AngloGold to report higher earnings as gold rallies


AngloGold to report higher earnings as gold rallies

Published Date: 2020-07-28 | Source: Stephen Gunnion | Author: Stephen Gunnion

AngloGold to report higher earnings as gold rallies

The gold producer has benefitted from a rising gold prices, higher foreign exchange gain and lower once-off costs.

AngloGold Ashanti said its first-half earnings would more than triple as the gold price hit a record high yesterday.

In a trading statement, the gold producer said it benefitted from a bigger than 25% improvement in the gold price it received over the six months to end-June, higher foreign exchange gains and more income from its joint ventures. While its cost of sales increased over the period, this was mitigated by weaker local currencies. Care and maintenance costs of $21 million incurred at its Obuasi mine in Ghana last year weren't repeated this year.

Gold hit a record $1,944 an ounce yesterday as the dollar weakened on concern over a rise in Covid-19 infections in the US weighed on investor confidence. The metal, seen as a safe haven, has gained 28% so far this year.

AngloGold said headline earnings for the six months would be in a range of $392 million to $416 million, an increase of 227-247% from the $120 million reported last year. Headline EPS would be up to 241% higher than the 29c previously reported. Including discontinued operations, the improvement would be even bigger, it said.

The company said the increases in earnings were partly offset by higher taxes, negative movements on realised and unrealised oil and gold derivatives, discounting of export duties receivable in Argentina and last year's legal settlement of $11 million received from a Brazilian power utility. Earnings were favourably impacted by $17 million relating to the non-cash impairment reversal on its SA assets and related liabilities after it agreed to sell them.

In February, the group sold its remaining SA assets to Harmony Gold for $300 million, including its Mponeng mine, the mothballed Tau Tona and Savuka mines and mine waste recycling operation Mine Waste Solutions.

Production for the period was expected to be 5.5% lower at 1.47 million ounces. It said the Obuasi Redevelopment Project in Ghana continued to ramp up and was impacted by the delays in receiving equipment and in the arrival of certain critical skills to site due to Covid-19.

Its results are scheduled for release on 7 August. Its shares rose 8.8% to R628.35 yesterday, in line with an 8.7% rise in the value of the JSE's Gold Mining Index.

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