JOHANNESBURG (miningweekly.com) – South Africa’s largest gold-mining company AngloGold Ashanti announced full-year adjusted headline earnings of $924-million on Wednesday, the second-highest on record, despite a difficult year in which an unprotected strike and safety stoppages caused major disruption to its South African operations.

“AngloGold Ashanti continues to deliver the best returns on capital amongst the gold majors, which reflects strict discipline in capital deployment over the past five years,” said outgoing CEO Mark Cutifani, who takes over as CEO of Anglo American on April 3. 

“That’s been core to our strategy since early 2008, when we outlined our vision for the company.”

The company was planning to deliver higher-margin production from its South African mines, which were shuttered by a strike between the end of September and the beginning of November.

Exploration spend across the group had been rationalised, corporate and operating costs were undergoing a review, some assets deemed to be noncore were being considered for sale and capital expenditure (capex) had been prioritised.

“We’ve moved decisively to ensure that we continue a strong recovery from a difficult end to last year,” joint interim CEO Tony O’Neill said. 

O’Neill has had oversight of all operating and exploration functions while fellow joint interim CEO Srinivasan Venkatakrishnan has had accountability for all financial and corporate matters.

Adjusted headline earnings for the year were $924-million, or 239 US cents a share, which included $208-million lost to the strike, compared with $1.3-billion, or 336 US cents a share in 2011.

Production in 2012 was 3.94-million ounces at a total cash cost of $862/oz, which included about 235 000 oz lost to the strike, compared with 2011 production of 4.33-million ounces at a cash cost of $728/oz .

The company said that it continued to seek to better the quality and diversity of its portfolio. Its main greenfield projects at Tropicana, in Australia, and the Kibali joint venture, in the Democratic Republic of Congo, remained on track to produce gold within a year.

The expansion of Cripple Creek & Victor mine, in the US, also remained on schedule.

Production in 2013 was anticipated to grow to between 4.1-million ounces and 4.4-million ounces at an improved total cash cost of $815/oz to $845/oz.

More focused investment in the business had helped the company to forecast stable capex of $2.1-billion for 2013.

Corporate costs were expected to decline by about 18% to $240-million.

Spending on exploration and feasibility studies was forecast at about $377-million, 18% lower than in 2012.

“Our focus is on improving margins and delivering returns, rather than production growth, and that will continue to drive our decision making,” Venkatakrishnan said, adding that the company had good projects and a solid financial base.

Its underground development contract with Mining and Building Contractors at Obuasi mine in Ghana had been terminated in an effort to improve production and costs.

Geita, in Tanzania, was the group’s largest production contributor, improving yearly production by 7% to 531 000 oz at a total cash cost of $660/oz.

Production for the year rose in the America’s region from 891 000 oz to 953 000 oz and the Australian operations increased output to 258 000 oz from 246 000 oz.

Fourth Quarter

Fourth-quarter adjusted headline earnings were $7-million, or $0.02c a share, compared with $295-million, or $0.76c a share in the fourth quarter of 2011.

The earnings were affected by the lower volumes and higher cash costs during the quarter, reflecting the impact of the strike in South Africa, which eroded $208-million of earnings; the change-over of the mine development contractor at Obuasi; as well as other factors which had a negative impact.

A strong performance from the Americas region was primarily offset by the strikes in South Africa.

Despite challenges faced in South Africa, Standard & Poor’s affirmed the investment-grade rating on AngloGold Ashanti’s publicly traded debt following an extensive review.

At Tropicana, one-million ounces were added to the resource and the group achieved its lowest quarterly injury frequency rate on record at 6.17 per million hours worked.