AngloGold Ashanti - Earnings Call - Q3 2025

Transcript

Operator (participant)

Good afternoon, ladies and gentlemen, and welcome to the AngloGold Ashanti 2025 Q3 results. All participants will be in listen-only mode. The question-and-answer session will follow the formal presentation. If you should require operator assistance during the call, please signal by keying in star and then zero on your telephone keypad. Please note that this event is being recorded. I would now hand you over to Mr. Stewart Bailey. Please go ahead.

Stewart Bailey (Chief Corporate Affairs and Sustainability Officer)

Thanks, Judith. Good morning. Good afternoon, everybody. Welcome to the Q3 results call. As normal, you have Alberto and Gillian doing the presentation. You have other members of the executive team available to answer questions after that presentation. Before we start, I would point you to the Safe Harbour statement at the front of the presentation, which contains important information regarding forward-looking statements, and we urge you to look at it. I'll hand over to Alberto.

Alberto Calderón (CEO)

Thank you, Stewart. Safety remains our highest priority, and we're committed to eliminating severe injuries from all of our sites. Our TRIFR improved 17% year on year, and it's now at 0.96, well below the 2024 ICMM average. We're proud of this result and the strides we've made in recent years, but we're always mindful that we're only ever as good as our last injury-free day. We will continue to work hard to mitigate risk and to learn from our mistakes and near misses. I'm pleased to report another excellent quarter, showing clearly how momentum continues to build alongside the success of our business improvement interventions. This result, strong by any measure, is underpinned by the much-improved resilience of our portfolio, steady delivery to plan, and growth in free cash flow and earnings. We did set a number of new records.

Free cash flow for the quarter was almost $1 billion and close to the free cash flow we generated for all of 2024, and we will take half of that as a dividend. Our adjusted net cash position of $450 million gives us our strongest balance sheet ever. Once again, we control costs very well despite persistent inflationary headwinds and higher royalties. The only cost that we really like. Our performance backs the long-term industry trend of cost rising ahead of the gold price since 2021. Our cash cost and fully sustaining cost have both remained remarkably stable in real terms. This is the result of operational excellence driven by full asset potential, disciplined project execution, and tight cost control. What we can't control, we continue to control very well. That's clear when you look at our managed operations.

Production benefited from higher contributions from Obuasi, Kibali, Geita, and Cuiabá. These strong performances were partially offset by lower tonnes and grades at Iduapriem, the temporary plant stop at Tropicana, and lower underground tonnes and grade at Sunrise. Obuasi delivered another steady on-plan performance in Q3. We're seeing the ongoing improvements in recoveries and tonne treatment. The result is supported by the investments we made in ventilation and also generally better equipment availability that we're working hard to sustain. Total cash cost for managed operations year to date was only up 3%. We expect that number for the full year to be similar, only 3% up. This is despite macro factors of 9% when you take into account the prevailing inflation rate of around 5% and the increasing royalties, which are linked to the gold price. Let me clarify this.

We expect to be within our guidance range, and that is before discounting the impact of royalties that we estimate for the year around $40 an ounce. Free cash flow at $1 billion was up 141%. Adjusted EBITDA growth grew 109%. Headline earnings were up 185%. The balance sheet is in excellent shape. We have ample liquidity, no material near-term maturities. At quarter end, even after record dividend payments in the first nine months, we have moved to an adjusted net cash position of $450 million. Let's have a quick refresher of our dividend policy. It provides a quarterly payout of $12.50 a share or around $63 million. It also provides for an annual true-up payment, bringing the payout to 50% of free cash flow.

We use this question to make that true-up at the half year, underlying it not only the extraordinary cash flow generation, but also our confidence in the outlook of the business. That took our dividend declaration for the half year to $469 million. We've done the same again for Q3 with a dividend declaration of $460 million, which matches in three months what we did in the first six months of the year. This provides one of the most generous and highest yields in the sector, and as normal, we expect a strong final quarter. With Obuasi continuing to ramp up, our tier one assets now account for more than 70% of production and 80% of reserves. We expect to see the production share from our tier assets to rise still further. Our tier two assets are also delivering a strong contribution.

We are seeing healthy margins across the portfolio and exceptional cash flow leverage as we remain active managers of our portfolio. The sale of Sierra Grande, which is expected to be finalized before the end of the year, will ensure that we can further sharpen our focus on the core business. During this extraordinary turnaround journey we have been on since 2021, we continually assess what we can generate, where we can generate the most value. The answer is clear. The best opportunities remain within. First, we are committed to lifting performance from our core assets, driving margin growth through cost discipline, which is continuing to do what we have done well in the past. Full asset potential has been invaluable in this regard, keeping cost rates in real terms, cost per ounce in real terms.

