Anglogold shows investors light at end of restructuring tunnel with solid results
ANGLOGOLD Ashanti gave investors their first look at what the company was capable of after it had pared the bulk of its South African mines from the group, lowering debt and boosting cashflows from its low-cost international operations.
AngloGold is left with a single deep-level mine in SA and a tailings retreatment operation as it moved away from high-cost operations.
It sold Moab Khotsong and Great Noligwa to Harmony Gold, and Kopanag to China’s Heaven Sent during the first quarter. It closed the TauTona mine too. SA now generates just 13% of AngloGold’s production.
Looking just at the performance of the retained operations, gold production increased by 6% to 773 000oz at an all-in sustaining cost of $1 002/oz for the first quarter of the year to end-March, compared with the same period a year earlier. This meant a 25% margin to the received gold price for the three-month period, it said.
“Our hard work in restructuring the business to focus on portfolio quality is starting to bear fruit as our operations are demonstrating strong, consistent results,” chief executive Srinivasan Venkatakrishnan said.
“The core portfolio is performing well, the balance sheet is solid, our projects are on schedule and we see good potential for further efficiencies in both our international and South African operations.”
The size of the support structures and services divisions supporting just a single mine and tailings retreatment business had to be downsized from those that supported five underground mines, he said. Including the assets it sold in the third month of the quarter, group output was 824 000oz at an all-in sustaining cost of $1 029/oz, from 830 000oz and a cost of $1 060 before.
Despite the removal of the South African production, AngloGold kept its full-year production forecast steady at up to 3.45-million ounces, with an all-in cost ranging between $990/oz and $1 060/oz. Capital expenditure this year will top out at $920-million (R11.5billion).
The Australian operations shot the lights out during the quarter, lifting output by 27%, with the higher grades at Sunrise Dam adding a sweetener to the increased mining volumes and mill throughput. The Sunrise Dam mine’s output increased by 54%.
A 25% improvement in cashflows to $117-million (R1.5-billion) from the retained operations and the proceeds realised from asset sales brought net debt down to $1.77-billion in the quarter from $2.05-billion a year earlier.
Our projects are on schedule and we see good potential for further efficiencies