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AngloGold Ashanti Boosts Reserves and Dividends, Charts Growth Path
AngloGold Ashanti Limited
(Incorporated in the Republic of South Africa)
Reg. No. 1944/017354/06
ISIN. ZAE000043485 – JSE share code: ANG
CUSIP: 035128206 – NYSE share code: AU
(“AngloGold Ashanti” or the “Company”)
NEWS RELEASE
AngloGold Ashanti Boosts Reserves and Dividends, Charts Growth Path
(PRESS RELEASE – JOHANNESBURG) – AngloGold Ashanti reported a fivefold
increase in its full-year dividend payment and added 6 million ounces of new Ore
Reserve, on a gross basis, as it chartered a return to growth in the coming years.
“After several years of rationalising our portfolio, we have a clear and credible path to
disciplined, high-return growth,” Interim Chief Executive Officer Christine Ramon said.
“We’ve built a solid balance sheet, which allows us to continue self-funding our capital
investment, while rewarding shareholders.”
The Company aims to grow annual production from last year’s 3.05 million ounces to
between 3.2 million ounces and 3.6 million ounces, by 2025.
This growth will mainly include the ramp-up of the Obuasi mine in Ghana, and
incremental improvements from existing assets in the next two years. Beyond that, it
will include the addition of new production from Colombia assuming plans for
investment are approved by the Board of the Company (the “Board”) later this year.
In fulfilling a strategic objective to improve direct returns to shareholders, the
Company’s Board declared a full-year dividend of 705 ZAR cents per share
(approximately 48 US cents per share), compared to a dividend of ZAR 165 cents per
share (9 US cents per share) in 2019.
RESERVE ADDITIONS
AngloGold Ashanti embarked on a multi-year initiative at the beginning of 2020, to
increase investment in ore reserve development and brownfields exploration. In its
first year, the programme yielded 6 million ounces of gold – more than replacing
depletion from mining and extending the overall reserve life of the Company’s portfolio.
These additions included 1.4 million new ounces of Ore Reserve at the Geita Gold
Mine in Tanzania, and 1.8 million ounces at Obuasi, in Ghana.
The aim of this investment was to increase the rate of Ore Reserve conversion, extend
the reserve lives of its assets, enhance mining flexibility and further improve the
knowledge of the ore bodies. This programme was designed to unlock latent value
from within the existing portfolio, with incremental investment in sustaining capital. The
Company will continue to deliver on this programme in 2021.
AngloGold Ashanti has, since 2013, used surplus cash generated by its mines and the
proceeds from the sale of assets in the US, South Africa and Mali, to reduce net debt
by more than 80%, to the lowest levels in a decade.
The Company also met guidance for the eighth consecutive year on production and
cost.
FINANCIAL AND OPERATING PERFORMANCE
Basic earnings for the period ended 31 December 2020 were $953m, or 227 US cents
per share, compared with a $12m loss, or 3 US cents loss per share in 2019.
Headline earnings for the period ended 31 December 2020 were $1,000m, or 238 US
cents per share, compared with $379m, or 91 US cents per share in 2019. Earnings
benefitted from the higher gold price net of increased profit-related taxes. Free cash
flow before growth capital – the metric on which dividends are calculated – increased
by 124% to $1,003m in 2020 versus $448m in the prior year.
Production was 3.047Moz at a total cash cost of $819/oz in the twelve months to 31
December 2020, from 3.281Moz at a total cash cost of $776/oz in 2019. The 7%
reduction in production was due mainly to the sale of our remaining South African
producing assets, the cessation of mining activities at Sadiola and Morila in Mali, and
the impact of the COVID-19 pandemic. The Company’s all-in sustaining costs (AISC)
came in at $1,059/oz in 2020, compared with $998/oz in 2019. The COVID-19 impact
on production in 2020 was estimated at 140koz or 5% and its impact on AISC was
estimated at $55/oz or 5%.
