AngloGold announced improved productivity figures in its second-quarter earnings announcement.?AngloGold Ashanti Limited ?? the third-largest gold producer in the world ? yesterday announced second-quarter results for its fiscal year 2014 (2QFY14, ended?June 30). The Johannesburg-based company reported earnings per share (EPS) of 19 cents against estimates of 31 cents. There were no analysts? expectations for sales and the company posted $1.36 billion in revenue, a year-over-year (YoY) increase of 4.5%.
?Improvements In Production
Production for the second quarter was 1.1 million ounces (Moz) for $836 per ounce, better than last year?s production of 935,000 ounces at $898 per oucne. It was also higher than the company?s 2Q guidance, which predicted production of 1.05-1.08 Moz at $850-870 per ounce.?Meanwhile production by the world?s largest gold-mining company, Barrick Gold Corporation (USA) (ABX), was almost 1.5 Moz at $594 per ounce in the second quarter, registering a YoY decline from 1.8 Moz for $552 per ounce. Barrick Gold Corporation also had a realized price of $1,289.
AngloGold also announced its third-quarter guidance, in line with 2Q results. In the third quarter, the gold producer forecasts production to be in a range of 1.06-1.09 Moz at about $850-890 per ounce.?Improvements in South African mines were a result of the company investing in ?targeted exploration program and technology? to increase underground productivity. South Africa accounts for almost 30% of the company?s total gold production.?3Q guidance takes into account production losses due to the disposal of the Navachab mine, lower production of about 30,000 ounces, from its Vaal River mining facility because of an earthquake, and the closure of its mining operations at Siguiri and Obuasi.
Second Quarter Performance
Revenues increased on the back of a 17% increase in production YoY, which more than offset the 9.3% decline YoY, in realized prices to $1,289. EPS fell lower than estimates as the company incurred closure costs of $27 million on assets like the Yatela mine in Mali and redundancy costs of $27 million incurred in its Ghanian mine of Obuasi.
Lowered costs across the board could not offset the costs incurred on the two mines in Mali and Ghana. However, the company did give post a reduced loss of $80 million for the quarter, down from $2.17 billion last year. The rise in production was due to the two mines contributing ?lower-cost ounces? and investments in safety that helped improve operations in South Africa.
The company reported improvements in its safety metrics with no fatalities in the second quarter. It also reported a better all-in injury frequency rate of 10% YoY to almost 6.8 per million hours worked.?Since the start of the year, AngloGold has been up 54.25% and has outperformed Barrick Gold Corporation, which observed an increase of nearly 9.25% during the same period. The stock gets coverage from five analysts who have a 12-month price target of $19.33.
