JOHANNESBURG (miningweekly.com) – Johannesburg Stock Exchange secondary-listed gold mining company AngloGold Ashanti has managed to repress costs to below 2% amid peer gold mining companies averaging above 15%.

“We maintain cost discipline despite persistent inflation,” AngloGold CEO Alberto Calderon outlined during the company’s presentation of half-year results, of doubled second-quarter earnings and free cash flow.

Since 2021, cash cost and all-in sustaining cost control has put the New York-listed company has given itself a 13%-plus cost control lead start of over its gold counterparts.

“That gap matters, especially in a strong gold price environment,” Colombian Calderon, a former International Monetary Fund luminary, emphasised during the presentation covered by Mining Weekly. (Also watch attached Creamer Media video.)

Financially, AngloGold is in an exceptionally strong position, having slashed debt, amplified liquidity and long-dated maturities.

Second-quarter free cash flow of $535-million was 149% up on the corresponding period of last year.

Gold production from managed operations was 25% up, supported by strong contributions from Africa’s Obuasi in Ghana and Geita in Tanzania as well as the addition of the Sukari gold mine in Egypt.

Since Calderon assumed the CEO role four years ago and including the first quarter of this year, the South Africa-created AngloGold has paid out $1.2-billion in dividends while simultaneously capitalising growth projects.

“Our new dividend policy will ensure shareholders see the fruits of the improved operating cadence, a higher gold price and much higher cash flow we're seeing now,” Calderon added.

An interim dividend of 80 US cents per share was declared, which includes the minimum quarterly dividend of $63-million or 12.5 US cents, with the balance reflecting the decision to pay half of the soaring free cash flow generated for the six months through to June 30 June.

“We've gone about systematically addressing the issues over the past three years and today the fundamentals of the business are strong and the outlook even better. We're taking meaningful strides to achieve and reach our full potential,” he said, describing the company’s valuation as being far from demanding.

PIPELINE OF ORGANIC GROWTH OPTIONS

Earnings before tax interest depreciation and amortisation increased 111% to $1.44-billion, headline earnings rose to $639-million, and net cash flow from operations rose to $1.02-billion.

“During the extraordinary turnaround journey we've been on since 2021 we've continuously assessed where we can generate most the value. The answer is clear; the best opportunities remain within.

“Firstly, we’re committed to lifting performance from our core assets, driving margin growth through cost discipline, full asset potential has been invaluable in this regard.”

“Keeping cost flat in real terms has improved our position and helps us to reliably deliver our guidance. This is now embedded in how we work, and we see more opportunity to drive value.

“The insights have helped us to unearth a pipeline of organic growth options that are beginning to reveal themselves. This pipeline extends well beyond Obuasi, which itself is starting to develop a consistent operating cadence as it ramps up. There are other equally exciting projects to build scale and extend life at Cuiabá, Siguiri, Geita, and Iduapriem.

AngloGold CFO Gillian Doran reported that liquidity remains substantial at $3.4-billion, including $2-billion in cash and cash equivalents, allowing AngloGold to fund its growth pipeline, return capital to shareholders and navigate commodity price cycles with confidence.

“We maintain cost discipline despite persistent inflation,” Doran highlighted amid the gold price averaging a 41%-higher $3 287 an ounce in the three months to June 30.

Doran put the stronger gold price down to sustained central bank buying, heightened geopolitical tensions, interest rate expectations, and uncertainty around the fiscal policy of the United States of America.

While inflation moderated across most of the jurisdictions in which AngloGold operates, exceptional disinflation took place in Argentina, where disinflation fell to a still-high 39% from the sky-high 272% of a year ago. In Argentina, AngloGold owns 92.5% of Cerro Vanguardia, with state company Fomicruz owning the remaining 7.5%.

Cerro Vanguardia is a gold-silver operation with multiple small open pits with high stripping ratios and multiple narrow-vein underground mines that produce gold with silver as a by-product. Three mining methods are used for underground mining: sub-level stoping (bottom-up and top-down), cut and fill, and room and pillar. There is a single tailings dam. The state road passes close to the operation, providing access for logistics. Power for the mine is supplied and purchased on the open market.

Inflation in Brazil has risen to 5.4% from 4.2% a year earlier. In Brazil, AngloGold has AGA Mineração in Minas Gerais, and Serra Grande in Goiás. AGA Mineração includes the Cuiabá and Córrego do Sítio (CdS) mining complexes, though the CdS complex was placed on care-and-maintenance in 2023. Serra Grande, in central Brazil, has three underground mines and one opencast mine, along with a metallurgical plant.

Overall realised inflation rate experienced by AngloGold was 4.6%, putting upward pressure on costs.

“We continue to look for opportunities to offset cost impacts from the macro factors we are exposed to,” Doran accentuated.