Calderon says AngloGold fighting against “scars of the past” in effort to narrow discount to rivals

Alberto Calderon, CEO, AngloGold Ashanti

ANGLOGOLD Ashanti was facing a credibility problem in which short-term gains were being outweighed by “scars from the past”, said Alberto Calderon, the group’s CEO since September.

“We are the results of the scars from the past. Our credibility loss is higher than any short-term gains we can make,” he said in an interview following the announcement of solid first quarter results.

Production at 588,000 ounces was unchanged quarter-on-quarter and at 4%, the increase in cash costs fared well against peer group companies. The company also received $536m in payments from the Democratic Republic of Congo (DRC) for profits earned by the Kibali gold mine it shares with Barrick Gold.

However, AngloGold’s share price has not performed well this year losing ground along with Kinross Gold while Barrick and Newmont Mining are 20% and 18% stronger respectively. Share price gains have also been made by Gold Fields this year.

Calderon said he was “surprised” the market hadn’t taken greater notice of the repatriation of profits from Kibali, but said the solution to the firm’s market value was in predictable quarterly performance.

“We need to show we can deliver what we’re saying, so I’m happy to be ‘steady as she goes’,” he said. Calderon has targed cash costs for AngloGold “within two digits” of Newmont’s $220/oz, and the deployment of stay-in-business (SIB) capital which would assist with improved mine planning.

“Under investment in SIB led us to not understand a two- and five year mine plan. That’s not where the top companies are. At Kibali they have a clear idea of where they are going to be in 10 years,” he said. Kibali is operated by Barrick Gold.

Calderon said AngloGold would unveil its five-year production profile in September as the company was currently doing the drill work to verify the planning.

RMB Morgan Stanley said in a report last week that extracting past profits out of the DRC – its cash conversion rate – would help narrow the discount in valuation of AngloGold shares to its rivals.

Asked whether the company’s rating could also be assisted by looking at moving its primary listing from Johannesburg to either the UK or North America, Calderon said the proposal – first raised by former CEO Kelvin Dushnisky in 2019 – was not currently on the table.

“It is in the suite of things that we can do and it’s something we can explore. But right now, there are so many other things that we can also do,” said Calderon.

One was completion of a mine-by-mine review which Calderon announced in February. Siguri in Guinea and Sunrise Dam in Australia had currently gone through the process. Calderon said mine planning was the feature that was cropping up in the reviews and which he expected to see elsewhere in the portfolio.