AngloGold swings to profit as costs drop ahead of CEO handover

AngloGold Ashanti [JSE:ANG] swung to a first-half profit after costs declined and output rose as the world’s third-largest gold producer prepares for a change in leadership.

Full-year production is now expected at the higher end of the previously forecast range, and costs will be at the bottom of the prior estimate, Johannesburg-based AngloGold said in a statement on Monday.

AngloGold has cut back on its South African output after selling and closing unprofitable mines to curb losses. Operations outside the country now account for about 87% of the company’s gold production.

“The business is in good shape,” said CEO Srinivasan Venkatakrishnan, who will leave the company in two weeks and be replaced by Barrick Gold’s Kelvin Dushnisky.

“Production is strong, costs are improving, and our pipeline is well stocked with options.”

AngloGold reported adjusted headline earnings, which exclude some one-time items, of $85m for the six months through June, compared with a loss of $93m a year earlier. Net debt dropped 17% year on year, to $1.79bn, the company said.

So-called all-in sustaining costs fell 5% from a year earlier to $1 020 per ounce and production from retained operations rose 4%.

For the full year, AngloGold has forecast all-in sustaining costs of $990 to $1 060 an ounce and production of 3.33 million to 3.45 million ounces.