AngloGold Ashanti - Q1 2024 TU

Transcript

Operator (participant)

Good day, ladies and gentlemen, and welcome to the AngloGold Ashanti 2024 Q1 Production Update. All participants will be in listen-only mode. There will be an opportunity to ask questions later during the conference. If you should need assistance during the call, please signal an operator by pressing star, then zero. Please note that this call is being recorded. I would now like to turn the conference over to Stewart Bailey. Please go ahead, sir.

Stewart Bailey (Chief Corporate Affairs and Sustainability Officer)

Thanks, Irene, and thanks everybody for joining us on our Q1 2024 Production Update. A couple of things. The first is the Safe Harbor Statement, which contains important information on forward-looking statements and information. It's important, and I would urge you to read it when you have a minute. The second is just to recap that, given our new corporate structure and ahead of our voluntary conversion to domestic filer status in the U.S., we can only report on production and not financials or costs, that held for the third quarter of last year and, of course, for the first quarter of this year, as we've mentioned before. We will, and this is important, resume reporting full financial results for our half-year reporting this year and then ongoing by quarter after that in line with our North American peers.

So this would be the last of these production-only updates that you'll see before we switch to the full monty from FY and onwards. Without further ado, I will hand over to Alberto for the presentation, but also noting that members of our executive team are on the call to assist with questions afterwards. Alberto?

Alberto Calderon (CEO)

Thank you, Stewart. Good afternoon, and thank you for joining us for this First Quarter Production Update. We've had a good start of the year with another strong safety result and a good overall performance from the portfolio. In fact, this is the strongest first-quarter performance from our operating assets this decade. That's down to greater consistency from most of our operations. In Brazil, both sites have shown significantly better performance with greater production control. Geita and Kibali were strong again, and Obuasi's ramp-up remained on track. We'll start where we always do, with safety. We're proud of another strong performance as we work hard to keep our people safe in an often challenging operating environment. We continue to make steady progress on our journey to zero harm. Our total recordable injury frequency rate is well under half of the average of ICMM members, but we've never grown complacent.

In fact, we dedicate an increasing amount of time and resources to understanding the root cause of accidents and near misses in the workplace, and we realize we're only as good as our last injury-free day. Production was up 2% year-on-year to 581,000 ounces, driven by strong performances from a number of our key assets and in spite of the 1-in-1,000-year rainfall event in Western Australia. This event caused a reduction in output, or more accurately, a postponement of about 15,000 ounces of production in Q1. Were it not for that, production would have been up more than 4%. The big movers in the portfolio were Cuiabá +55%, Serra Grande +40%, Kibali +19%, and Geita +16%. There were offsets. We'll talk more about that later in from Siguiri and, obviously, from our Australian operations.

Importantly, we're well on track to achieve guidance we set out in February of 2024. Most of our Tier 1 assets recorded a solid quarter, starting at Geita, that production improvements was driven by higher volumes and grade. At Kibali, with a 19% gain, we saw increases in recovery grades and ore tonnes processed. The flooding at Tropicana interrupted power to the plant and caused mining to be suspended. I'll talk to the remedial steps there in a moment, but suffice to say production is back on track now that things have dried out. Moving to the other two mines, we continue to drive Full Asset Potential initiatives to enhance asset performance. Cuiabá recorded a strong quarter producing 44,000 ounces from concentrate and 21,000 ounces from the gravity circuit. The same weather system that hit Tropicana had a lesser impact on Sunrise Dam, which otherwise had a very solid performance.

Siguiri, production was hit by poor equipment availability and, to a greater extent, by a drop in metallurgical recoveries associated with highly carbonaceous ore from parts of the Bidini. A new excavator and the decision to prioritize ore from alternative mining areas has helped production bounce back after the quarter end with 22,000 ounces of attributable production in April. Across at Serra Grande, we're very pleased to see the start of a turnaround with a 40% increase in production year-on-year. Obuasi, the V30 Reamer continues to do exactly what we expected. To recap, we're establishing conventional stopes with a much wider reamer head, which is overcoming a lot of the challenges we saw through Q3 of last year. We're seeing better results with ore tonnes up 16% year-on-year and at similar levels of Q4.

