AngloGold hunkers down with $1.4bn in debt citing lack of visibility on COVID-19 impact

ANGLOGOLD Ashanti has drawn on $1.4bn in debt to bolster its balance sheet of which $700m has been put aside to tide it over during the COVID-19 crisis.

The balance of the debt drawn down – which is from its US dollar revolving credit facility (RCF) – will be to settle $700m in bonds which fall due in April.

Explaining its actions, AngloGold Ashanti said today it was sufficiently well capitalised but considered conservatism the better course of action. As of December 31, AngloGold had $463m of cash, $2bn of debt and an RCF with $1.42bn and R4.65bn available.

After the drawdowns, cash on hand is about $1.8bn, excluding cash lock-up positions at Kibali and Sadiola, where AngloGold Ashanti’s combined share totals about $300m.

“Management will continue to take a prudent and proactive approach to managing the Company’s liquidity, which may include procuring additional credit facilities or debt over and above its current facilities,” it said.

This development comes as COVID-19 mitigation efforts grip the world’s mining sector with mine suspensions or go-slows par for the course.

In the case of AngloGold, it has decided idled production at its Brazil, Argentine and South Africa mines by dint of government edict. This would result in a total production hit of between 30,000 to 40,000 oz, equivalent to about 2% of annual production.

The production shortfall was not enough to unseat production guidance of 3.05 million to 3.3 million oz for the year as the company had had a good start. However, the company decided to withdraw production guidance nonetheless. AngloGold Ashanti said there’s no certainty on the extent of the lockdown.

“Nonetheless, given the uncertainties with respect to future developments, including duration, severity and scope of the COVID-19 pandemic and the necessary government responses to limiting its spread, AngloGold Ashanti has decided to withdraw its market guidance at this time,” it said.

South Africa today recorded its first two fatalities from the disease.