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AngloGold Ashanti
Precious Metals  
21 August 2017

AngloGold Ashanti sees strong Q2 operating recovery; projects on track

Triple-listed AngloGold Ashanti has achieved a strong Q2 operating recovery, set new safety records and kept all of its brownfield projects on budget and on schedule.

AngloGold Ashanti has delivered gold production of 1.748 Moz for the first half of the year. AngloGold Ashanti also maintained its full-year cost and production guidance.

“We saw an exceptionally strong operational recovery in the second quarter after a slow start to the year, and we achieved that whilst setting new safety benchmarks across our portfolio,” states AngloGold Ashanti CEO, Srinivasan Venkatakrishnan.

“Our brownfield projects are on budget and on schedule, and we are working diligently to maintain this strong momentum through the rest of the year. We continue to focus on our long-term strategy of improving the underlying quality of our portfolio through investment in high-return projects and removal of loss-making ounces.”

Production was 1.748 Moz at a total cash cost of $796/oz for the six months ended 30 June 2017, compared to 1.745 Moz at $706/oz in the first half of last year.

AISC for the six months ended 30 June 2017 were $1,071/oz compared to $911/oz in the first half of last year, reflecting the impact of stronger operating currencies, lower grades, cost inflation and the planned increase in sustaining-capital expenditure.

AngloGold Ashanti has significantly increased capital expenditure in the first half of 2017, investing in a slate of self-funded, high-return brownfields projects at its international operations, to improve the quality of its portfolio by extending mine lives and improving margins.

AngloGold Ashanti has also taken steps to remove loss-making ounces from some of its older mines.

Capital expenditure (including equity accounted investments) rose 43%, from $318 million in the first half of last year, to $454 million for the six months ended 30 June 2017.

The increase was largely due to increased spend on asset improvements aimed at improving mine lives and costs profiles across the portfolio.

For the first time ever, three back-to-back quarters passed with no fatal accident at any of AngloGold Ashanti’s operations, including its ultra-deep South African mines which registered 339 days fatality-free at the end of June 2017.

Every operation surpassed a million fatality-free shifts.

Yatela, Geita, Iduapriem, Obuasi, La Colosa, Gramalote, Quebradona and Greenfields exploration ended the second quarter with no injuries at all.

Group production in the first six months of 2017 was marginally higher than in the first six months of last year.

The slow production from the South African operations was offset by another strong performance from the international operations, with Siguiri achieving a 25% increase in production due to higher grades.

Iduapriem, Kibali, Tropicana and AGA Mineração also reported solid performances.

AngloGold Ashanti recovered from the first quarter under-performance, with second quarter production increasing 11% to 918 000 oz, from 830 000 oz in the first quarter.

Adjusted earnings before interest, tax, depreciation and amortisation was $610 million for the first six months of 2017, down 22% from $781 million for the first half of last year.

The adjusted EBITDA excluded the impact of the South African redundancy costs and impairments but included the impact of the estimated provision in respect of the silicosis class-action and related costs of $63 million.

The ratio of net debt to adjusted EBITDA at 30 June 2017 was 1.56 times compared with 1.44 times at 30 June 2016. The current net debt to adjusted

EBITDA ratio falls well below the covenant ratio of 3.5 times which applies under the company’s revolving credit facility agreements (RCFs), highlighting the success of AngloGold Ashanti’s continued efforts to maintain financial flexibility.

The guidance for the full year remains unchanged as follows:

  • Production between 3.6 Moz and 3.75 Moz
  • Capital expenditure between $950m and $1,050m
  • Total cash costs between $750/oz and $800/oz; and
  • AISC between $1,050/oz and $1,100/oz, assuming average exchange rates against the US dollar of 13.20 ZAR (Rand), 3.20 BRL (Brazil Real), 0.77 AUD (Aus$) and 16.75ARS (Argentina Peso), with oil at $48/bl on average for the year

Feature image credit: AngloGold Ashanti

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