AnganGold cuts output goal after Ghana gold mine accident

- AngloGold Ashanti Ltd. dropped as much as 12% after the company cut its production forecast and said a key mine in Ghana could not resume production this year after an accident in May.

AngloGold revised its output goal on Friday by about 12% after removing planned gold from Obuasi operations. Mining activities will remain suspended at the project until the conclusion of a third-party review of the mining and ground management plans.

AngloGold traded 8.7% lower in Johannesburg at 256.61 rand a share at 9: 42 a.m. in 256.61 rand, extending its decline in 2021 to 25%?

The Johannesburg-based producer has underperformed rivals after the accident at Obuasi in the past year, where it had started ramping up production after investing $545 million to redevelop the operation. The company also spent nearly a year looking for a new chief executive officer after the announcement of Kelvin Dushnisky's departure after only two years.

'Obuasi was going to be quite a big contribution this year, interim Chief Executive Officer Christine Ramon said on a call. There is production at this stage but we can't predict whether there will be production by the end of the year.

AngloGold announced last month that former BHP Group executor Alberto Calderon will take over the helm from October 1 with Ramon returning to her post as CFO. In addition to the troubles at Obuasi, the new boss will have to deal with rising costs eating into the company's profit margins - expenses surged from a year earlier in the six months through June from 33% and an ongoing battle to repatriate profits from its Kibali mine in Democratic Republic of Congo and tax repayments from the government of Tanzania.

While AngloGold said it expects to see a solution to the profits locked up in Congo today, Ramon declined to give exact dates for the government to release the funds.

The company, which came from a mining empire created a century ago by Ernest Oppenheimer, sold its remaining South African operations last year to focus on more profitable mines elsewhere in Africa, Australia and the Americas.

AngloGold said net income declined 5.2% to $362 million in six months, due to the production setbacks in Obuasi. The company declared an first dividend - the interim since 2013 - of 6 cents a share. The lower output doesn't affect AngloGold’s ability to pay a full year dividend, she said.

AngloGold's free cash flow could 'underwhelm versus market expectations' given its constrained interim cash-flow, RMB Morgan Stanley analysts said. AngloGold raised payouts to 48 cents a share last year to fivefold.