AngloGold Ashanti Ltd HY 2014 financial results presentation

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AngloGold Ashanti Ltd Listed on the Johannesburg Stock Exchange has released its Half Year Results presentation. Check out Insights into this company in their presentation which appears below. Sign up to the to receive earnings presentations of all listed companies in Africa by email.
  • 1. Results for the second quarter ended 30 June 2014 AUGUST 2014 2 Second Quarter 2014 Results Presentation Building safety procedure A siren will sound and information will be broadcast over the public address system. Move quickly to the nearest exit points, which are on both sides of the auditorium and at the back right hand corner. Please gather at the open car park behind Turbine Square where safety wardens will advise you on any additional procedures. SAFETY IS OUR FIRST VALUE in case of an emergency…
  • 2. 3 Second Quarter 2014 Results Presentation Disclaimer Certain statements contained in this document, other than statements of historical fact, including, without limitation, those concerning the economic outlook for the gold mining industry, expectations regarding gold prices, production, cash costs, all-in sustaining costs, cost savings and other operating results, return on equity, productivity improvements, growth prospects and outlook of AngloGold Ashanti’s operations, individually or in the aggregate, including the achievement of project milestones, commencement and completion of commercial operations of certain of AngloGold Ashanti’s exploration and production projects and the completion of acquisitions and dispositions, AngloGold Ashanti’s liquidity and capital resources and capital expenditures and the outcome and consequences of any potential or pending litigation or regulatory proceedings or environmental, health, and safety issues, are forward-looking statements regarding AngloGold Ashanti’s operations, economic performance and financial condition. These forward-looking statements or forecasts involve known and unknown risks, uncertainties and other factors that may cause AngloGold Ashanti’s actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied in these forward-looking statements. Although AngloGold Ashanti believes that the expectations reflected in such forward- looking statements and forecasts are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic, social and political and market conditions, the success of business and operating initiatives, changes in the regulatory environment and other government actions, including environmental approvals, fluctuations in gold prices and exchange rates, the outcome of pending or future litigation proceedings, and business and operational risk management. For a discussion of such risk factors, refer to AngloGold Ashanti’s annual report on Form 20-F for the year ended 31 December 2013 which was filed with the United States Securities and Exchange Commission (“SEC”) on 14 April 2014. These factors are not necessarily all of the important factors that could cause AngloGold Ashanti’s actual results to differ materially from those expressed in any forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on future results. Consequently, readers are cautioned not to place undue reliance on forward-looking statements. AngloGold Ashanti undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except to the extent required by applicable law. All subsequent written or oral forward-looking statements attributable to AngloGold Ashanti or any person acting on its behalf are qualified by the cautionary statements herein. This communication may contain certain “Non-GAAP” financial measures. AngloGold Ashanti utilises certain Non-GAAP performance measures and ratios in managing its business. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the reported operating results or cash flow from operations or any other measures of performance prepared in accordance with IFRS. In addition, the presentation of these measures may not be comparable to similarly titled measures other companies may use. AngloGold Ashanti posts information that is important to investors on the main page of its website at and under the “Investors” tab on the main page. This information is updated regularly. Investors should visit this website to obtain important information about AngloGold Ashanti. Agenda • Venkat – Introduction • Mike O’Hare – South Africa • Ron Largent – International • Graham Ehm – Projects & Exploration • Richard Duffy – Financials • Venkat – Q2 2014 Conclusion
