AngloGold Ashanti has literally struck more gold in a big way and at a higher grade.
The precious metals miner, which raked in $314 million (R6 billion) in cash inflows for the second half period to end-December 2023, has announced a huge gold resource discovery of 9.1 million ounces of the sought-after and safe haven metal in Nevada, in the US.
The market welcomed the news with shares in AngloGold closing 3.66% higher on Friday at R346.84. During the day the shares hit an intra-day spike of R356.73, 6.6% higher. Over three years the shares are up 17.01%.
AngloGold said on Friday that after spending $73m on brownfield exploration in Nevada and completing 129km of drilling, it had now confirmed a big inferred mineral deposit of the precious metal at the Merlin gold deposit under its Expanded Silicon Project.
The mining firm announced, “129 kilometres of drilling was completed at the Nevada projects for a total exploration cost of $73.9m, principally at the Merlin deposit of the Expanded Silicon Project. This has delivered exceptional results and supported the declaration of an initial 9.1 million ounces Inferred Mineral Resource.”
CEO Alberto Calderon said during an analysts briefing that the discovery of an additional gold resource at Merlin nearly doubles AngloGold Ashanti’s resource base in Nevada. Once operational, AngloGold Ashanti plans to produce up to 500 000 ounces of gold from the new find.
He also said AngloGold was not interested in joint venture partnerships in pursuit of production from the new discovery in Nevada. For now, the company was focused on understanding the massive discovery first.
“It’s not on our ‘to-do’ list. We are now just busy on understanding this massive resource,” he said.
AngloGold had “found a lot of gold, at a very good grade” in one of “the best jurisdictions” for gold mining in the world, added Calderon. This, he said, was “potentially a game-changer” for the company.
Additional exploration activities at its African operations confirmed “expansion potential” and “showed underground potential at depth” at the Nyamulilima open pit mine under the company’s Geita operation in Tanzania.
The exploration results and resource discoveries capped a strong 2023 second-half performance for AngloGold. The company’s free cash-in flows of $314m for the half-year sharply contrasted with the $205m in cash-out flows in the first half to June 2023.
This was after AngloGold raised half-yearly gold production by 15% to 1.388 million ounces compared to the June 2023 half-year. Although 3% lower in the full year context as a result of challenges at Siguiri, AngloGold Ashanti’s only operation in the Republic of Guinea, which experienced a CIL tank failure at its processing plant.
AngloGold Ashanti’s 2023 second-half performance was underpinned by strong performances from Iduapriem, Kibali, Cuiabá, Tropicana and Geita.
The Obuasi mine in Ghana started to make a good recovery in the fourth quarter of 2023, gaining momentum following the slowdown in the third quarter of 2023 when it was affected by poor ground conditions at some of its high-grade areas.
Gold production for Obuasi in the fourth quarter of 2023 was 61 000 ounces, a 33% increase over the third quarter of 2023.
AngloGold’s total cash costs per ounce amounted to $1 154 per ounce for its subsidiaries and $802 per ounce for joint venture operations during the year to December. Overall, group cash costs remained within guidance at $1 108 per ounce, although there was an 8% increase on a year-on-year basis.
Adjusted net debt for the company increased to about $1.3bn as at the close of 2023 compared to $878m a year earlier. This has been attributed to lower cash generation from operating activities and the once-off costs associated with the corporate restructuring of the company after it moved its primary listing from Johannesburg to New York.
Last year AngloGold announced and executed the listing change, saying the company would be domiciled in the UK instead of South Africa in a bid to gain access to a deeper pool of investors and to reduce risks associated with South Africa.
It subsequently commenced trading on the New York Stock Exchange on September 25, 2023. However, the gold firm retains a listing on the JSE. This as its largest shareholder, South African state-owned asset manager Public Investment Corporation, owns a stake of more than 10%.
Capital expenditure for subsidiaries for the year 2023 stood at slightly above $1bn, while capex invested in joint ventures was slightly lower at $85m for the same period compared to $90m a year earlier.
BUSINESS REPORT