Commodities Buzz: AngloGold Ashanti Posts Strong First Quarter Performance With Lower Debt

AngloGold Ashanti posted a strong first-quarter performance, with lower debt and improvements in both production and all-in sustaining costs, driving wider margins and stronger cash flows. The Australian operations were the standout performers.

Production of 824,000oz at all-in sustaining cost of $ 1,029/oz in the three months through 31 March, compared with 830,000oz at AISC of $ 1,060/oz in the first quarter of last year. Production was little changed despite TauTona undergoing orderly closure and the sales of Moab Khotsong and Kopanang concluding a month before the end of the quarter. Looking only at retained operations (operations excluding closed and sold operations), production rose 6% to 773,000oz at an AISC of $ 1,002/oz, representing a margin of 25% to the gold price received for the period.

n++Our hard work in restructuring the business to focus on portfolio quality is starting to bear fruit as our operations are demonstrating strong, consistent results,n++ Chief Executive Officer Srinivasan Venkatakrishnan, said. n++The core portfolio is performing well, the balance sheet is solid, our projects are on schedule and we see good potential for further efficiencies in both our International and South African Operations.n++

AngloGold Ashanti has restructured its portfolio to focus on higher-margin, longer-life assets, while investing in a series of brownfield projects with strong return profiles. The company has focused on tight cost control and disciplined capital allocation across its portfolio, which now has about 87% of production from its International Operations.

With roughly a quarter of the full years guided production delivered in the seasonally weak first quarter, AngloGold Ashanti remains on track to meet its annual production, cost and capital guidance.

Production at the International Operations increased 5% year-on-year to 666,000oz, with AISC improving further to $ 950/oz from $ 963/oz in the first quarter of last year, as the continued focus on operating efficiencies gains momentum. Standout performers include Sunrise Dam in Australia which recorded a 54% increase in production, and Tropicana, Kibali, Iduapriem and Serra Grande.

In South Africa, the smaller and more focused footprint delivered an encouraging performance as production from Mponeng increased 29%, while rand-denominated all-in sustaining costs fell 14%. Restructuring of the asset portfolio in South Africa is still underway to ensure that both the on- and off-mine cost structures are appropriate for the size of the smaller production base in the country.