AngloGold Ashanti CEO Kelvin Dushnisky
Photo by: Bloomberg
JSE- and NYSE-listed AngloGold Ashanti achieved a 156% year-on-year increase in free cash flow to $87-million for the third quarter, ended September 30.
This was, however, offset by higher capital expenditure and operating costs and lower gold sales.
Its gold production decreased by 3% year-on-year to 825 000 oz for the quarter.
Production for the quarter was impacted on by the planned reduction in output from Cerro Vanguardia, in Argentina, which now produces fewer by-products and at lower grades; Kibali, in the Democratic Republic of Congo, where openpit mining ccontributed fewer ounces off the high base achieved in the comparable quarter last year; and Mponeng, in South Africa, where grades were lower than in the prior comparable quarter.
Stabilisation of the Siguiri combination plant, in Guinea, proved challenging, particularly given ore variability aggravated by high rainfall and associated delays in the crushing circuit caused by wet fines.
“The site team has taken remedial steps and is optimising hard-rock throughput ahead of an expected recovery in both cost and production through the balance of the year and into 2020,” AngloGold said last week.
It added that strong performances were achieved at Geita, in Tanzania, and AGA Mineração and Serra Grande, in Brazil, during the third quarter.
However, given the lower production, total cash costs for the company came in at $786/oz, which was 9% higher than the $722/oz reported in the prior comparable period.
All-in sustaining costs rose 12% year-on-year to $1 031/oz in the quarter under review, compared with $920/oz in the prior comparable period, mainly owing to an increase in total cash costs.
The company noted that costs were also impacted on by lower grades, inflation, lower silver by-products from Cerro Vanguardia, and higher royalties, more than offsetting benefits from exchange rates, throughput volumes and efficiencies.
AngloGold maintained its production guidance for the full year at 3.25-million ounces, albeit in the lower half of the range for production and at the upper end of the range for costs.
The company expects production increases from Geita and Siguiri and from the Australian and Brazilian operations in the fourth quarter.
Meanwhile, the company’s 4 000 t/d Obuasi redevelopment project, in Ghana, is progressing within budget and is on schedule for the first gold pour by the end of the year, while Phase 2 is on track to be completed by the end of next year.
Twenty per cent of Obuasi’s $545-million capital cost was spent in 2018, while 50% was spent this year, with the balance earmarked for next year.
“The team has made extraordinary progress towards meeting the year-end target of bringing this world-class orebody back into production.
“The fact that we’ve generated strong cash flow and improved our balance sheet while making this investment is testament to the strength of our portfolio,” CEO Kelvin Dushnisky commented.
He noted that cash flow was also supported by a strong average gold price of $1 464/oz during the quarter, which was 22% higher year- on-year.
AngloGold is, meanwhile, also continuing with its asset disposal plans.
Earlier this year, it initiated processes to review divestment options for its entire business in South Africa and its interests in Sadiola, in Mali, and Cerro Vanguardia in a strategic move to streamline its portfolio, optimise capital allocation and increase its focus on areas with the greatest long-term potential for value-adding growth.
These divestment processes are active and continue to make progress. In South Africa, the process has moved forward at a steady pace, with site due diligence by prospective bidders now complete.