  • 3. 5 Second Quarter 2014 Results Presentation Building blocks for AngloGold Ashanti Seek to maximise sustainable free cash flow from a high-quality, diversified portfolio… …whilst maintaining the fundamentals of the business, with a focus on delivery. 6 Second Quarter 2014 Results Presentation Safety performance First fatality-free quarter in four years… …and records across each metric. Fatalities 12.23 11.44 9.84 8.50 7.59 6.79 Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013 Q2 2014 All injury frequency rate (AIFR) per million hours • Fatality free quarter; first since 2010, third in AGA history. YTD FIFR 0.04, ▼25% (vs. prior YTD) • Best second quarter AIFR performance on record (6.79), 2nd best overall. YTD AIFR 7.24, ▼7% (vs. prior YTD) • 26% fewer injuries and 11% (or 2,274) fewer lost work days (vs. prior YTD). • Eleven operating entities complete quarter with zero LTIs, three with zero injuries. Eight operations have no LTIs this year. • South Africa posts record safety performance. 1H’12 1H’13 1H’13 vs 1H’14 Change 1H’14 South Africa 6 5 (4) 1 International 2 0 2 2 Exploration 1 0 ‐ 0 Total 9 5 (2) 3
  • 4. 7 Second Quarter 2014 Results Presentation Second quarter highlights Solid second quarter led by strong operating results… …in addition to progress in both balance sheet and portfolio management. • Fatality free quarter and record safety performance on all key metrics; Longest period with no fatality. • Production of 1.098Moz ahead of guidance; Up 17% year-on-year and 4% on prior quarter. • Total cash costs $836/oz, at lower end of market guidance; 7% lower year-on-year. • AISC $1,060/oz, a decrease of 19% year-on-year on overhead and direct cost improvements. • Revolving Credit Facilities refinanced with five-year maturities with more favourable financial covenants. • Normalised AHE $76m on strong production, despite lower gold price, inflation and winter power tariffs. • Newly agreed natural gas pipeline for Australian operations expected to reduce costs. • Full-year production outlook remains intact. 8 Second Quarter 2014 Results Presentation Highlights: quarterly and year-on-year comparisons Despite a significant decline in the gold price, free cash flow is positive… …as significant improvements are being realised in operating and overhead costs. Particulars Q2 2013 Q2 2014 Improved Q2‘14 vs Q2’13? H1 2013 H1 2014 Improved H1 14 vs H1 13? Gold price received ($/oz) 1 421 1 289 -9% 1 529 1 289 -16% Gold production (kozs) 935 1 098 17% 1 834 2 152 17% Total cash costs ($/oz) 898 836 7% 896 804 10% Corporate and marketing costs ($m) 57 20 65% 123 45 63% Exploration and evaluation costs ($m) 79 33 58% 158 62 61% Capital expenditure ($m) 556 311 44% 1 069 585 45% All-in-sustaining costs* ($/oz) World gold council standard 1 302 1 060 19% 1 288 1 027 20% All-in-costs* ($/oz) World gold council standard 1 679 1 192 29% 1 650 1 153 30% Cash inflow from operating activities ($m) 140 336 140% 496 687 39% EBITDA** ($m) 288 382 33% 796 858 8% Free cash inflow/(outflow) ($m) (488) 34 107% (727) 56 108% *Excludes stockpiles written off **Adjusted
  • 5. Agenda • Venkat - Introduction • Mike O’Hare – South Africa • Ron Largent – International • Graham Ehm – Projects • Richard Duffy – Financials • Venkat – Q2 2014 Conclusion 10 Second Quarter 2014 Results Presentation Regional overview: South Africa • Total cash costs improved year-on-year despite wage increases and inflation. • West Wits operations saw an improvement with less seismic related activity and fewer safety stoppages. • At Mponeng, operating results benefitted from reduced stope-widths and an increased overall grade due to lower intake of waste tonnages. • In the Vaal River, a focus on cost management helped mitigate inflationary pressure. • Moab Khotsong was the lowest cost producer in the region at $707/oz. The integration of Great Noligwa into Moab Khotsong continues. *World Gold Council standard Total cash costsAll in sustaining costs* 890 863 1,213 1,064 Q2 2013 Q2 2014 Costs $/oz 307 000 319 000 Q2 2013 Q2 2014 Production oz South Africa continues to be a key operating region for the business... consolidation continues to deliver better cost performance.
  • 6. 11 Second Quarter 2014 Results Presentation SA Region safety The South Africa Region has made enormous strides in improving safety… …with strong gains on all operations. *Includes Savuka 0 1 2 3 J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J 2012 2013 2014 6 months fatality free 4 months fatality free Q1’2014 SAR Services 1m fatality-free shifts Great Noligwa 1m fatality-free shifts TauTona* 1m fatality-free shifts Kopanang 3m fatality-free shifts Q2’2014 SA Region Fatality Free TauTona* 1 year fatality-free (May 27) Great Noligwa 2 years fatality-free (June 13) Moab 2 years FOG fatality-free (June 22) Q3’ to date SAR Services 1m LTI-free shifts Moab 3m shifts no FOG fatality SAR 4.1m fatality free shifts 156 Days Fatal incidents 12 Second Quarter 2014 Results Presentation Update on recent earthquake Our infrastructure and safety protocols worked as they should… …safely hoisting to surface each one of the 3,300 employees working underground. Mine Lease Boundary Vaal River Mined out area Great Noligwa Shaft STILFONTEIN ANGLOGOLD ASHANTI FREE STATE TAU LEKOA BUFFELSFONTEIN GREAT NOLIGWA KOPANANG MOAB KHOTSONG HARTEBEESFONTEIN PAMODZI- AURORA ~27km Moab Khotsong Shaft Kopanang Shaft
