AngloGold expects spike in annual earnings
Miner predicts $910m-$982m in earnings from continuing operations compared with $364m before
AngloGold Ashanti, the world’s third-biggest gold miner, expects its annual earnings to more than double, despite a dip in output due to the Covid-19 pandemic.
AngloGold has much noise in its 2020 annual results due to the sale of its mines in SA and Mali, resulting in financials split between continued and discontinued operations.
The process of clearing the portfolio of expensive operations is complete, with the biggest sale being the $300m disposal of all its SA assets to Harmony Gold, marking the end of decades of mining in the country that gave it the platform and money to build a large international footprint.
The market is widely anticipating the company to shift its primary listing from Johannesburg, possibly to London, to better reflect the international nature of its business, which has assets in Africa — the main source of its gold — Australia and South America. AngloGold has made clear this is not a priority.
There is an outside chance that a permanent CEO could be announced on February 22. Canadian Kelvin Dushnisky resigned unexpectedly last year after less than two years in the position. He was soon followed by chair Sipho Pityana, who was replaced quickly by Maria Ramos. The CEO role has been temporarily filled by CFO Christine Ramon.
Focusing on its continuing operation, AngloGold said it expects basic earnings for the year to end-December of $910m-$982m compared with $364m a year earlier.
Headline earnings, which account for one-off items, are expected to be $962m-$1bn after $379m before.
The main drivers were a 27% increase in the gold price AngloGold received during the year and currencies that were weaker against the dollar in the jurisdictions in which it has mines, the company said.
AngloGold also received a $110m dividend payment from its Kibali joint venture with Barrick in the Democratic Republic of the Congo.
AngloGold realised a profit of $18m on the sale of its Sadiola and Morila interests, while it recorded a $81m loss on the sale of its SA assets to Harmony Gold. AngloGold reversed a $17m impairment of its mines in SA.
Looking at gold production for the year, AngloGold noted it will report output of 3.037-million ounces, down from 3.281-million ounces before, mainly because of the disruptions to its mines from the pandemic and the sale of the SA mines.
“AngloGold Ashanti delivered a solid production performance for the year, taking into consideration the challenges created by the pandemic,” the company said.
The standout performance came from the Geita mine in Tanzania, with record output.
The redesigned and restarted Obuasi mine in Ghana generated 127,000oz of gold during the year. This meant AngloGold was no longer paying $47m a year towards caring for and maintaining the operation.
The level of output was lower than the 147,000oz expected, said Renaissance Capital analysts who noted AngloGold had flagged disruptions in Ghana caused by the pandemic, which interrupted the delivery of equipment and the arrival of skilled people.
The Obuasi mine had been a perennial underperformer, prompting AngloGold to close the operation to redesign it so it could reach its full potential.
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