AngloGold Ashanti 2026 Q2 Earnings Call

Good afternoon, good morning to everyone, depending on where you are, and welcome to our results for the second quarter and the first half of 2026. Alberto and Gillian will be presenting, but we have members of the executive team for any questions you might have. As always, we have a safe harbor statement at the front of the presentation, which has important information regarding forward-looking statements, and we would encourage you to read that. I'll hand over to Alberto.

Thank you, Stewart. I will start with safety. You will remember from our Q1 presentation that we had a tragic fatality at Obuasi on April 24. We suspended operations for two weeks to undertake a thorough investigation into the incident, and we are taking the necessary and important steps to prevent a recurrence. This kind of event validates the effort and resources that we spend every day to improve our safety performance. We do remain proud of the enormous strides we have made over the past five years, as you can see. Before we go into the quarter, let's take a step back and look at the first half, which really, how are we doing after half a year? Production after stripping out the sale of Serra Grande was more or less stable year-on-year at around one and a half million ounces.

We had an exemplary cost performance again, managing controllable costs slightly lower in real terms. That is, if you strip away inflation, oil price, royalties, exchange rate, which is what we can control, we once more are below that level of controllables. Once again, you see strong growth in the EBITDA and earnings. Its comparisons are not usually nice, but probably we had the best EBITDA growth year-on-year of all of the large gold companies. Comfortably outstripping the rise in the gold price along with a more than doubling in cash flows. We made sure that shareholders both see the full benefit and see it right away with just under $1 billion in dividends declared over six months. It's been an extraordinary period by any measure.

As we look to Q2, there was a production impact from both Serra Grande sale and the temporary safety suspension at Obuasi. On the positive side of the ledger, we had standard performances at Tropicana and Cuiabá. Total cash costs to the group were $1,480 per ounce. Once again, as with the half year, the macro context is critical. As I mentioned before, royalties, fuel, broad inflation, FX basically accounted for all of the increase. While this impact is driving cost inflation across the industry, our underlying operational discipline is firmly intact. That discipline is why our financial metrics are so strong. We've ensured that earnings and cash flow grow well ahead of the gold price. EBITDA was up 46% to $2 billion. Headline earnings were 58% better at $1 billion. You can see our cash flows remain robust. Cash generated from operations grew 49% to $1.8 billion.

As we expected, cash taxes more than doubled year-over-year to $542 million. This reflects not only our improved profitability, but also the timing of payments across our operating jurisdictions. Importantly, it is a seasonal peak. As we start reading the analyst reports, I think that that's probably something that needs to be adjusted because, for example, we do expect cash taxes to fall to less than half of that $542 million, to about $230 million-$250 million in each of Q3 and Q4. That points to an even stronger cash conversion over the remainder of the year. We continue to transform the balance sheet. Liquidity is ample at $4.2 billion, underpinned by a net cash position of nearly $1 billion. To put that in perspective, we had a net debt position of $311 million just 12 months ago.

This allows us to comfortably invest in our growth pipeline while ensuring our shareholders benefit from strong cash returns. This is an interesting graph. We could make this one since 2021, but right now you're seeing since H1 of 2024. As we look at the broader industry landscape, it's clear that external market-driven factors have fundamentally reshaped cost profiles across the industry. Every operator is navigating the same intense macroeconomic pressures, persistent inflation, fuel spikes, and the impact of higher gold price-linked royalties. Our approach is not to passively accept them. We are relentlessly focused on executing what we can control. This chart provides important historical context of our cost performance. The gray bars represent our normalized cost. That is what our total cost would be if we simply accepted market inflation and royalty hikes and nothing else changed.

Through active mitigation strategies implemented across our portfolio, we have managed to partially offset these macro factors. This is reflected in the orange parts, which represent the total cash costs we actually reported, proving our ability to consistently outperform these macro-inflated baselines. Through rigorous operational discipline and our Full Asset Potential program, we have successfully compensated not only for the increase due to these external factors, but also for normal changes in grade and mining further from infrastructure that is inevitable. Ultimately, by decoupling our controllable operating costs from these escalating market headwinds, we ensure that the full benefit of record gold prices flows directly to the bottom line, maximizing free cash flow and driving our sector-leading yields. Our Tier 1 assets are the core growth and cash engine of the group, accounting for over 70% of total production at an exceptional 71% cash margin.

