(ANGLOGOLD ASHANTI) – AngloGold Ashanti today announced full-year adjusted headline earnings* of $924m, the second-highest on record, despite a difficult year in which an unprotected strike and safety stoppages caused major disruption to its South African operations.
The company is planning to deliver higher margin production from its South African mines, which were shuttered by a strike between the end of September and the beginning of November. Exploration spending across the group has been rationalised, corporate and operating costs are undergoing a review, some assets deemed to be non-core are being considered for sale and capital expenditure has been prioritised.
“We’ve moved decisively to ensure that we continue a strong recovery from a difficult end to last year,” Joint Interim Chief Executive Officer Tony O’Neill said. O’Neill has oversight of all operating and exploration functions while fellow joint interim CEO Srinivasan Venkatakrishnan has accountability for all financial and corporate matters.
AHE for the year was $924m, or 239 US cents a share, which included about $208m lost to the strike, compared with $1.3bn, or 336 cents a share in 2011. Production in 2012 was 3.94Moz at a total cash cost of $862/oz, which included about 235,000oz lost to the strike. The annual production compares to 4.33Moz at a cash cost of $728/oz in 2011.
AngloGold Ashanti continues to seek to improve the quality and diversity of its portfolio. The main greenfield projects at Tropicana, in Australia, and the Kibali joint venture, in the Democratic Republic of Congo, remain on track to produce gold within a year. The expansion of Cripple Creek & Victor, in the US, also remains on track.
Production in 2013 is anticipated to grow to between 4.1Moz and 4.4Moz at an improved total cash cost of $815/oz to $845/oz. More focused investment in the business has helped AngloGold Ashanti forecast stable capital expenditure of about $2.1bn for 2013, while corporate costs are expected to decline by about 18% to $240m. Expensed spending on exploration and feasibility studies is forecast at about $377m, 18% lower than in 2012.
“Our focus is on improving margins and delivering returns, rather than production growth, and that will continue to drive our decision making,” Venkatakrishnan said. “We have good projects and a solid financial base.”
During October, the company took a decision to terminate its underground development contract with Mining and Building Contractors Limited at its Obuasi mine in Ghana in an effort to improve production and costs. Geita, in Tanzania, was the group’s largest production contributor, improving annual production by 7% to 531,000oz at a total cash cost of $660/oz. The rest of the group continued to see positive results with annual production in the America’s region rising from 891,000oz to 953,000oz and the Australian operations increasing output to 258,000oz from 246,000oz.
“AngloGold Ashanti continues to deliver the best returns on capital amongst the gold majors, which reflects strict discipline in capital deployment over the past five years,” Outgoing CEO Mark Cutifani said. “That’s been core to our strategy since early 2008, when we outlined our vision for the company.”
Fourth-quarter AHE was $7m, or 2 US cents a share, compared to $295m, or 76 US cents a share in the fourth quarter of 2011. AHE was affected by the lower volumes and higher cash costs during the quarter, reflecting the impact of the strike in South Africa which eroded $208m of earnings and the change-over of the mine development contractor at Obuasi and other factors which had a negative impact.
A strong performance from the Americas region was primarily offset by the strikes in South Africa. Despite challenges faced in South Africa, Standard & Poor’s affirmed the investment grade rating on AngloGold Ashanti’s publicly traded debt following an extensive review. Major milestones were reached outside of South Africa, most notably the termination of the underground development contract at Obuasi, where sub-par development performance has been identified as a key constraint to the mine’s performance in recent years and which had also hurt earnings in the fourth quarter. At Tropicana, 1.0Moz was added to the resource and the group achieved the lowest quarterly All Injury Frequency Rate (AIFR) on record for the organisation at 6.17 per million hours worked.
*Adjusted headline earnings
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Certain statements made in this communication, other than statements of historical fact, including, without limitation, those concerning the economic outlook for the gold mining industry, expectations regarding gold prices, production, cash costs and other operating results, growth prospects and outlook of AngloGold Ashanti’s operations, individually or in the aggregate, including the achievement of project milestones, the completion and commencement of commercial operations of certain of AngloGold Ashanti’s exploration and production projects and the completion of acquisitions and dispositions, AngloGold Ashanti’s liquidity and capital resources and capital expenditure and the outcome and consequence of any potential or pending litigation or regulatory proceedings or environmental issues, are forward-looking statements regarding AngloGold Ashanti’s operations, economic performance and financial condition. These forward-looking statements or forecasts involve known and unknown risks, uncertainties and other factors that may cause AngloGold Ashanti’s actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied in these forward-looking statements or forecasts. Although AngloGold Ashanti believes that the expectations reflected in such forward-looking statements or foreacsts are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic, social, political and market conditions, success of business and operating initiatives, changes in the regulatory environment and other government actions including environmental approvals, fluctuations in gold prices and exchange rates, and business and operational risk management. For a discussion of certain of these and other factors, refer to AngloGold Ashanti's annual report for the year ended 31 December 2011, which was distributed to shareholders on 4 April 2012, the company’s 2011 annual report on Form 20-F, which was filed with the Securities and Exchange Commission in the United States on 23 April 2012 and the prospectus supplement to the company’s prospectus dated July 17, 2012 that was filed with the Securities and Exchange Commission on July 25, 2012. These factors are not necessarily all of the important factors that could cause AngloGold Ashanti’s actual results to differ materially from those expressed in any forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on future results. Consequently, stakeholders are cautioned not to place undue reliance on forward-looking statements. AngloGold Ashanti undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after today’s date or to reflect the occurrence of unanticipated events, except to the extent required by applicable law. All subsequent written or oral forward-looking statements attributable to AngloGold Ashanti or any person acting on its behalf are qualified by the cautionary statements herein.
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