DENVER GOLD FORUM
SEPTEMBER 2020
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, total cash costs, all-in sustaining costs, all-in costs, cost savings and other operating results,
return on equity, productivity improvements, growth prospects and outlook of AngloGold Ashanti Limited's (AngloGold Ashanti or the Company) 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, dispositions or joint venture transactions, AngloGold Ashanti's liquidity and capital resources and capital expenditures and the outcome and consequence 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, any supply chain disruptions, any public health crises, pandemics or epidemics (including the COVID-19 pandemic) and other business and operational risks and other factors. For a discussion of such risk factors, refer to AngloGold Ashanti's annual report on Form 20-F for the year ended 31 December 2019, which has been filed with the United States Securities and Exchange Commission (SEC). 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.
The financial information contained in this document has not been reviewed or reported on by the Company's external auditors.
Non-GAAP financial measures
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.
2
POSITIONED TO CREATE VALUE THROUGH THE CYCLE
Generate sustainable cash flows and shareholder
returns by focusing on
five key areas to
improve margins, extend mine lives, create an organic pipeline and enhance our license to operate.
1
Focus on
quality ounces
5
Disciplined
capital
allocation
4
Maintain
robust balance
sheet
2
Replace and grow reserves
3
Ensure
excellence
in ESG
3
WORLD CLASS GLOBAL PORTFOLIO
GROUP | 3.196Moz | $2,129m | ||||||
Produced from continuing and | ||||||||
discontinued operations | Group Adjusted EBITDA | |||||||
Americas | Continental Africa | South Africa** | ||||||
667,000oz | $1,072/oz AISC* | 1,599,000oz | $864/oz AISC* | 372,000oz | $1,170/oz AISC* | |||
Mali | |||||
Guinea | |||||
Ghana | |||||
Colombia | DRC | Tanzania | |||
Brazil | |||||
South Africa | |||||
Argentina | |||||
*AISC World Gold Council standard | Operations | Projects | Asset sales underway | Greenfields exploration | |
**Discontinued operations (undergoing sales processes) | |||||
All figures represent the last 12 months to 30 June 2020
All figures refer to continuing and discontinued operations, unless otherwise stated.
$978/oz
Group AISC* continuing and
discontinued operations
Australia
558,000oz | $1,101/oz AISC* |
Australia
4
DISCIPLINED EXECUTION OF STRATEGY OVER THE LONG-TERM
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
• Peak net debt - $3.1bn | • CC&V sale - $820m | • Resumed dividends | • Obuasi studies | • Obuasi stability | • Initiated SA asset sale | • Agreed SA asset sale |
• Obuasi first gold pour | ||||||
• Obuasi moved to | • Explored JVs at | • Siguiri Combination | • Sold Moab Khotsong | agreements ratified | • Redeemed $700m bond | |
• Capital guardrails set - | ||||||
Limited Operations | Obuasi and Colombia | Plant initiated | and Kopanang in SA | • CVSA sale initiated | ND/EBITDA; Returns | • Net debt/EBITDA <1.0x |
• Restructuring initiated | • Positive FCF | • Expanding Kibali | • Closed TauTona in SA | • Quebradona Reserve - | • Gramalote JV deal | • Investing in Ore Reserve |
Underground footprint | 2.2Moz Au, 2.8Blb Cu | • Agreed Sadiola sale | ||||
• Ongoing Tropicana and | • Sadiola sale initiated | Development and | ||||
• Fatality free year | ||||||
Kibali Investment | • Positive FCF | • Positive FCF | • Positive FCF | Reserve Conversion | ||
• Positive FCF | ||||||
• Positive FCF* | ||||||
Fundamentally improving the business through disciplined self-help -
WITHOUT RAISING EQUITY CAPITAL IN THE LAST DECADE
EBITDA | 28% | NET DEBT | 54% | FREE CASH FLOW | 270% |
2014 $1.665bn | 2014 $3.133bn | 2014 $(198)m | |||
2020* $2.129bn | 2020* $1.428bn | 2020* $336m |
*Figures represent the last 12 months to 30 June 2020 | 5 |
