AngloGold assets in for a shake-up under new CEO Kelvin Dushnisky
CEO Kelvin Dushnisky delivers his first results and tells investors to expect strong production and lower costs for the full year
AngloGold Ashanti, the world’s third-largest gold miner, has started the shakeup of its global mining portfolio, putting its shared Malian mine up for sale as new CEO Kelvin Dushnisky says 14 mines “feel a bit heavy”.
Dushnisky, a Canadian who was president of Barrick Gold until two months ago, replaced AngloGold stalwart Srinivasan Venkatakrishnan, who drove a tough programme of selling and closing mines, cutting costs and reducing debt as well as triggering a $450m-$500m investment in restarting the problematic and suspended Obuasi mine in Ghana.
”It’s not about the specific number of mines, but as I survey the landscape, what I’d like is for us to consider whether there are assets that are valuable but which could have more value in another company’s portfolio and allow us to take proceeds from a divestment and reinvest it in our portfolio,” Dushnisky said in an interview.
AngloGold's 14 mines span Africa, Australia and South America.
“I'm all about focus. We want to put our attention into areas where we want to generate a critical mass, areas where we see strong geological potential, ore body optionality to allow us to extend mine lives and increase margins. It would be a constant review and portfolio management as we go forward.
“There’s some opportunity to tighten up the portfolio a little. We’ve initiated a process to review our strategic options around the Sadiola mine. That is a good example of what I’m describing.”
An agreement with the Malian government has not been reached on investment terms to develop a deeper-level mine at Sadiola and extend its life.
AngloGold, which jointly holds 82% of Sadiola with Canada’s Iamgold, has said the operation that started in 1996 would be put on care and maintenance by the middle of 2019 once stockpiles have been depleted if there was no agreement with the government for developing an underground mine.
AngloGold was unlikely to take part in mergers and acquisitions to grow its production and would instead rely on a strong pipeline of exploration prospects in the US, with properties in Nevada and Minnesota suggesting promising opportunities, while in Colombia there was a long-running exploration programme that Dushnisky was keen to advance.
AngloGold would not shy away from joint ventures to bring new mines into production, he said.
AngloGold advised the market to expect its full-year production to be towards the upper end of its forecasts, which were pegged at between 3.325-million ounces and 3.45-million ounces, while costs were seen to be trending lower for the 12 months.
In the September quarter AngloGold produced 851,000oz of gold at an all-in sustaining cost of $920/oz. Stripping out the South African mines sold and closed earlier in 2018 to give a like-for-like comparison, AngloGold’s production in the same quarter a year earlier was 853,000oz at a cost of $1,031/oz.
The standout mines during the quarter were SA’s Mponeng — the world’s deepest mine at 4km below surface — Kibali in the Democratic Republic of Congo, Iduapriem in Ghana and Tropicana in Australia.
There were no intentions of disposing of Mponeng, Dushnisky said. “A single asset in a jurisdiction that has the potential for longer mine life and margin improvement that certainly accords with what we are looking for. We'll take them on a project-by-project basis.”
In SA, where AngloGold was planning to cut up to 2,000 jobs to better match its mining footprint, after asset sales and voluntary severances, the number of forced retrenchments would involve fewer than 200 people.