AngloGold Ashanti Ltd

NYSE:AU

Q1-2025 Earnings Call

[Operator]

Good day, ladies and gentlemen, and welcome to the AngloGold Ashanti Quarter 1 2025 Earnings Release. [Operator Instructions]. Please note that this call is being recorded. I would now like to hand the conference over to Stewart Bailey. Please go ahead.

[Stewart Bailey, executive]

Thanks, Irene, and welcome, everybody, to our Q1 2025 earnings call. You have Alberto and Gillian will be delivering the presentation. We have other members of the executive team present. I would urge you all to look at the safe harbor statement at the beginning of the presentation deck today, which contains some important information, particularly on forward-looking statements made. Without any further ado, I'll hand over to Alberto.

[Alberto Calderon, executive]

Thank you, Stewart. Safety remains our highest priority, and we've committed to eliminating injuries from our sites. We're proud of the strides we've made, but always mindful that we're only ever as good as our last day injury group free day. We work hard to mitigate risk and to learn from our mistakes and near misses.

For the first quarter of the year, our TRIFR was 1.11 injuries per million hours worked. That remains well below the average 2023 ICMM member. The averages of those members are at 2.59, so more than double.

I'm pleased to report a strong start to the year. We have delivered an impressive operational and financial performance, underpinned by continued momentum in our portfolio and a supportive gold price. Production increased 22% year-on-year to 720,000 ounces. That's the highest Q1 output since 2020. The result was driven by clear year-on-year improvements from Siguiri, Tropicana and Sunrise Dam as well as a steady performance from Obuasi and the addition of Sukari.

I'd like to focus first on the performance from our managed operations. That is all of our operations, except Kibali, where production was up 28% year-on-year. The cost performance is impressive. We saw a 2% drop year-on-year in both total cash cost per ounce and all-in sustaining cash cost per ounce.

If you think about it, when we started the year, there's 2 things that are inevitable, which is obviously inflation and probably a good cost at our royalties. So for a company, if it stayed exactly the same as the previous year, their cash cost would have increased by 10%, roughly 5% from inflation and 5% from the royalties. So the fact that we dropped 2% implies that we have between, obviously, Sukari, operational improvement, for potential, all of that delivered a reduction in cash cost of about 12%, which is quite, I believe, impressive in the scheme of things.

Unfortunately, the opposite happened with our non-managed operation. You can calculate the cash costs went up 60% and their production was really suffered. I know that they're doing everything they can, but still a very big impact on the company.

Cash flow was exceptionally strong. The business generated over $1 billion in EBITDA, up 85% and more than $400 million in free cash flow. That's a sevenfold increase from Q1 last year. This underscores the quality of our asset base and our ability to stay a step ahead of inflation. More importantly, though, these results are the product of exceptional collaboration and teamwork across the business.

Our operating teams continue to execute well across the board front, setting the stage for another strong year as we reaffirm guidance on all metrics.

Improving fundamentals. What we could control this quarter, we control very well. That is clear when you look at our managed operations. Production was up at Siguiri, Tropicana, Cerro Vanguardia and Sunrise Dam. Obuasi recorded a steady quarter in line with our plan and Sukari showed its quality.

Australia's production was up 24% year-on-year with both Tropicana and Sunrise Dam bouncing back from the flood-related disruptions in Q1 last year. And finally, at Kibali, our only non-managed JV production was down principally due to lower recovery grades. Our cash costs remained steady over the year, which reflects the continued focus on driving efficiencies across the business.

You see that in the free cash flow significantly higher at $403 million and in our overall profitability, EBITDA was up 158% to $1.12 billion and headline earnings up nearly eightfold to around $400 million.

We have a strong balance sheet with leverage close to 0 and no material near-term maturities. And we're implementing our new dividend policy with a quarterly dividend of USD 0.125 a share of around $63 million.

As a reminder, we will pay that amount each quarter with a true-up to 50% of free cash flow at the end of the year to take the overall payout to half of free cash flow. That's a very healthy number, particularly the gold price remains anywhere near current levels.