  • 7. 13 Second Quarter 2014 Results Presentation Immediate actions and emergency response All safety systems and protocols were observed... ...and all employees and contractors were instrumental in ensuring a positive outcome. • Immediately activated disaster protocols, established control centre. • Re-established power – secured ventilation and hoisting capability. • Conducted shaft examinations to enable safe hoisting. • Evacuated 28 injured employees to waiting medical staff. • Safely hoisted to surface remaining underground employees. • Accounted for all 3,300 employees. • Trauma counselling immediately available and is ongoing. • Commenced with major shaft infrastructure assessment. • Removal of staff from buildings with serious damage. • Established community and media liaison. • Ongoing communications with employees, regulators, unions and local communities. 14 Second Quarter 2014 Results Presentation Further actions and priorities A thorough examination of all underground infrastructure will take place… ...once it is deemed safe for inspection crews to proceed underground. • Diminishing seismic intensity determines safe re-entry. • Rock engineers and seismologists working closely with mine management. • Schedule and complete work to repair damage. • Production scheduled to commence at night shift, Monday Aug. 11 once working places deemed safe. • Secure redundant power from Eskom. • Safety will not be compromised. • AngloGold Ashanti working with communities and local authorities to offer assistance. • Production loss estimated at about 30,000oz.* *may be adjusted higher or lower as our recovery work continues
  • 8. 15 Second Quarter 2014 Results Presentation Update on technology and innovation Reef Boring (Stoping): • Nine holes drilled at the test site in Q2; focus on drilling sequences to optimise efficiencies and extraction ratios – results remain encouraging. • Three mid-range production machines commissioned at TauTona Mine. • Small-range prototype rig delivered to Great Noligwa; testing commenced. Site Equipping: • Opening up and development of the 2014 production sites at TauTona and Great Noligwa complete; work continues at the other sites. • 2015 production sites identified and scheduled for site preparation. Ultra High Strength Backfill (UHSB) • Available reef-boreholes in production block and test site block filled. • Underground backfill plant commissioned; allows semi-automated process. • Surface testing continues to improve horizontal reticulation process. Geological Drilling: • Rotary percussion drilling comparisons with reverse circulation method. • Delivery of the newly designed compressor for RC drilling awaited upon which RC testing will continue to test drilling efficiencies of 8m/hr to depths of 300m. We have progressed beyond pure technology trials… …and are in the preliminary stages of starting to produce from our trial mining sites. Agenda • Venkat – Introduction • Mike O’Hare – South Africa • Ron Largent – International • Graham Ehm – Projects • Richard Duffy – Financials • Venkat – Q2 2014 Conclusion
  • 9. 17 Second Quarter 2014 Results Presentation Regional overview: Continental Africa • Production during the quarter saw an improvement reflecting contributions from Kibali and strong production at Siguiri. • Total cash costs, excluding Kibali, continued to improve with the realization of company wide cost reduction initiatives offsetting inflation pressures. • Siguiri production benefited from accessing higher grade ore sources; with a 33% increase in recovered grade to 1.01g/t. • Kibali affected by start-up challenges encountered during the sulfide-circuit commissioning; good recovery from these issues is underway. *World Gold Council standard Total cash costsAll in sustaining costs* 883 846 1,205 998 Q2 2013 Q2 2014 Costs $/oz 343 000 395 000 Q2 2013 Q2 2014 Production oz Cost rationalisation in the region has contributed significantly to group performance... ...with opportunities still available for continued savings. 18 Second Quarter 2014 Results Presentation Regional overview: Americas • Production slightly lower than prior year mainly due to a decline in production at CC&V. • The heap leach stacking plan at CC&V was modified to defer production in the first half of the year. • Production in Brazil saw year-on-year increase with the help of production from new ore body at CDS (Sulphide II). • Argentina costs increased due to higher equipment maintenance costs and greater materials consumption. *World Gold Council standard Total cash costsAll in sustaining costs* 733 765 1,123 1,077 Q2 2013 Q2 2014 Costs $/oz 235 000 229 000 Q2 2013 Q2 2014 Production oz The Americas region saw stable production year-on-year... ...with lower production at CC&V offset by output in Brazil.
