AngloGold Ashanti Limited (AU) CEO Kelvin Dushnisky on Full Year 2018 Results - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported all-in sustaining costs for the full year at $976 per ounce, a 7.4% improvement from the prior year [9] - Free cash flow for the year was $67 million, significantly improved despite various one-off items [12] - Net debt decreased to $1.65 billion, the lowest level since 2012, reflecting a 17% reduction year-on-year [17] Business Line Data and Key Metrics Changes - Production from retained operations increased by 2% compared to the previous year, with all-in sustaining costs for international operations at $920 per ounce, down from $972 [11][16] - The South African business generated positive free cash flow in H2 2018, despite restructuring costs [14][31] - The Americas saw a drop in production mainly due to constraints at AGA Mineração, while Australia experienced a 21% increase in production at Sunrise Dam [24][25] Market Data and Key Metrics Changes - The company expects production in 2019 to range from 3.250 million ounces to 3.450 million ounces, adjusting for asset sales and closures [21] - Cash cost guidance reflects improvements compared to 2018, capturing weaker currency and current commodity price assumptions [22] Company Strategy and Development Direction - The company is focused on streamlining its portfolio and has initiated divestment processes for Cerro Vanguardia in Argentina and Sadiola in Mali [5][6] - A new target for net debt to EBITDA has been set at one times through the cycle, down from 1.5 times, to enhance capital discipline [6][18] - The company aims to maintain a disciplined approach to capital allocation, ensuring that investments meet a 15% after-tax IRR at a $1200 gold price [6][56] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of operational excellence and cost management to navigate inflationary pressures, particularly in fuel costs [66] - The company remains committed to meeting guidance and improving its license to operate, with a focus on safety and environmental management [8][56] - Future cash flow generation is expected to benefit from current market conditions and efficiency improvements [19] Other Important Information - A cash dividend of $0.07 per share was declared, aligning with the company's policy to pay 10% of free cash flow [20] - The company has a strong liquidity position, providing flexibility in a volatile climate [17] Q&A Session All Questions and Answers Question: Performance of operations in 2019 compared to 2018 - Management indicated an uptick in Brazil operations and a flat performance in Africa, with slight improvements expected in Continental Africa and Australia [63][64] Question: Inflationary pressures in cost structure - The primary inflationary pressure identified is fuel costs, with labor costs remaining stable and balanced by exchange rates [66][67] Question: Capital items on the development front - The overall capital guidance for 2019 is set between $19 million and $990 million, with significant spending planned for the Obuasi project and other key mines [68][69]