That's improved our position on the cost curve and helped us to reliably deliver on our guidance. The insights from this program have also helped to unearth a pipeline of organic growth options that are beginning to reveal themselves. This extends beyond Obuasi, which is starting to develop a consistent operating cadence as it ramps up. There are other projects under consideration to build scale and extend life at several other key assets. These are relatively low-risk, low capital-intensive opportunities that allow us to leverage our existing footprint, infrastructure, and knowledge. The returns, as you can imagine, are more than competitive. We'll flesh those out in the coming quarters, helping to daylight more value in this extraordinary portfolio of ours. Third, we're laying a foundation for the next stage of growth in Nevada, a world-class gold camp where we're building scale and optionality.

We committed to bringing some of our most exciting internal opportunities to life, and we'll start today with Geita, our marquee asset. For years, Geita has been viewed as a world-class mine and relatively short reserve life. That is completely changing. This is a tier one operation by every measure: consistent delivery, strong margins, and exceptional operational stability. What's often overlooked is the geological quality. Geita sits in the Lake Victoria Greenstone Belt on the Tanzanian Craton, part of the same gold province that hosts Kibali and North Bullfrog. After two decades of mining, large parts of the concession remain underexplored, with compelling structural and geotechnical targets pointing to significant downtime potential along strike and depth. Today, Geita hosts an open pit and multiple underground operations, producing around 500,000 oz per year, underpinned by 3.5 million oz in reserves and more than 7 million oz in resources.

We're now showcasing the next chapter to Geita, a mine positioned to remain a tier one asset for at least the next 20 years, but in reality, it's going to be much longer than that. Here you see the simple roadmap to unlock further value. We're allocating a total of $50 million and an additional $15 million a year to exploration. With that investment, we expect to grow reserves by about 60% to increase life to 10 years or more, from around 7.5 today to about 10 years or more. Our focus is on near-mine drilling, with a priority of 90 oz to the four mining fronts we have established. We're working through a conceptual option to increase mill capacity. For this mill expansion, which we conservatively forecast to cost around $100 million, we expect to grow production by 20% to about 600,000 oz.

Importantly, we're focused on maintaining margin here and not simply creating an expansion to push through lower-grade material. We will update you as we move through the study process. At a proposed capital intensity of only $1,000 per ounce of incremental annual production, this is an extraordinarily profitable project. We're looking to put this additional investment to work in an area with proven geological quality and longevity. Since we started dialing up our exploration investment in 2021, reserve life has more or less doubled to current levels around seven years. If we zoom out a little further, we've added 2 million oz of reserves between 2017 and 2024, over and above the 4.3 million oz of depletion during that period. That comes at a cost of $39 an ounce, which is exceptional value by any measure, and reinforces the quality of the geology and our exploration team.

The pipeline of targets is exceptionally rich. We've identified around 40 prospects already and believe that we will easily improve reserve life with an initial target of 10 years or more. We aim to achieve the first milestone by 2028. The first route marker for us is to see Geita's reserve at around 4 million oz by next year and then 5 million oz by the end of 2028. We have set clear initial priority areas for this drilling campaign. Given that exploration at Geita has been somewhat underdone over the past decades or more, there is a lot of low-hanging fruit. This slide shows both Geita Hill and Nyankanga underground mines, where we have established a solid track record of predictable production and an excellent understanding of the geology.

Importantly, these deposits remain open at depth, and development and drilling over the next years will let us more clearly define the extent of the deposits. At Star and Comet, it's very much the same approach. Resource definition drilling is aimed at defining the extension of the resource. At Nyamulilima, drilling has confirmed the extension of the ore body at depth, with good potential to transition to underground mining in time. We have additional high-confidence exploration targets within striking distance of the pit, where we've already intercepted mineralization, including some high-grade areas. Where does it fall, Geita? We have a world-class ore body supporting a compelling investment case. With the incremental exploration spend, we expect to leverage the large resource base, growing reserve life to 10 years or more and keeping it at that level for many, many years.

The mine has maintained a resource-to-reserve conversion rate of more than 30%. This will underpin the baseline production of +500,000 oz over a reserve life of 10 years. Over the medium term, we will continue to progress the mill expansion opportunity, which will step up production to 600,000 oz. We'll update you at key points for the feasibility process. That leaves Geita well-positioned to unlock significant value to sustain its tier one for decades to come. Now we move to Nevada. On North Bullfrog is our first step in Nevada, part of the [audio distortion] One discovery at which the Nevada strategy turns. It is one of the most significant gold discoveries in a generation, and it is in one of the world's top mining jurisdictions. This is not a modest asset. It is a large with significant high grade.

