AngloGold Ashanti trebles first quarter cash flow; bolsters liquidity to US$2bn

AngloGold Ashanti bolstered its available liquidity to more than US$2bn, improved leverage and more than trebled first-quarter cash flow from operating activities as key mines delivered solid performances.

A diverse portfolio of 14 mines in nine countries helped limit the impact of COVID-19 related stoppages to 11,000 ounces during the first quarter of 2020.

First-quarter free cash flow before investment in growth projects (the measure on which dividend payments are based) rose 231% year-on-year to US$94m. Cash flow from operating activities rose by 227% from US$67m to US$219m over the same period.

“Cash flow is strong, leverage is down, and all operations are running,” Chief Executive Officer Kelvin Dushnisky said.

“We’re making good progress on achieving our core strategic objectives – including asset sales and the redevelopment of Obuasi – and have worked hard to ensure we have the liquidity to weather potential disruptions.”

AngloGold Ashanti received a strong tailwind from bullion prices which averaged US$1,506 per ounce during the first quarter of 2020 and have continued to rise in subsequent weeks as investors sought a safe haven.

The Company secured an additional US$1bn credit facility to supplement cash on hand of around US$1.1 billion as it increased its liquidity position to withstand any potential disruptions from the COVID-19 epidemic.

The company has made good progress in achieving its strategic objectives, namely the ongoing redevelopment of its Obuasi Gold Mine, investment in the increase of reserves and mine lives of its key assets, and the process to conclude the announced sales of assets in South Africa and Mali.

These milestones were achieved despite the disruption caused by COVID-19-related stoppages at Serra Grande, Cerro Vanguardia and the South Africa operations, which straddled the first and second quarters and have since been lifted.

The announced sale of the South African Operations to Harmony Gold crossed an important hurdle after the South African Competition Tribunal approved the transaction, without conditions, on 29 April 2020.

Meanwhile, AngloGold Ashanti will no longer be selling its Cerro Vanguardia mine in Argentina, after concluding it can derive more value for shareholders by developing the remaining potential in the ore body.

Balance sheet

The company’s balance sheet continues to improve as strong cash flows helped with the continued reduction in Adjusted net debt. Adjusted net debt to Adjusted EBITDA was 0.85* times at 31 March 2020, below targeted levels of 1.0 times through the cycle.

On the other hand, adjusted net debt was 10% lower at US$1.6 billion at quarter-end, from US$1.78 billion at the same time last year.

The statement said the company is in a strong cash position of US$1.1bn after it redeemed the 10-year US$700 million bond and the coupon and has secured additional credit facilities of US$1bn, providing further liquidity in the event of operational disruptions.

Production

Production was 716,000 ounces at a total cash cost ofUS$814 per ounce for the quarter ended 31 March 2020, from 752,000 ounce at $791 per ounce in the same period last year.

Geita and Iduapriem in Ghana delivered stand out performances, offsetting lower production at Siguiri, Sunrise Dam and AGA Mineração.