Q1 2025 at a glance. We have an impressive portfolio of Tier 1 assets. They account for around 2/3 of production, 80% of our reserves and about half of our resource. We expect to see that production share rise still further as Obuasi ramps up. Cuiaba's move into the Tier 1 category is underpinned not only by the exceptional turnaround this year, but also its low-cost profile and its strong geological potential. Over the next 3 years, our plan is to incrementally grow production there to over 300,000 ounces as we accept deeper, higher-grade ore parts of the ore body. It's clearly a Tier 1 asset, even though slightly, let's say, at 300,000 short of 500,000, but it's grade close to 6. It's the free cash flow we produce, for example, in the last quarter is in the $400 per ounce. So it is a magnificent asset.

Our Tier 2 assets are also operating very well. What you see here are healthy margins and exceptional cash flow leverage, which is especially pronounced in the current gold price environment. We are and will continue to be active managers of our portfolio. Last week, you would have seen the sale of our interest in the Doropo and ABC projects to resolute mining. This makes good on our commitment to evaluate and act without unnecessary delays to maintain a tight focus on the main engine room of our business.

One thing we understand well after 3 decades in this space is that distractions are to be avoided at all costs. Early this week, we agreed with Gold Fields to pause discussions regarding our potential JV in Ghana. Over the past 2 years, we've identified significant improvements to the stand-alone mine plan at Iduapriem, which has closed the relative path with the JV proposition. Now our focus will be on fleshing out that mine plan in more detail. Importantly, without the distraction of the potential JV, which is not healthy for any large mine, we'll be able to focus on driving operational improvements and realizing full value from our research.

On Obuasi, we hosted a site visit to Obuasi in March, in which we were able to showcase our investment in underground infrastructure that will greatly improve flexibility and underpin the ramp-up with 2 main access points to move people and materials, the decline and the KMS shaft, we have vastly improved our ability to handle movements of ore and waste.

We have a hybrid mining method that is fit for purpose with bulk loss mining for areas of relatively low grade and more selective underhand drift and fill for high-grade zones where ground conditions have been challenging. Crews are working hard now to ensure that upgrades to the underground ore handling infrastructure and in particular, new ore passes to move material from Block 8 and 10 to the KMS are commissioned in time and functioning according to plan. So far, so good.

Gold production in Q1 is steady at 554,000 ounces. Ore tonnes mined from underhand drift and fill were up 72% over Q4. That's an important trend which underpins the UHF contribution of around 8,000 ounces in Q1.

Our asset potential remains a cornerstone of our ability to operate predictably to drive better cash flows and to improve the long-term value of our business. More than that, it's come to define how we operate. We monitor improvements to the fundamental value drivers at each site, whether it is the mining volumes, recoveries, development or any other lever available to us. We know and trust that once the underlying indicators trend in the right direction, the cash flows will look after themselves.

Here, you will see the improvements from the Q1 2022 baseline. Tropicana has been focused on pushing underground volumes as one of its main value drivers. Those were up 20%. At Geita, where we're also driving underground volumes, tonnages are up 55% since the beginning of 2023. At Sunrise Dam and Siguiri, where we focus on the plant, recoveries are also strongly up.

A key success of the program has been the introduction of league tables to compare the performance at each site. We started with processing, which included the company's recoveries, run time and tonnes processed as a percentage of the theoretical maximum of full asset potential at each site. This slide shows the relative improvement year-on-year, which again, almost 2 percentage points just between 2024 and Q1 2025 in terms of ounces and ultimately dollars, that is a huge uplift.

What is even more exciting is the result we got in Q1, where in aggregate, our plants reported closing the gap to 100.2% of the theoretical maximum. These league tables would also have injected some healthy competition into the business. Everyone wants to be on top, nobody wants to be at the bottom. We're less fixated on that and focused more on the upward improvement journey.

Look at Siguiri as a good example. It may be propping up the bottom of the table, but its improvement year-on-year is impressive. Its cash contribution to the business, even more so. We've now rolled out league tables for open pit and underground mining and hope to see similar results.

We continue to uncover value in the U.S., where the overall quality of our discovery in Southern Nevada will deliver value to shareholders and a host of other local stakeholders for decades to come. North Bullfrog remains an important opportunity for economic development around the BT Mining District. It will provide hundreds of jobs and a significant investment into the area. It also serves as a step towards our expanded silicon project, which we have renamed the Arthur Gold project.

As we've said, North Bullfrog will allow us to learn and adapt to smooth out the development pathway for the larger price in the region. At North Bullfrog project, we have chosen voluntarily to develop the water conservation alternative in response to the public input we received during scoping.