DELIVERING ON OUR STRATEGY
QUALITY OUNCES | ROBUST BALANCE SHEET | PIPELINE |
- Ramp up Obuasi
- Conclude sales*
- Gramalote JV
- Investing in Ore Reserve
- Development and Reserve Conversion
- Strong cash flow utilised for reinvestment and debt reduction
- Net Debt / EBITDA ratio 0.67x
- Emphasis on maintaining capital discipline
- Advancing feasibility studies at Gramalote and Quebradona
- Greenfields options in USA, Australia and Brazil
IMPROVING SOCIAL LICENSE TO OPERATE
*subject to any impact of the COVID-19 pandemic | 6 |
DISCIPLINED CAPITAL ALLOCATION
Capital Allocation Framework
Priorities
Prioritising reserve increases, improved flexibility
Sustaining
capital
Growth capital
1X Net Debt/EBITDA
through the cycle
Debt
reduction
Dividends
Sustaining capital
- Reinvesting in our ore bodies
- Low capital / high return
Debt Reduction
- Continue to deleverage the balance sheet
Dividends
- 10% of FCF pre-growth capital
- ~$137m returned to shareholders since 2016
Growth capital
- Complete Obuasi Development
- Longer term options in Colombia
Surplus cash
- Continue to evaluate all options that seeks to enhance shareholder value
15% IRR @ $1,200/oz | Clear Dividend Policy |
7
IMPROVING BALANCE IN CAPITAL ALLOCATION PRIORITIES
Total capital | Total capital | Total capital | Total capital | Total capital | Total capital | Total capital Gold price | |||
$1.2bn | $856m | $811m | $953m | $724m | $814m | $366m | $/oz | ||
100% | 1,800 | ||||||||
90% | 1,700 | ||||||||
80% | |||||||||
1,600 | |||||||||
70% | |||||||||
60% | 1,500 | ||||||||
50% | 1,400 | ||||||||
40% | 1,300 | ||||||||
30% | |||||||||
1,200 | |||||||||
20% | |||||||||
10% | 1,100 | ||||||||
0% | 1,000 | ||||||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | H1 2020 | |||
Sustaining capex | Growth capex | Exploration | Finance costs | Dividends | Gold price - RHS |
The dividend policy provides for an annual dividend based on 10% of free cash flow generated before growth capital expenditure.
8
IMPROVING MARGIN TREND
Higher gold price provides opportunity to expand margins
All-in Sustaining Costs* vs. Gold Price Received
$/oz | ||||||||
2,100 | ||||||||
1,900 | SPOT ** $1,928/oz | |||||||
1,700 | ||||||||
1,500 | ||||||||
1,300 | 14% | 37% | ||||||
28% | margin | |||||||
margin | 19% | 16% | ||||||
21% | 23% | |||||||
margin | ||||||||
1,100 | margin | 21% | margin | |||||
margin | margin | |||||||
margin | ||||||||
900 | ||||||||
700 | ||||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | H1 2020 | |
AISC* | Avg Gold Price |
*AISC World Gold Council standard **Spot - 7 September 2020
9
BALANCE SHEET STRATEGY ENFORCES DISCIPLINE | |||||||||||||||
Adjusted Net Debt | Adjusted Net Debt to Adjusted EBITDA | ||||||||||||||
$m | |||||||||||||||
4,000 | |||||||||||||||
Self-funded development of | 3.0x | ||||||||||||||
Tropicana, Kibali | |||||||||||||||
3,000 | 1.0x | ||||||||||||||
2.0x | Target through | ||||||||||||||
the cycle | |||||||||||||||
54% | |||||||||||||||
2,000 | decline | 1.0x | *0.67times | ||||||||||||
Self-funded redevelopment of Obuasi | |||||||||||||||
1,000 | Redeemed $700m bond | 0.0x | |||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | H1 2020 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | H1 2020 |
Last-12-months Adjusted net debt to Adjusted EBITDA ratio | |||||||||||||||
*Calculations include discontinued operations |
Facilities and Cash available
Balance sheet improvements over time, achieved through disciplined capital allocation and without equity issuance.
R2.05bn ZAR Facilities
US$60m**RCFs | On 15 April 2020 | |
Facilities and cash | ||
US$1,292m cash | used to redeem | |
c.$2.47bn* | $700m10-year bond | |
US$1,000m Stand-by RCF
*Total calculated with ZAR facility at R17.3210/$, and AUD facility at A$0.6902/$ ** US$1.4bn RCF includes a capped facility of AU$500m
10
WE ARE LED BY OUR VALUES, WHICH DEMAND A SHARP ESG FOCUS
Our values guide our behaviour, and drive us to make a positive impact.