  • 10. 19 Second Quarter 2014 Results Presentation Regional overview: Australia • Operating performance in the region continues to benefit from a strong contribution from the Tropicana Mine. • Sunrise Dam gold production increased in line with the strategy to steadily increase underground ore production, which has now reached an annualised rate of more than 2 Mtpa. • Tropicana continues to meet project expectations. Grades and productivities are as expected. Regular plant shutdowns continue to be undertaken to monitor wear and make improvements as necessary. • The change to natural gas as the fuel for power generation is expected to reduce cash operating costs at both sites by between A$25- A$30/ounce in 2016. *World Gold Council standard Total cash costsAll in sustaining costs* 1 829 850 2,424 1,048 Q2 2013 Q2 2014 Costs $/oz 50 000 155 000 Q2 2013 Q2 2014 Production oz Both Tropicana and Sunrise Dam reported strong results... ...with costs in the region improving significantly. Agenda • Venkat - Introduction • Mike O’Hare – South Africa • Ron Largent – International • Graham Ehm – Projects • Richard Duffy – Financials • Venkat – Q2 2014 Conclusion
  • 11. 21 Second Quarter 2014 Results Presentation Project update: Kibali (45% AngloGold Ashanti) Kibali continues to make strong progress toward completion… …with off-shaft development now commencing. • Completion and commissioning of sulphide circuit. • Commenced ramp-up of the sulphide circuit operation – 91,000oz production. • Declines and vertical shafts progressing well. • Vertical shaft now at 525m. First load-level development well advanced. • Nzoro hydropower station commissioned and delivering power. • Decline development ahead of schedule. • Cross-cut development into the 3,000 load progressing on three levels. Kibali Met plant and process water dam 22 Second Quarter 2014 Results Presentation Project update: CC&V MLE2 CC&V MLE2 project remains on track … … to increase the mine life of the asset. • MLE2 Project was 47% complete through the second quarter. • Mill is on schedule and is expected to deliver first gold production in the fourth quarter of 2014. • Stockpiling of mill grade ore continues to ensure mill production can commence when the mill is commissioned. • Valley leach facility (VLF) and associated gold recovery plant is on schedule to commission in mid-2016. Valley Leach Facility 2 (VLF2) Squaw Gulch VLF – Overview: Pregnant Solution Storage Area (PSSA) Relocated Hwy 67 Compacted soil (clay) liner 1st of 2 synthetic liners Crushed rock placed between 1st and 2nd synthetic liners Shaped original ground with compacted structural fill Shaped original ground with compacted structural fill Future site of new gold processing plant (ARD2) High Grade Mill Flotation and Regrind Circuits
  • 12. 23 Second Quarter 2014 Results Presentation Obuasi Meaningful action taken to correct Obuasi underperformance… …with progress in key areas. Areas of progress • Amendment to Programme of Mining Operations submitted to regulators. • Labour reductions continue. • Rationalisation of site footprint continues. • Stakeholder dialogue continues on a range of issues, including security and economic development. • New decline development breaks through. 0 500 1000 1500 2000 2500 3000 0 10 20 30 40 50 60 70 80 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 $/oz koz Production and All-in sustaining cost trend Production (koz) All-in sustaining cost ($/oz) 24 Second Quarter 2014 Results Presentation Obuasi
  • 13. 25 Second Quarter 2014 Results Presentation Nuevo Chaquiro Cu-Au Porphyry discovery New results from drilling of high grade zone are very encouraging… …and support potential for 200Mt Zone. CHA-042: 520m @ 0.21g/t Au & 0.52% Cu CHA-016: 183m @ 0.31g/t Au & 0.51% Cu CHA-018: 372m @ 0.18g/t Au & 0.48% Cu CHA-043: 420m @ 0.23g/t Au & 0.41% Cu CHA-019: 482m @ 0.20g/t Au & 0.54% Cu CHA-007: 190m @ 0.22g/t Au & 0.49% Cu Current drillholes Drillholes: 2014 Drillholes: pre-2014 Drillhole trace: mineralised holes Mineralisation: +0.45% Cu Equivalent Other Significant Intersections Mineralisation: High grade CHA-044: 492m @ 0.22g/t Au & 0.44% Cu CHA-046: 430m @ 0.22g/t Au & 0.48% Cu Target zone for high grade Cu / Au mineralisation. Projection to surface of 0.45% Cu envelope CHA-047: 218m @ 0.40g/t Au & 0.48% Cu CHA-029: 482m @ 0.20g/t Au & 0.54% Cu 26 Second Quarter 2014 Results Presentation Nuevo Chaquiro Cu-Au Porphyry discovery Sericitic alteration Early quartz diorite Intra-mineral intrusives +0.45% Cu equivalent shell +0.60% Cu equivalent shell Section A-A’ • Q2 results support potential for +200Mt high grade core. • Good continuity at depth. • Potential zone of very high grade >2% Copper between 350m-450m depth. Topography over high grade zone.
  • 14. Agenda • Venkat – Introduction • Mike O’Hare – South Africa • Ron Largent – International
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