The performance for the year was underpinned by a strong year at Geita, whilst steady
performances at Kibali, Iduapriem, Siguiri, Sunrise Dam, and AGA Mineração helped
offset declines in production at Tropicana, Cerro Vanguardia (CVSA) and Serra
Grande. The Obuasi Redevelopment Project continued its ramp-up, delivering a
127,000oz in production despite delays in receiving equipment and in the arrival of
skilled personnel, critical to the project as a result of COVID-19 related lockdowns in
various jurisdictions during the year.
BALANCE SHEET
The balance sheet continues to improve as stronger cash flows helped with the
continued reduction in adjusted net debt. Adjusted net debt for continuing operations
declined by 62% to $597m at 31 December 2020, from $1.581bn at 31 December
2019. Adjusted EBITDA for continuing operations increased by 56% year-on-year to
$2,470m in 2020, from $1,580m in 2019.
The ratio of adjusted net debt to Adjusted EBITDA for continuing operations at the end
of December 2020 was 0.24 times compared with 1.00 times at the end of December
2019, well below the targeted level of 1.0 times through the cycle. This reflects
disciplined reduction in debt and robust cash generation from the business.
SAFETY
Regrettably, AngloGold Ashanti recorded six fatalities last year, four at Mponeng in
South Africa and two at Obuasi. Last week, on 16 February, we tragically lost
another of our colleagues at our Serra Grande Mine in Brazil. We continue to invest
considerable resources in understanding the root causes of all accidents - including
high potential incidents, or ‘near misses’ - in order to prevent reoccurrences. This
year, we expect to implement an updated safety strategy across our business, with
particular focus on the critical controls needed to eliminate what we call ‘high
consequence, low frequency’ events.
The Company’s response to COVID-19 remains on safely ensuring business
continuity as we navigate through the pandemic. We continue to work hand-in-glove
with authorities and local communities in each of our operating jurisdictions –
providing not only healthcare support where needed, but also assistance in other
areas that are experiencing considerable strain from the pandemic.
GUIDANCE AND INDICATIVE OUTLOOK*
Production guidance for the 2021 year is estimated to be between 2.7Moz and 2.9Moz.
Total cash costs are estimated to be between $790/oz and $850/oz and AISC between
$1,130/oz and $1,230/oz at average exchange rates against the US Dollar of 5.00
(Brazilian Real), 0.72 (Australian Dollar), 98.00 (Argentinian Peso), and 16.95 (South
African Rand), with Brent oil at $50/bbl average for the year. Sustaining capital
expenditure is anticipated to be between $720m and $820m, including investments in
Ore Reserve Development and Exploration ($330m to $380m) and Brazil tailings
compliance capital for 2021 ($70m to $80m).
Following the key strategic objectives set out by the Company a year ago, related to
streamlining the portfolio and reinvestment in assets with high geological potential,
AngloGold Ashanti is pleased to provide detailed two-year guidance, as well as a five-
year indicative outlook.
AngloGold Ashanti expects to see an average 2.0% compound annual growth rate
(CAGR) in gold production over the next two years relative to 2020 production from
continuing operations. The primary driver of production growth is related to Obuasi
operating at steady-state, Tropicana reverting to normalised production levels
following the reinvestment in its life extension, and AGA Mineração, Siguiri and
Sunrise Dam expected to increase production to higher levels.
On a five-year indicative outlook, the Company expects to see an average of 5.0%
CAGR in gold production between 2021 and 2025. This is underpinned by the
Company’s ten operating assets, as well as the Company potentially moving forward
with investments in the Quebradona and Gramalote projects. As a result of these
investments, total capital expenditure is expected to increase in 2022 to 2024, before
declining. Following the completion of these projects, as well the expected return of
sustaining capital to normalised levels following the intensive brownfield investment
campaign, the Company is expected to be well positioned to operate at an AISC
between $900 - 1,150/oz - in nominal terms - in 2025.
