AngloGold makes strong second-quarter recovery

Cape Town - AngloGold Ashanti [JSE:ANG] announced on Monday that it achieved a strong operating recovery in its second quarter, setting new safety records and keeping all its brownfield projects on budget and on schedule.

The company delivered gold production of 1.748 million ounces (Moz) at a total cash cost of $796 per ounce for the six months to end-June 2017, compared to 1.745Moz at $706/oz in the first half of last year.

All-in sustaining costs for the six months to end-June 2017 were $1 071/oz compared to $911/oz in the first half of last year, reflecting the impact of stronger operating currencies, lower grades, cost inflation and the planned increase in sustaining-capital expenditure.

Capital expenditure in the first half of 2017 (including equity accounted investments) rose 43%, from $318m in the first half of last year to $454m for the six months to end-June 2017. This was largely due to increased spend on asset improvements aimed at boosting mine lives and cost profiles across the portfolio.

AngloGold invested in a slate of self-funded, high-return brownfields projects at its international operations and has also taken steps to remove loss-making ounces from some of its older mines.

For the first time ever, three back-to-back quarters passed with no fatal accident at any of the company’s operations, including its ultra-deep South African mines which registered 339 days fatality-free at the end of June 2017.

Group production in the first six months of 2017 was marginally higher than in the first six months of last year. The slow production from South African operations was offset by another strong performance from the international operations.

AngloGold recovered from its first-quarter underperformance, with second-quarter production increasing 11% to 918 000 oz, from 830 000 oz in the first quarter.

Adjusted earnings before interest, tax, depreciation and amortisation (adjusted Ebitda) was $610m for the first six months of 2017, down 22% from $781m for the first half of last year.

$63m set aside for silicosis settlement

The adjusted Ebitda excluded the impact of the South African redundancy costs and impairments, but included the impact of the estimated provision in respect of the silicosis class-action and related costs of $63m.

The ratio of net debt to adjusted Ebitda at June 30 2017 was 1.56 times, compared with 1.44 times at June 30 2016.

The company's full-year guidance remains unchanged as follows: production between 3.6Moz and 3.75Moz; capital expenditure between $950m and $1 050m; total cash costs between $750/oz and $800/oz; and all-in sustaining costs between $1 050/oz and $1 100/oz, assuming average exchange rates against the US dollar of R13.20.

AngloGold CEO Srinivasan Venkatakrishnan said: “Our brownfield projects are on budget and on schedule, and we are working diligently to maintain this strong momentum through the rest of the year. 

"We continue to focus on our long-term strategy of improving the underlying quality of our portfolio through investment in high-return projects and removal of loss-making ounces.”

AngloGold shares were trading 3.13% down at R130.36 shortly after opening time on the JSE.

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