Production was slightly lower than year-over-year, which was in line with our plan and down simply to the lower grade areas in the mine plan. The important thing is we continue to see production for the year between 275,000 and 320,000 ounces with a back-end loaded profile, an H2 loaded profile. The real price for us this year will be the higher-grade Block 10, which is now being opened up and will be available to mine in the second half. This underpins our planned annualized 360,000 ounces in Q3, reaching that level in Q3. The underhand drift and fill trial is going well. This is the method that we'll use in very high-grade areas, which are increasingly associated with difficult ground conditions. We've mined and filled the first cup and tested the strength of the fill from a parallel drive. We're actually beginning this week to mine underneath that.

We've also filled that parallel drive in a single bore with that field curing in 14 days. Okay, next slide. Phase III is the refurbishment and return to service of the KMS Shaft and associated infrastructure. This will provide direct access to the very high-grade Block 11 and other areas. It will double our current underground materials handling capacity to around 12,000 tons per day. If you look at the red block on this slide, it shows the significant advantage we'll have when we can when we can move waste ore and other materials down the shaft with no congestion rather than transporting it via a 12-kilometer decline. The added flexibility will be a significant benefit. We estimate completion by about the end of this year.

You'll also notice, and this is important, in the orange outlined Block 10 with grades around 8.3 grams per ton, where we expect to roll out the underhand, UHDF mining method, but also we expect to be reaching through conventional stoping in Q3 this Block 10. The next key project milestones include completing and commissioning the vent shaft rail system and new pump stations, as well as four passes between the upper mine and rail transport level, with progress being made to clear mud between 5,100 level and the shaft bottom. Brazil. Brazil has seen an enormous amount of work done over the past nine months under the new leadership that we put in place. It is an extraordinary turnaround. We've done a root and branch cleanup to the org structure, ensuring accountability is properly located, waste is being stripped out, and capital expenditure scrubbed.

We've narrowed the focus of the team by placing the heavily loss-making CdS on care and maintenance last year, and the Full Asset Potential program is working as designed. Cuiabá has bounced back strongly after switching to a concentrate operation last year. Grades are up. Volumes are up. In all, that's helped us post a 55% increase in production. Importantly, planning is well advanced in advance to restart the Queiroz Plant, which will be another quantum leap in performance. Serra Grande has also come to the table with a 40% increase in production. The focus for us now will be to ensure that this trajectory can be maintained. You will recall this time last year, our Group free cash flow was negative $161 million, primarily driven by the challenges in our Brazil operations.

We have seen a complete turnaround and look forward to sharing the financial results of this region when we report a half-year in the coming months. We aren't, as we said, presenting full financials, but nevertheless, in a preview, using the metric that we have heard has become very fashionable through some of our competitors. Free cash flow before working capital, it would have three digits in Q1, and it's gonna be quite strong for the rest of the year. Also, after working capital, we also would have a positive free cash flow in the first quarter of the year. Slide 10, operational focus areas. Our focus on recovering from the challenges during the quarter. You can see from the picture here the extent of the flooding that hit our operations during the quarter.

350 millimeters of rain, or almost half the annual rainfall, fell in under three days. Access to roads were out of action. Power was interrupted, and mining was suspended. Since then, remedial work to restart operations was successfully completed, and mining and processing has since restarted. Siguiri production was impacted in Q1, and consequently, for the first half, we expect to recover a significant portion of this production in the second half. I spoke about the challenges we saw at Siguiri in Q1, low digger availabilities, and a big drop in recoveries. A new digger is being delivered to site, and plant recoveries have stabilized and improved back to normal levels. We've taken Bidini ore out of the plant feed and have replaced it with ore from a series of other pits. Thankfully, Siguiri is blessed with multiple ore sources.

