Amid record gold prices, AngloGold Ashanti’s recent acquisition of Egypt’s largest gold mine has been a boon for the group.
Sukari, one of the world’s biggest gold mines by output, added 117,000oz to the company’s first quarter production, resulting in a 28% rise in gold production year on year.
The stronger operational performance enables AngloGold to capitalise on the soaring price of gold, which gained 19% in the three months to end-March.
Thanks to Sukari’s contribution and record gold prices, the group reported a nearly eight-fold increase in attributable profit for the period and a sevenfold increase in free cash flow.
The company said in previous statements that the addition of Sukari would increase its annual production by about 450,000oz to more than 3-million ounces for the year.
The strong performance puts AngloGold on track to continue with its growth strategy, aimed at closing the valuation gap with its North American peers through “disciplined capital allocation and active portfolio management”.
To do that, the miner is focusing on growing its US operations while getting rid of higher cost, second-tier mines, such as two operations in Ivory Coast which were sold last week.
However, the group said earlier this week that it had agreed to pause discussions with Gold Fields to create what would have been Africa’s largest gold mine, after Ghana’s government failed to endorse the groups’ proposal to combine their Iduapriem and Tarkwa gold mines.
AngloGold expects capital expenditure for the full year to be $1.62m-$1.77m. In the first quarter, capex rose 27% to $336m, the majority of which was sustaining capex added by the inclusion of Sukari.
‘We’ve seen strong growth in production with the addition of Sukari and our cost control efforts continue to offset inflation, which has ensured that we capture the benefit of the higher gold price,” AngloGold CEO Alberto Calderon said.
The group said it “remains committed to closing the valuation gap with its North American peers by driving continuous improvements in operating performance, enhancing cash conversion, extending life-of-mine and maintaining a disciplined approach to capital allocation”.
Headline earnings per share were up more than sixfold from the previous first quarter to $0.88.
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