These assets hold approximately 80% of our mineral reserves, underscoring the structural long-term quality of our global portfolio. Our Tier 2 assets continue to serve as reliable cash generators, delivering a solid 58% margin with ongoing focus on operational discipline and cost competitiveness. This combined asset structure provides superior cash flow leverage to the higher gold price environment while maintaining the quality foundation needed to keep us firmly on track for full year guidance. The high-quality portfolio we just walked through is not static. We are fortunate to have an emerging slate of low-risk capital efficient and potentially very high return brownfield and greenfield opportunities. These projects underscore what I've said repeatedly, while we always scan the landscape for value-adding M&A, the best opportunities for us lie within our portfolio. Nevada is anticipated to become a significant production center for the company in the early 2030s.

We're advancing to full feasibility study at Arthur. Even at our existing operation, we have options with the potential to add between 10%-15% to our current production profile in the next three years, all from our existing operations. There are various opportunities identified through leveraging our established strategic asset review and option analysis processes. Key operational focus areas include additional ore sources and processing plant expansions aimed at sustainably improvement on current production bottlenecks at Cuiabá, Geita, Siguiri, Obuasi, and Sukari. We are currently advancing high-value exploration opportunities, priority studies, and project implementations all along the pipeline with a new, more agile fast-track project framework. I will give a detailed update of these growth projects in Q3.

This is what disciplined capital allocation looks like, taking part of our record free cash flow and reinvesting in its low-risk, high-return opportunities that will optimize the value we can deliver from our world-class ore bodies. We are pre-funding the health and expansion of these assets today, ensuring they remain highly profitable cash generators well into the next decade. On dividends, it is worth having a quick reminder of our dividend policy. It provides for quarterly payout of $12.5 a share. It also provides for an annual true-up payment, bringing the pay up to 50% of free cash flow. We again use discretion to make that true-up at the half year, underlining not only the extraordinary cash flow generation, but also our confidence in the outlook of the business. That takes our dividend declaration for the half year to $949 million, with $364 million declared in Q2.

This remains one of the most generous yields in the sector. As normal, we expect a strong second half. When you look at our overall capital allocation framework, you will see it working precisely as intended. Our portfolio is well capitalized and is performing consistently to plan. Our balance sheet is the strongest it's ever been. We're delivering sector-leading returns with one of the industry's most attractive yields. We've shown an investor-forward approach with more frequent dividend payments. In April, we executed a buyback of our outstanding bonds, retiring $666 million of our 2028 and 2030 notes. That's another reduction in our longer-term financing risk and a clear improvement in our strategic flexibility. That position was willing to deploy excess liquidity into a $2 billion open market share buyback program. Shareholders approved the program last week, and we're now waiting approval from the South African Reserve Bank.

If you step back, this is a business with a predictable operating base, an unrivaled project pipeline, and a balance sheet that will stand us in good stead in whatever market we encounter. With that, I hand over to Gillian.

Thank you, Alberto. We generated free cash flow of $727 million in Q2, a 36% increase over the $535 million reported in Q2 of last year. This was underpinned by a 41% year-on-year increase in net cash flow from operating activities to $1.4 billion, driven by disciplined cost execution and a 35% higher average gold price received. The upward pressure on cost for our industry were particularly acute this quarter. U.S. CPI escalated to 3.5% in June of 2026 from 2.7% 12 months earlier. The primary driver was the 45% increase in Brent crude prices, which led to a spike in our energy inputs. Australia was the clearest example, with inflation more than doubling to 4%, putting pressure on local labor and consumables. U.S. dollar weakness was matched by appreciation of our local currencies, creating strong cost headwinds. This currency-driven inflation is receiving aggressive focus on internal cost containment measures.