AngloGold Ashanti Q3 profit at record $457m
AngloGold Ashanti posted record quarterly adjusted headline earnings* of USD457m and boosted its dividend to improve cash returns to shareholders. Payouts to shareholders will now be made quarterly, instead of twice yearly.
AngloGold Ashanti eliminated the gold industry's last remaining major hedge book a little more than a year ago, improving cash inflows and profits by increasing exposure to the rising gold price. Bullion remains firmly underpinned by strong demand from large emerging markets like China and India, a range of Central Banks diversifying reserves and investors seeking a safe haven from global economic turmoil.
While prices rise, the company is implementing a new operating model to improve productivity across 20 mines and a portfolio of development projects. Adjusted headline earnings in the three months to September 30 rose 34% to USD457m, or 118 US cents a share, compared with USD342m, or 89 US cents the previous quarter.
The Continental Africa operations were a significant contributor, with Geita the largest contributor at 149,000oz at a cash cost of USD473/oz. Cash flow generated from the company`s operating activities during the first quarter more than doubled to USD863m, another record. Net debt** improved by a further 28% to USD620m, underscoring the improvement in AngloGold Ashanti's cash generation, even after funding capital expenditure.
The improved cash flow allowed for a 90 South African cents quarterly dividend, equal to the first-half dividend payment. The company plans to repeat that payment in the fourth quarter, taking the total dividend for the year to 270 South African cents, compared with the previous year's 145 South African cents.
Production for the three months to 30 September 2011 was 1.092Moz at a total cash cost of USD737/oz. This compared to guidance of 1.11Moz at USD775/oz and the previous quarter's production of 1.086Moz at USD705/oz. The previous quarter`s costs received the once-off benefit of higher-grade feed at Geita to compensate for the SAG mill shutdown, which was not repeated during the third quarter.
The third quarter`s result was bolstered by strong performances at Geita in Tanzania, Iduapriem in Ghana and from the Americas, where Cerro Vanguardia in Argentina was once again a standout as the group`s most efficient producer. Nevertheless, drought continues to impact production from Cripple Creek, while Sunrise Dam`s recovery from flooding in the first half of the year was again slower than anticipated, as was the ramp-up of production following the five-day wage-related strike at the South African operation. In addition, winter power tariffs, higher wages, increased royalties and lower by-product credits also contributed to cost pressure in South Africa.
Tragically, three fatalities were recorded in South Africa. The company continues to invest in improving its long-term safety performance, with the benchmark all injury frequency rate of 9.51 per million hours, the lowest in the company`s history. The company continues to strive toward an elimination of workplace injuries. Given the increased safety stoppages in South Africa, the ongoing water shortages at CC&V and the slower ramp up at Sunrise Dam, full year 2011 production is now estimated to be around 4.33Moz.
Total cash costs*** are estimated at between USD735-USD745/oz on the basis of slightly weaker local operating currency assumptions for the year. This translates to a fourth quarter estimated production of approximately 1.11Moz at a total cash cost of approximately USD790/oz. The increase in fourth quarter costs is driven mainly by deferred stripping and inventory charges. * Excludes cost of accelerated hedge buy-back ** Excludes mandatory convertible bonds *** Assuming an exchange rate of R7.10/USD and an oil price of USD111/barrel.
This article was originally posted on Africa Oil & Mining Network
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