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AngloGold Q1 earnings rise to $203m despite lower production, higher costs

Gold mining company AngloGold Ashanti reported first quarter (Q1) headline earnings of $203-million, driven by the higher gold price.

Q1 production of 2021 of 588 000 oz was down on the 630 000 oz for the same period last year and total cash cost of $999/oz was well up on the $773/oz from continuing operations in the same period in 2020.

Headline earnings of $203-million, or $0.48 a share in the three months to the end of March 2021, compare with $143-million, or $0.34 a share, in the first quarter of 2020.

Adjusted net debt declined by 43% year-on-year to $908-million in the first quarter of 2021 from $1 606-million in the first quarter of 2020.

“We continue to make progress in delivering on our strategy,” interim CEO Christine Ramon said. “Our balance sheet remains in a solid position and Obuasi is making steady progress to completion.”

This year and next would be key investment years for AngloGold as it increased production from brownfield projects and built on strong reserve additions from exploration in 2020, to increase its overall reserve base and the life of its mines, the company said in a media release to Mining Weekly, in which it added that guidance for 2021 was expected to be met.

Construction at the Obuasi Redevelopment Project, which is expected to transform the 20-million-ounce high-grade gold orebody into a top-tier gold producer, achieved 97% completion by the end of March this year.

Production from the mine rose 53% to 46 000 oz in the first quarter of 2021, from 30 000 oz in the prior quarter.

In the first quarter of 2021, Covid-19 accounted for an estimated 4 000 oz of lost production and an estimated $29/oz of all-in sustaining costs (AISC). The Brazilian operations and Obuasi mine were most affected by the pandemic during the first quarter, with high rates of absenteeism affecting productivity in Brazil and ongoing challenges encountered in the rotation of expatriate workers from Australia to Ghana.

In the first quarter of 2021, total cash costs increased mainly as a result of lower grades and the drawing down on ore stockpiles at some of the operations, as well as inflationary pressures recorded across most of the portfolio, while waste stripping and underground development progressed.

This increase was partly offset by operating efficiencies. AISC rose by 26%, or $266/oz, to $1 287/oz in the first quarter of 2021, compared with $1 021/oz from continuing operations in the first quarter of 2020.

The primary drivers of production growth over the next two years are Obuasi operating at steady state, Tropicana reverting to normalised production levels following the current reinvestment in its life extension, and planned production gains from AGA Mineração, Siguiri and Sunrise Dam.

Adjusted earnings before interest, taxation, depreciation and amortisation (Ebitda) increased by 3% year-on-year from $434-million in the first quarter of 2020 to $449-million in the first quarter of 2021, giving a strong adjusted Ebitda margin of 47% in the first quarter of the year. The adjusted net debt to adjusted Ebitda ratio improved from 0.93 times at the end of last year’s first quarter to 0.37 times as at the end of March this year.

The implementation of the recommendations of the Task Force on Climate-Related Financial Disclosures, which was created by the Financial Stability Board, is expected to be completed later this year, along with new emission reduction targets and strategies to further reduce emissions and carbon footprint.

FATALITY IN BRAZIL

Regrettably, one fatality occurred in February 2021 when a miner at the Serra Grande mine in Brazil was fatally injured in a fall-of-ground-related incident during blasting preparation activities, which AngloGold described as a stark reminder of the need to remain diligent in its work towards achieving zero harm.

The company reported the implementation of a revitalised safety strategy across the business, with particular focus on the critical controls needed to eliminate what are called ‘high consequence, low frequency’ events.

Source: Mining Weekly

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