AngloGold Ashanti plc — FY 2023 Preliminary Financial Update
Filing: Form 6-K furnished 23 February 2024 for the six months and year ended 31 December 2023. The update is preliminary, unaudited and subject to completion of the year-end audit.
Business Context and Reporting Period
AngloGold Ashanti is a global gold producer with operations and projects in Africa, Australia and the Americas. The company completed the move of its primary listing to the New York Stock Exchange during 2023 and intends to transition to U.S. domestic issuer reporting forms beginning with its second-quarter 2024 filing.
Reported production and cost measures exclude the Córrego do Sítio operation, which was placed on care and maintenance in August 2023, unless otherwise stated.
Key Financial and Operating Metrics
| Metric | FY 2023 | FY 2022 | Change |
|---|---|---|---|
| Gold production | 2.593Moz | 2.672Moz | Down 3% |
| Gold sold | 2.573Moz | 2.648Moz | Down 3% |
| Gold income | $4.480bn | $4.388bn | Up 2% |
| Cost of sales | $3.541bn | $3.366bn | Up 5% |
| Gross profit | $1.027bn | $1.129bn | Down 9% |
| Total cash cost per ounce | $1,108 | $1,000 | Up 11% |
| All-in sustaining cost per ounce | $1,538 | $1,344 | Up 14% |
| Net cash from operating activities | $971m | $1.804bn | Down $833m |
| Free cash flow | $109m | $657m | Down $548m |
| Adjusted net debt | $1.268bn | $878m | Up $390m |
| Total borrowings | $2.410bn | $2.169bn | Up $241m |
| Capital expenditure | $1.127bn | $1.118bn | Up $9m |
The company declared a 19 U.S. cent per share dividend for the second half of 2023, bringing the full-year 2023 dividend to 23 U.S. cents per share.
Second-half performance improved materially: production increased 15% to 1.388Moz, group total cash costs decreased 9% to $1,060 per ounce, operating cash inflow increased to $678m from $293m in the first half, and free cash flow improved to an inflow of $314m from an outflow of $205m.
Material Changes Versus Comparable Periods
- FY 2023 production declined primarily because of the Siguiri processing-plant CIL tank failure and lower production at Obuasi, Geita, Cerro Vanguardia and Serra Grande. Siguiri returned to full processing capacity in early November 2023.
- Obuasi production declined 10% year over year to 224,000 ounces because of poor ground conditions, but fourth-quarter production rose 33% sequentially to 61,000 ounces.
- Costs increased because of lower production, higher labor and contractor costs, commodity, logistics, power and consumables costs, royalties, Brazilian real appreciation and additional Siguiri and Brazil-related costs.
- Operating cash flow and free cash flow were affected by the absence of the $460m Kibali legacy cash release received in 2022 and by $268m of corporate restructuring costs in 2023.
- Sustaining capital expenditure increased to $894m from $779m, while non-sustaining capital expenditure decreased to $233m from $339m.
- Gold Mineral Reserve decreased to 28.1Moz from 28.8Moz, while gold Inferred Mineral Resource increased to 46.4Moz from 40.8Moz. The increase included a 9.1Moz Inferred Mineral Resource at the Merlin deposit in Nevada.
- Córrego do Sítio recorded a $32m impairment loss in 2023 and remains on care and maintenance. Serra Grande recorded a $90m impairment loss, while Cuiabá recorded a $28m impairment reversal.
Guidance, Outlook and Management Commentary
Revised 2024 group guidance, adjusted to include Cuiabá and exclude Córrego do Sítio, is production of 2.590Moz to 2.790Moz, total cash costs of $1,075 to $1,175 per ounce, AISC of $1,500 to $1,600 per ounce, total capital expenditure of $1.130bn to $1.360bn, sustaining capital expenditure of $850m to $1.050bn and non-sustaining capital expenditure of $280m to $310m.
Management expects approximately 4% production growth at the midpoint in 2024, driven primarily by the Obuasi ramp-up following Phase 3 redevelopment and recovery at Siguiri. Obuasi is forecast to produce 275,000 to 300,000 ounces in 2024 and 325,000 to 375,000 ounces in 2025.
2025 guidance provides for production of 2.650Moz to 2.850Moz, group AISC of $1,475 to $1,575 per ounce, total cash costs of $1,050 to $1,150 per ounce and total capital expenditure of $1.175bn to $1.425bn.
The North Bullfrog feasibility study supports a 1.0Moz Mineral Reserve, estimated initial capital expenditure of $369m, average production of 117,000 ounces during the first five full years and a 13% IRR at a $1,600 gold price. Construction remains subject to permitting and regulatory approvals, anticipated during the first half of 2025.
The company commenced the Tropicana renewable energy project, which is expected to be commissioned in the first quarter of 2025 and reduce site greenhouse-gas emissions by approximately 65,000 tonnes annually over the power-purchase agreement term.
Material Accounting Issue, Risks and Contingencies
On 21 February 2024, the Audit and Risk Committee concluded that the previously issued FY 2022 audited financial statements and H1 2023 interim financial statements should no longer be relied upon. The issue concerns an overstated deferred tax asset for the Obuasi mine caused by incorrect underlying data, IFRS application and interpretation of Ghanaian tax law.
The company currently expects potential reductions in profit of up to approximately $97m for FY 2022 and $49m for H1 2023, plus approximately $16m and $1m, respectively, for other immaterial errors. These amounts are preliminary, unaudited and may change. The issue is non-cash and does not affect reported production, costs or cash flow.
Management identified one or more material weaknesses in internal control over financial reporting and expects to report that internal and disclosure controls were ineffective at 31 December 2022 and 31 December 2023. The company plans to present restated prior-period information with its audited FY 2023 Form 20-F rather than amend the 2022 Form 20-F.
Other significant risks include permitting and construction risk at North Bullfrog and Quebradona, challenging ground conditions and redevelopment execution at Obuasi, the Calcinados tailings storage facility remaining in care and maintenance at Cuiabá, foreign-exchange restrictions and delayed VAT recoveries, inflation, gold-price volatility, operating interruptions, community and regulatory issues, supply-chain constraints and mining safety incidents.
The company had open gold collars covering approximately 347,000 ounces for periods in 2024 at 31 December 2023, with an unrealized mark-to-market loss of $15m. The 2023 oil hedges had no open contracts at year end.
Important Facts for Investors to Verify
- Verify the final audited FY 2023 Form 20-F and the exact restatement of FY 2022 and H1 2023 results, including the Obuasi deferred tax asset and related material weaknesses.
- Reconcile preliminary free cash flow, adjusted net debt, liquidity and covenant measures after final audit adjustments.
- Assess whether Obuasi Phase 3 is completed on schedule and whether production reaches the 2024 and 2025 guidance ranges.
- Monitor Siguiri’s sustained recovery following the CIL tank failure and the financial impact of Cuiabá and the Calcinados TSF restrictions.
- Evaluate whether North Bullfrog receives required permits and whether its capital, production, cost and IRR assumptions remain achievable.
- Compare realized gold prices, total cash costs and AISC with guidance, taking account of non-GAAP definitions and foreign-exchange assumptions.
- Track VAT recoveries, Argentine dividend approvals, Kibali distributions and other restrictions affecting cash availability.