SOURCE: AngloGold Ashanti Ltd

July 28, 2005 02:15 ET

AngloGold Ashanti Second Quarter Earnings Results


Key features:

--  Gold production steady at 1.569Moz.
--  Strong financial performance, including $74m increase in profit
    attributable to equity shareholders to $96m.
--  Headline earnings adjusted for the effect of unrealised non-hedge
    derivatives up 19% to $92m.
--  Total cash costs down 2% to $278/oz, with South African total cash
    costs 3% lower at R60,287/kg as a result of cost-cutting initiatives.
--  Interim dividend of R1.70 ($0.25)/share declared.

Commenting on AngloGold Ashanti's performance, CEO Bobby Godsell said the June quarter had produced steady operational results and a good financial performance including a 19% increase in headline earnings adjusted for the effect of unrealised non-hedge derivatives to $92m. He explained that $35m of the $92m related to the net positive effect of a statutory tax rate reduction in Ghana to 25% for three years (28% thereafter). The profit attributable to equity shareholders was $74m higher, due to the statutory tax rate reductions and as a result of unrealised non-hedge derivative gains in the second quarter compared with losses in the first quarter.

A combination of factors had led to a 4% increase in gross profit adjusted for the effect of unrealised non-hedge derivatives of $117m. The weakening of the rand contributed $16m to profitability, while savings arising from improved efficiencies were partly offset by lower grades and inflationary increases, with the sustained strength of the oil price continuing to have a negative impact on open-pit operations.

Production was consistent quarter-on-quarter, at 1.569Moz, due to solid performances from the Brazilian, Malian and Australian assets. There were also significantly improved performances at several operations, including Siguiri in Guinea which posted a 37,000oz increase in production, while Obuasi in Ghana continued on its course of operational improvement with production up by 11% to 102,000oz and total cash costs down by 10% to $324/oz. Geita in Tanzania and Cerro Vanguardia in Argentina, on the other hand, posted production declines of 14% and 11%, respectively.

Turning to costs, Mr. Godsell said increasing mining contractor rates, the strong oil price and the generally higher price of consumables required that cost management remained "a key management focus" across the group. The stringent cost savings programmes noted last quarter were beginning to take effect with the South African region in particular making strides in achieving its cost-cutting targets. Total South African cash costs, at R60,287/kg, constituted a 3% improvement quarter-on-quarter for the region.

For the report on the company's quarterly results, please visit the AngloGold Ashanti website at

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