AngloGold Ashanti digs itself out of debt
South Africa’s AngloGold Ashanti (NYSE:AU) (JSE:ANG), the world’s third-largest producer of the metal, returned to profit in the fourth quarter thanks to a combination of cost cutting measures and improved bullion prices.
The company, however, did not manage to avert posting a net loss for 2015, which widened to $70m versus a $39m loss a year earlier. Revenues were $4.17bn from $5.11bn in 2014.
AngloGold has cut overhead expenditure by more than two-thirds since the end of 2012 to battle weak gold prices, which have dropped by more than 35% from 2011 highs above $1,900 an ounce.
Among the measures that have helped the miner dig itself out of debt, the company highlighted the sale of its Cripple Creek & Victor mine in Colorado, U.S., for $820 million in cash to Newmont Mining (NYSE:NEM).
Chief executive Srinivasan Venkatakrishnan said the firm was still looking at options for Obuasi, its ageing mine in Ghana, one of Africa’s largest gold mines. Randgold Resources (LON:RSS), which has several joint ventures with AngloGold, pulled out of a proposed joint redevelopment at Obuasi in December, saying the project would not generate the returns it sought.
Venkatakrishnan emphasized the need for AngloGold to be “unemotional” regarding Obuasi, which is beset with conflict owing to an invasion of the mine premises by hundreds of illegal miners.
Military forces withdrew from the mine on February 2, a development that threatened the long-term viability of the mine, AngloGold said. On February 6, an AngloGold employee was killed during a riot.
For the current financial year, AngloGold has targeted output of up to 3.8 million ounces, but Venkatakrishnan said the company was no longer forecasting “absolute numbers” allowing it the flexibility to cut unprofitable output.