Research archive for ANG

Looking at SENS this morning we had Anglogold Ashanti Limited - Report For The Quarter And Six Months Ended 30 June 2015. The numbers look solid enough given the tough environment for gold and gold producers. The shares are up 7.8% at the moment. The company unfortunately still made a loss given high interest costs but on an adjusted basis made a small profit. The other good news is that they brought their all-in costs down from $/oz 1 155 to $/oz 1021. If all the different costs reported confuses you as much as me, here is how they are calculated - Gold companies' cash costs and all-in sustaining cash costs.

Anglo American had their investor day presentation release yesterday, the actual presentation can be downloaded. So, now what? I mean, Minas-Rio is on track, 400 million Dollars lower than the revised plans, and is relatively low cost 33-35 Dollars per wet metric tonne. The wet has to do with the transportation method, a slurry pipeline 525 kilometres long. That is just a little shorter than the distance from Jozi to Maputo, imagine that sports lovers! Capex has been cut for next year, and the year thereafter. The dividend is expected to be funded from cashflows generated during 2016, just around when debt peaks. The company identified 10 projects (see the statement) and you can see which ones are going to be key in the coming years. As much as Mark Cutifani can do at the company in terms of operational brilliance and deep mining insight (I do not mean deep as in the sense of shaft deep), the tough operating conditions, the patchy power supply and unhelpful government (in some instances) against the backdrop of weakening metal prices hardly makes the company any more appealing now. We continue to avoid, in spite of all the best intentions and cost cutting in the world.

Falling into the category of strange, AngloGold Ashanti announced a mere five days after they were restructuring that they were not restructuring. A massive push back from their shareholders no doubt have led them to pull back. Or is it a little more complicated than that? I mean, why put out the announcement and then engage with your shareholders thereafter? That hardly builds confidence in the relationship that exists between the owners of the business, the shareholders and the custodians of their funds, the management team, or is it only me that thinks that way?

AngloGold Ashanti, which announced that they were going to restructure the business as well as look for more funding from their shareholders. Wow, the cost savings were big and Mark Cutifani did a lot of work whilst he was there to streamline the business, the company has been under pressure to restructure their debt, as well as some vocal shareholders calling for a split in the various businesses.

An ex Anglo company that still shares the name to some extent, but not the shareholder, AngloGold Ashanti announced yesterday alongside their results that they would look to "sharpen (their) focus on efficiency and to tighten up on costs, overheads and capital." And what that means is lower production guidance for the year, but pleasing to note that cash costs are in-line with expectations. Lower yield mines would attract less capital expenditure, that would be deferred to their higher quality production. Next quarterly results when we can expect more information is the 7th of August.

An announcement from AngloGold Ashanti's chief yesterday, Mark Cutifani, was rather sobering, but was something that we had been talking about for some time. Job losses in the mining sector as a result of South African mining houses shutting less profitable operations is closer than you think. From the release, AngloGold Ashanti update on unprotected strike at SA mines: "Clearly for South Africa's gold sector, as for many others, there is a very clear trade-off between investing in the sustainability of our business and not putting employment at risk. If the current unprotected strike continues, it compounds the potential likelihood of a premature downsizing of AngloGold Ashanti's South African operations."

And then there were results from AngloGold Ashanti. Quarterly results, this for the third quarter to end September. First surprise is that the company has moved to a quarterly dividend payout, in line with the distributions of many bigger listed companies internationally. Before you get too excited, 90 ZA cents per quarter. 360 ZA cents a year. But these results were far ahead of consensus, 100 US cents worth of earnings were expected, the actual number came in at 118 cents per share, that was a jump of 34 percent from the last quarter. Production was a little lower than guidance, 1.092 million ounces for the quarter, but cash costs were slightly lower than the guidance. Costs higher versus the last quarter, by nearly five percent, and production slightly higher, just a touch. Yes, well, maybe, no. The stock looks cheap, even if they maintain this current quarterly run rate. But there are other stocks in the commodity space, majors like BHP Billiton and Anglo American that are more diversified, better dividend payers and cheaper. And for the life of me, I cannot work out the fundamentals for the gold price. When in doubt and you do not understand something, don't make the investment.

AngloGold Ashanti out with quarterlies this morning. Fantastic, debt reduction by 200 million US Dollars on the quarter. The hedge noose or hedge yoke is gone. And now the time to wind down all this debt is here. Crossed fingers for higher gold prices for a while still. Production of 1.039 million ounces of Gold, AND 681 thousand ounces of silver. Plus of course 365 thousand pounds of uranium for the quarter. Adjusted HEPS of 53 US cents which translates to 350 odd South African cents per share. Not bad I guess. Total cash costs contained at 200 thousand ZAR per kilogram.

AngloGold Ashanti should change their name reported numbers for the quarter yesterday afternoon. The dudes on Hot Stoxx last night on CNBC Africa were talking about the trading update. The one enormous theme that I get from most of the South African portfolio managers is as follows: I don't like Gold mining companies, if I was pushed I would prefer to own the ETF. That is the overwhelming consensus that I get from the fellow talking heads. And in truth if most of them had stuck their money where their mouth was (and been long GLD) over the last five years they would have crushed the local gold producers.

I did two things yesterday that were noteworthy, breakfast and supper. No, I am kidding, I got a call from my mate I was talking about and we chatted about the gold price, AngloGold Ashanti, South African gold producers, the platinum market, the longer term prospects and what has happened to South Africa. And the other thing was Naspers. That was tough, more on that later, perhaps Monday, first thing, the South African gold market. We all know that South African gold production is slipping right? But the 40 year graph tells the most incredibly sad story. It is not that the gold is not there anymore, there is still a lot to be mined, but technology will have to advance further in order to extract all the gold under our feet here, the streets that we beat each and every day.

AngloGold Ashanti. Mark Cutifani, the CEO of AngloGold Ashanti said something funny a while back after having a particularly good reporting period, where he said something along the lines of call us "earnings 'r us". From then on I view him as a cuddly little teddy bear called Mark cute-and-funny. Anyway, that aside, the company reported for their third quarter this morning and early signs are that they are post some of the hedges unwind starting to look exciting. As they say in the statement ---> "Residual hedge book eliminated on 7 October at an average price of $1,300/oz, ending discounted gold sales." A good outcome at current gold price levels. For the record the company have eliminated nearly 12 million ounces of gold hedges since the beginning of 2008, that is nearly three years worth of full production.

AngloGold Ashanti was smashed yesterday as the company announced they were raising a whole lot of money to close out their hedge book.

The first thing about the AngloGold Ashanti results are that they are listed everywhere. The sun almost never sets on their trading day. During market hours of course. As one client used to say to me, they be making. As a direct result of a higher bullion price and higher production. 1.126 million ounces of gold mined and 387 thousand pounds of uranium for the quarter, for the half year it is lower, not a "good" first quarter. Production costs quarter on quarter in check, I guess that part is pleasing. 35 US cents per share worth of earnings. In the US the stock trades at around 43 Dollars a share. Cool code in New York though, AU. For those of you who know how to value gold companies, tell me what you think.