Now based on the latest information available, we anticipate a regular decision from BLM by the end of next year. Importantly, we're looking collaboratively with the multiple federal and state agencies and look forward to progressing this important opportunity that will bring investment and good paying jobs to benefit the region.

We're on track to deliver the PSF for Arthur -- PFS for Arthur by around the end of the year and are working hard to make the first reserve declaration for the project at the same time. We're more confident than ever that this will be a magnificent Tier 1 asset over the very long term in the world's top mining jurisdiction.

On renewables, we recently took another major step towards meeting our decarbonization plans. As a reminder, we've committed to a 30% reduction in emissions from our 2021 baseline. The guideline has been clear from the outset that each project must be value accretive to the business. Our first big win was the grid connection we gained last year, which brings cleaner, cheaper energy for the site.

We have now completed and commissioned the mega renewables project at Tropicana, creating the largest hybrid power system in Australia's mining sector. It's impressive for a number of reasons, but it's worth acknowledging that this project was delivered on time and on budget despite the epic flooding we experienced last year. The integration of 61 megawatts of clean energy into the existing power system at the mine will cut diesel and gas consumption for power generation by 96% and 50%, respectively. That translates into a reduction of more than 65,000 tons a year in our carbon emissions.

Pacific Energy, which owns and operates the gas-fired power station at Tropicana will operate the hybrid system under a 10-year power purchase agreement. Combined thermal and renewable power systems will have a capacity of 150 megawatts. It's another example we believe that you can do well by doing good.

I'll now hand over to Gillian to run through the financials.

[Gillian Doran, executive]

Thank you, Alberto, and good morning. In 2025, the gold price continued its upward trend with the average price received for the quarter up 39% year-on-year. That's a result of a number of factors, including, but certainly not limited to, continued sovereign buying, geopolitical uncertainty, rate expectations and stubborn inflation.

Oil prices were around 8% lower than the prior year. U.S. CPI decreased to 2.4%, down from 3.5% in 2024, highlighting a steady moderation in inflation. Argentina saw a sharp drop in inflation, reducing to 56% from 288%, while Brazil went the other way, up around 5.5% from 3.9% in the prior year. It is uncertain at this stage what the impact of the U.S. reciprocal tariffs will have on the U.S. and global economy. We will monitor and don't anticipate significance to our global costs. Our realized inflation rate, which represents CPI changes in the jurisdictions that we operate was around 5.1%, keeping an upward pressure on cost.

Q1 saw production of 720,000 ounces versus 591,000 ounces in Q1 last year. That's our strongest Q1 since 2020. This improvement reflects mainly the first full quarter contribution of 117,000 ounces from Sukari and stronger operational consistency across the broader portfolio. This result was driven by a particularly strong performance from managed operations, partially offset by continuing operating challenges at Kibali.

Production at managed operations rose by 28% to 650,000 ounces, up from 515,000 ounces in Q1 '24 despite operational challenge and a temporary plant stoppage at Iduapriem. This growth was underpinned by the inclusion of Sukari into the portfolio and strong year-on-year improvements at Siguiri, adding 32,000 ounces and Tropicana up 21,000 ounces.

Siguiri delivered a sharp turnaround in performance, achieving 80,000 ounces in Q1 2025 versus 48,000 ounces in Q1 2024, supported by improved metallurgical recoveries and higher throughput. Both Tropicana and Sunrise Dam recovered from last year's rainfall disruptions.

Overall, we realized a year-on-year uplift in milled tonnes and underground recovered grade on the back of continued reinvestment in improvement initiatives. Total cash costs from managed operations decreased by 2% despite rising inflation and total ASIC from managed operations decreased by 2%, reflecting the company's ongoing focus on efficiency and operational discipline.

The numbers underscore disciplined execution and operational excellence, translating into meaningful value creation. Adjusted EBITDA rose 158% year-on-year to $1.1 billion as firm cost control ensured that stronger revenues converted into earnings and cash flow.

Basic earnings climbed to $443 million from $58 million a year earlier, bolstered by the 39% increase in average gold price received and a 28% rise in managed operations output. Net cash from operating activities was up 188% to $725 million, reflecting improved operating fundamentals.

After capital expenditure and Kibali proceeds, free cash flow reached $403 million, 7x that of the prior year. Adjusted net debt fell 60% versus March '24, reducing the adjusted net debt-to-EBITDA ratio to 0.15x. That's its lowest in more than a decade, providing us with significantly increased financial flexibility.

