AngloGold sells another mine as new CEO tightens grip
Kelvin Dushnisky has put a second mine up for sale as he tackles an ‘asset heavy’ portfolio of 14 mines
AngloGold Ashanti put a second mine up for sale as new CEO Kelvin Dushnisky makes his presence felt.
The Cerro Vanguardia mine in Argentina joins Sadiola in Mali on the selling block as Canadian Dushnisky tightens AngloGold’s portfolio six months into the job.
“It’s not going to be a big bang approach,” he said on a media call in his maiden results presentation, calling the portfolio “asset heavy”.
“It can benefit from streamlining,” he said. “There will be no fire sales. It will be systematic and measured. We are considering divestments for strategic reasons. Our balance sheet and liquidity are in great shape, so we’re not pressed into anything.”
Cerro Vanguardia, which has been in the AngloGold portfolio for two decades and remains a profitable asset, is a standalone mine and there was no option to build critical mass around it as the new strategy demanded, Dushnisky said.
Asked if Mponeng and its tailings business in SA were also up for sale, Dushnisky said the world’s deepest mine (4km) had turned cash positive at the end of 2018 and had eight years of profitable mining before a decision had to be made on a heavy capital investment programme.
The “laser focus” on the company was delivering the Obuasi mine in Ghana, advancing exploration, and re-evaluating the suite of assets in the company and pulling them down the cost curve. There are two projects in Colombia that AngloGold has in feasibility study.
AngloGold, reporting its full-year results to end-December, reported a 95c dividend and a post-tax profit of $150m from a $171m loss before.
Once the Obuasi mine, which is being rebuilt in Ghana, is in production and generating cash in 2020, the returns to shareholders could be increased, Dushnisky said.
Dushnisky has lowered the net debt to earnings before interest, tax, depreciation and amortisation (ebitda) target to one times from 1.5 times, which he said better suited a company exposed to a single, volatile commodity.
During 2018, that ratio fell to 1.12 times from 1.35 times, with net debt reduced by 17% to $1.66bn. Free cash flow improved to $67m from $1m the year before.
AngloGold would provide an update on the Sadiola sale process during the first half of the year after putting the mine up for sale at the end of 2018, while Dushnisky expected the Cerro Vanguardia mine to be sold during the course of 2019.