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AngloGold Ashanti’s gold production fell in the third quarter to September as higher costs offset some of the benefit of rising gold prices.
Costs per ounce rose 26% to $2,170 in the quarter, from $1,720 in the same period last year, the company said on Thursday. Gold production fell 9% to 696,000oz from 768,000oz.
Total cash costs increased 25% to $1,534/oz, from $1,225/oz a year earlier.
AngloGold attributed most of the increase in costs to external market factors, including higher royalties linked to the gold price and increased fuel costs following movements in global crude oil prices.
The higher realised gold price supported the group’s financial performance, rising 21% to $4,239/oz from $3,490/oz and helping lift earnings before interest, tax, depreciation and amortisation (ebitda) by 12% to $1.57bn.
Profit for the period increased to $927m from $815m while headline earnings rose to $790m from $672m.
Free cash flow fell to $722m from $920m in the corresponding period last year. AngloGold attributed the lower figure to fewer ounces sold, increased capital expenditure, higher tax payments and working capital requirements.
Capital expenditure rose 45% to $563m in the quarter as the miner increased spending on mine development, equipment upgrades and its Nevada projects.
Despite the weaker production performance, AngloGold maintained its full-year gold production guidance of 2.8-million to 3.17-million ounces. Production for the first nine months stood at 2.164-million ounces.
Production at Iduapriem in Ghana fell 43% year on year in the third quarter, while output at Obuasi in Ghana fell 26% and Sukari in Egypt 21%. Siguiri in Guinea was the company’s strongest performer, increasing production by 49%.
The miner expects production to improve in the final quarter. At Iduapriem, dewatering work has restored access to mining areas. Output at Obuasi and Sukari is also expected to benefit from access to higher-grade ore.
AngloGold ended September with net cash of $1.26bn, compared with $231m a year earlier. It declared an interim dividend of 71 US cents per share, amounting to $361m.
The company plans to spend $750m-$900m over three years expanding its Geita mine in Tanzania, Siguiri in Guinea and Cuiabá in Brazil. The projects are expected to add 300,000oz-450,000oz to annual production by the end of the decade, compared with 2025 levels.
Business Day
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