AngloGold Ashanti PLC (AU) shares hit a new 52-week high of $32.34 on August 20th, driven by a surge in gold prices. The stock closed the session slightly lower at $32.09. AngloGold Ashanti boasts a market capitalization of $13.5 billion and currently holds a Zacks Rank #3 (Hold). The company’s shares have skyrocketed by 71.7% year-to-date, outperforming both the industry’s 28.9% growth and the S&P 500’s 17.7% rise. In contrast, the Basic Materials sector has experienced a 4.2% decline in the same period.
The recent stock surge can be attributed to several key factors. AngloGold Ashanti’s shares have gained 15% since the company reported strong first-half fiscal 2024 results on August 6th. Adjusted earnings per share reached 74 cents, a remarkable 429% improvement from 14 cents in the prior year’s comparable period. This substantial increase was driven by a combination of factors, including increased gold sales, higher average gold prices, and reduced operating costs. Earnings were also positively impacted by higher equity earnings from joint ventures, increased finance income, and lower foreign exchange losses. These gains were partially offset by higher losses on non-hedge derivatives, rising corporate and operating expenses, and increased taxation. Notably, the company witnessed a significant turnaround in its Brazil operations, which contributed to the year-over-year gain in cash flow and earnings. Last year, AngloGold Ashanti restructured its Brazilian operations after a sustained period of losses, leading to the recent improvement.
Gold production rose 2% year over year to 1.25 million ounces, fueled by improvements at AngloGold Ashanti Mineração, Serra Grande, Iduapriem, Geita, and Kibali. Revenue climbed 16.7% year over year to $2.55 billion. Total cash costs per ounce decreased 1% year over year to $1,158 in the first half, compared to $1,169 in the same period last year. This improvement was primarily driven by enhanced operational performance and cost efficiency linked to the company’s Full Asset Potential initiatives. Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) increased 65% year over year in the first half to $1.118 billion. Free cash flow saw an inflow of $206 million, a significant turnaround from an outflow of $205 million in the comparable period of the prior fiscal. This increase was primarily attributed to the turnaround in the Brazil operations, a higher average gold price received per ounce, and loan repayments from Kibali, partially offset by higher capital expenditure and increased cash taxes. Following these upbeat results, the company also declared an interim dividend of 22 cents a share.
Looking ahead, AngloGold Ashanti maintains its gold production guidance for 2024 in the range of 2.65-2.85 million ounces. The midpoint of this guidance indicates an approximate 4% growth from 2023. This increase will be driven by the ramp-up at Obuasi and Siguiri, where AngloGold Ashanti expects year-over-year recovery following the 2023 carbon-in-leach tank failure. Total cash costs are projected to be between $1,075 and $1,175 per ounce. For 2025, gold production is anticipated to be in the range of 2.71-2.91 million ounces, indicating a 2% year-over-year growth. This will be primarily driven by the continued ramp-up at Obuasi and modest gains across multiple mines. The company expects total cash costs per ounce to be between $1,050 and $1,150. Gains from the Full Asset Potential initiative and gold production efficiencies are expected to lower unit costs.
Gold prices have surged by 21.8% in 2024, outperforming most major asset classes. Several factors have contributed to this impressive performance, including increased geopolitical tensions, the potential for monetary policy easing, and continued purchasing by central banks. The yellow metal is currently trading at around $2,510 per ounce, supported by increasing bets on U.S. interest rate cuts.
Investors interested in the basic materials sector may consider some other well-ranked stocks, including Carpenter Technology Corporation (CRS), IAMGOLD Corporation (IAG), and Newmont Mining Corporation (NEM). Each of these stocks currently sports a Zacks Rank #1 (Strong Buy). Carpenter Technology’s fiscal 2025 earnings are projected to reach $6.06 per share, representing a 27.85% increase from fiscal 2024. The consensus estimate for earnings has moved 17% upward in the past 60 days. CRS shares have gained 99.9% year to date. IAMGOLD’s 2024 earnings are projected to be 39 cents per share, indicating a 333% year-over-year growth. The consensus estimate for earnings has moved 44% upward in the past 60 days. IAG shares have gained 104% year to date. Newmont’s 2024 earnings are projected to be $2.82 per share, indicating a 75% year-over-year growth. The consensus estimate for earnings has moved 15.6% upward in the past 60 days. NEM shares have gained 24% year to date.