In the meantime, our technical team is doing additional test work to improve the recoveries of the carbonaceous Bidini ore. So in sum, in Siguiri, we have, right now, the recoveries up to the mid-80s. We have moved to owner-miner operated, and now we have improved the availabilities. Hence, we're seeing we saw a very good month in April and seeing a very good month in May, too. Nevada. Moving to Nevada, where permitting is underway at North Bullfrog, we continue to anticipate the record of decision next year. In the meantime, detail engineering is on track. We've started the PFS at Expanded Silicon, which is focused on the Merlin high-grade area with mining, processing, and infrastructure trade-off studies. We're targeting completion in H2 of next year, as we've said before.

The project team has also identified potential for some early cash-generating potential in the southern extent of the lease and is evaluating those. The Sterling project is a small early-stage project that plans to reprocess 1.5 million tons of previously mined ore and mine 42 million total tons, 13.4 million ore tons using open-pit heap leach methods. The project could produce around 200,000 ounces at an all-in sustaining cost of $870 an ounce. There are existing permits in place that will need modification, which will be the critical path for production. It is estimated to produce first gold in 2028. Currently, metallurgical test work is underway to confirm recovery and CapEx assumptions used. I look forward to giving you a further update on Nevada in August.

In closing, we remain focused on making more improvements and on delivering more consistent results in line with the targets that we have set out. We've achieved key milestones over this period, notwithstanding the challenges that we have faced. Brazil is well on its way to a stronger 2024 performance, almost unimaginable from where it was this time last year. We've recovered Siguiri, have a robust plan that we're executing at Obuasi, and expect Tropicana to achieve its production targets by year-end. Our Tier 1 assets are performing well with more improvements in the pipeline. We're optimizing our important Tier 2 mines. We're focused on improving operating and capital efficiencies as we continue to improve our cost competitiveness. We're again on track to achieve our guidance in all metrics.

While this call is a production and operating update, we are confident in the delivery of our cash costs and our all-in sustaining costs at the lowest end of our full-year guidance. We are ensuring that high gold prices flow through the free cash flow net taxes and royalties. In other words, even though we are facing, like all of our competitors, around 5% inflation, we have basically managed to compensate it almost completely with our Full Asset Potential program. We have already seen the guidance of our competitors. If you remember three years ago on cash costs, we were about $300 an ounce away, and we set ourselves the target to narrow that to a two-digit level.

Well, if we deliver like we believe, to the lowest end of the guidance, we would be between $30-$95 an ounce of the two largest gold companies in the world. More importantly, for 3 years in a row, we have met the guidance on production and cash costs, probably the only company. And that's how we have basically closed almost between 70%-90% of the gap that we have. Thank you. We open to questions.

Operator (participant)

Thank you. Ladies and gentlemen, if you would like to ask a question, you're welcome to press star and then one on your touchscreen phone or on the keypad on your screen. You will hear a confirmation tone that you have joined the queue. If you decide to withdraw the question, please press star and then two to remove yourself from the queue. Once again, if you would like to ask a question, you may press star and then one. The first question we have is from Josh Wolfson of RBC. Please go ahead.

Josh Wolfson (Managing Director)

Yeah, thank you very much. On the financial statements, I think the release had said there wasn't a timeline, but your commentary, Alberto, at the beginning of the call sounded like maybe the third quarter is sort of the target for issuance of this. Is that, you know, is that what we should be thinking too?

Alberto Calderon (CEO)

So let me see if I understand your question. Yeah, we will now for the second half and then from then on, all the quarters be reporting full financials.

Josh Wolfson (Managing Director)

Okay. Got it. Thank you. And then for Obuasi, just to understand for the high-grade areas that are planned in the second half of the year, does this mining incorporate the planned cut-and-fill mine plan revisions, or would this all be with the sort of traditional methods there that have been used so far?

