Gold mining company AngloGold Ashanti has advised its shareholders to expect a considerable decrease in earnings for the six months ended June 30, causing AngloGold’s JSE share price to fall.

The renowned gold mining company, meanwhile, is set to publish its interim results tomorrow, August 4, 2023 expects to report an 82% to 92% year-on-year decrease in basic earnings, compared with the $298-million reported same period last year – the first half of 2022.

“Shareholders are advised that AngloGold Ashanti has reasonable certainty that basic earnings for the Period are expected to be between $25 million and $54 million, resulting in basic earnings per share (“EPS”) between 6 US cents and 13 US cents, a decrease of between 82% to 92% from the comparative period. Basic earnings and EPS for the comparative period were $298 million and 71 US cents, respectively.”
AngloGold Ashanti

Similarly, AngloGold Ashanti said it expected headline earnings to be below $160 million, representing about 60% decrease compared with the $300-million reported for the prior comparable period of 2022.

“Headline earnings for the Period are expected to be between $125 million and $155 million, with headline earnings per share (“HEPS”) between 30 US cents and 37 US cents, a decrease of between 48% to 58% from the comparative period. Headline earnings and HEPS for the comparative period were $300 million and 71 US cents, respectively.”
AngloGold Ashanti

According to AngloGold Ashanti, the significant decrease in earnings is attributed to various factors, including non-cash impairments and derecognitions at the company’s Brazilian operations, amounting to $103-million net of tax.

These impairments are linked to operational underperformance at the Córrego do Sítio and Cuiabá’s Queiroz metallurgical plant, which suspended operating activities during the design and completion of the buttress at the Calcinados tailings storage facility (TSF).

Legacy TSFs No Longer In Use Derecognised

Additionally, legacy TSFs no longer in use were derecognised. Furthermore, both basic and headline earnings were adversely affected by higher non-cash environmental provisions of $38-million net of tax. These provisions were implemented following new legislation in Brazil relating to emergency response and safety management for TSFs.

Other contributing factors to the decline in earnings include industry-wide inflation, increased operating costs, higher investment in exploration and evaluation costs, the transition to third-party gold concentrate sales at the Cuiabá mine complex, and the Siguiri carbon-in-leach (CIL) tank failure that occurred in May this year.

On the operational front, AngloGold expects to report gold production of about 1.24-million ounces, a slight increase on the 1.23-million ounces reported in the same period last year, 2022.

The growth in gold production was attributed to a stronger second quarter, with higher contributions from Obuasi, Sunrise Dam, Geita, Iduapriem and Tropicana.

However, this increase was partially offset by lower tonnes processed at AGA Mineração following the transition to gold concentrate sales and planned mill shutdowns at Geita.

Additionally, the CIL tank failure at Siguiri temporarily affected production, but it has since been repaired.

AngloGold’s share price on the JSE fell by more than 8 percent, following the announcement of the company’s trading statement.

AngloGold Ashanti is an independent, global gold mining company with a diverse, high-quality portfolio of operations, projects and exploration activities across nine countries on four continents. The projected decline in earnings is expected to have a significant impact in the shares of the AngloGold Ashantiin the short run.