AngloGold Ashanti Q2 Earnings Call Highlights

AngloGold Ashanti’s EBITDA rose 46% year over year to $2 billion, while headline earnings increased 58% to $1 billion and free cash flow climbed 36% to $727 million, driven largely by higher gold prices. A fatality-related suspension at Obuasi affected production, although the mine has resumed at a normalized rate and full-year production guidance was reaffirmed. Total cash costs increased 21% to $1,480 per ounce due to inflation, fuel prices, royalties, currency effects and the Obuasi disruption. The company declared $364 million in second-quarter dividends and may supplement dividends with share buybacks under its approved $2 billion program, pending regulatory approval. AngloGold is prioritizing organic growth across existing mines and advancing the Arthur project in Nevada and a grid connection at Sukari. AngloGold Ashanti reported higher second-quarter earnings, cash flow and free cash flow as stronger gold prices more than offset inflation, fuel costs, currency effects and a temporary operational suspension at its Obuasi mine. Chief Executive Officer Alberto Calderon said the company generated $2 billion in EBITDA during the quarter, up 46% from a year earlier, while headline earnings rose 58% to $1 billion. Chief Financial Officer Gillian Doran said basic earnings per share increased to $1.97 from $1.32 in the prior-year quarter. Free cash flow rose 36% year over year to $727 million in the second quarter, supported by a 41% increase in net cash flow from operating activities to $1.4 billion. Doran attributed the improvement to cost discipline, a 35% increase in the average gold price received and improved cash receipts from Kibali. Calderon opened the call by addressing a fatality at the Obuasi mine on April 24. AngloGold suspended operations for two weeks while it conducted an investigation and implemented measures intended to prevent a recurrence. The suspension, along with the sale of Serra Grande, affected second-quarter production. However, Calderon said first-half production, excluding Serra Grande, was broadly stable year over year at about 1.5 million ounces. Tropicana and Cuiabá delivered what he described as strong performances. Obuasi is operating at a normalized run rate, and the company expects second-half production from the mine of 150,000 ounces. Calderon said the mine is currently operating without the KM Shaft and certain ore passes following the incident, but management expects to restore normal operations and complete a replacement ore pass during the fourth quarter. For the full portfolio, AngloGold reaffirmed its annual guidance and expects production to be weighted toward the second half, particularly the fourth quarter. Calderon said the company anticipates second-half production could rise about 6% from the first half if operations proceed as expected. Production at Tropicana is expected to decline slightly as open-pit mining moves into the lower-grade Havana 6 pit. At Iduapriem, production has been affected by difficulty accessing temporarily flooded higher-grade areas. Total cash costs increased 21% year over year to $1,480 per ounce in the second quarter, compared with $1,226 per ounce a year earlier. Doran said inflation, higher gold-price-linked royalties and foreign-exchange effects added about $216 per ounce, or 18%, to the company’s cost base. The Obuasi suspension added...