International ratings agency, Fitch Ratings, has affirmed AngloGold Ashanti’s national ratings at a long-term ‚AA-(zaf)‘ (AA minus) with a stable outlook, and a short-term ‚F1+(zaf)‘.
The agency said in a statement, on Monday, that AngloGold Ashanti’s ratings reflected its scale as South Africa’s largest gold producer, and the third largest globally, as well its good geographical diversification with operations in Africa, Australia and the Americas. The ratings also reflected the company’s historically conservative financial profile with a200tph hydraulic cone crusher assembly detailsverage leverage of about 1x over the past three years.
The stable outlook reflected Fitch’s expectation that the gold price would continue to be supportive over the next 12 months.
The miner’scrusher plant baloni 2007 full-year results showed continued satisfactory earnings performance, albeit moderately lower than in the previous year, the agency stated.
“The reduction in earnings reflected lower output (down 2,8% to 5,5-million ounces), and higher cash costs (used stone crusher equipment in the usaup 15,9% to $357/oz); partly offset by a stronger average gold price received during the year,” it noted.
The lower earnings and higher debt negatively affected gearing, with Fitch’s adjusted net debt/ operating earnings before interest, tax, depreciation and amortisation (Ebitda) ratio deteriorating to 2x from 1x. Using AngloGold Ashanti’s adjusted Ebitda ($1,224-million), net debt/adjusted Ebitda come to a still acceptable 1,1x at year-end 2007, though a deterioration from the 0,7x at year-end 2006.
Fitch said that AngloGold Ashanti would benefit from its recent $1,77-billion rights issue, which was used to reduce its hedge book by 3,15-million ounces to 6,88-million ounces, in the 2008 financial year and beyond.
“This will result in the average price received from future gold sales being more reflective of the spot price,” it said. Proceeds from the rights issue would also be used to repay about $340-million of maturing debt this year. In the longer, term Fitch expects AngloGold Ashanti to maintain adjusted gearing below 1,5x.
Key risks to the current ratings were a continued sharp increase in cash costs, although Fitch said it expects that these would rise less rapidly in the 2008 financial year, than in the 2007 financial year, and a further reduction in gold output.