| Thu 17 Feb 2011, 8:01 | | ANG - Anglogold Ashanti - Anglogold Ashanti`s $294m profit follows hedge |
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ANANO
ANG - Anglogold Ashanti - Anglogold Ashanti`s $294m profit follows hedge
elimination; forecasts growth
ANGLOGOLD ASHANTI
Incorporated in the Republic of South Africa
Registration Number: 1944/017354/06)
ISIN Number:ZAE000043485
JSE Share Code: ANG
("AngloGold Ashanti/Company")
ANGLOGOLD ASHANTI`S $294M PROFIT FOLLOWS HEDGE ELIMINATION; FORECASTS GROWTH
(JOHANNESBURG) - AngloGold Ashanti posted adjusted headline earnings* of $294m
during the fourth quarter after its operations in South Africa, Argentina and
Guinea posted strong production results and elimination of the company`s hedge
book in October boosted cash flow.
"As long as the hedge book was in place, we were fighting with one hand tied
behind our backs," Chief Executive Officer Mark Cutifani said. "Now that we`re
selling our gold at spot prices and entrenching business improvements across the
organization, we`re spinning off significant cash flow."
The result represents strong growth in underlying profitability given that the
previous quarter`s adjusted headline earnings* of $303m were boosted by a once-
off credit of $84m. Cash flow generated from the company`s operating activities
in the three months to December 31, excluding hedge buy-back costs, surged 60%
to $679m.
Since AngloGold Ashanti`s new strategy was launched at the end of March, 2008,
when the company had almost 12Moz committed under its legacy hedging programme,
those contracts have been eliminated, the balance sheet strengthened and wide
ranging operational improvements made across its operating portfolio. The
company has also approved the first greenfield project development in more than
a decade, at its Tropicana deposit in Western Australia.
Production was 1.148Moz at a total cash cost of $672/oz in the three months to
31 December compared with 1.162Moz at $643/oz the previous quarter, and guidance
of 1.14Moz at $675/oz assuming an exchange rate of R6.75/$.
The South African operations delivered another good performance, maintaining
production of 476,000oz despite the sale of the Tau Lekoa mine during the
September quarter. The result was helped by an excellent safety performance,
which allowed for better operational continuity. Cerro Vanguardia increased
production 4% to 50,000oz and improved total cash costs to $357/oz, while
production from Siguiri rose 15% to 71,000oz from the previous quarter.
The final tranche of the accelerated buy-back of the company`s outstanding hedge
positions was completed on 7 October and $2.64bn was spent at an average price
of $1,300/oz. This allows AngloGold Ashanti to sell its gold at market prices,
allowing it to better fund its organic growth projects which are expected to add
about 1Moz to current production over the next five years.
Production in 2011 is anticipated at between 4.55Moz and 4.75Moz at a total cash
cost of $660/oz- $685/oz, assuming an average exchange rate of R7.11/$ and oil
at $95 a barrel. This represents a return to growth after six years of declining
production. The first quarter, which traditionally has the lowest output
following the Christmas break in South Africa, is expected to be 1.04Moz at a
total cash cost of $675/oz to $700/oz, assuming R7/$ and oil at $95 a barrel.
AngloGold Ashanti posted a reserve of 71.2Moz at the end of 2010, more than
replacing its production during the year. The reserve was calculated at $850/oz,
considerably lower than the price used by the company`s North American peers.
Its resource calculated at US$1,100/oz of 220Moz of gold was little changed from
2009.
*Excludes cost of accelerated hedge buy-back
ENDS
17 FEBRUARY 2011
JSE Sponsor - UBS
Contacts
Tel: E-mail:
Alan Fine (Media) +27 11 637 6383 afine@AngloGoldAshanti.com
Sicelo Ntuli (Investors) +27 11 637-6339 sntuli@anglogoldashanti.com
Stewart Bailey(Investor) +1 2128364303 sbailey@anglogoldashanti.com
or +27 82 330 9628
Certain statements made in this communication, including, without limitation,
those concerning the economic outlook for the gold mining industry, expectations
regarding gold prices, production, cash costs and other operating results,
growth prospects and outlook of AngloGold Ashanti`s operations, individually or
in the aggregate, including the completion and commencement of commercial
operations of certain of AngloGold Ashanti`s exploration and production
projects, the completion of announced mergers and acquisitions transactions,
AngloGold Ashanti`s liquidity and capital resources, and expenditure and the
outcome and consequences of any litigation proceedings or environmental issues,
contain certain forward-looking statements regarding AngloGold Ashanti`s
operations, economic performance and financial condition. Although AngloGold
Ashanti believes that the expectations reflected in such forward-looking
statements are reasonable, no assurance can be given that such expectations will
prove to have been correct. Accordingly, results could differ materially from
those set out in the forward-looking statements as a result of, among other
factors, changes in economic and market conditions, success of business and
operating initiatives, changes in the regulatory environment and other
government actions including environmental approvals and actions, fluctuations
in gold prices and exchange rates, and business and operational risk management.
For a discussion of certain of these factors, refer to AngloGold Ashanti`s
annual report for the year ended 31 December 2009, which was distributed to
shareholders on 30 March 2010. The company`s annual report on Form 20-F, was
filed with the Securities and Exchange Commission in the United States on April
19, 2010 and as amended on May 18, 2010. AngloGold Ashanti undertakes no
obligation to update publicly or release any revisions to these forward-looking
statements to reflect events or circumstances after today`s date or to reflect
the occurrence of unanticipated events. All subsequent written or oral forward-
looking statements attributable to AngloGold Ashanti or any person acting on its
behalf are qualified by the cautionary statements herein.
AngloGold Ashanti posts information that is important to investors on the main
page of its website at www.anglogoldashanti.com and under the "Investors" tab on
the main page. This information is updated regularly. Investors should visit
this website to obtain important information about AngloGold Ashanti.
Date: 17/02/2011 08:01:01 Produced by the JSE SENS Department.
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