AngloGold Ashanti hits $161m in cashflow despite challenges

Even though gold prices on the world market continues to plummet, AngloGold Ashanti a mining giant saw a significant jump in its cash flow to 161 million dollars, further improving its net debt position in the third-quarter of this year.

With gold now trading around 1,222 an ounce and decline in ore grades at some of its operations and a challenging operating environment for its South African and Ghanaian business the company managed to stay within budget.

AngloGold Ashanti has for the past three years delivered on a range of self-help measures to cut debt, using internally generated funds without diluting shareholders.

Whilst it was indicated previously that costs would be higher in the second half of the year, the increase was exacerbated by a poor performance in South Africa, a delay in accessing higher grades in Brazil, capital expenditure absorbed over fewer ounces, and strengthening currencies.

By the end of the third quater of this year the freecash flow was 161 million dollars, before the 30 million dollars one-off cost incurred for the early repayment of its high-yield bond, which is the Company’s most expensive debt ever incurred.

The free cash flow generation has been is to be significant improvement on what was reported same period in 2015 which was 50 million dolars and 49% more than the 108 million dollars generated in the first half of this year.

Commenting on the results the Chief Executive Officer of AngloGold Ashanti Srinivasan Venkatakrishnan in a release to the media said. "We generated strong free cash flow in the third quarter, taking this year’s cumulative free cash flow to nearly a quarter of a billion dollars, further reducing debt."

"Work is already well advanced to turn around our operating performance in the near term by improving volumes and accessing higher grades as per our plans, and over the medium term by investing in our low-capital, high-return brownfields projects," he stated.

Production in the third quarter acording to the AngloGold was 900,000oz compared to 974,000oz in the third quarter of last year, which included a combined 32,000oz from Cripple Creek & Victor and Obuasi, which have been sold and idled respectively. Moab Khotsong, Mponeng, Iduapriem, Siguiri and Serra Grande delivered improved performances.

Total output from South Africa dipped 7% year-on-year to 235,000oz, mainly due to lower average recovered ore grades from underground. The Company’s mines in South Africa faced stoppages following three fatalities in July.

Lower production from the AngloGold Ashanti’s International Operations of 665,000oz, compared with 702,000oz in the third quarter of last year, was mainly a result of lower ore grades as planned, at both Tropicana and Geita, as well as delays in accessing high-grade ore at its operation in Brazil.

For the first nine months of the year, all-in sustaining costs were $965/oz, an increase of 4% compared to the same period the prior year.