Gold Company Outlook 2022

Not much to help the increase in gold prices. However, the world's largest gold company still has a good resilience to deal with inflationary pressures.

Gold companies are suppressed by the impact of world inflation, and all components of company costs must be corrected. Even though the gold price tends to rise, the costs incurred are increasing.

The optimism indicates that the gold company can still carry out activities such as mining, processing, distribution, and others.

Then how do gold companies view their outlook in 2022?

Newmont Corporation

Due to the effects on projected gold output in the first half of the year and the ongoing impact of inflationary pressures on costs, Newmont is presenting an updated 2022 projection. For more details, please refer to the warning statement in the end notes. Investors are urged to listen in on Newmont's second quarter 2022 earnings conference call for more information.

According to Newmont's amended 2022 projection, the attributable gold output will total 6.0 million ounces, and production of copper, silver, lead, and zinc will produce 1.3 million ounces of gold equivalent. The updated projection for attributable gold output takes into account the negative effects of Ahafo's operational issues, CC&V's conversion to a leach-only operation, and the difficulties posed by a competitive labor market, particularly in Canada and Australia.

Due to issues with labor availability and supply chain breakdowns that prevented the delivery of new machinery and essential spare parts, Ahafo had difficulty ramping up mining rates at Subika Underground. As a result, Ahafo's annual production decreased by about 80,000 ounces. The CC&V operation has started the shift to a higher-value, longer-life leach-only operation, resulting in a loss of about 40 thousand ounces of production over the entire year. Additionally, Newmont continues to face decreased productivity as a result of a competitive labor market in Australia and Canada, which has a full-year production impact in those countries of around 50 thousand ounces and 30 thousand ounces, respectively.

A revised 2022 CAS forecast is predicted to be $900 per ounce of gold and $750 per ounce of gold equivalent in co-products. A revised 2022 AISC estimate of $1,150 per ounce of gold and $1,050 per co-product gold equivalent ounce is anticipated. The impact of lower production volumes and greater direct operating expenses related to labor, energy, consumables, and supplies as a result of persistent inflationary pressures is taken into account in the updated projection.

A $1.1 billion development capital budget is anticipated for 2022 to account for spending delays at Yanacocha Sulfides and Ahafo North.

A $270 million general and administrative expense is anticipated, including marginal increases in personnel costs brought on by inflationary pressures. Due to the timely refinancing of our 2022 and 2023 notes in December of last year, interest expense is anticipated to be $200 million, a reduction of $25 million.

Barrick Gold

Barrick has continued to advance its key growth projects while being on track to meet its annual gold and copper production forecast thanks to a stronger Q2 performance across the portfolio.

The primary contributors to the quarter's higher-than-expected gold production of 1.04 million ounces were Carlin and Turquoise Ridge in Nevada, Veladero in Argentina, and Bulyanhulu and North Mara in Tanzania. The second half of the year is predicted to see more growth in this sector. The amount of copper produced was 120 million pounds.

For the quarter, free cash flow1 was $169 million while operating cash flow was $924 million. In terms of net earnings per share, they were $0.27 and $0.24, respectively. On the strength of the solid operating results and net cash of $636 million, a dividend of $0.20 per share was issued for the quarter.3 During the quarter, Barrick repurchased $182 million in shares under the $1 billion share buy-back program introduced earlier this year. Additionally, it brought back from the Democratic Republic of the Congo the remaining extra funds for Kibali.

With the start of the public consultation process and the choice of a preferred location for the new tailings storage facility, subject to the conclusion of an environmental and social impact assessment, the Pueblo Viejo expansion project in the Dominican Republic advanced. With an expected minimum average annual production of 800,000 ounces, the huge project has the potential to extend the mine's existence until 2040 and beyond.

The Goldrush project's public review phase has begun in Nevada, and a record of the decision is anticipated in the first half of 2023 when the production schedule will be confirmed. On the Reko Diq project, the definitive agreements that support the framework agreement between Barrick and the governments of Pakistan and Balochistan are now being completed. One of the largest undeveloped copper-gold resources in the world, Barrick will update its feasibility study after this procedure is finished and the required legalizing stages have been followed. The first production is anticipated to begin in 2027 or 2028.

With a stronger workforce, Barrick is extending its global exploration reach. The quest in North America has spread from Nevada to ongoing efforts in Canada. New projects have been launched in Zambia, Tanzania, and Egypt in Africa and the Middle East as a result of the enhanced exploration activity in Latin America. Progress is being made at Reko Diq and in Japan, and a new Asia Pacific team is actively searching for additional prospects elsewhere in this region.