These behaviours and beliefs link our business activities to our social performance.
The Health and Safety of | We treat each other with | We value diversity. |
employees is our first value. | dignity and respect. |
We are accountable for our | We want the communities and societies in | We respect the |
actions and undertake to | which we operate to be better off for | environment. |
deliver on our commitments. | AngloGold Ashanti having been there. | |
1 The Company's Human Rights Policy is available to public on the company website | 11 |
BREATHING LIFE INTO OUR VALUES AND ESG AMBITIONS
ENVIRONMENT Zero harm and equitable use of natural resources
Water use efficiency | GHG emissions intensity | Reportable environmental incidents | |||||||||||||
Kilolitres per tonne treated | Kilograms per tonne treated | Number of incidents | |||||||||||||
0.64 | 48 | ||||||||||||||
0.59 | 0.61 | 0.59 | 45 | 46 | 4 | ||||||||||
32 | 32 | ||||||||||||||
0.57 | 3 | 3 | |||||||||||||
2 | |||||||||||||||
1 | |||||||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | |||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||
SECURITY AND HUMAN RIGHTS
No human rights violations and communities assist in protecting our business
0 | 3 | 99.5% |
VPSHR* | VPSHR | VPSHR training of |
incidents | allegations | security personnel |
(2018:0) | (2018:1) | (2018:98%) |
*Voluntary Principles on Security and Human Rights
SAFETY Workplaces free of injury and harm | HEALTH Healthy workplaces, healthy | All occupancy disease frequency rate | |||||||||||
All injury frequency rate | 0 | employees and healthy communities | per million hours worked | ||||||||||
per million hours worked | 82% | 7.13 | 7.03 | ||||||||||
7.18 | 7.71 | 7.49 | 6.62 | ||||||||||
4.81 | 3.3 | 3.29 | 1.36 | ||||||||||
Fatalities in 2019 | Three-year reduction in | ||||||||||||
All occupational disease | |||||||||||||
(2018:3) | frequency rate | 2015 | 2016 | 2017 | 2018 | 2019 | |||||||
2015 | 2016 | 2017 | 2018 | 2019 | |||||||||
As we deepen the integration of sustainability into our business, we are working to strengthen the connection between our activities and the United Nations Sustainable Development Goals (SDGs)
GOVERNMENTS & COMMUNITIES Contributing to resilient, self-sustaining communities
$808m | $559m | $208m | $26m | $1,715m | = | $3,316m |
Government + Employees + Providersof capital | + Community + andSuppliersservices | |||||
Total economic value distributed |
12
MANAGING COVID-19 - LIMITING IMPACT ON BUSINESS AND COMMUNITIES
H1 2020 | 85,000oz | ~$11m | $53/oz |
COVID-19 | |||
of impacted production | in additional costs related to PPE, | impact on Group AISC* of which | |
IMPACT | charter flights, working capital, fixed | increase in costs | |
$43/oz is related the impact of | |||
costs and donations | production and $10/oz related to |
Interventions to improve operating flexibility and reduce risk:
- Steps taken to ensure uninterrupted bullion transport
- Increased stocks of critical consumables
- Additional facilities and infrastructure
- Ore stockpiling strategies in key areas
- Logistical arrangements to move critical skills to and from operations
- Comprehensive protocols to limit spread at sites and surrounding areas
- Humanitarian support provided to host governments and communities
*Continuing and discontinued operations | 13 |
PRINCIPLE PORTFOLIO FOCUS AREAS
Nevada | Colombia | Siguiri | Obuasi | Tropicana |
Developing district option | Quebradona and Gramalote | Accelerate CIL Recovery | Continue the ramp up of | Boston Shaker on track for |
commercial production | ||||
Exploration underway | Feasibility Studies | Improvement Project | Phase 2 | |
H2 2020 | ||||
Mali | |||
Guinea | |||
Operations | |||
Projects | Colombia | Ghana | DRC |
Asset sales underway | Brazil | Tanzania | |
