AngloGold Ashanti Hits 52-Week High: What's Aiding It?

Shares of AngloGold Ashanti PLC AU scaled a new 52-week high of $32.34 on Aug 20 before ending the session lower at $32.09. The upside was fueled by a spike in gold prices.

AngloGold Ashanti has a market capitalization of $13.5 billion and currently carries a Zacks Rank #3 (Hold).

Shares of the company have gained 71.7% year to date, outpacing the industry's 28.9% growth and the S&P 500's 17.7% rise. Meanwhile, the Basic Materials sector has declined 4.2% in the same time frame.

Image Source: Zacks Investment Research

What's Driving the Stock?

Solid H1 Results: AngloGold Ashanti's shares have gained 15% since the company reported strong first-half fiscal 2024 results on Aug 6. Adjusted earnings per share were 74 cents, a 429% improvement from 14 cents in the prior year's comparable period. 

The substantial increase in earnings was attributed to increased gold sales, higher average gold prices and lower operating costs. Earnings also benefited from higher equity earnings from joint ventures, an increase in finance income and lower foreign exchange losses, which were partly offset by higher losses on non-hedge derivatives, rising corporate and operating expenses and increased taxation. 

The company witnessed a significant turnaround in its Brazil operations, which also contributed to the year-over-year gain in cash flow and earnings. Last year, it  had taken steps to restructure the business in Brazil after a sustained period of losses, which led to the improvement. 

Gold production rose 2% year over year to 1.25 million ounces, aided by improvement at AngloGold Ashanti Mineração, Serra Grande, Iduapriem, Geita and Kibali. Revenues were up 16.7% year over year to $2.55 billion.

Total cash costs per ounce decreased 1% year over year to $1,158 in the first half from $1,169 in the same period last year. This was mainly aided by improved operational performance and enhanced cost efficiency linked to the company's Full Asset Potential initiatives.

Adjusted earnings before interest, tax, depreciation and amortization increased 65% year over year in the first half to $1.118 billion. Free cash flow was an inflow of $206 million against an outflow of $205 million in the comparable period in the prior fiscal. This increase was mainly due to the turnaround in the Brazil operations, a higher average gold price received per ounce and loan repayments from Kibali, partially offset by higher capital expenditure and increased cash taxes.

Following the upbeat results, the company also declared an interim dividend of 22 cents a share.

Upbeat Outlook: AngloGold Ashanti maintained its gold production guidance for 2024 in the range of 2.65 – 2.85 million ounces. The midpoint of the guidance indicates growth of approximately 4% from 2023. The increase will be led by the ramp-up at Obuasi and Siguiri, where AngloGold Ashanti expects year-over-year recovery following the 2023 carbon-in-leach tank failure. Total cash costs are projected to be between $1,075 and  1,175 per ounce.  

For 2025, gold production is expected to be in the range of 2.71-2.91 million ounces, which indicates 2% year-over-year growth. This will be driven primarily by the expected continued ramp-up at Obuasi and modest gains across multiple mines. The company expects total cash costs per ounce to be in the range of $1,050 - $1,150. Gains from the Full Asset Potential initiative and gold production efficiencies are anticipated to lower unit costs.

Rally in Gold Prices: Gold prices have gained 21.8% so far in 2024, surpassing the performance of most major asset classes. Several factors have contributed to this solid performance in 2024, including increased geopolitical tensions, the potential for monetary policy easing and continuous purchasing by central banks. The yellow metal is currently at around $2,510 per ounce supported by increasing bets on U.S interest rate cuts.

Stocks to Consider

Some better-ranked stocks from the basic materials space are Carpenter Technology Corporation CRS, IAMGOLD Corporation IAG and Newmont Mining Corporation NEM. Each of these stocks sports a Zacks Rank #1 (Strong Buy) at present.

The Zacks Consensus Estimate for Carpenter Technology's fiscal 2025 earnings is pegged at $6.06 per share, which indicates a 27.85% increase from fiscal 2024. The consensus estimate for earnings has moved 17% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 15.9%. CRS shares have gained 99.9% year to date.

The Zacks Consensus Estimate for IAMGOLD's 2024 earnings is pegged at 39 cents per share, which indicates 333% year-over-year growth. The consensus estimate for earnings has moved 44% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 200%. IAG shares have gained 104% year to date.

The Zacks Consensus Estimate for Newmont's 2024 earnings is pegged at $2.82 per share, which indicates 75% year-over-year growth. The consensus estimate for earnings has moved 15.6% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 19.2%. NEM shares have gained 24% year to date.

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