AngloGold Ashanti forecasts significant decrease in earnings for H1 2023 impacted by impairments
AngloGold Ashanti, the prominent gold mining company, has projected a substantial decline in its basic and headline earnings for the first six months of 2023. The company expects basic earnings to be in the range of $25 million to $54 million, translating to basic earnings per share (EPS) between 6 US cents and 13 US cents. This represents a sharp decrease of between 82% to 92% from the comparative period, where basic earnings and EPS were $298 million and 71 US cents, respectively.
Headline earnings are also expected to face a significant downturn, projected to be between $125 million and $155 million, with headline earnings per share (HEPS) between 30 US cents and 37 US cents. This marks a decline of 48% to 58% from the comparative period, where headline earnings and HEPS were $300 million and 71 US cents, respectively.
The anticipated decrease in basic earnings is attributed to non-cash impairments and derecognitions at AngloGold Ashanti’s Brazilian operations, amounting to $103 million net of tax. These impairments stem from operational underperformance at Córrego do Sítio and the suspension of operating activities at Cuiabá’s Queiroz metallurgical plant during the construction of the Calcinados tailings storage facility buttress. Additionally, legacy tailings storage facilities that are no longer in use have been derecognized.
Both basic earnings and headline earnings were further impacted by higher non-cash environmental provisions of $38 million net of tax, related to legacy tailings storage facilities following the implementation of new legislation in Brazil. Other contributing factors included industry-wide inflation, increased investment in exploration and evaluation costs, the transition to third-party gold concentrate sales at the Cuiabá mine complex, and the Siguiri carbon-in-leach tank failure in May 2023.
In terms of operational performance, AngloGold Ashanti expects gold production for the period to be 1.236 million ounces, marginally higher than the comparative period’s 1.233 million ounces. The increase was driven by a stronger second quarter, with higher production contributions from various mines, offset by lower tonnes processed in some operations due to planned mill shutdowns and repair work.
As the company faces challenges impacting its earnings, AngloGold Ashanti remains focused on optimizing operations and exploring opportunities for sustainable growth in the gold mining sector.
