AngloGold Ashanti on Friday reported a decline in its first half-year net profit while declaring that it is on track to meet its guidance for the full year despite inflation expected to increase further.
Implats said it had accounted in its guidance for the price of the Brent oil price. In the first half, the biggest impact Implats felt with inflation was the cost of diesel.
Chief executive Alberto Calderon said looking at next year, while inflation currently was at 7 percent, the cost of inflation would be in the second half at about 13 percent. However, they expected crude oil prices to decline, with an expected increase in production, which was catered for in their guidance.
Calderon said: “The fundamentals of our company continue to improve, despite the challenging cost environment. We have the right structure and the right people in place to further optimise our portfolio and close the gap with our peers.”
In its interim results for the six months ended June 30, released on Friday, the group said basic earnings dropped to $298 million (R5 billion) from $362m a year earlier.
Headline earnings decreased to $300m in the reported period, from $363m in the first half of 2021.
AngloGold’s production was up by 3 percent year on year to 1.23 million gold ounces, with second-quarter output up 10 percent versus the first quarter of 2022.
“Production growth underpinned by higher grades and tonnes processed, leading to marked improvements from the Australian and Latin American operations, which offset lower production from the Democratic Republic of Congo’s Kibali and Tanzania’s Geita,” the group said.
The company declared an interim dividend of $121m, or 29 US cents per share.
The balance sheet remained in a solid position after funding the Corvus acquisition and paying the 2021 year-end dividend, with approximately $2.6bn in liquidity, including cash of $1.3bn at the end of June 2022.
The $1.4bn multi-currency revolving credit facility was refinanced during the second quarter of 2022, extending the maturity to 2027.
The $365m cash acquisition of Corvus Gold was completed in January 2022, creating a strong foothold in the prospective Beatty district in Southern Nevada which the company plans to bring into production in about three years.
“The district is expected to grow over several years to more than 300 000 ounces per year production after mining commences and be active for two decades or more, with all-in costs well below AngloGold Ashanti’s current average,” it said.
The Africa region produced 712 000 ounces at a total cash cost of $1023 per ounce for the reported period, compared to 717 000 ounces at a total cash cost of $946 per ounce for last year’s first half.
The Americas region produced 267 000 ounces at a total cash cost of $1 062 per ounce for the period under review, compared to 261 000 ounces at a total cash cost of $923 per ounce for the first half of 2021.
The Australian region produced 254 000 ounces at a total cash cost of $1 204 per ounce, compared to 222000 ounces at a total cash cost of $1 296 per ounce for the six months ended June 30, 2021.
Looking forward, the group said due to Russia’s invasion of Ukraine and the resultant disruption of supply chains, certain key commodity supplies are experiencing volatility and inflationary pressures.
“These include oil and lubricants, ammonia-related products (explosives and cyanide), and labour. We expect inflationary pressures to continue to impact operating costs for the remainder of the year,” it said.
BUSINESS REPORT