R500m boost from ura­nium sales

Driv­ing debt lev­els down to man­age­able lev­els

Finweek English Edition - - Companies & Markets -

AN­GLOGOLD ASHANTI will gen­er­ate an ex­tra R500m in rev­enue from its ura­nium busi­ness this year as it takes ad­van­tage of in­creased pro­duc­tion and big­ger ex­po­sure to the spot mar­ket, says CEO Mark Cu­ti­fani. An­gloGold Ashanti, South Africa’s largest pro­ducer of the en­ergy metal, will pro­duce 1,3m lb of ura­nium this year, around 100 000 lb more than last year.

It can­celled 1m lb of out­stand­ing ura­nium con­tracts last year at a cost of US$32m. How­ever, it does mean it will re­ceive a price of around $50/lb in­stead of the con­tracted $25/lb.

That’s just one of the deals done by the dy­namic Cu­ti­fani, who took over the com­pany to­wards end-2007. He’s re­struc­tured An­gloGold Ashanti and its bal­ance sheet and cut its oner­ous gold hedge book or for­ward sales by half, im­prov­ing the price it re­ceives for each ounce it sells.

The ex­tra ura­nium rev­enue will play a role in driv­ing net debt down to an en­tirely man­age­able $300m by year-end 2009 from well above $1bn. That will give An­gloGold the room it needs to ma­noeu­vre in adding 2m to 3m oz to pro­duc­tion that, net of re­place­ment ounces, will lift pro­duc­tion to 6m oz in five to seven years.

“RBC Cap­i­tal Mar­kets has lit­tle doubt An­gloGold Ashanti could well con­tinue to over de­liver on its prom­ises, But given its own guid­ance and a $900/oz gold price, RBC Cap­i­tal Mar­kets can only main­tain its cur­rent tar­get price of R320/share,” the com­pany says in a note.

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