AngloGold Ashanti nearly doubled free cash flow in 2019 to $127 million, raised its dividend and improved leverage to below its target level after a higher gold price and improved efficiencies helped ensure exceptional performances at a number of its key mines.
The Company’s safety performance was also the best on record.
The Company worked to deliver its strategic objectives, meeting guidance on its key operating metrics for the seventh straight year; concluding agreements to sell its South African portfolio and the Sadiola mine in Mali; lowering debt; adding reserves at its retained assets after accounting for depletion; and restarting its Obuasi mine in Ghana on schedule and on budget.
Read more about mining in West Africa
The annual dividend increased by 74% to 165 ZAR cents per share (approximately US 11 cents per share).
“We’re working hard to deliver on our strategy and to capture the wider margin in this strong gold price environment,” CEO, Kelvin Dushnisky said.
“We’re generating strong cash flow from our operations, and that’s allowing us to increase returns to shareholders, strengthen our balance sheet and invest in our ore bodies.”
AngloGold Ashanti invested sustaining capital of $494 million in 2019 and has forecast an increase to between $640 million and $670 million in 2020.
The additional investment will help the Company convert existing resources into additional ore reserves and increase development at its key mines.
The added reserves extend mine lives, while more development will allow greater operating flexibility, which in turn will translate into more efficient and predictable cost and production outcomes.
Read more about gold mining
Production was 3.281 Moz at a total cash cost of $776/oz in the 12 months through 31 December 2019, from 3.400 Moz at $773/oz in the previous year.
AISC was $992/oz for the year ended 31 December 2019, compared to
$976/oz for the previous year.
Headline earnings of US 91 cents per share, were up 72% from the previous year, while free cash flow before capital expenditure on growth projects, rose 106% to $448 million.
The Company reported exceptional performances from its Geita, Kibali, Tropicana and Iduapriem mines, with production and efficiency gains partly offset by operating challenges at its Siguiri and Sunrise Dam mines.
The balance sheet continues to improve as stronger cash flows helped with the continued reduction in Adjusted net debt. Adjusted net debt to Adjusted EBITDA was 0.91 times at year end, below targeted levels of 1.0 times through the cycle.
Adjusted net debt was 5% lower at $1.581 billion at year end, down from $1.659 billion at 31 December 2018.
Production for the second half of 2019 was 1.727Moz at a total cash cost of $762/oz, compared to 1.772 Moz at $726/oz for the last six months of 2018. AISC was $981/oz for the last six months of 2019, compared to $936/oz for the same period in 2018.
Adjusted EBITDA was $1,033m during the second half of 2019, compared to $756 million during the second half of 2018. Free cash flow of $159 million was generated in the second half of 2019, compared to $118 million for the second half of 2018.
AngloGold Ashanti’s safe production strategy, along with targeted safety campaigns, have helped ensure a record safety performance for the Company.
For the first time in its history, AngloGold Ashanti passed a calendar year without a workplace fatality and injury rates declined by almost two thirds since 2012. While these are important milestones, the pursuit of zero-harm remains in sharp focus.
Production guidance for the 2020 year is estimated to be between 3.050 Moz and 3.300 Moz.
Total cash costs are estimated to be between $775/oz and $825/oz and AISC between $1,040/oz and $1,100/oz at average exchange rates against the US Dollar of 15.00 (South Africa Rand), 3.95 (Brazil Real), 0.70 (Australia Dollar) and 70.00 (Argentina Peso), with oil at $65/bbl average for the year, based on market expectations.
Total capital expenditure is anticipated to be between $920 million and $990 million, with AngloGold Ashanti prioritising investment in growing its Ore Reserves and improving operating flexibility by investing in Ore Reserve Development and Reserve Conversion at sites with high geological potential.
The increase in sustaining capital for 2020 includes around $30/oz to facilitate additional exploration and development.
Two projects are being advanced simultaneously in Colombia, with the completion of feasibility studies expected by year end 2020 for both Quebradona and Gramalote, the latter now managed by B2Gold Corp.