Alberto Calderon (CEO)

The accessing Block 10 will be for the traditional mining method. We will start accessing Block 8 and the next sort of part we're still on trial mode of the underhand cut-and-fill will be on Block 8. But the Block 10 is for the traditional. And as I've said, it's working well. We are being able to, on average, keep the consistency of about 90,000 tons of ore per month. And that should go up, probably in the second half of the year between 100 and 120.

Josh Wolfson (Managing Director)

Got it. Okay. The current schedule. When is Block

Alberto Calderon (CEO)

I don't know. If you want. . Just asking Richard if he wants to comment on something on Obuasi.

Richard Jordinson (COO)

No, that's right, Alberto. Yeah. We're still in trial mode. And, obviously, depending on the success, we'll be obviously transitioning across to more underhand cut-and-fill after the trial after we've assessed the results. Yeah. Thanks.

Josh Wolfson (Managing Director)

Got it. Okay. And then lastly, just looking at Merlin, you know, following you know us sort of digesting the very significant resource that was issued earlier this year, and then some of the technical information, you know, the historical commentary from the company was something along the lines of 300,000 ounces combined from Nevada. I know there's no PFS out now, and it's still gonna be quite a while for that. But what's the current thinking for, you know, what the scale is of the opportunity at Merlin given some of the more positive updates there in terms of resource size? Thank you.

Alberto Calderon (CEO)

Look, we try to not put out statements that are, like, let's say, not supported by our studies. It's obviously gonna be much higher than 300. But we just need to complete the work, and we will keep updating you. There are—I have seen—scenarios that are profitable at, let's say, around 500,000 a year. But let us, yeah. Just do the work. Every three months, we'll be updating you on how we're seeing things. What we know is, as you say, that it's a massive resource, that it is even much larger than what we have stated up to now.

We know that we have a long, long time of oxide gold that is, let's say, relatively easy to mine. So, but there are the whole pre-feasibility study goes into depth into what is the optimized capital expenditure, what is the type of mining that we want. Most probably, it'll be open-pit, but we need to consider all of the options. And then what is the optimal way of approaching the permit? So those are all complex things that we expect to have a very good idea at the end of this pre-feasibility study. But it will be one of the Tier 1, probably lowest costs in the AngloGold portfolio.

Josh Wolfson (Managing Director)

Great. All right. Look forward to hearing more details. Thank you very much.

Alberto Calderon (CEO)

Thank you.

Operator (participant)

The next question we have is from Leroy Mnguni of HSBC. Please go ahead.

Leroy Mnguni (Mining Equity Analyst)

Hi, Alberto. Thanks for the update and, and for the opportunity as well. I've got two questions. The first one is on the Tarkwa Iduapriem merger. It certainly seems like a slam dunk for all parties involved, the government included, but yet it still kind of seems like it's experiencing some challenges there. I wonder if you could maybe give us some insights as to what, what are the issues, what's holding it up, and, and how long you think it would take to, to resolve some of those. And then just on Tropicana, you've classified it as a Tier 1 asset. It, it the costs are quite compelling, but, it does have a short reserve life.

I was wondering if you could maybe comment on how you see this, fitting into your portfolio going forward. Is there a possibility that it may be classified as a non-core asset and if you would be interested in selling it at all? Thank you,

Alberto Calderon (CEO)

Leroy. Those are good questions that are difficult to answer. I'll tell you why. Well, on the Tarkwa, I'll echo the comments that Mike did about two days ago. I think we've made good progress in the last weeks with the government, and we're close, but we're not there yet. Probably one thing I will say is that even though it is good for all parties, it is a quite complex sort of negotiation. It produces the largest gold mine in Africa, but it has a lot of angles. And I can understand why; it's not an easy negotiation for any party.

But I can't really talk about details because you can't talk about details at a negotiation that is ongoing. As I said, what I can say is that we have made progress. And I want to thank. There's a very constructive approach from the government officials, from the minister whom I met, from the head of the Minerals Commission. And I hope to have probably more definite news in the next update. But we're close, but we're not there yet, and that's how these things go. Tropicana, we all of these mines have a very extensive exploration, brownfield exploration. And that's how this goes. They, you always close to it find sort of initially more blue sky and resource. And so we are in those plans, nothing to report right now.

