AngloGold warns of lower full-year earnings

Gold producer AngloGold Ashanti expects to report headline earnings of between $572-million and $642-million for the year ended December 31, 2021 – a 40% year-on-year decrease.

Headline earnings per share (HEPs) will likely be between $1.37 and $1.53.

The company posted headline earnings of $1-billion and HEPS of $2.38 for 2020.

Further, basic earnings for 2021 are expected to be between $584-million and $650-million, resulting in basic earnings a share of between $1.39 and $1.54 apiece – a decrease of at least 32% year-on-year.

AngloGold attributes the decrease in earnings to lower gold sales volumes; higher operating costs as a result of lower grades and inflationary pressures; unfavourable foreign exchange movements of $43-million; increased exploration and evaluation costs of $40-million; and lower income from joint ventures since the company disposed of its Mali operations in 2020.

Other one-off expenses for the year included the voluntary suspension of underground mining activities at Obuasi, in Ghana, following a sill pillar incident in May 2021, while care-and-maintenance costs totalled $45-million during the shutdown.

The company also incurred retrenchment costs of $18-million in its organisation streamlining efforts and accelerated bond settlement costs of $24-million, to settle its 2022 bonds and replace them with 2028 bonds, which extended the debt maturities of the company at lower interest rates.

AngloGold admittedly experienced a challenging 2021, with full-year production of about 2.4-million ounces, compared with the 3.04-million ounces produced in the prior year.

The company has been divesting from its South African operations and undertaking significant reinvestments across key assets, while lower realised grades also impacted on certain operations.

Covid-19 has also had persistent impacts on the company’s production, which can be quantified to 47 000 oz in 2021, affecting operations in Ghana, Brazil and Argentina.

AngloGold will publish its results on or about February 22.