President and Chief Executive Mark Bristow gave a review of the quarter and noted that there was growing skepticism about alleged "greenwashing" and increased scrutiny of ESG and sustainability disclosures. In light of this, Barrick continues to report the group's performance clearly and objectively against a wide range of common indicators in its annual Sustainability Scorecard, a first for the industry.

AngloGold Ashanti

AngloGold Ashanti Limited ("AngloGold Ashanti", "AGA," or the "Company") reported a positive first half of 2022 performance, with production up 3% year over year, growth in total cash expenses held to 6%, and a significant improvement in cash flow. The company continues to be on track to meet full-year forecasts and issued an interim dividend of 29 US cents per share, or $121 million.

In the first half of 2022, production totaled 1.233Moz, with second-quarter output increasing by 10% from the first quarter. Higher grades and tonnes processed underpinned production increase, which resulted in pronounced gains from the operations in Australia and Latin America and offset lower production from Kibali and Geita. Through the quarter, Obuasi maintained ramping up and is on target to meet its 2022 annual production projection of between 240,000 and 260,000 ounces.

The total cash expenses for the first half of 2022 were $1,068/oz, up 6% from the same period the previous year. This increase was mostly the result of increasing inflation in various input categories as well as greater royalties because of the higher gold price attained. Operating enhancements and a 10% rise in underground grades largely countered these cost concerns.

Chief Executive Officer Alberto Calderon stated that the foundations of our Company continue to strengthen, notwithstanding the adverse cost environment. 

"We have the right structure and the right people in place to further optimize from our portfolio and close the gap with our peers," he said on AngloGold Ashanti's official website.

Compared to the first half of 2021, which had $876 million in adjusted EBITDA, the first half of 2022 had $864 million. In comparison to the first half of 2021, which saw headline earnings of $363 million or 87 cents per share, the first half of 2022 saw headline earnings of $300 million or 71 cents per share.

The balance sheet remains flexible throughout a continuous period of investments in strengthening its portfolio, and free cash flow improved to $471 million for the first half of 2022 from an outflow of $25 million in the corresponding period last year. The Democratic Republic of the Congo's Kibali gold mine provided $549 million, which helped to enhance free cash flow.

In January 2022, Corvus Gold Inc. ("Corvus") was acquired for $365 million in cash, giving the Company a solid foothold in the promising Beatty district in Southern Nevada, which it intends to put into production in around three years. After mining begins, the district is anticipated to increase over several years to produce more than 300,000 oz per year and remain operational for at least two decades, with all-in costs far lower than the current average for AngloGold Ashanti.

After paying for the Corvus acquisition and disbursing the 2021 year-end dividend, the balance sheet was still in good shape, with over $2.6 billion in liquidity, including $1.3 billion in cash at the end of June 2022. During the second quarter of 2022, the $1.4 billion multi-currency revolving credit facility underwent refinancing, bringing the maturity date to 2027.

The Sunrise Dam mine in Australia and the Siguiri mine in Guinea have both completed the initial evaluation stage of the company's Full Asset Potential ("FAP") review plan. Now that both sites have reached the implementation stage, the discovered optimization potential will be put into practice. The FAP assessment for the Cuiabá mine in Brazil is currently being finished. The following sites are anticipated to go through the assessment process in the second half of 2022: Tropicana, Geita, and Serra Grande. The goal of the FAP review program is to achieve a significant boost in operating performance and competitiveness.

Gold companies survive in the shadow of the pressure impact of world inflation.
Foto: stantec.com.

  

Kinross

Kinross Gold Corporation (TSX: K, NYSE: KGC) (“Kinross” or the “Company”) today announced its results for the second quarter that ended June 30, 2022.

Due to the designation of the Company's Russian and Ghanaian assets as discontinued as of June 30, 2022, the results from these assets have been omitted from its Q2 2022 continuing results as well as comparative numbers.

