AngloGold Ashanti Ltd. has dropped its output goal by about 12% after it cut production forecast and removing planned gold from the Obuasi operation, a key mine in Ghana
The company suspended all mining activities at the project pending the conclusion of a third-party review of the mining and ground management plans. While AngloGold hopes to restarts the mine by year-end, it would take a “cautious approach” to limit chances of a repeat of the incident that happened in May, interim Chief Executive Officer Christine Ramon said in an interview.
The company reported net income declined 5.2% to $362 million in the six months through June because of the production setbacks at Obuasi. It declared an interim dividend — the first since 2013 — of 6 cents a share. The lower output doesn’t affect AngloGold’s ability to pay a full year dividend and the payout may improve with anticipated rise in output during the second half of the year.
The shares fell by the most in nine months in Johannesburg, before paring some of the losses to trade 8.6% lower at 256.89 rand at 12:51 p.m. local time. The Johannesburg-based producer has under performed rivals in the past year after the accident at Obuasi, where it had been ramping up production following $545 million of investments. The company also spent nearly a year looking for a new CEO after announcing Kelvin Dushnisky’s departure after just two years. It expects to see a solution soon to the profits locked up in Congo
“Obuasi was going to be quite a big contribution this year,” Ramon said on an earlier call. “We can’t predict at this stage if there will be production by the end of the year.”
AngloGold also announced last month that former BHP Group executive Alberto Calderon will take the helm from Sept. 1, with Ramon returning to her post as chief financial officer. In addition to the troubles at Obuasi, the new boss will be faced with rising costs eating into the company’s profit margins expenses surged 33% in the six months through June from a year earlier. There’s also an ongoing battle to repatriate profits from its Kibali mine in the Democratic Republic of Congo and tax repayments from the government of Tanzania.