As of our latest update, Arthur holds a resource of around 16 million oz. The deposits are predominantly off-site, which is key. Our focus is currently on the Merlin deposit, where we have some more exceptionally high-grade intercepts during resource definition drilling. These results reinforce our confidence in the project tier one quality. When fully developed, the Arthur complex is anticipated to be a long-life, multi-million ounce producer, which will become the center of gravity for AngloGold Ashanti and will become the largest and probably most longevity asset that we will have in the portfolio, giving us low cost, low risk, high margin ounces, and plenty of them. We are currently at the back of our comprehensive pre-feasibility study, which will run through the remainder of the year. We expect to talk about the results of that pre-feasibility study in our results in February of next year.

The remainder of the year. We expect to talk about the results of that pre-feasibility study in our results in February of next year.

Gillian Doran (CFO and Executive Director)

For our own realized inflation rate, which represents CPI changes in the jurisdictions that we operate, was around 4.7%, keeping an upward pressure on our cost base. We continue to actively look for opportunities to mitigate cost impacts across the business, which we continue to demonstrate within our cash cost performance. Production was 17% higher year-on-year.

Alberto Calderón (CEO)

For the year, Siguiri will still be up 8% versus 2024, so it will still be a very good year for Siguiri.

Stewart Bailey (Chief Corporate Affairs and Sustainability Officer)

Right, the next question from Yaameen Gosain at Laurium Capital. He says, "Hi team, well done and a wonderful set of results. The current CapEx run rate is around $368 million a quarter, implying $590 million in Q4 to reach the midpoint of guidance. Can we expect to see a big CapEx number in Q4 or will some of this be rolled over into 2026? Gillian.

Gillian Doran (CFO and Executive Director)

Thank you for the question. I think we would anticipate relatively stable capital spend in stripping or development, etc. We do in Q1 for some orders for fleet management strategy, and you will definitely see an increase, but we are going to manage that well within our guidance range for the full year.

Stewart Bailey (Chief Corporate Affairs and Sustainability Officer)

Good. There is another question here from Herbert Kharivhe at Absa. He says, "What is the outstanding dividend payment from CVSA, and is it likely that you receive an amount this quarter?"

Gillian Doran (CFO and Executive Director)

Just to get clear, we have finalized our 2024 financial statements for CVSA, which allows us to pay up dividends through to our parent company. We have done that quite significantly, actually, in 2025, and so there's no restrictions on how much we can kind of flow back through to the parent company. We, of course, will want to maintain working capital levels in Argentina, but we've made really good progress on, you know, cash lock-ups in that region. Yeah.

Alberto Calderón (CEO)

The cash lock-ups, I think if you look at it, we've gone from $176 million to $100 million, roughly, so dramatically reduced the cash lock-ups, probably where we made the most gains. Just obviously that's not surprising given sort of that there's an adult as president in charge first time in a long time in Argentina, so things are better.

Stewart Bailey (Chief Corporate Affairs and Sustainability Officer)

Thanks, Alberto. We have one from Larry Claasen at REDD Intelligence, and he just wants to understand if we've paid back any of our bonds over the quarter. The answer for that is no, not very much. Just to sort of close up, there are a couple of questions. Martin Creamer, Mining Weekly. Martin, you've asked some questions on clean energy use installed and whatnot. If you would just allow me to come back to you after the call on those questions. Jack Forbes, Jack, you can get hold of me just to follow up on your question on [email protected], and we can have a discussion just around the difficulty you're having on that. Other than that, we have no other questions. Alberto, just maybe a closing remark from you before we wrap.

Alberto Calderón (CEO)

I hadn't thought about that, but anyway, I look, it's all about discipline execution. It's really, and when we talk about discipline execution, it's 40,000 people who really do the work and deliver every day. It's just pretty amazing to see. It's been a journey the last four years, but seeing how everybody's seeing to that same tune and just being able to reliably and predictably deliver what we say we're going to do, that's your ambition in mind, the highest ambition to do that. We have been able to do it. Just again, it's the 40,000 people who understand that and are really getting up every day and delivering that. For me, it's just thanks to all of them and thanks to our shareholders and investors, and we will keep trying to be predictable, reliable, and at the top end of the gold mining industry. Thank you.

Stewart Bailey (Chief Corporate Affairs and Sustainability Officer)

Perfect. Thanks, Alberto. Thank you.

Operator (participant)

Thank you all. Ladies and gentlemen, that concludes today's event. Thank you for joining us. Anyone else, just connect your line.