AngloGold Ashanti to speed up growth

[] — ANGLOGOLD Ashanti was getting rid of its hedge book in order to speed up its growth projects in a market where management believed the gold price would continue to rise.

That’s according to CEO Mark Cutifani who told a media conference call in Johannesburg on Wednesday morning that removing the hedge would increase the group’s annual free cash flow by between $500m and $600m.

He said management had taken a decision to push for growth more aggressively given current conditions in the gold market.

AngloGold Ashanti has forecast capital expenditure totalling $2.45bn on new growth projects over the next three years. Cutifani said this estimate excluded any developments in Colombia which fell beyond the three year horizon.

Amongst the projects the group wanted to push ahead with more rapidly were the Moab and Mponeng developments in South Africa.

“We are particularly encouraged by the positive conversations between the industry and government in South Africa and the good things that are happening around the mining legislation,’ he said.

Cutifani added, “AngloGold Ashanti has the best growth profile in the gold industry and the best assets in the industry. We can develop our projects at around one third of the cost incurred by some our competitors on projects where they have had to make acquisitions to secure growth.’

Cutifani pointed out AngloGold Ashanti had been significantly restructured over the past two years.

He said some of the group’s shareholders had put forward the view that, “you have done all the hard work – why not finish it off by getting rid of the hedge completely and providing a platform for growth with full exposure to the gold price.”

Cutifani declined to make a specific forecast on the gold price but he commented, “we are very strong in our view on the future of gold.

“Investment demand remains strong while the supply and demand fundamentals remain good for gold.

“On the supply side the industry is struggling to maintain production let alone increase it. We will need a price north of where gold is to bring more production on stream while cost pressures on the industry also underpin the price required.

“We don’t see much downside from where we sit. We do have the option to slow down development of our projects if we see real weakness in the gold price but we are not expecting that.’

Just before the end of the conference call AngloGold Ashanti chief financial officer “Venkat’ Venkatakrishnan said that the bookbuilding exercise had already been completed with the issue heavily oversubscribed.

He said $1.368bn had been raised which, with the completion of the associated “greenshoe’ would push total receipts before costs to $1.578bn.