But at this stage, it's still in our Tier 1 assets, and we're very happy with it. Now, we are not attached per se to anything, and we're always looking for value. So but, but that is not the intention right now. Right now, we're focused on making the most out of our Australian assets, and they're providing good cash flow.

Leroy Mnguni (Mining Equity Analyst)

Thank you. That covers it for me.

Alberto Calderon (CEO)

Thank you, Leroy.

Operator (participant)

The next question we have is from Raj Ray of BMO Capital Markets. Please go ahead.

Raj Ray (Managing Director)

Thank you, Alberto. Good afternoon, Alberto and team. I have three questions, last of ours two, and the last one is on Obuasi, so I'll keep that for later. First up on Brazil, Alberto. It's good to see the improvement at Brazil, quarter or two quarters in a row. How confident are you that you will be able to show consistent performance from here on? Are you there yet, or is there still more work to be done? And if you can, specify some details there. Second, on Siguiri, what if you can comment on what the recovery was for Q1. Now, in 2020, and this would have been before your time, Alberto, there had a similar problem.

The operation had a similar problem with carbon issues, and as if I'm not wrong, there was a modified circuit modification that was put in to deal with the carbon issues. So I'm a bit surprised that the recovery process recovery problem resurfaced at Siguiri. I'll ask the question on Obuasi later.

Alberto Calderon (CEO)

Okay. Thank you. Look, Brazil, we're really happy with the turnaround and the team, which is new, not only at the head of Marcelo of the Americas, but also the GM in Cuiabá, the GM in Serra Grande, and our finance head. And they're all really doing a very good job. You can see the, yeah, Serra Grande 40% increase focusing on not only volume but and ore, but grade. So we are confident that we will meet our guidance for the year and that the turnaround, not only in production but in financials is quite significant. And there's also been good progress, I have to say, in Cuiabá. The relationship with the regulators has improved. We still have obviously, there's still things pending that I will not talk about.

But for example, there were external tailings consultants who came out with a revision of our tailings dam in Q1 of this year. Basically, we meet what is called the post-liquefaction safety factors, and therefore, no additional remedial measures are needed. That report was issued to the National Mining Agency in accordance with Brazilian legislation. We'll see next steps. But what I'm trying to say is we make good progress not only on production but also in the relations with the regulators. Yeah, Cuiabá really solidified and strengthened its position in the portfolio of the company. In terms of Siguiri, I wasn't there, but there were people who were there who told me, "Well, maybe someone will remember the issues." So yeah. This is related, but it is different.

One of the things that I have learning still on gold that is so different from all the other commodities that I've operated is that it is it's so complex. And the metallurgy, sort of how you recover all the different ores is just, it's so it's, it's full of unexpected surprises. We thought in the Bidini ore that it was a special sort of had some special metallurgical characteristics that they turn out to be a bit more complex. We sent a team from the CTO's office, from the chief technology officer. And I think that they made a good job. They know what the issues is. And the good thing, as I said in my presentation, is that Siguiri now, as opposed to 2020, has many options, has multiple sort of sources of ore. So for now, we don't need that Bidini ore.

And for now, I mean probably for this year. But then the team will be testing how to process that. It I understand it's more an issue around oxygen, that Bidini ore sucks up the oxygen. And so, again, I understand that it is something that we can with relatively low CapEx manage. So the important thing is to reiterate at this stage, Siguiri, both communities, recoveries, and the availabilities are back to our plan. I don't know if Marcelo is on the call. I mean, we're different, but if you want to add something, Marcelo.

Marcelo Godoy (CTO)

Yes, sure, Alberto. Look, there is one basic difference that you have here that we are seeing this carbonaceous ore in the transition zone. So what we are seeing here now is a transition from oxide to sulfide. So we see more sulfidic ore, which is not something we saw back in 2021. But as Alberto said, the team has been on the ground. They are there right now and working closely with sites. And again, we are very lucky to have other sources of ore so we can keep the plant going. Thank you, Alberto.

