AngloGold slashes full year guidance 300,000 oz amid Obuasi safety review

ANGLOGOLD Ashanti lowered its full year gold production guidance for its 2021 financial year as the suspension of its Ghana mine Obuasi was extended to the remainder of the year.

Commenting in its second quarter and interim results announcement today, AngloGold Ashanti forecast production of 2.45 million to 2.6 million ounces for the year, a reduction of 300,000 oz. All-in sustaining costs would increase to between $1,240 and $1,340/oz from previous guidance of $1,130 to $1,230/oz.

Shares in the company fell more than 7% by mid-morning in Johannesburg. The company is now trading 29% weaker on a year-to-date basis.

AngloGold Ashanti shut Obuasi in May following a fatal accident resulting from a pillar failure. It said it would scour the mine for signs of fundamental engineering risk. Development work had been restarted and production would be incrementally phased in towards the end of the financial year, the company said.

Commenting in a media call, AngloGold Ashanti’s outgoing CEO, Christine Ramon, said the assumption that the mine would not produce more gold this year was “a conservative estimate”. Ramon will resume duties as CFO of the company following the appointment last month of former BHP executive, Alberto Calderon who joins AngloGold in September.


AngloGold Ashanti was beset by other headwinds in the second quarter including staff turnover at its Brazil operations. This was partly due to the boom in the iron ore industry which had seen employment and salary opportunities increase.

Absenteeism related to a fresh increase in Covid-19 infections in Brazil and Argentina had required the hire of expensive, less productive contractors which had resulted in a reduction in gold grades. AngloGold Ashanti also recorded low grades at the Geita, Tropicana and Iduapriem mines owing to interruptions and reinvestment activities.

“The performance is nowhere near good enough,” said Ramon. “We have our work cut out for us.” Asked if the company was caught napping by the impact of fresh Covid-19 cases, Ramon said it had been “more intense than we predicted”.

Costs were also negatively impacted by the conversion of tailings storage facilities (TSFs) to new structures in Brazil. This programme would now cost between $120m to $130m from a previous estimate of $70m to $80m.

Despite these issues, AngloGold Ashanti approved the payment of a $0.06 US cents per share interim dividend despite lower interim basic earnings which came in at 86c/share, or $363m, a 5.5% year on year decline.

The dollar gold price received at $1,801/oz was 9% better for the six months to end June compared to the same period last year. This helped cushion the impact of higher AISC for the six month period which was 33% higher at some $1,333/oz. The net cash inflow of $467m was $85m less than in the prior period.

There was a $25m free cash outflow for the six months.

As a proportion of adjusted EBITDA, net debt rose slightly at the close of the six month period to 0.36x. However, the general direction of travel remains solid for net debt which at just under $1bn is down from $3bn in 2013.