Q2 2022 highlights from continuing operations:

• Gold equivalent production of 453,978 Au eq. oz. produced.
• Production cost of sales ¹ of $1,027 per Au eq. oz. sold and all-in sustaining cost² of $1,341 per Au eq. oz. sold.
• Margins ³ of $845 per Au eq. oz. sold.  
• Adjusted operating cash flow ² of $251.9 million, operating cash flow⁴ of $257.1 million, and free cash flow² of $107.7 million.
• Reported net loss ⁵ of $9.3 million, or $0.01 per share, with adjusted net earnings^2, 6 of $37.4 million, or $0.03 per share².
• Cash and cash equivalents of $719.1 million, and totalliquidity⁷ of approximately $2.1 billion on June 30, 2022.
• Kinross’ Board of Directors declared a quarterly dividend of $0.03 per common share payable on September 1, 2022, to shareholders of record at the close of business on August 18, 2022.

Development projects:

• Kinross is proceeding with the development of the 70%-owned Manh Choh project in Alaska, which is expected to increase the Company’s production profile by approximately 640,000 attributable Au eq. oz. over the life of mine at lower costs.
• The world-class Great Bear project in Red Lake, Ontario continues to make excellent progress, with drilling results from the first half of the year continuing to confirm Kinross’ vision of developing a large, long-life mining complex. The Company plans to declare an initial mineral resource estimate as part of its 2022 year-end results.
• The Tasiast 24k project remains on plan to reach 24,000 tonnes per day throughput in mid-2023.

Russia and Ghana divestments:  

• On June 15, 2022, Kinross announced the completion of the sale of 100% of its Russian assets to the Highland Gold Mining group of companies for $340 million in cash. The Company received $300 million in U.S. denominated cash on closing with a deferred payment of $40 million due on the first anniversary of closing.
• On April 25, 2022, Kinross announced the sale of its 90% interest in the Chirano mine in Ghana to Asante Gold Corporation for total consideration of $225 million in cash. The sale is expected to close in August 2022.

Agnico Eagle

Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM)

("Agnico Eagle" or the "Company") reported financial and operating results for the second quarter of July 2022.

The second quarter of 2022 highlights: 

Record gold production and strong earnings and cash flow generation in the second quarter of 2022 – Payable gold production in the second quarter of 2022 was 858,170 ounces at production costs per ounce of $766, total cash costs per ounce of $726, and all-in sustaining costs ("AISC") per ounce3 of $1,026. These results include the first full quarter of production following the completion of the merger between Agnico Eagle and Kirkland Lake Gold Ltd. ("Kirkland Lake Gold") on February 8, 2022 (the "Merger"). For the second quarter of 2022, the Company reported a quarterly net income of $0.61 per share, with an adjusted net income4 of $0.76 per share. Operating cash flow was $1.39 per share.

Gold production and costs in the second quarter of 2022 were better than expected primarily due to positive grade reconciliation at Amaruq and Detour Lake and productivity improvements at Macassa. Better grade performance allowed Amaruq to have its best operational quarter since start-up with payable production of 96,698 ounces of gold at production costs per ounce of $1,110 and total cash costs per ounce of $993. In total, Nunavut's payable production was 194,270 ounces of gold at production costs per ounce of $997 and total cash costs per ounce of $915. In Ontario, payable production was 256,777 ounces of gold at production costs per ounce of $664 and total cash costs per ounce of $626. The strong operational performance in the second quarter of 2022 puts the Company in a good position to deliver on 2022 guidance forecasts.

Expected payable gold production in 2022 remains unchanged at between 3.2 and 3.4 million ounces with total cash costs per ounce and AISC per ounce between $725 and $775 and $1,000 and $1,050, respectively. Given that inflationary pressures are expected to continue in the second half of 2022, the Company believes that total cash costs per ounce and AISC per ounce could trend towards the top end of these ranges. Gold production in the second half of 2022 is expected to be approximately equally split between the third and fourth quarters. Total expected capital expenditures (excluding capitalized exploration) for 2022 remain estimated to be approximately $1.4 billion. Guidance for 2022 includes production, costs, and capital for the period commencing January 1, 2022, for the Detour Lake, Macassa, and Fosterville mines.

During the first half of 2022, cost pressures were largely offset by strong operational performance, optimization and cost-saving initiatives, positive foreign exchange impacts (weaker Euro and Canadian and Australian dollars), and currency and fuel hedging programs. In the second half of 2022, the Company's focus will continue to be on increasing operational efficiencies and cost optimization at all mining operations. In addition, the Company anticipates continuing to opportunistically add to operating currency and fuel hedges.

These are some of the successes of gold companies that are included in the top 10 gold mining companies. For more information, please visit the company's official website.

The article only presents information to inform that under pressure from the impact of world inflation, gold mining companies are not disturbed by their economic activities. (fyp)