We remain focused on narrowing the valuation gap with our North American peers by sustaining operational improvements, maximizing cash conversion, extending mine life and maintaining disciplined capital allocation.

The total cash cost performance underlines the progress we've made in improving our position on the cost curve. Group total cash costs were $1,223 an ounce within the guidance range of $1,125 an ounce and $1,225 an ounce and only 4% year-on-year higher year-on-year despite persistent inflation and royalty costs.

Underperformance at the non-managed Kibali JV added approximately $45 an ounce to the group's total cash cost. Managed operations total cash costs fell 2% to $1,213 an ounce, aided by the addition of Sukari and continued efficiencies at Sigiuri.

Industry-wide macro factors, namely inflation and higher gold price-linked royalties added about 7% or $78 an ounce to cash costs, an impact largely offset by favorable currency movements in Australia and Brazil.

Adjusting for the prior year's one-off weather events at Tropicana, controllable costs and managed operations, including Sukari, improved by $62 an ounce, reflecting tight discipline on volumes, grades and absolute spend. These benefits were partially offset by operational challenges and a temporary plant stoppage at Iduapriem.

All-in sustaining costs tell the same story. Group AISC rose just 1% despite the drag from inflation, whilst managed operations AISC declined 2% to $1,657 an ounce. These results demonstrate our consistent focus on operational excellence, cost containment and capital efficiency, key drivers in our strategy to advance down the peer group cost curve.

We continue to focus on ensuring that the higher gold price is translated efficiently into earnings and cash, which came in at $403 million, up from $57 million in Q1 2024. Gold price gains of $544 million, equivalent to $811 an ounce delivered an after-tax boost of $346 million, underscoring disciplined financial execution.

Higher sales, mainly at Siguiri and Tropicana and including the first contribution from Sukari added a further $246 million. Cost pressures were contained to $165 million, principally from price-linked royalties and higher volumes.

Movements in working capital rose by $62 million to $169 million in Q1 of '25. Inventory was flat, trade receivables higher, partly driven by higher gold price and Sukari debtors. And finally, trade payables lower as we settled bonuses, royalties and contractor labor invoices in the first quarter of the year.

Capital expenditure increased in line with our plans and the inclusion of Sukari, ensuring sustainability and growth of the portfolio.

We have continued to have strong liquidity and financial position over the quarter. Adjusted net debt down to $525 million at the 31st of March 2025, whilst the adjusted net debt-to-EBITDA ratio improved to 0.15x from 0.21x at year-end, underscoring disciplined cash generation and a leaner capital structure. Management retains through-the-cycle target of 1x on this leverage metric.

Liquidity remains ample at approximately $3 billion, including $1.5 billion in cash and cash equivalents. That positions us well to fund our capital pipeline to return cash to shareholders and to maintain resilience regardless of the price environment. We are pleased to reaffirm our 2025 guidance on all metrics. As usual, production is expected to be second half weighted, albeit quite balanced across the year.

With that, I'll hand back to Alberto to wrap this up.

[Alberto Calderon, executive]

Thanks, Gillian. We passed on strong operating improvements, but we're far from satisfied. We will continue to find ways to optimize and operate more efficiently. Full asset potential is embedded in the business and has now shifted from a pure operational optimization program to a way of working. It has improved both our predictability and our resilience over the past 2 years.

Obuasi has developed its infrastructure, is undergoing its pivot to the hybrid mining method and is getting our full attention as it moves up the curve. At Sukari, we expect to enhance value through full asset potential. We've realized the bulk of the corporate synergies around $30 million and are working each day to ensure we leverage our global abilities across procurement, supply chain and talent.

We continue to refine the operating model and remain vigilant to prevent any regression to the [indiscernible] organizational structure and corporate entropy of past years. We continue to look at the shape of the portfolio, always asking the question of whether any asset is worth more inside or out. We have a new more generous dividend policy, which ensures timely cash return to shareholders, and that is part of our commitment to ensure capital is allocated in the most prudent and value-enhancing way.

Our world-class exploration team continues to add value through the drill bit across our properties. We continue to prioritize safety and advance our decarbonization projects, which are not only NPV positive, but reduce our reliance on thermal energy and often complex supply chains to get fuel to remote sites.

Our technical team continues to uncover value in Nevada as they work to bring our projects to account.

