AngloGold Ashanti Reports Performance for 1st-Half 2017

South African miner posts adjusted headline loss

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AngloGold Ashanti Litd. (AU, Financial)  reported its financial and operating results for the first half of fiscal 2017 on Aug. 21.

The South African gold mining company closed the period with an adjusted headline loss of $93 million, or 23 cents per share. This figure represents a negative turnaround from a net profit of $159 million, or EPS of 39 cents, in the comparable period of fiscal 2016.

First half of fiscal 2017 earnings are backed on revenue that came in at $2.03 billion, a 3.6% upside from the first half of fiscal 2016.

Gold production was nearly flat year over year with a total volume of 1.748 million ounces. Regardless, the miner says it is on track to meet its full-year guidance, which is between 3.6 million and 3.75 million ounces. Improvements at Siguiri in Guinea – which belongs to AngloGold Ashanti’s international operations segment – helped offset negative effects due to lower grades and slowing production at some of its operations.

AngloGold Ashanti produced one ounce of gold at an all-in sustaining cost (AISC) of $1,071 per ounce, which is a 17.6% increase year over year due to allocating more funds to capital expenditures.

For the year, AngloGold Ashanti forecasts its capital expenditures will range between $950 million and $1.05 billion.

During the period, AngloGold Ashanti sold 1.790 million ounces of gold for $1,236 per ounce. The miner reported increases in the volume of ounces sold – 2.5% year over year – and in the gold price received from the sale of the metal, 1.14% year over year. However, headline earnings were affected by a $47 million provision for retrenchment and by a $46 million provision raised by AngloGold Ashanti to settle possible silicosis class-action suits in the future.

The company generated cash flow of $321 million from operations, versus an operating cash flow of $476 for the comparable period of 2016.

The increase in capital expenditures to develop brownfield projects along with higher operating costs and unfavorable movements in working capital caused a 250% decrease in the free cash flow to an outflow of $151 million.

The amount of cash on hand and securities, including restricted cash, decreased by nearly 63% to $183 million. With total debt falling 11% to $2.366 billion, the company's net debt at the end of the first half was $2.151 billion. The net debt to adjusted EBITDA ratio was 1.56 versus a value of 1.44 a year ago.Â

AngloGold Ashanti is currently trading around $9.82 per share with a market capitalization of $4.01 billion and an EV/Ebitda ratio of 4.55.

Disclosure: I have no positions in AngloGold Ashanti.