AngloGold Ashanti’s $722m cash flow masks rising gold mining costs

AngloGold Ashanti plc (NYSE: AU; JSE: ANG) reported third-quarter EBITDA of $1.568 billion, an increase of 12% year on year, as stronger gold prices supported earnings despite declining production and rising operating costs. The global gold producer generated $722 million in free cash flow and declared an interim dividend of $361 million, equivalent to 71 US cents per share. The November 5, 2026, results also confirmed progress on major growth investments, including the North Bullfrog project in Nevada.

The improvement in earnings was accompanied by a more complicated operating performance. AngloGold Ashanti produced approximately 696,000 ounces of gold during the quarter, down from 768,000 ounces a year earlier, while all-in sustaining costs increased from $1,720 to $2,170 per ounce. Free cash flow declined from $920 million despite the higher EBITDA, reflecting greater capital investment, tax payments and lower gold sales.

The results illustrate an increasingly important challenge for gold producers operating in a high-price environment. Strong commodity prices can support exceptional earnings and shareholder distributions, but they can also coincide with higher royalties, energy expenditure and labour costs. AngloGold Ashanti must convert the current favourable pricing environment into productive assets and sustainable cash generation without allowing cost inflation to absorb the benefits.

Why did AngloGold Ashanti’s EBITDA increase when gold production declined?

AngloGold Ashanti reported quarterly gold production of 696,000 ounces, compared with 768,000 ounces in the corresponding period of 2025. The decline reflects planned mine sequencing and operational challenges at several facilities rather than a uniform deterioration across the portfolio. Nevertheless, lower production volumes reduced the benefit that could otherwise have been generated from stronger gold prices.

The average gold price received increased to approximately $4,239 per ounce from $3,490 a year earlier, an improvement of roughly 21%. This substantial pricing gain supported EBITDA growth to $1.568 billion from $1.4 billion. The result demonstrates the powerful earnings sensitivity of a major gold producer to changes in commodity prices.

However, higher realised prices do not automatically translate into proportional increases in profit. Mining companies face labour, energy, equipment, processing and sustaining capital costs, while royalty payments can rise as gold prices increase. Production volumes also influence the allocation of fixed costs across each ounce produced.

AngloGold Ashanti’s total cash costs increased from $1,225 to $1,534 per ounce, while all-in sustaining costs rose by approximately 26% to $2,170 per ounce. The difference between the realised price and these cost measures remains substantial, but the increasing expense base limits the proportion of higher gold prices that can be converted into cash.

For investors, the company’s latest results therefore show both strong commodity-price exposure and the importance of operational discipline. A durable improvement would involve higher production and more stable unit costs alongside favourable selling prices, rather than relying principally on further increases in gold prices.

Which AngloGold Ashanti mines are affecting production and profitability?

The company’s operations delivered uneven production results during the quarter. Siguiri increased output by 49% year on year, while Sunrise Dam, Kibali, Cuiabá and Cerro Vanguardia also recorded growth. These improvements were offset by weaker contributions from several other facilities.

Iduapriem production declined 43%, reflecting operational disruption associated with flooding from a neighbouring mine earlier in 2026. The company said dewatering work had restored access to high-grade mining blocks, creating the potential for improved output. However, restored access does not automatically guarantee that production will immediately return to previous levels.

Sukari recorded a 21% decline in production, while Obuasi output decreased by 26%. The company is progressing waste-stripping work at Sukari to provide access to higher-grade ore, while underground operations at Obuasi are continuing their ramp-up. These initiatives could strengthen future production but remain subject to geological, safety and operational constraints.

The company also disclosed that an employee died following an underground rockfall at Sukari in August 2026. Operations were suspended for investigation and safety reviews before subsequently resuming. The incident reinforces the importance of safety performance as a fundamental operating risk, particularly where underground mining and complex geological conditions are involved.

AngloGold Ashanti maintains a geographically diversified portfolio, reducing its dependence on any individual operation. However, diversification cannot eliminate the impact of production interruptions when several important mines experience difficulties during the same reporting period. Consistent execution across the portfolio will be essential to achieving the company’s annual output objectives.

Why did free cash flow fall despite higher gold prices and EBITDA?

AngloGold Ashanti generated $722 million in third-quarter free cash flow, compared with $920 million a year earlier. The approximately $198 million decline occurred despite the improvement in EBITDA, demonstrating that reported operating earnings are only one part of the company’s financial performance. Capital expenditure, taxes, working capital and production volumes substantially influence the cash ultimately available.

