AngloGold Ashanti plant and open pit at Geita
AngloGold Ashanti, the international gold major, revealed that it successful cut its net debt by 30% last year from US$3.13 billion in 2014 to $2.19 billion.
AngloGold Ashanti plant and open pit at Geita
As pictured above, photograph shows AngloGold Ashanti plant and open pit at Geita, one of the company’s top performing mines

This achievement was in spite of increased margins and lower gold prices.

The company also announced that it generated free cash flow of US$160 million in its fourth quarter to December 2015.

AngloGold Ashanti delivered on a range of self-help measures last year to reduce its debt over the years using internally generated funds, without diluting shareholders. The Cripple Creek & Victor mine in the United States was sold for $820 million plus a royalty, and most of the proceeds were used to buy back a portion of the company’s most expensive debt.

At the same time, a strong performance from the company’s international mines helped expand margins even as gold prices fell.

[quote]”We’ve again shown consistency in hitting our production guidance, beating cost estimates, delivering free cash flow and delivering a sharp reduction in net debt levels,” says CEO Srinivasan Venkatakrishnan. “We achieved all of that despite lower gold prices.”

All-in sustaining costs (AISC) improved to an average of $910/oz in 2015, more than 11% lower than the $1 020/oz recorded the previous year, and lower than guidance of $950 – $980/oz.

Production of 3.95 Moz was at the top end of guidance of 3.8 Moz – 4 Moz.

AngloGold Ashanti has for 12 consecutive quarters either met, or beaten, its cost and production guidance.

The significant year-on-year improvement in AISC reflects an especially strong showing from AngloGold Ashanti’s international operations, which saw their AISC for the year fall by more than 16% to $822/oz.

Geita was once again a standout performer in Continental Africa, with AISC of $717/oz, whilst the American operations as a whole had AISC of $792/oz.

South Africa still AngloGold Ashanti’s weak link

The robust performance of the international operations once again offset a drop in output at the South African operations to 1.004 Moz, from 1.22 Moz in 2014 – due mainly to a combination of lower grades and safety-related disruptions during the year.

The full-year AISC of $1 088/oz at the South Africa operations was $24/oz higher than the previous year, reflecting the weaker operating performance, which was only partially offset by the weaker Rand.

The fourth quarter showed an improving trend, however, with the South African operations reporting AISC of $988/oz.

Adjusted earnings before interest, tax, depreciation and amortisation (adjusted EBITDA) for the full year was $1. 47 billion, compared to $1.61 billion in 2014, reflecting lower production year-on-year and weaker average price received.

Free cash flow for the full year improved to $141 million compared with an outflow of $112 million in 2014. This despite an 8% drop in the gold price.

2016 outlook

Production guidance for 2016 year is estimated to be slightly lower between 3.6 Moz and 3.8 Moz.

Total cash costs are estimated to be between $680/oz and $720/oz and all-in sustaining costs between $900/oz and $960/oz.

Capital expenditure is anticipated to be between $790 million and $850 million, of which $120 million – $140million is earmarked for projects.