Shares in AngloGold Ashanti slumped more than 10% on Friday after it trimmed its 2021 production estimate and posted a 10% drop in headline first-half earnings due to the impact of the Covid-19 pandemic and increased bullion mining costs.

Africa’s top gold producer revised its full year production guidance to 2.4-2.6 million ounces in 2021 against an earlier target of 2.7-2.9 million ounces, citing the suspension of underground mining activities at the Obuasi Mine in Ghana following a fatal accident in May. 

Shares in AngloGold Ashanti slumped more than 10% on Friday after it trimmed its 2021 production estimate and posted a 10% drop in headline first-half earnings due to the impact of the Covid-19 pandemic and increased bullion mining costs.

Africa’s top gold producer revised its full year production guidance to 2.4-2.6 million ounces in 2021 against an earlier target of 2.7-2.9 million ounces, citing the suspension of underground mining activities at the Obuasi Mine in Ghana following a fatal accident in May. 

Ore quality

Interim CEO Christine Ramon told Reuters in an interview after the company results that it expects to increase the life of its mines to more than 11 years in 2021 on average and to 14-15 years in the “medium term”.

AngloGold’s traditional mine life had been an average of seven years compared with 12 to 14 years for peers and an increase in mine life will help to reduce the discount to fair value, she said.

It will also focus on producing better quality grades of ore through investments in brown-field projects over the next three years.

“I think that is a big chunk of the range of catalysts that we’re focusing on addressing (the discount),” Ramon said.

CEO-designate Alberto Calderon told Reuters last month that the discount was roughly 80% relative to rivals. Mining majors Barrick Gold and Newmont Corp are among AngloGold’s main competitors.

AngloGold’s headline earnings for the first half declined to $363 million compared with $404 million posted in the same period a year earlier, and it declared an interim dividend of R0.87 ($0.0601) per share.

Production for the first half was down to 1.2 million ounces against 1.32 million ounces last year partly due to the suspension of underground mining activities at Obuasi.