher at 152 000 ounces for the September quarter compared to 140 000 ounces in the same quarter last year. Output from Australia also firmed 125 000 ounces to 143 000 ounces, the company reported.

This propped up AngloGold Ashanti’s overall gold output for the period by 20% to 738 000 ounces. The Obuasi mine in Ghana was a major contributor, with a 454% surge in output, with the company attributing its overall elevated bullion productivity to “higher grades across most assets” it operates.

Despite the stronger production and financial performance, AngloGold Ashanti was 1% down at R235.30 in afternoon trade on the JSE yesterday in a day of massive price shedding across the South African stock market.

This was after the US Federal Reserve lifted rates by 0.75%, bringing the US main rate to a 15-year high of 4%, translating to emerging market jitters that have had knock-on effects on JSE-listed stocks such as AngloGold Ashanti and the rand currency.

AngloGold Ashanti is proposing a $150 million upfront cash acquisition of Coeur Mining’s Nevada properties next to its own deposits in the area. According to the company, this “will further consolidate its foothold in the prospective Beatty district in Southern Nevada, where production is expected to commence” in 2025.

Cash costs for the quarter were 4% higher at $996m.

CEO Alberto Calderon explained yesterday that the company’s inflation relating to input was running 14% higher. He highlighted that 2023 was poised for further inflationary pressures, which was likely to exert pressure on cash costs.

AngloGold Ashanti has subsequently provisioned $90m in non-sustaining capital expenditure for the third phase of a redevelopment programme for Obuasi.

An additional $110m has also been provisioned for the Tropicana project as AngloGold Ashanti progresses with waste stripping at Havana. An investment of $60m has also been set aside for life of mine extension at Iduapriem.

Ebitda earnings for the period were also 5% stronger at $472m while free cash flows of about $169m sharply spiked from the $17m in the third quarter of 2021.

“The company continues to generate strong cash flows from its Kibali joint venture, which remitted $7m during the third quarter of 2022 versus $53m in the same period last year, despite the lower gold price and lower production from the Kibali mine (in the DRC),” AngloGold Ashanti said.

Cumulatively, AngloGold Ashanti has received cash distributions of $620m over the nine-month period to end September from the Kibali venture. There is an additional $50m that is due to the company from its share of “outstanding cash balances” from the DRC project.

AngloGold Ashanti has applied to the Argentinian Reserve Bank for the approval of US dollar purchases for offshore dividends for the 2019 and 2020 financial years in the amount of $79m.

BUSINESS REPORT

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