Anglogold Ashanti Plc Q1 FY2020 earnings call

• Overall objective: Safely deliver better quality production to widen margins, extend mine lives and improve portfolio.
• Safety: 4 fatalities in Q1, emphasized need to intensify efforts to eliminate workplace injuries.
• Production: 716,000 ounces produced, COVID-19 impacted 11,000 ounces.
• Cash flow: Robust, free cash flow before growth capital was $94 million, up 231% year-on-year.
• Balance sheet: Net debt down 10% year-on-year to $1.6 billion, gearing at 0.5 times net debt-to-EBITDA.
• Divestment: Announced deal to sell South African assets, retained CVSA in Argentina.
• COVID-19 response: Implemented various initiatives, liquidity bolstered to $2.3 billion.

Continental Africa

• Production: 360,000 ounces, 22,000 ounces higher than Q1 2019. All-in sustaining cost was $879 an ounce, 9% lower year-on-year. Geita had production at 135,000 ounces, the highest in eight years, 24% higher than previous period. Kibali's production was marginally lower year-on-year due to processing lower-grade material. Iduapriem's production was 5% higher as it mined higher-grade ore from Blocks 7 and 8. Siguiri's gold production was 48,000 ounces, 2% lower than previous periods, but total tonnes treated was 20% higher, though metallurgical recovery was an issue.

International operations

• Americas: Locally, gold production at AGA Mineracao was 10% lower than Q1 2019 due to new underground support standards and heavy rains. Serra Grande in Brazil restarted on April 1, and Cerro Vanguardia in Argentina restarted on April 6.
• Australia: Sunrise Dam had production in line with mine plan with exploration, drilling and development ahead of plan. Tropicana produced 73,000 ounces, reached 2 million ounces milestone, and development of Boston Shaker underground mine remains on track.

• On March 27, withdrew guidance for 2020 due to COVID-19 uncertainty.
• Production expected to be weighted to second-half of the year, with Obuasi ramping up through the year.
• Impact of South African asset sale and Sadiola transaction on production, net debt, etc.
• All-in sustaining cost expected to increase due to COVID-19 impacts, sustained capital spending and reserve development, but efficiency improvements to mitigate rise.
• Expect strong improvement in cash flow generation this year due to higher gold price and efficiency improvements.

• COVID-19 related: Production stoppages, supply chain disruptions, personnel mobility restrictions.
• Obuasi project risks: Impacted by international travel restrictions and supply chain delays.
• Safety risks: Potential for workplace injuries.
• Regulatory risks: Uncertainty around approval of South African asset sale and other divestment transactions.

Q: Question on margins and free cash flow, and about Geita in Tanzania.

A: Kelvin and Christine responded on factors affecting free cash flow from all-in cost, working capital, etc. Regarding Geita, they mentioned received permit for Geita Hills underground, no immediate ownership change discussions, business as usual.

Q: Question on CVSA's outlook, credit rating, CapEx, and reserve-resource to reserve conversion cost.

A: Kelvin talked about CVSA's mine life around four years, intention to extend it with reserves development; credit rating not expected to be impacted by South African asset disposal; CapEx dropped from Q4 to Q1, and target for ORD is around $30 an ounce.

Q: Questions on Obuasi risks, inflation, and returns to shareholders.

A: Graham discussed COVID-related risks to Obuasi project like skilled workforce shortage and material delivery; Christine reported average cost inflation of 4.5% globally; Kelvin mentioned dividend policy tied to free cash flow before growth capital, with intention to increase dividend prudently in future