AngloGold Ashanti added more than R90bn to its market value last week as shareholders celebrated the group’s renewed focus on investing in its existing asset base.
The company has comfortably retained its status as the JSE’s biggest gold miner after a more than 15% rally, which saw its share price peak at an intraday record of R1,487 on Thursday. At Friday’s close, the company boasted a market cap of R690bn.
The buying frenzy follows a recent trading update in which AngloGold outlined a growth plan where development and exploration, rather than inorganic growth, take centre stage.
With soaring gold prices unlocking record free cash flow, the group has an unprecedented opportunity to unlock more production and cost savings from the flagship mines, which have been held in its portfolio for decades.
It said the most immediate opportunities were at its huge Geita mine, where recent feasibility studies suggest increased investment could unlock significantly more gold (equal to about 60% of its existing reserves) and a further decade of mining.
Geita, in Tanzania, has been wholly owned since the company’s formation in 2004 and is already one of the largest gold mines in the group’s portfolio.
The expansion is projected to increase the mine’s output to about 600,000oz a year for at least a decade, equal to about a quarter of AngloGold’s total gold production last year.
The group also sees exploration potential in North America, where it has recently consolidated its ownership in the Beatty District of Nevada and Canada’s Augusta Gold.
These transactions will allow it to develop one unified regional plan for “one of the most significant emerging gold districts in the US”, AngloGold said last week in a trading update for the nine months to end-September.
The miner told investors it would direct targeted spending towards exploration, mineral reserve development and turning resources into active mine sites at locations with high geological potential over the next three years.
The ambitions are backed by a healthy balance sheet as record gold prices keep cash flows elevated. The group boasted $920m in free cash flow for the quarter to end-September, more than double that of the previous third quarter.
AngloGold is on track for its best year on record after gaining 224% since end-December when its market cap was just R213bn.
Uncertainty about US tariffs and ongoing wars has helped grow AngloGold’s share price as safe-haven demand keeps gold prices on a steady ascent.
The rally has helped the group close its valuation gap with North American peers such as Barrick Gold and Newmont — one of the top ambitions set out by CEO Alberto Calderon when he took the helm in 2021.
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