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AngloGold AngloGold slashes debt, returns to profit

A strong performance from the company’s international mines helped expand margins even as gold prices fell, the company said in statement on Monday.

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A view of a section of Ashanti Goldfields' big mining complex at Obuasi, in this photo. REUTERS/Luc Gnago/Files play

A view of a section of Ashanti Goldfields' big mining complex at Obuasi, in this photo. REUTERS/Luc Gnago/Files

((Reuters)
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The Chief Executive of AngloGold Ashanti (AGA) Srinivasan Venkatakrishnan, known as Venkat, has said the company slashed its net debt by 30% as a result of "self-help measures" despite falling gold prices.

In an interview with Bloomberg TV, Venkat said "For the last year, we have been implementing a range of self-tough measures which is built on our strategies and that is how the cost improved by about 10% to 14% year on year. And we slashed debt by about 30%. Our cost came in about $86 an ounce all in sustaining across the group. And that is quite a result."

He dispelled suggestions that the debt cut was as a result of falling currencies and oil prices.

AngloGold Ashanti sold its stake in Creek & Victor (CC&V) mine in the United States to reduce its debt last year. However, Venkat ruled out any further sale of it assets from a balance sheet point of view.

"We did say our target net reduction in debt is about a billion dollars. And we achieved that with the sale of our mines in the US, and as you'd have seen, our free cash follow generation in the fourth quarter alone was around $160 million. So there is no real need from a balance sheet point of view to sell more assets."

Asked if the company is not changing its debt target for this year, Venkat said :"No we are not at this stage, obviously, what you'd have seen is our margin improved about 14% year on year and that was despite 10% draft in gold price, obviouly we'd apply some of the cash to pull down debt. But there is no compulsion to look at the portfolio from a balance sheet point of view."

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A strong performance from the company’s international mines helped expand margins even as gold prices fell, the company said in statement on Monday. 

The company swung into profit, the statement said.

Despite the challenges in its mining concession in Obuasi which led to the death of the company's communications director, AGA said suitors have expressed interest in buying or partnering in its idled Obuasi mine in Ghana.

"There is quite a lot of interest, even now, in terms of the Obuasi assets, even in the form of a joint venture," Venkat, told journalists after the company released its 2015 results, Reuters reported.

Asked if anyone had approached AngloGold about buying Obuasi outright, Venkat said: "At various points in time, but it has not progressed to a point of concluding a sale."

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