AngloGold Ashanti bolstered its available liquidity to more than $2bn, improved leverage and more than trebled first quarter cash flow from operating activities as key mines delivered solid performances.
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A diverse portfolio of 14 mines in nine countries helped limit the impact of COVID-19- related stoppages to 11,000oz during the first quarter of 2020. First quarter free cash flow before investment in growth projects – the measure on which dividend payments are based – rose 231% year-on-year to $94m. Cash flow from operating activities rose by 227 % from $67m to $219m over the same period. “Cash flow is strong, leverage is down, and all operations are running,”
Chief Executive Officer Kelvin Dushnisky said. “We’re making good progress on achieving our core strategic objectives – including asset sales and the redevelopment of Obuasi – and have worked hard to ensure we have the liquidity to weather potential disruptions.” AngloGold Ashanti received a strong tailwind from bullion prices which averaged $1,506/oz during the first quarter of 2020 and have continued to rise in subsequent weeks as investors sought a safe haven.
The Company secured an additional $1bn credit facility to supplement cash on hand of around $1.1bn* as it increased its liquidity position to withstand any potential disruptions from the COVID-19 epidemic. AngloGold Ashanti has made good progress in achieving its strategic objectives, namely the ongoing redevelopment of its Obuasi Gold Mine, investment in the increase of reserves and mine lives of its key assets, and the process to conclude the announced sales of assets in South Africa and Mali. These milestones were achieved despite disruption caused by COVID-19-related stoppages at Serra Grande, Cerro Vanguardia and the South Africa operations, which straddled the first and second quarters and have since been lifted.
The announced sale of the South African Operations to Harmony Gold crossed an important hurdle after the South African Competition Tribunal approved the transaction, without conditions, on 29 April 2020. AngloGold Ashanti will no longer be selling its Cerro Vanguardia mine in Argentina, after concluding it can derive more value for shareholders by developing the remaining potential in the ore body.
The ramp-up of Obuasi’s mining rate to 4,000 tonnes per day, from 2,000 tonnes per day, is now expected to occur in the first quarter of next year. This is due to slower shipments of certain equipment to Ghana and difficulties in ensuring key, skilled employees can travel to the site amidst COVID-19-related border closings. The project remains on budget.