AngloGold Ashanti plc(AU) - 2019 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Production for the year was 3.30 million ounces, with a strong fourth quarter performance [7] - All-in sustaining cost for the year was $992 per ounce, which was 2% higher than 2018 [18] - Cash generated by operations was strong, up 22% to just over $1 billion [7] - Free cash flow before growth capital doubled year-on-year to $448 million [7] - EBITDA increased by 16% year-on-year to $1.7 billion, and free cash flow rose by 90% year-on-year to $127 million [14] Business Line Data and Key Metrics Changes - Geita, Kibali, Tropicana, and Iduapriem registered record production numbers in 2019 [6] - Geita produced 604,000 ounces, its best performance in 14 years, with a total cash cost of $695 per ounce [27] - Kibali produced 366,000 ounces at an all-in sustaining cost of $704 per ounce [28] - Siguiri's production was lower at 213,000 ounces due to commissioning challenges, but it showed a 14% quarter-on-quarter increase in Q4 [29] Market Data and Key Metrics Changes - The company experienced a favorable gold price environment, which contributed to improved margins [9] - Cash costs were largely steady at $776 per ounce, with inflationary pressures offset by weaker currencies [18] - The company received $75 million in dividends from Kibali for the year [15] Company Strategy and Development Direction - The company's strategy focuses on delivering quality production, widening margins, and improving the portfolio [6] - The company is committed to responsible mining and enhancing partnerships with local communities [9] - The ongoing portfolio transformation includes the sale of non-core assets to create a more focused business [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate challenges and improve cash flow generation [47] - The company anticipates production guidance for 2020 to be between 3.05 million ounces and 3.3 million ounces [22] - Management highlighted the importance of disciplined capital and cost management to take advantage of favorable market conditions [10] Other Important Information - The Board declared a final dividend of $0.11 per share for 2019, a 57% increase from 2018 [21] - The company has a strong liquidity position with approximately $1.4 billion undrawn on its credit facility [20] - The Obuasi Redevelopment Project is expected to achieve commercial production around mid-2020 [16] Q&A Session Summary Question: Expectations for ore reserve conversion and development - Management expects increases in reserves in 2020 and beyond, with updates provided throughout the year [52][53] Question: Cost inflation assumptions and operational efficiencies - Cost inflation is assumed at 6%, with management focusing on operational excellence to mitigate increases [57][58] Question: Guidance on production and balance sheet outlook - Production is expected to step down due to asset sales and lower production from certain operations, but ramp-up at Obuasi is anticipated [62] Question: Capital allocation framework and hurdle rates - The company maintains a 15% after-tax return hurdle rate for projects, with a conservative gold price of $1,100 per ounce for reserves [71][74] Question: Satisfaction with portfolio adjustments - Management is pleased with the progress made in streamlining the business and does not foresee further transactions at this time [76]