ANGLOGOLD Ashanti staged a $400m swing in year-on-year free cash flow for the six months ended June after slashing total cash costs at its mines.
The gold miner consequently bumped up the interim dividend to 22 US cents a share, in excess of its 20% of free cash before capital dividend policy. It paid out four US cents per share at the same time last year.
Free cash flow totalled $206m for the first half of its 2024 financial year compared to a $205m outflow last year. The performance was driven by a turnaround of its Brazil assets where output was 50% higher and cash costs lowered 19% year-on-year.
AngloGold’s total group gold production totalled 1.25 million oz for the six months, while the gold price came to the party: the average price received was $2,178 per ounce compared to a $1,917/oz average last year.
Alberto Calderon, CEO of AngloGold said in a presentation to analysts on Tuesday that he expected the group to do even better in the second half of the year. Free cash flow generation would double that of the first half, he said adding: “Cash flow outpaced the gold price’s impact on revenue in the first half.
“We kept every penny of the gold price and surpassed it”.
Interim all-in sustaining costs (AISC), which accounts for growth projects, increased 2% year-on-year to $1,658/oz but it was at the unit cost level that AngloGold made headline progress improving 1% to $1,200/oz against inflation of 6% in the period.
As the only major gold producer to reduce cash costs the company stood alone as capturing the improvement in the dollar gold price, said Calderon. “This is not luck but despite stiff headwinds we experienced in Australia (flooding) and at Guinea (metallurgical recovery challenges). We believe there is more to come,” he said.
The outcome was a 65% year-on-year increase in adjusted interim Ebitda to $1.12bn. In terms of the dividend payout – equal to $93m – AngloGold paid an extra $25m, or six US cents per share over its policy.
“We see the first half numbers as encouraging with AngloGold benefiting from good cost control and working capital management with improved operational momentum in the second quarter boding well for a stronger second half,” said UBS in a report.
AngloGold said it was likely to hit the mid-point of gold production guidance which was previously set at 2.65 to 2.85 million oz. Total cash costs would be in the region of $1,100/oz compared to a guidance range of $1,075 – 1,175/oz, said Calderon.
AngloGold’s Ghana mine Obuasi tracked at the low end of guidance in the first half of the year, the group said. Calderon had “no doubt” the mine would meet its targets, but he also warned progress at the mine would be uneven.