Greenfields exploration
South
Africa
ArgentinaAustralia
CVSA
Drilling programme - potential to add 1Moz Au and 7.5Moz Ag Resources over 3 years
AGA Mineração
Accelerate exploration activities at Cuiabá and Córrego do Sítio
Kibali
Drilling to confirm presence of mineralisation at KCD & satellite deposits at depth
Geita | Sunrise Dam |
Advance Geita Hill | |
Continue intensive drill | |
underground studies | |
programme - enhancing | |
Testing promising | |
flexibility | |
open pit targets | |
14
OBUASI MINE - INVESTING IN AFRICA'S NEXT GENERATION GOLD MINE
Innovation and discipline has enabled the project to progress despite the current circumstances
Phase 1
Complete
- Construction and commissioning activities completed - key to ramp-up to 2,000tpd
- First gold pour achieved on 19 Dec 2019
*Status as of 30 June 2020
** Based on 2019 total group production
Phase 2
Ongoing
- Phase 2: 68.4% complete*
- Process plant: concrete and structural steel works completed
- Equipment, piping, electrics and instrumentation works are advanced
- Earthworks for BIOX TSF and water dams well advanced
- Ball-millheads fitted
Operational
Readiness
- Mining rates constrained at 60% - 70% capacity due to skilled labour shortages caused by COVID-19
- Mining rates averaged 1,590tpd in Q2 2020
- Mining commenced in Block 8 Lower - providing second mining front to Sansu
Steady State
- Targeting steady state in 2021
- ~11% uplift to current group production levels**
Adds
350-400koz
Gold production per year for the first 10 years
15
COLOMBIA - ACCELERATING THE MOVE UP THE VALUE CURVE
QUEBRADONA: | GRAMALOTE: | |||
A HIGH MARGIN COPPER PROJECT | MOVING UP THE VALUE CURVE | |||
Ore Reserves | 6.6bn lb Cu & 2.5Moz Au | Mineral Resource (Indicated) | 2.14Moz Au | |
Annual Production | 128M lb & 62Koz (321Koz AuEq*) | Annual Production | 284Koz | |
Plant feed grade | Averaging 1.21% Cu & 0.66g/t Au | Average grade | 0.85g/t Au | |
Low Cost | AISC* $0.88/lb Cu | Competitive Cost | AISC $648/oz | |
Gramalote | ||||
Return | IRR 17% | Return | IRR 18.1% | |
Quebradona | ||||
Payback period | 8 years | Payback period | 3.6 years | |
Long Life | 23 years | Life of Mine | 14 years | |
- Feasibility study drilling completed; engineering commenced
- Geotechnical testing and conceptual hydrogeological model completed
- Licensing process will align with the Feasibility Study
- Local consulting programs underway
- Commodity price assumptions: Cu $2.89/lb ; Au: $1,242/oz
• Experienced partner in B2Gold
• Low cost, improving fundamentals
• Simple metallurgy / high recoveries
• Strong community support
Project metrics on 100% basis
Based on B2Gold PFS published on 21 January 2020 - Gold price assumption: $1,350/oz
AngloGold Ashanti will publish its own pricing sensitivities upon
completion of the Feasibility Study | 16 |
EXPLORATION SUCCESS - BACKED BY A PROVEN TRACK RECORD
Ringfencing incremental capital for brownfield drilling and associated ore reserve development, to improve ore-body knowledge and planning, and more reliable longer-term forecasting
Implied LoM
years | ||||||
16 | ||||||
14 | Balance sheet stabilisation and reinvestment | Reserve growth | ||||
12 | 10 years | |||||
10 | ||||||
8 | ||||||
6 | ||||||
4 | ||||||
2 | ||||||
- | ||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
Implied LoM excludes South Africa
Gold discoveries 2003 - 2017
Moz
100
90
80
70
60
50
40
30
20
10
-
AGA | Peer 1 | Peer 2 Peer 3 | Peer 4 | Peer 5 Peer 6 | ||||||
Operating | Potential | La Colosa | Disposed | |||||||
S&P Global
AGA excludes South Africa
17
PRIORITISING RESERVE CONVERSION
We're working to unlock the significant potential (AND VALUE) from our portfolio through exploration & project pipelines
Years of Reserve reported
80.0
60.0 | Our geologists have added | ||||||||||||
