Gold mining company AngloGold Ashanti on Friday reaffirmed annual guidance as it reported an improved second-quarter performance compared with the first three months of the year, underpinned by a 12% increase in production.
Gold production rose to 652 000 oz in the second quarter of 2023 compared with 584 000 oz in the previous three-month period. The stronger second quarter was supported by production and cost improvements across most assets primarily driven by both higher tonnes processed and recovered grades.
Total cash costs improved 2% quarter-on-quarter and all-in sustaining costs (AISC) improved 4% quarter-on-quarter.
AngloGold Ashanti is taking steps to narrow a value gap with international peers by improving relative costs and the life of its key mines, all while enhancing safety, cash conversion and the delivery of projects. In the past year, the New York- and Johannesburg-listed company added an additional five-million ounces of mineral resource in Nevada, proposed a joint venture with Gold Fields in Ghana to create Africa’s largest gold mine, and proposed a change in the primary listing for its shares to the New York Stock Exchange (NYSE), the largest global market for investment in gold equities.
“We’re seeing momentum continue to build at our key assets after a steady start to the year and a much improved second quarter,” AngloGold CEO Alberto Calderon said. “We’re expecting strong operating improvements in the second half.”
FIRST HALF CAPPED BY IMPROVED SECOND QUARTER
Following a challenging first quarter of 2023, second-quarter production was up on the first quarter at Democratic Republic of Congo’s Kibali gold mine by 38%, at Tanzania’s Geita by 21%, at Brazil’s AGA Mineração (63%) and Serra Grande (47%), and at Australia’s Sunrise Dam (8%) and Tropicana (16%).
Second-quarter production would have been higher had it not been for the carbon-in-leach (CIL) tank failure at Guinea’s Siguiri, which has since been repaired. Second quarter total cash costs per ounce were 2% lower than in the first quarter of 2023.
Second-quarter total cash costs per ounce rose 8% year-on-year compared with the 16% year-on-year increase in first-quarter total cash costs per ounce.
OBUASI CONTINUES FIRST-HALF RAMP-UP
First-half production was marginally higher versus the first half of 2022, with a strong production gain from Ghana’s Obuasi supported by steady contributions from Sunrise Dam, Geita, and Ghana’s Iduapriem and Tropicana. Recovered grades continued their upward trend, increasing 4% year-on-year mainly dowing to ongoing reinvestment in the portfolio.
The Obuasi gold mine in Ghana continued its ramp-up with a 29% jump in production year-on-year alongside a drop in unit costs as grades and tonnages improved. Obuasi is expected to deliver a stronger second-half performance as more material is moved to surface following successful de-bottlenecking of existing infrastructure.
In Brazil, the Cuiabá mine continued to produce gold from its gravity circuit and gold concentrate in line with its plan. Despite second-quarter improvements in production versus the first quarter of 2023, the Brazil portfolio continued to make losses.
CONTINUED INFLATIONARY IMPACT
Total cash costs per ounce increased 11% from $1 068/oz in the first half of 2022 to $1 189/oz in the first half of 2023, mainly owing to costs related to Brazil of $20/oz and the Siguiri CIL tank failure of $22/oz, higher operating costs as a result of sustained inflationary pressures, higher waste stripping costs at Tropicana in line with expectations, lower by-product revenue and volumes in Brazil and Argentina, and higher royalties paid owing to higher revenues. The increase was partially offset by weaker foreign exchange rates against the dollar and favourable inventory movements. AISC were 12% higher at $1 587/oz in the first half of 2023 compared with $1 418/oz in the first half of 2022, on mainly higher total cash costs and a planned increase in sustaining capital expenditure.
Basic earnings were $40-million, or $0.10 a share, in the first half of 2023, compared with basic earnings of $298-million, or $0.71 a share, in the same period a year earlier. Basic earnings in the first half of this year were impacted by losses of $141-million mainly related to impairments and derecognitions in the Brazil portfolio. Headline earnings of $140-million, or $0.33 a share, in the first half of 2023, compared with $300-million, or $0.71 a share, in the same period a year earlier.
AngloGold’s Full Asset Potential review programme, to optimise assets and counter inflation, is making progress, with highlights including increased underground tonnes mined at Sunrise Dam and Geita, with the former also achieving much-improved recoveries.
At Tropicana, progress has been made with its decarbonisation strategy. Pacific Energy will build and operate a 62 MW wind and solar facility at the site, supplementing the existing natural-gas plant. The project is expected to halve natural gas consumption at the site.
The balance sheet remained robust following the payout of the final 2022 dividend, with liquidity of $2.3-billion, including cash and cash equivalents of $0.7-billion at the end of June 2023.