Raj Ray (Managing Director)

Okay. Thank you, Marcelo. Okay. That's great. Thank you. And one last question on Obuasi. So assuming the trial mining for underhand drift and fill is successful, and it looks like it's going well, what percentage of your stopes will require this? And then as you go down to Block 10, you, Albert, you mentioned that it was gonna be the sublevel open stoping that's that'll be applicable there. But do you run into similar ground conditions in Block 10 as well? Has there been work done on that? When I say ground conditions, it's. I'm talking about the graphitic schist.

Alberto Calderon (CEO)

Yeah. Let me probably mention something that is important. We have found ground conditions similar to what we had in Q3. The issues that we had then is we were using a 250-millimeter reamer, and that sort of made all the issues related to very difficult ground conditions even more difficult. So the V30, which is three times as large, really has been a game changer with the existing mining method. And that's why we're keeping track of it, of the amount of around 90,000 and going to 100,000, which is critical, and we've been able to do that.

So the underhand is an alternative mechanized mining method that we will be using, again, in a cost-benefit analysis, saying, "Okay. For this one, we believe the cost per ounce is gonna be lower." It's not that we can't use the current method; it's that our cost per ounce, our dilution in these very high grades will be lower. So at this stage, we don't have a percentage. It's gonna be on, and the other probably interesting thing is, in our forecast, we don't have any production from underhand drift and fill, which we will have some ore. And as Richard says, it depends how the progress continues. It is a learning experience, basically, around the strength of the paste because you want to make sure that it's absolutely perfect so you can go underneath from a safety perspective.

But so, in the long and short answer is, the current method is working fine. We're actually gonna be using another one that is not the V30 but another one where that is used at Kibali, but similar, in 750 millimeters, which, I understand we will be able to go much faster. So the current mining method is working fine. The underhand, it will if it works better, we'll use it more. If it works it's, it's lower, we'll use it less.

Raj Ray (Managing Director)

Okay. That's great, Alberto. That's it from me. Thank you very much.

Alberto Calderon (CEO)

Thank you, Raj.

Operator (participant)

Ladies and gentlemen, just a final reminder. If you would like to ask a question, you are welcome to press star and then one. The next question we have is from Tanya Jakusconek of Scotiabank. Please go ahead.

Tanya Jakusconek (Managing Director)

Yes. Good morning, everybody. Sorry, I just joined the call, and there's another call at the same time as well. So if you've answered these questions, I really apologize for having to ask them again. Can I just, number one, start with just, again, following up on the, you know, your, your reporting under U.S. GAAP? I think you mentioned it's gonna be, you know, second half of the year. So can I just confirm with you guys that Q2 will now only be a production number as well, and it will be Q3 onward that you will be putting in detailed financial statements? Can I just confirm that?

Alberto Calderon (CEO)

It's from Q2 is full financials. So this is the last quarter where we don't report full financials. Okay. Okay.

Tanya Jakusconek (Managing Director)

Then with the full financials, can you just remind me so once you file and report under U.S. GAAP, can you just remind me of the indices' movements so that I understand? 'Cause there's obviously movement out of the emerging markets and adding to other indices as well. Can someone just walk me through the movement in the indices from the second half of 2024 into Q1 or first half of 2025, please?

Alberto Calderon (CEO)

So Stewart can help me on this, but I just want to clarify. So we are not moving in the second in Q2 to U.S. GAAP. We are reporting full financials, and we have all of the reconciliations that we needed to do, which were issues that we had for this quarter and for Q3. The requisites for reporting U.S. GAAP have not been triggered as of the half of this year, but we will do it voluntarily, and we will update the market when we are ready. But the important thing is, one, we have full financials from Q2 onwards indexation, it's not only domestic filing, but there are a number of sort of issues that probably Stewart knows better than I that will trigger indication. So maybe, Stewart.

