AngloGold Ashanti Ltd.'s (NYSE:AU) shares fell 2.1% to close at $20.56 on Thursday despite posting strong second-quarter and first-half 2019 results.
The South African miner recorded a 20.8% year-over-year increase in earnings to 29 cents per share for the first half of the year, in line with its guidance.
For the first six months of the year, gold production declined 4.6% from the prior-year period to 1.55 million ounces at a total cash cost of $792 per ounce, down 3.8%, and an all-in sustaining cost of $1,002, which declined 1.8%.
The miner also published results for the second quarter, posting the following changes from the previous quarter.
Gold output improved 7% to 801,000 ounces following a seasonal production trend.
Thanks to the implementation of several cost efficiency initiatives and a more disciplined allocation of resources throughout the asset portfolio, AngloGold Ashanti's free cash flow shifted to inflows of $78 million from outflows of $19 million. A slight increase in the realized gold price also helped boost results.
Further, adjusted earnings before interest, taxes, depreciation and amortization increased by $42 million to $382 million.
"Tight cost management will continue to be a key driver for us," CEO Kelvin Dushnisky said.
Financial conditions are improving.
The net debt-to-Ebitda ratio advanced to 1.2 in the second quarter from 1.27 in the first quarter and is expected to continue improving.
The net debt-to-Ebitda ratio is substantially below the covenant ratio of 3.5 as required by revolving credit facilities rules. As of June 30, Anglogold Ashanti can withdraw $1.38 billion from a $1.4 billion multicurrency revolving credit facility.
The company said its balance sheet is robust. As of June 30, it had $342 million in cash on hand and equivalents, up 59% from the prior-year quarter, and $1.74 billion in net debt, down 3%.
For full-year 2019, the miner confirmed production projections of between 3.25 million and 3.45 million ounces. The company also maintained its cash costs guidance of $730 to $780 per ounce and its AISC guidance of $935 to $995 per ounce.
AngloGold Ashanti produces the precious metal from 14 mineral deposits, which are distributed over 10 countries throughout Africa, the Americas, Asia and Australia.
Total funds to allocate to capital expenditures in 2019 were also kept unchanged at $850 million to $920 million.
The stock gained 140% over the past year through Aug. 8 to above the 200-, 100- and 50-day simple moving average lines. The market capitalization is $8.51 billion.
The closing share price on Thursday was 191% off the 52-week low of $7.08 and only 5.5% from the 52-week range of $21.74.
The 14-day relative strength indicator is 64, suggesting the stock is neither overbought nor oversold.
Wall Street issued a hold recommendation rating with an average price target of $17.77.
Disclosure: I have no positions in any securities mentioned.
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