ANGLOGOLD Ashanti described its 2021 financial year ended December 31 as “challenging”, adding in a trading update today that lower grades, a decline in production and retrenchment costs of $18m would result in basic earnings being as much as 38% weaker year-on-year.
Total basic earnings would come in between $584m and $650m resulting in total basic earnings per share of 139 US cents to 154 cents per share. The company reported basic earnings of $953m for its 2020 financial year. AngloGold Ashanti is due to report its year end numbers on February 22.
Production for the 12 months was 2.47 million ounces which compares to output of three million oz in the 2020 financial year. The decline was partly down to the sale of the group’s Mponeng and Mine Waste Solutions assets to Harmony Gold which accounted for 241,000 oz of the output decline.
But the dominating negative event of the year was the suspension of mining at the firm’s Ghana mine following a rockfall. Mining only recommenced in the third quarter with underground stoping activities directed towards building the mine’s stockpiles. The production for 2021 was within adjusted guidance, the company said.
The increase in stockpile drawdowns as well as lower average grades across a number of operations resulted in higher operating costs. There was also an increase in exploration costs of $40m, equal to 10 cents/share in earnings.
An $18m charge related to retrenchments was following “… the implementation of the new operating model with the view of streamlining the organisation and making it more efficient”, the company said.
Headline earnings were expected to come in between $572m and $642m with headline share earnings of 137 to 153 cents a share – a decline of 36% to 42% compared to the performance in the previous financial year.