AngloGold Ashanti records better second quarter results; Obuasi maintains strong growth in the first half

AngloGold Ashanti Limited’s Q2 performance shows improvement, driven by a 12% rise in production. The Interim 2023 half-year report reveals that gold production increased to 652,000 ounces in the second quarter compared to 584,000 ounces in the previous three months.

The second quarter’s strength was attributed to production and cost enhancements across most assets, mainly due to increased tonnes processed and higher recovered grades. Total cash costs improved by 2% quarter-on-quarter, and all-in sustaining costs (“AISC”) also showed a 4% improvement quarter-on-quarter.

The company stated its efforts to reduce the value gap with international peers by enhancing relative costs and extending the life of its key mines, prioritizing safety, cash conversion, and project delivery. In the last year, they added 5 million ounces of Mineral Resource in Nevada, proposed a joint venture with Gold Fields to establish Africa’s largest gold mine in Ghana, and suggested changing the primary listing of its shares to the New York Stock Exchange (NYSE), the world’s largest market for investing in gold equities.

Chief Executive Officer Alberto Calderon mentioned that momentum is growing at their key assets, following a steady start to the year and a significantly improved second quarter. He also expressed the expectation of strong operating improvements in the second half.

The first half of 2023 saw an improved second quarter performance, with increased production at various assets. However, the second quarter production could have been higher if not for a tank failure at Siguiri, which has been repaired.

Total cash costs per ounce were lower in the second quarter compared to the first quarter of 2023, but there was an 8% year-on-year increase in total cash costs per ounce for the second quarter, higher than the 16% year-on-year increase in the first quarter.

Obuasi gold mine in Ghana showed a significant 29% increase in production year-on-year, contributing to a marginal rise in overall production for the first half of 2023 compared to the same period in 2022. Recovered grades also increased by 4% year-on-year due to reinvestment in the portfolio.

In Brazil, the Cuiabá mine maintained its production in line with its plan but the Brazil portfolio continued to incur losses despite improvements in production during the second quarter of 2023. The company expects Obuasi to perform strongly in the second half as more material is moved to the surface following infrastructure debottlenecking.

The company experienced continued inflationary impact during the first half of 2023, leading to an 11% increase in total cash costs per ounce compared to the same period in 2022. This rise was mainly attributed to various factors, including costs related to Brazil and the Siguiri CIL tank failure, higher operating costs due to inflationary pressures, increased waste stripping costs at Tropicana, lower by-product revenue and volumes in Brazil and Argentina, and higher royalties paid due to higher revenues.

However, the impact was partially mitigated by weaker foreign exchange rates against the US Dollar and favorable inventory movements. All-in sustaining costs (AISC) also increased by 12% to $1,587/oz in the first half of 2023, primarily due to higher total cash costs and planned increases in sustaining capital expenditure.

As a result of these financial factors, basic earnings for the first half of 2023 were $40 million, or 10 US cents per share, significantly lower than the basic earnings of $298 million, or 71 US cents per share, reported in the same period the previous year.