AngloGold Maintains Annual Forecast Even as Production Falls

  • Output falls 11% to 861,000 ounces as costs decrease 6.5%
  • Miner says its full-year cost, production outlook is unchanged

AngloGold Ashanti Ltd., the world’s third-largest gold miner, maintained its full-year output and cost forecasts even as production and earnings dropped in the first quarter.

Production slipped 11 percent to 861,000 ounces in the three months to March 31, partly mitigated by a 6.5 percent decline in all-in sustaining costs to $860 an ounce, the Johannesburg-based company said in a statement Monday. Adjusted earnings before interest, tax, depreciation and amortization decreased 6 percent to $378 million.

AngloGold has cut costs by about half in the last three years and reduced its debt by a third after it was forced to restructure following the metal’s 28 percent plunge in 2013. While the company still doesn’t pay a dividend, its cash flow improved after gold rallied this year and currencies declined in its major-producing countries such as South Africa, lowering expenditure.

“We view this as an in-line first-quarter 2016 result,” Johann Steyn, a Johannesburg-based analyst at Citigroup Inc., wrote in a note. AngloGold “continues to deliver operationally and we believe the company is well positioned to benefit from the high rand-gold price,” he said.

Shares Fall

AngloGold dropped as much as 10 percent, the most since December, and was 9.4 percent lower at 221 rand by 4:06 p.m. in Johannesburg. The shares retreated as gold declined 1.8 percent to $1,265.68 an ounce and mining stocks slumped.

A weaker rand helped gold priced in the South African currency reach a record in February, data compiled by Bloomberg show.

“You saw during the quarter the diversified portfolio offering good leverage to gold prices,” while currencies also benefited the company, Chief Executive Officer Srinivasan Venkatakrishnan said on a call with reporters.

The company generated $70 million of free cash flow in the first quarter, compared with an outflow of $40 million in the same period a year ago, Venkatakrishnan said. Net debt dropped to $2.1 billion, from $2.2 billion the previous quarter.

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