Total capital expenditure increased 45% to $497 million during the quarter. The spending supported waste stripping, fleet upgrades and development of growth projects, including North Bullfrog and Arthur in Nevada. Such expenditure can strengthen future output and mine life, but its benefits may not appear immediately in reported earnings or cash generation.

Net cash tax payments increased to $174 million from $75 million a year earlier, reflecting the impact of stronger profitability and related obligations. Working-capital movements also absorbed cash, including changes in receivables and payables. These items combined with lower gold sales to limit quarterly free cash flow.

The company ended September with approximately $1.256 billion in net cash and around $4.5 billion in overall liquidity. This provides financial flexibility for investment and shareholder distributions, although the two measures should not be treated as equivalent. Liquidity includes additional available funding capacity, while net cash reflects the company’s defined financial position after borrowings.

AngloGold Ashanti’s balance sheet is therefore strong enough to support a substantial investment programme, but future cash generation will still depend on gold prices, production performance and expenditure discipline. A prolonged period of higher unit costs could reduce cash conversion even if bullion prices remain elevated.

What does the North Bullfrog funding decision mean for AngloGold Ashanti’s Nevada strategy?

AngloGold Ashanti disclosed that its board approved funding for the execution phase of the North Bullfrog gold project in Nevada on November 3, 2026, subject to obtaining federal and state permits. The decision represents progress towards establishing an additional production centre in a major mining jurisdiction. However, it should not be described as an unconditional final construction approval.

The North Bullfrog project forms part of a broader Nevada development strategy that also includes Arthur. The company is advancing permitting and feasibility activities while seeking to establish a substantial long-term production platform. The financial value of these developments will ultimately depend on project capital requirements, mineral recovery, operating costs and future gold prices.

Permitting remains particularly important. Board-approved funding demonstrates the company’s willingness to invest, but regulatory approvals and construction execution are separate milestones. Delays or changes in technical requirements could affect project schedules and the timing of future production.

AngloGold Ashanti is also pursuing brownfield growth opportunities at Geita, Siguiri and Cuiabá, alongside the continuing recovery at Obuasi. It expects approximately $750 million to $900 million of investment across the Geita, Siguiri and Cuiabá growth projects over three years. Management anticipates that these developments could contribute an additional 300,000 to 450,000 ounces of annual production relative to a 2025 baseline by the end of the decade.

Brownfield expansions can offer advantages because they use existing infrastructure and established operating knowledge. Nevertheless, expected production additions remain forecasts that depend on successful investment and mine development. Investors should evaluate these projects against capital expenditure, timing and projected operating costs rather than expected ounces alone.

Can AngloGold Ashanti sustain dividends while its investment requirements increase?

AngloGold Ashanti declared a third-quarter interim dividend of $361 million, or 71 US cents per share. This brought total dividends declared during the first nine months of 2026 to approximately $1.31 billion, equivalent to 259 US cents per share. The distributions demonstrate management’s commitment to returning cash generated during a favourable gold-price environment.

The company also reaffirmed full-year production guidance of 2.8 million to 3.17 million ounces. With 2.164 million ounces produced during the first nine months, achieving the lower end of the range requires approximately 636,000 ounces in the fourth quarter. Reaching the upper end would require approximately 1.006 million ounces, a much more demanding outcome relative to recent quarterly production.

Management expects operational improvements at several mines to support a stronger fourth quarter. The recovery at Iduapriem, higher-grade access at Sukari and improved underground production at Obuasi are among the relevant factors. However, the scale and timing of these contributions remain subject to execution risk.

AngloGold Ashanti shares closed at approximately $88.55 in New York on November 5, up 0.73% for the session, while its Johannesburg-listed shares registered a stronger increase of approximately 3.56%. These movements indicate a positive market response, although short-term trading also reflects broader gold-price expectations and investor positioning.

The company’s financial position provides the capacity to reward shareholders while investing in future production. Yet sustaining both objectives will become more challenging if gold prices weaken or project costs rise faster than expected. The next important evidence will come from fourth-quarter production, unit-cost performance, capital expenditure and progress towards Nevada permitting milestones.

AngloGold Ashanti’s latest results demonstrate substantial cash-generating potential, but also reveal the limits of relying on favourable commodity prices. Its longer-term prospects depend on translating current earnings into higher-quality production, safer operations and disciplined capital allocation. A strong gold market provides the opportunity, while operational execution will determine how much value is retained.