Ramping up production and cutting costs has seen AngloGold Ashanti’s earnings jump in the third quarter.
Adjusted headline earnings for South African miner’s third quarter were $576 million, compared with a loss of $135 million posted in the previous quarter after AngloGold wrote down almost $2.2 billion worth of its assets due to weaker gold prices.
The gold miner’s production was up 12 per cent from the previous quarter to 1,043 thousand ounces at a total cash cost of $809 per ounce, a 10 per cent improvement.
“AngloGold Ashanti responded swiftly to a sharp drop in the gold price this year, cutting unprofitable ounces from its production base, optimising its capital expenditure and enhancing efficiency by slashing waste and improving its mine plans,” the miner said in a statement.
AngloGold Ashanti is the world’s third largest gold producer with 21 operations on ten continents.
Appointing a new chief executive officer Srinivasan Venkatakrishnan in May, the company looked to cut $460 million from corporate and exploration costs and $500 million from direct operating costs.
AngloGold Ashanti’s corporate costs fell 26 per cent in the September quarter, in comparison to the previous quarter.
While expensed exploration costs dropped 30 per cent to $55 million and capital expenditure was 19 per cent lower than the previous quarter.
“We’ve delivered a decisive response to the lower gold price with all operating regions showing better production and we’ve seen cost improvements at every level,” Srinivasan Venkatakrishnan, said.
“We’ll continue driving hard to build on these early successes.”
The company’s Tropicana mine in Western Australia and the Kibali mine in the Democratic Republic of Congo, both produced their first gold in the last week of September, ahead of schedule and within budget.
“Together, these two mines are expected to contribute production of between 550,000oz to 600,000oz next year at total cash costs below our current average,” AngloGold Ashanti said.
While these are expected to further improve AngloGold Ashanti’s overall cost profile, the company said it will continue removing unprofitable ounces from its production base in order to further improve free cash flow generation.
Venkatakrishnan recently explained that, while the group remains positive about gold’s long term prospects, in the short to medium term the group expects to endure heightened turbulence.
"It is best to be prepared for a low gold price environment so you are better positioned to tackle an upside in the gold price," he said.