AngloGold Ashanti has recorded headline earnings of US$363 million in the first half of the year, while also drastically truncating debt outstandingly by 41 per cent.
Headline earnings fell from US$404 million or 97 US cents per share to US$363 million or 87 US cents per share in the first half of 2021. Also, net debt declined to US$850 million representing 41 per cent year-on-year from US$1.431 billion. The company has also declared a dividend of 87 ZAR cents per share (approximately 6 US cents per share) for the six months ended 30th June 2021.
Following this trend, overall operational performance faced headwinds as a result of the ongoing COVID-19 pandemic, increased costs, lower realised grades across certain operations and the voluntary suspension of underground mining activities at the Obuasi Mine following a fatal accident on 18th May 2021.
Company’s Gold production performance
On the production front, the first six months of 2021 yielded a total of 1.200Moz of gold at a total cost of US$1,003/oz compared to 1.323Moz at US$770/oz from continuing operations for the first six months of 2020.
Moreover, all-in sustaining costs (AISC) were $1,333/oz for the first six months of 2021, compared to $1,002/oz from continuing operations for the corresponding period last year. These mainly reflected higher cash costs, higher sustaining capital expenditure in line with the tailings compliance programme and the planned reinvestment objectives in the portfolio, COVID-19 impacts, stockpile movements and lower gold sold. Production for the half year was impacted by an estimated 42,000oz due to COVID-19.
“AngloGold Ashanti remains focused on its strategy to create long-term value, whilst maintaining a strong balance sheet and mitigating any financial or operating risks to the business.” Interim Chief Executive Officer, Christine Ramon, commented.
“Our reinvestment projects remain on track to improve operating flexibility and access to higher grades. We are also pursuing operating and capital efficiencies over the remainder of the year.”
Christine Ramon, Chief Executive Officer
Company’s Financial Performance
Going forward, the statement highlighted that the Company remains committed to the improving operating flexibility through Ore Reserve development and Ore Reserve expansion investments at sites with high geological potential.
Per the statement, this is reflected by a 33 per cent year-on-year increase in total capital expenditure to US$461 million (including equity accounted joint ventures) in the first half of 2021, compared to US$346 million in the first half of 2020.
Furthermore, the Company expects the mining of lower grades and stockpile utilisation to be transitory in nature. This is the case as the reinvestment projects provide improved flexibility and access to higher-grades, and as Covid-19 vaccination drives progress across areas within the company’s jurisdictions that are most affected.
Notwithstanding, significant pressure on costs related to the tailing storage facilities (TSF) transition in Brazil, this investment is also transitory given the upcoming legal deadline, the statement highlighted.
Meanwhile, mining activities at Obuasi will remain suspended pending the conclusion of a third-party review of the mining and ground management plans, the statement indicated.
“On 1 September 2021, Mr. Alberto Calderon will assume the role of Chief Executive Officer of the Company and Ms. Christine Ramon will return to her role as the Company’s Chief Financial Officer.”
The company’s financial performance for the first half of 2021 recorded a free cash outflow of US$25 million, compared to an inflow of US $177 million which consisted a cash flow from the discontinued South African assets of US$35 million in the same period last year. Accordingly, free cash flow was impacted by lower gold, higher costs, and higher taxes paid.
Overall, AngloGold Ashanti is optimistic that on-going operations for the second half will be favorable as it hints that, “[it] remains committed to maintaining a flexible balance sheet with an Adjusted net debt to Adjusted EBITDA target ratio not exceeding 1.0 times through the cycle.”
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