South Africa-based gold miner AngloGold Ashanti Tuesday reported a 38.66% drop in profit for 2021 and forecast higher gold production this year, but said inflationary pressures were likely to be a key risk to earnings.

The company’s headline earnings per share (HEPS) — the main profit measure in South Africa — was 146 US cents, down from 238 US cents a year ago, mainly due to lower production and higher costs.

The Johannesburg Stock Exchange-listed company is among the world’s top three miners of gold but its shares usually trade at a discount to global peers such as Newmont Corp. or Barrick Gold due to its lower reserves, the shorter life of its mines and its higher costs of production.

Its all-in sustaining cost (AISC) — a metric to measure overall gold production cost of miners — was $1 355 per ounce, up from $1 037 per ounce a year ago. Its Canadian rival Barrick Gold reported a full-year AISC of $1 026 per ounce last week.

The Anglo American unit is targeting production of between 2 550 million ounces and 2 880 million ounces of gold at an AISC of $1 295-1 425 per ounce in 2022.

After reaching a peak of over $2 000 per ounce in August 2020, gold prices have followed a choppy gradual downward trajectory with prices currently hovering round $1 900 per ounce, primary due to inflationary pressures and prospects of a rise in interest rates.

AngloGold said inflation and spread of Covid-19 continued to be key risks for the company but was trying to mitigate its impact through implementation of a reformed company structure initiated by the new CEO Alberto Calderon. 

This involves cutting redundant staff and increasing efficiency at operating sites.

The miner, with operations across Africa, Australia and Latin America, said it will pay a dividend of 14 cents per share, taking the full-year dividend to 20 cents per share.