AngloGold Ashanti has reported improved operational performance for the first half of 2024, after the successful turnaround of its Brazilian operations.
The increased production and higher gold prices put the group in a good position, ending June with a liquidity of $2.3bn (R42.59bn).
Production increases were led by a successful turnaround of Brazil operations, which saw production increasing 15% year on year for the six months ending June. Brazil operations also saw a free cash flow turnaround of $193m for the period, with total cash costs falling 18% year on year.
The past two years have seen AngloGold’s Brazil operations dragged down by the Córrego do Sítio (CDS) mine.
Sustained losses and low production saw the CDS mine reporting $30m in negative free cash flow for the first half of 2023, with the group at the time saying “the mine has been unable to sustain itself or to fund the capital needed to ensure its long-term future”.
According to Reuters, AngloGold CEO Alberto Calderon initially planned to divest the CDS mine, but failed to attract buyers. Instead, it was temporarily closed and put on “care and maintenance”, a process that aims to preserve vital infrastructure while gold is not being produced. This also involved reducing the mine’s workforce.
“We took decisive steps last year to restructure our business in Brazil after a sustained period of losses,” Calderon said. “That created the foundation for this step-change in operating performance, which we will look to improve further.”
In addition to Brazil, the second quarter saw significant turnarounds in Australia, where operations recovered firmly from floods at the end of the first quarter. Production was up 38% quarter on quarter for Australia’s Tropicana site, and 14% for its Sunrise Dam site. The Siguiri mine in Guinea also saw production surge by 67% quarter on quarter.
These turnarounds saw the group reporting impressive operational performance for the second quarter, with production rising by 12% quarter on quarter, to 663,000oz. The increased production allowed the group to capture the benefits of higher gold prices, with spot gold up over 16% this year-to-date.
Driven by increased production and elevated gold prices, the group reported strong financial results for the first half of 2024.
Adjusted earnings before interest, taxes, depreciation and amortisation (ebitda) was at $1 118m, up 65% year on year. Headline earnings were at $313m, up 413% year on year. Finally, free cash flow was an inflow of $206m, compared to an outflow of $205m in the first half of 2023.
“These results show the hard work that’s been done to improve the fundamentals of our business, to drive productivity benefits and manage costs to ensure we capture the benefit of stronger gold prices,” Calderon said. “We expect to deliver an even stronger second-half performance.”
AngloGold moved its primary listing to New York in 2023, in a bid to close the valuation gap between it and larger North American mining houses.
AngloGold’s share price on the JSE was up over 5% on Tuesday — the highest intraday increase since April — peaking at R519.17.
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