Stewart Bailey (Chief Corporate Affairs and Sustainability Officer)

Yeah. Thanks, Alberto. So again, just to reiterate the point, IFRS financials going forward. And then the U.S. GAAP would be after we trigger domestic filing status in the U.S.. And, you know, that will be, you know, there are a number of things that could do that, if we don't voluntarily change first. So, you know, we'll provide an index update later on in the year as we see how the shareholder register changes and as we progress towards that domestic filer status, Tanya.

Tanya Jakusconek (Managing Director)

Okay. Can you just then remind us what indices what impacts? I'm not asking for number, why the movement of shares. I'm just asking, you know, you are gonna be be removed out of the emerging market index, right? So that will happen sometime. And then you are going to be added to the Russell, the CRSP. Can you just remind me where I'm being removed and where I'm being added?

Stewart Bailey (Chief Corporate Affairs and Sustainability Officer)

So Tanya, I, I would say that we, we wouldn't anticipate and again, this is not a commitment because the index providers will do what they will do ultimately. But we don't anticipate being removed from the Emerging Markets Index until we trigger domestic filing status. So those, you know, when that domestic filer status change happens is when we think the EM ind indices would look at us again. So nothing in the short to medium term on the emerging market side. But we'll let you know when we make that change.

Tanya Jakusconek (Managing Director)

Okay. And then when you trigger to U.S. GAAP, what indices would you then be included in?

Stewart Bailey (Chief Corporate Affairs and Sustainability Officer)

Well, again, no commitments on that side, but we would be targeting Russell 2000 and CRSP.

Tanya Jakusconek (Managing Director)

Okay. Thank you for that. And then maybe just on an operational question, if I could move on to. Again, I missed the call, but wondered if you were more specific in, you know, you said your production guidance is intact. I don't know if your cost and capital are also intact as, you know, what you had said in February. And with this lower Q1, what does the year look like as we ramp up? Is it going to be at 45 first half, 55 second half? Can someone just walk me through that?

Alberto Calderon (CEO)

Okay. So what we said, Tanya, is that we are keeping production guidance. And I think at this point, I think I would target towards the middle point, let's say, of our production guidance, so well within range. It usually is a 45-55, but I haven't seen the numbers lately, so it will be skewed up like in Obuasi clearly. There are others that usually, yeah, have that, that skew of 45, 55, like, like most miners. So, so that will happen. In terms of cost, even though we don't talk about it, but, what I can mention is we will be on the lowest end of the guidance. And we know that because we already know our cost for Q1.

And what I have said is that we basically are compensating all of the inflation. And, and the inflation is, around 5%. So we've made very good progress on cost.

Tanya Jakusconek (Managing Director)

And on, on the inflation, then I'll be.

Alberto Calderon (CEO)

And this is all-in sustaining. All-in sustaining. Sorry?

Tanya Jakusconek (Managing Director)

Yeah. You mentioned the inflation. So can, can you just tell me, are you seeing some relief in inflationary pressures, or they've stopped going up? Some companies have said labor is flat. They've seen some relief in consumables. Can I ask, where you operate, what are you seeing in your input?

Alberto Calderon (CEO)

So we the labor is still there. And I would say it's on average about 5%. And this is the issue. In the developed world, inflation is about maybe 4%, but in the developing world, it's higher. So on average for us, what I can tell you that what we saw Q1 2024 versus Q1 2023, on average, it's about a 5% inflation. Now, we are seeing relief on many fronts. I think in commodities, there is relief, and some are starting to go down. Explosives, I think we will start seeing them come down. We they haven't yet, but we expected that it will start going down.

So I do think we are at the we're starting to see better sort of, more encouraging signs with inflation. But the Q1 number is that I can tell you. I can quote, and that is and I've seen several other results with sort of a similar number of around 5%.

Tanya Jakusconek (Managing Director)

Okay. And some companies on their calls have mentioned that cyanide prices are still sticky, and lime is still sticky. Is that what you're seeing as well?

