AngloGold Flips to Profit Ahead of Leadership Handover
(Bloomberg) -- AngloGold Ashanti Ltd. swung to a profit and is in “good shape” before its incoming chief takes the helm, according to outgoing Chief Executive Officer Srinivasan Venkatakrishnan.
AngloGold’s output rose, costs dropped and it reduced net debt in the first six months of the year, the Johannesburg-based company said in a statement Monday. That’s a sharp reversal from a year ago, when it posted a first-half loss, dragged down by faltering output and surging costs at its underperforming South African mines.
Since then, the producer has sold and closed operations in its home country, which now accounts for about 13 percent of total output. Full-year production will be at the top end of the forecast range and costs are likely to be at the bottom of previous estimates, AngloGold said. The company has also started preparations to redevelop its idled Obuasi mine in Ghana after receiving government approvals.
“Most of the heavy-lifting has already been done,” Venkatakrishnan told reporters on a conference call, commenting on efforts to improve operations and resolve a raft of disputes with host governments. “I would have ideally have liked to have a number of things resolved, but it’s like writing an exam, you wish you had more time.”
The CEO will leave at the end of this month and be replaced by Barrick Gold Corp.’s Kelvin Dushnisky.
Production from AngloGold’s operations in the rest of Africa is expected to expand to more than 50 percent of the total as output ramps up at the Siguiri mine in Guinea and Kibali in the Democratic Republic of Congo and as Obuasi restarts in 2019, Venkatakrishnan said.
“The business is in good shape,” he said in an earlier statement. “Production is strong, costs are improving and our pipeline is well stocked with options.”
Still, Dushnisky’s job won’t be without challenges.
AngloGold and its partner on Kibali, Randgold Resources Ltd., are trying to persuade the Congolese government to revise new regulations that increase taxes and may pursue international arbitration, Venkatakrishnan said. The company has already filed for arbitration in a dispute with the government of Tanzania and may rethink development at the Sadiola mine in Mali if authorities don’t agree to fiscal agreements and approvals.
Dushnisky will contribute “good negotiation skills,” Venkatakrishnan said.
AngloGold reported adjusted headline earnings, which exclude some one-time items, of $85 million for the six months through June, compared with a loss of $93 million a year earlier. Net debt dropped 17 percent year on year, to $1.79 billion, the company said.
So-called all-in sustaining costs fell 5 percent from a year earlier to $1,020 per ounce and production from retained operations rose 4 percent. For the full year, AngloGold has forecast all-in sustaining costs of $990 to $1,060 an ounce and production of 3.33 million to 3.45 million ounces.
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