*Production, cost and capital expenditure forecasts include existing assets as well as the Quebradona and Gramalote projects
that remain subject to approval, Mineral Resource conversion and high confidence inventory. Cost and capital forecast ranges
are expressed in nominal terms. In addition, both production and cost estimates assume neither operational or labour
interruptions, or power disruptions, nor further changes to asset portfolio and/or operating mines (excepted as described above)
and have not been reviewed by our external auditors. Other unknown or unpredictable factors could also have material adverse
effects on our future results and no assurance can be given that any expectations expressed by AngloGold Ashanti will prove to
have been correct. Measures taken at our operations together with our business continuity plans aim to enable our operations to
deliver in line with our production targets; we, however, remain mindful that the COVID-19 pandemic, its impacts on communities
and economies, and the actions authorities may take in response to it, are largely unpredictable. Accordingly, actual results could
differ from guidance and/or indicative outlook and any deviation may be significant. Please refer to the Risk Factors section in
AngloGold Ashanti’s annual report on Form 20-F for the year ended 31 December 2019 and the Risk Factors section in AngloGold
Ashanti’s Prospectus Supplement dated 28 September 2020, which have each been filed with the United States Securities and
Exchange Commission (SEC). Furthermore, our five-year indicative outlook assumes that AngloGold Ashanti proceeds with the
Quebradona and Gramalote projects. However, the Board has not yet made a final decision on those projects and there can be
no assurance that they will materialise. A negative decision or other discontinuation of those projects may have a material adverse
impact on our indicative outlook.
ENDS
Johannesburg
22 February 2021
JSE Sponsor: The Standard Bank of South Africa Limited
CONTACTS
Media
Chris Nthite +27 11 637 6388/ +27 83 301 2481 cnthite@anglogoldashanti.com
General inquiries media@anglogoldashanti.com
Investors
Yatish Chowthee +27 11 637 6273 / +27 78 364 2080 yrchowthee@anglogoldashanti.com
Fundisa Mgidi +27 11 637 6763 / +27 82 821 5322 fmgidi@anglogoldashanti.com
Certain statements contained in this document, other than statements of historical fact, including, without limitation, those concerning the economic outlook for the gold
mining industry, expectations regarding gold prices, production, total cash costs, all-in sustaining costs, all-in costs, cost savings and other operating results, return on
equity, productivity improvements, growth prospects and outlook of AngloGold Ashanti’s operations, individually or in the aggregate, including the achievement of project
milestones, commencement and completion of commercial operations of certain of AngloGold Ashanti’s exploration and production projects and the completion of
acquisitions, dispositions or joint venture transactions, AngloGold Ashanti’s liquidity and capital resources and capital expenditures and the outcome and consequence of
any potential or pending litigation or regulatory proceedings or environmental health and safety 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. Although AngloGold Ashanti believes that the expectations reflected in such forward-looking statements and forecasts 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 and political and market conditions, the 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, the outcome of
pending or future litigation proceedings, any supply chain disruptions, any public health crises, pandemics or epidemics (including the COVID-19 pandemic), and other
business and operational risks and other factors. For a discussion of such risk factors, refer to AngloGold Ashanti’s annual report on Form 20-F for the year ended 31
December 2019 and the Risk Factors section in AngloGold Ashanti’s Prospectus Supplement dated 28 September 2020, which have each been filed with the United States
Securities and Exchange Commission (SEC). 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, readers 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 the date hereof 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.
Non-GAAP financial measures
This communication may contain certain “Non-GAAP” financial measures. AngloGold Ashanti utilises certain Non-GAAP performance measures and ratios in managing its
business. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the reported operating results or cash flow from operations or any
other measures of performance prepared in accordance with IFRS. In addition, the presentation of these measures may not be comparable to similarly titled measures
other companies may use.
Incorporated in the Republic of South Africa Reg No: 1944/017354/06
ISIN. ZAE000043485 – JSE share code: ANG CUSIP: 035128206 – NYSE share code: AU
Website: www.anglogoldashanti.com
Date: 22-02-2021 07:07:00
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