Alberto Calderon (CEO)

Look, I think that most I don't know from memory the cyanide, Tanya, and we can get back to you on that. But I would think that reagents have come down. And in other places, like oil, we all know where oil is. So I think that in terms of commodities, we're in much better days. In terms of consumables, in much better days. It is the wages, which is more than half of our cost, that are still very sticky. That, for me, is the main point.

Tanya Jakusconek (Managing Director)

Okay. And then lastly, just operationally, congrats on getting Brazil back, with improvements there. I just wanted to make sure, you know, ask you if your strategy on, you know, still looking at the sale of some of the Brazilian assets is still on, or with this improvement, do you think that, you know, Brazil is a keeper now for in your portfolio?

Alberto Calderon (CEO)

Look, the Cuiabá asset is definitely a keeper. It's still a very high-grade ore body as Richard, when he came back, he said, "Listen, this is this; this should become a much stronger than at Q2." And our plans not in the short term, but in the medium term, is for even higher production. So Cuiabá certainly performing very well and with very positive cash flows. Our issue with the other two assets was you really cannot sustain assets that lose cash flow. And that was a thing of CdS. We just couldn't make it work. It's a difficult ore body. It's very small. It demanded a lot of attention. And so that was the right call to close it. There are some companies that are still looking at it, but that's at this stage; we haven't been on care and maintenance, and we're okay.

But if there's a company that we are at ease, that it has the right sort of license to operate attitude, and values, let's say, we will be happy to pass it along. Serra Grande, I have to tell you, Tanya, that the turnaround has been, like, a surprise. I thought that it was gonna be good, but even a 40% increase in production, it's just quite extraordinary. So at this stage, it's fine. Like, in theory, 100,000-ounce, 80,000-ounce operations are should not be in the long run in our company, like AngloGold. But right now, it doesn't bother us at all. We are not actively doing any process. The team has done a phenomenal job.

So right now, I probably would like to keep things as they are. But in the long run, it's just a size that it shouldn't belong in a company. Like, we would want assets probably at a minimum of 250 or something like that.

Tanya Jakusconek (Managing Director)

Yeah. And that makes sense. Thank you so much for taking my questions and apologies for coming late on your call.

Alberto Calderon (CEO)

No. No worries, Tanya. Thank you.

Operator (participant)

At this time, we have no further questions. And I would like to hand the call back to Alberto Calderon for any closing comments. Please go ahead, sir.

Alberto Calderon (CEO)

Okay. Well, as always, thank you for your very comprehensive questions. We are, let me just close by saying, for us, our guidance, our credibility, the fact that we are talking to all of you or most of you every three months is for us very, very important. We are proud of the fact that we, for the third year in a row, will be able to keep our guidance on production, on cash costs, and also on all-in sustaining costs. We couldn't, because this is the last quarter that we cannot; we only presented production.

We, unfortunately, couldn't talk more about our costs, which I would say was more stunning performance for the quarter. But I did sort of give some preview of what we are anticipating. And that, in the end, we expect you to see that we have significantly, almost, as I said, between 70% and 90% closed the gap in cost. If you remember, three years ago, it was location, primary listing, and cost competitiveness that we set out to close. And we're quite happy with the progress. In the end, it all starts with operations, having the right people in the right place, and as we do now.

The operators around the world, our 30,000 people, just do a sterling job. I always say that's the hardest job. Well, one of the hardest operators, it's just a relentless daily battle that always starts with safety, but then you have to face all of the issues. So our people in operations are just performing very well. They're supported by a very strong technical team. The Full Asset Potential, we'll talk much more in the half year and give you numbers, but it continues to progress significantly. And in similar levels, remember, last year, it contributed about 300-something, $350 million on EBITDA. And there will be similar numbers on this year. So that is basically the reason why we can offset the inflation that is still relatively high for us. So yeah, steady as it goes. Thank you all again.

Stewart Bailey (Chief Corporate Affairs and Sustainability Officer)

Sure. Thanks, Alberto. Thanks, Irene. Thanks, everybody.

Operator (participant)

Thank you. Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your lines.