AngloGold Ashanti’s earnings jump as Kibali’s production ramps up

AngloGold Ashanti share price fell as much as 9% on Monday, despite the company saying it expects a more than seven-fold surge headline earnings per share (HEPS) for the year to end-December.

The ramping up of production at AngloGold Ashanti’s Kibali mine in Democratic Republic of the Congo (DRC) lifts the company’s bottom line, as did lower development costs at an ore development project in Brazil.

Cost-savings were due to the closure of the company’s Tautona mine in 2017, as well as increased production at new assets, notably Kibali. This mine delivered income of $95m during the period, or 23c per share in earnings.

AngloGold Ashanti expects to report headline earnings of between $297m and $227m during the period, between a 666% and 729% increase on the previous comparable period. Basic earnings are expected to rise to between $129m and $137m, after the previous comparative period’s basic loss of $191m.

A once-off payment of $46m, or 11c per share, weighed down the company’s performance in the 2017 financial year. The costs were related to a settlement of silicosis class-action claims, and related expenditures.

The company is in the process of rationalising its 14 assets, saying that this number may be inappropriate given its size.

AngloGold Ashanti’s share price reached an intraday low of R172.02 at 12.17pm on Monday. The company’s share price rose 41.31% during 2018, lifted by a rising bullion price, which is hovering at an eight-month high this week.

gernetzkyk@businesslive.co.za