70.0 | 53Moz of Ore | ||||||||||||
60.0 | Reserves between 2004 and | ||||||||||||
2019 across the Group at a | |||||||||||||
50.0 | cost of $33/oz | ||||||||||||
40.0 | |||||||||||||
32.8 | |||||||||||||
30.0 | 21.2 | ||||||||||||
26.5 | |||||||||||||
20.0 | 15.5 | 10.7 | 16.1 | ||||||||||
10.0 | 8.2 | 11.3 | |||||||||||
8.7 | |||||||||||||
15.0 | 4.7 | 8.5 | 3.0 | 6.4 | 10.3 | 4.2 | 7.8 | 4.3 | 2.4 | ||||
- | |||||||||||||
Obuasi | AGA | Siguiri | Serra Grande | Iduapriem | Kibali | Sunrise Dam | Tropicana | CVSA | Geita | ||||
Mineração | Reserve Life (Years) | Resource Life (Years) | |||||||||||
18
HIGH QUALITY LEVERAGE TO THE GOLD PRICE
671%
H1 2020 year-on-year changes
376% | |||||||||
237% | 278% | ||||||||
59% | 76% | 101% | |||||||
26% | |||||||||
-18% | |||||||||
Gold | Net | EBITDA | Net | Gross | Headline | Cash | FCF | FCF | |
price | Debt | CFO | Profit | Earnings | and Cash | (Ex- growth) | |||
Equivalents |
19
2020 GUIDANCE REINSTATED
Updated 2020 Group Guidance
(including contribution from SA assets to end of Sep 2020)
Updated 2020 Group Guidance
(excluding SA assets for the full year 2020)
Production (000oz) *# | 3,030 | 3,100 |
All-in sustaining costs ($/oz) ^ | 1,060 | 1,120 |
Total capital expenditure ($m) ^ | 890 | 950 |
Sustaining capital expenditure ($m) ^ | 610 | 650 |
Non-sustaining capital expenditure ($m) ^ | 280 | 300 |
Production (000oz) #
All-in sustaining costs ($/oz) ^
Total capital expenditure ($m) ^
Sustaining capital expenditure ($m) ^
Non-sustaining capital expenditure ($m) ^
2,800 | 2,860 |
1,050 | 1,100 |
850 | 905 |
570 | 605 |
280 | 300 |
- South African assets are expected to have produced approximately 240,000oz in the nine months to 30 September 2020, at an AISC of approximately $1,300/oz.
# Production includes pre-production ounces from Obuasi.
^ All-in sustaining costs and capital expenditure assume three months of commercial production from Obuasi relating to Phase 1 of the Redevelopment Project.
# Production includes pre-production ounces from Obuasi.
- All-insustaining costs and capital expenditure assume three months of commercial production from Obuasi relating to Phase 1 of the Redevelopment Project.
Economic assumptions are as follows: ZAR16.66/$; A$/$0.69; BRL5.12/$; AP70.00/$; Brent $44/bbl.
Both production and cost estimates assume neither operational or labour interruptions, or power disruptions, nor further changes to asset portfolio and/or operating mines and have not been reviewed by our external auditors. Other unknown or unpredictable factors could also have material adverse effects on our future results and no assurance can be given that any expectations expressed by AngloGold Ashanti will prove to have been correct. Accordingly, actual results could differ from guidance and any deviation may be significant. Please refer to the Risk Factors section in AngloGold Ashanti's annual report on Form 20-F for the year ended 31 December 2019, filed with the United States Securities and Exchange Commission (SEC).
AISC - World Gold Council standard | 20 |
POSITIONED AS A LEADING, RESPONSIBLE MINING COMPANY
Strategy is clear and remains unchanged
• We are guided by our values
• Prioritising the welfare and safety of people
• Committed to excellence in ESG
• Capital allocation focused on returns
Business is in solid shape
• Balance sheet strong and getting stronger
• Robust cash flow aiding debt reduction
• Portfolio quality improving
Clear set of priorities
• Navigate safely through COVID-19 pandemic
• Improve cash conversion
• Maintain safe and efficient operations
• Enhance Ore Reserve profile
21
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AngloGold Ashanti Ltd. published this content on 21 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 September 2020 08:39:05 UTC