AngloGold production targets not out of reach under reliable hand of its new CEO

Alberto Calderon, CEO, AngloGold Ashanti

ALBERTO Calderon appears the CEO AngloGold needs at this time following two years of management flux and strategic tumult that kicked off in September 2020 when former CEO, Kelvin Dushnisky quit the firm.

He was followed by his chairman Sipho Pityana about 15 months later amid allegations of harrasment. Interim CEO, Christine Ramon steered the company through some rough seas, committing AngloGold in the period to production growth to 3.5 ounces from 2.8 million oz.

Ramon has consequently announced her early retirement from AngloGold effective end-June. Her replacement, once unveiled, will cap a drastic overhaul of senior heads at AngloGold. All in all, the group will have replaced six of eight executive committee roles, predominantly in ways that boost its technical capability. Including Ramon, two board members have also been replaced.

In the view of RMB Morgan Stanley analysts this “… proves tangible evidence of steps being taken to reposition AngloGold as well as a defined plan and timeline for operational improvements following a period of under-performance”. The management changes support the strategy, they say.

Commenting on future prospects, Calderon still thinks Ramon’s growth target announced in 2020 is a possibility, but the timeline has changed.

“It’s very important for our credibility to meet our production guidance for this year,” he told the Financial Mail. That’s to return AngloGold to around 2.8 million oz prior to Covid-19 downtime and a pillar collapse at Obuasi which brought the mine to a standstill last year. He will also run a two-year, mine-by-mine asset review aimed at weeding out costs and identifying potential weak links in the portfolio, even with a view to divestments.

Calderon declines to go public on the group’s outlook beyond this year. “There’s no point unless we think we can get there,” he says of possible output guidance for the later years. Five-year production guidance is due in 2023, he says.

The force appears to be strong with Calderon. Failure to achieve cash conversion was a major frustration of Dushnisky’s and Ramon’s period in charge, largely down to unrepatriated profits from the firm’s 40% stake in the Congo gold mine Kibali, held in joint venture with the mine’s operator, Barrick Gold. Based on Barrick’s assessment, more than $500m will now be paid out. Calderon says proceeds will be divvied across the group in terms of capital expenditure – which is heavy this year specifically in stay-in-business capital – as well as debt reduction.

These are necessarily disruptive months for AngloGold, but there’s “no success without a struggle”, said Calderon at an analysts’ presentation, citing Kendrick Lamar, a hip-hop artist. The allusion is possibly entirely lost on analysts but popular culture references aside, Calderon exudes reliability.

This article first appeared in the Financial Mail.