AngloGold Ashanti (NYSE: AU) Announces Record 2nd-Quarter Earnings on
Higher Production, Gold Price
JOHANNESBURG, SOUTH AFRICA--(Marketwire - July 31, 2009) - AngloGold
Ashanti Limited (NYSE: AU) reported an 11% increase in second quarter
adjusted headline earnings to a record, after improved performance
from its Tanzanian and Ghanaian regions helped boost production.
Adjusted headline earnings increased to $167m, or US47 cents a share
in the three months to 30 June, compared with $150m, or US42 cents,
in the previous quarter.
"We saw a strong operating performance across most of the operations
and a nice sweetener from our received gold price," Chief Executive
Officer Mark Cutifani said. "We're seeing the results of our
interventions in the continued improvements at Obuasi and the early
signs of a recovery at Geita are also very encouraging for us."
AngloGold Ashanti's production during the period rose to 1.127Moz at
a total cash cost of $472/oz, from 1.103Moz at $445/oz in the prior
quarter. Higher production and lower costs were realised in South
America and in Africa, outside of South Africa.
The company has appointed new management this year to oversee its
operations in Ghana and Tanzania, part of its strategy to ensure
appropriate skills at each level in the organization. Obuasi reported
a 10% rise in production to 101,000 ounces and a 16% drop in cash
costs to $589/oz, while Geita posted a 43% increase in production to
63,000 ounces and a 14% decline in costs.
The company's West Wits operations in South Africa raised production
by 7%, despite the large number of public holidays around Easter and
the general election. The Vaal River operations, however, reported a
15% decline in output and a commensurate increase in costs, largely
due to safety-related stoppages.
Eight of our colleagues tragically lost their lives across the
company's operations during the quarter. This safety performance is a
matter for concern and AngloGold Ashanti's management has intensified
its efforts to improve overall safety across its operations.
Interventions have been made with teams that have had the highest
accident rates to effect rapid improvements. A broader strategy to
better the organisation's safety performance will be implemented in
the first quarter of 2010. It is important to note that AngloGold
Ashanti's lost time injury frequency rate, a broad measure of overall
safety performance, declined 19% during the quarter to its lowest
level ever. There have been no fatalities since June 2.
The safety stoppages, combined with mill repairs in the first quarter
at Geita and lower-than-anticipated recoveries from the Cripple Creek
& Victor in the U.S., have necessitated the adjustment of full-year
guidance to 4.7Moz - 4.8Moz from the original target of 4.9Moz -
5.0Moz. For the third quarter, production is estimated at 1.2 million
ounces at a total cash cost of approximately US$530 per ounce,
assuming an average rand exchange rate of R8.10 to the US dollar for
The average price received during the quarter increased by 5% to
$897/oz, achieving a 3% discount to the spot price.
Following the successful issue of a five-year convertible bond and
receipt of the first tranche of the proceeds from the sale of its
Boddington stake, the company used $797m of its internal cash
reserves to restructure its hedge book during July.
"We've worked hard to strengthen our balance sheet and that gave us
the flexibility to skin the hedge book by getting it well below one
year's production," Cutifani said. "The market fundamentals are
extremely robust for gold, so we decided to move aggressively sooner
rather than later."
The restructuring affected about 1.4 million ounces, reducing the
overall hedge commitment to 4.47 million ounces at July 25, less than
one year's production. The committed ounces are expected to decline
further, to 4.1 million ounces by the end of 2009, a year ahead of
The company now expects to achieve a 7% discount to spot gold prices
at $950/oz gold price, with the hedge book
reducing by approximately 800,000oz a year, until it winds up at the
end of 2014.
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This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.