JOHANNESBURG (miningweekly.com) – Gold mining company AngloGold Ashanti is working hard to be a solid, predictable business that generates value through the cycle, CEO Kelvin Dushnisky emphasised to journalists on Thursday, as the company proceeded to dispose of all of its remaining South African assets, along with holdings in Argentina and Mali.

While Dushnisky emphasised that the assets would be retained if the bids for them failed to reflect their value, he spoke of being pleased with the high level of interest from credible parties in AngloGold’s last two South African mining assets – Mponeng, the world’s deepest mine, and surface operations, which include Mine Waste Solutions.

The South Africa region’s operations, which last year produced 487000 oz at a total cash cost of $1 033/oz, employ 6 000 people, 5 500 at the assets.

In 2018, AngloGold sold South Africa’s Moab Khotsong mine to Harmony Gold and the Kopanang mine to Heaven-Sent SA Sunshine for R3.574-billion.

Dushnisky fielded questions on the potential change effect the rising gold price might have on the Johannesburg- and New York-listed company’s divestment programme.

While the rising gold price was showing good potential to hold at the $1 500/oz level, that did not change the company’s divestment plans “by one iota”, Dushnisky reiterated during the conference call in which Mining Weekly Online participated.

“We’ve received interest from very strong and credible parties and we’re very pleased with the high level of interest,” he said of the bids in so far.

The South African asset divestment process is the newest in the chain and “a very high level of interest has surfaced”, he added.

“We opened the data room in July. We’ve been going through a series of management presentations and we’re very pleased with the early start to the process. But, at the end of the day, if we don’t see a bid that we think is adequate, we’re also happy to own these assets and we’ll continue to run them well and to generate cash from them.

“Mponeng is a great asset and it’s just a matter of us having other priorities in the portfolio. We feel that the asset could represent greater value in the hands of another company,” he commented to Mining Weekly Online.

Two separate processes are under way for the disposal of the holdings in Cerro Vanguardia, in Argentina, and Sadiola, in Mali.

“We’ve been in discussions and have indicative bids for those assets and those discussions are ongoing and we’ll continue those discussions over the course of the next period.

“We’ve been clear from the start that we put these assets up for sale. They’re valuable assets. This is certainly no fire sale. We put them in for sale for strategic reasons. We haven’t adjusted our thinking at all regarding the process. We’ll see. At the end of the day, we have to be comfortable that the bids represent full value for our shareholders. If they do, we’ll transact, and if they don’t, we’re happy to keep owning those assets. We’ve been very clear on that,” he said.

For the rest of the business, which includes Sunrise Dam and Tropicana in Australia, Geita in Tanzania, Siguiri in Guinea, Iduapriem in Ghana and Kibali in the Democratic Republic of Congo, management is tightening its rein on costs and capital allocation and keep a close eye on margins to ensure optimum leverage.

“We’re working hard to be a solid, predictable business that generates value through the cycle,” Dushnisky said of the company that has capital allocation criteria of 15% after-tax return on a $1 200/oz gold price. 

“While we know we’ll be a beneficiary of a higher gold price, we’re not relying on it. We’re going to maintain our discipline and what we really want to do is to be in a position to provide margin and that’s the reason people invest in us. I do think there is strong potential for the gold price to stay at these levels for some period.

“We’re certainly seeing the effects on the gold price of the US-China relations and there is a lot of instability in the world right now and we expect that’s going to support the gold price. But, again, we’re focused on running our business as best we can and we’ll benefit from the price rise,” he said, adding that the company would be continuing to chip away at reducing its debt down to one.

The company, which is maintaining guidance and which is expecting strong second-half production, is on schedule for a gold pour at Obuasi in Ghana at the end of this year and to ramp up in 2020 from 2 000 t/d to 4 000 t/d.

“What’s really driving us is the ramp-up to full production. From that perspective, we feel quite confident,” he said.

With regard to where the ultimately streamlined AngloGold Ashanti could be primarily listed, Dushnisky said nothing that potentially improved shareholder value was ever off the table, but that there would always be a link to the Johannesburg Stock Exchange (JSE): “We’ll always have a listing on the JSE, full stop,” he affirmed.