Why AngloGold Ashanti? When I joined the business just under 3 years ago, the mission was simple to safely regain cost competitiveness. It's a bit more than 3 years ago. At the time, we have jumped to the top of the industry cost curve. Then in late 2021, with new senior leadership working alongside empowered operating and with a new clear operating model in place, we've implemented the full asset potential program to turn the tide.

We continue to evaluate progress against our initial goals. with mid-2021 as the base and adjusting for U.S. CPI, our cash costs are about 1% higher in real terms relative to a 20% average increase for the peer group. We have also narrowed the gap appreciably in absolute terms.

We believe we have now embedded in our business the tools to help us continue to improve our competitive position. For as long as this company has been in existence, we struggled with the disconnect of our production size and rating relative to our North American peers. We know that this isn't the result of a single thing, but rather the cumulative effect of a number of factors. We've gone about systematically addressing the issues over the past 3 years.

Today, the fundamentals of our business are strong and the outlook is even better. We're doing what we promised, and we're taking meaningful strides to achieve and reach our full potential. And as you can see, the valuation metrics, we believe the AngloGold Ashanti continues to offer an attractive investment proposition. If you look at the table from left to right top, free cash flow yield is one of the highest in the industry. Dividend yield is also one of the highest in the industry. Inferred all-in cost is basically very similar now to most of our peers, except Pier 1. And then nevertheless, when you look at EV to EBITDA, we're still lagging. If you again exclude Pier 1, we are about 10% lower still in EV to EBITDA. So still a room to grow in relative terms.

With that, I'll take your questions.

[Operator]

[Operator Instructions]. The first question we have is from Raj Ray of BMO Capital Markets.

[Raj Ray, analyst]

Three questions, if I may. First up on Obuasi. Alberto, if you can give us some visibility on how the ramp-up is going. When we were at site, it was good to see all the infrastructure work finally complete, was down to the increased development rate. There was a new crew that was supposed to come in. Can you give us some color as to how that's going?

Secondly, on Iduapriem, the decision to pause the press release highlighted that there is potential for enhanced value at Iduapriem. If you can touch upon what positives you're seeing based on the work you've done at Iduapriem and how you can increase value.

And third is with respect to the working capital, it's more for Gillian. Last year, there was a $254 million negative working capital move. In Q1, that's another $169 million. Can you give us some idea as to how we should look at the working capital for the rest of the year? Do you see some unwind the rest of the year? That's it for me.

[Alberto Calderon, executive]

Thank you, Raj. The ramp-up is going well in Obuasi. We -- at this stage, we believe we will be within the range that we signaled to the market.

I'll give you one indicator. We have to do about 130,000 tonnes of ore per month. And as I look at April, most of the weeks and all of that, we're doing about that, which is 30,000 per week. So I think the second quarter will be good. And so we're -- and pretty even, let's say, across the quarters. So yes, we're happy with Obuasi. It's still obviously, there's a lot of work and focus and dedication from everybody at the mine site and from corporate, but it's going well.

Iduapriem, there's 2 things, obviously. One we did a lot of additional work in our -- what we call our SLW, the long-term plans, the potential for the asset. And when we started reassessing the numbers, and it's always about, okay, well, what does the future of this asset look independently and with the JV?

What we had seen 2.5 years ago with the knowledge we had then, with the understanding of the other asset and our asset there was a clear, let's say, benefit in increasing NPV. That's not the case right now. And so that's where we said, okay, let's just look at how we can stabilize this one because this has been very unsettling for the teams on the ground. But also, we have a new understanding. We've discovered the way to mine that additional resource.

And so Iduapriem has an exciting future as a stand-alone. And that's the one. We'll talk to the market more. This is early stages. But basically, it's all about developing that additional resource that we see now clearly in our, what we call H2 horizons and H3 horizons. Gillian?

[Gillian Doran, executive]

Yes. Thanks, Raj. So I think, firstly, there's obviously a number of factors within working capital. So the first one, we do have a reduction in gold inventories primarily Geita and Cuiaba. Cuiaba, you know, has transitioned back to full plant production from a sort of a concentrate mix. And so there are some temporary working capital impacts there.

Receivables then is up partially from sort of higher prices and then the inclusion of Sukari's balances in there. And then on payables, we had significant payments in Q1 off the back of sort of contractor cost payments in January and then royalty payments and also payments of bonuses, et cetera.

What we anticipate for the remainder of the year is a recovery somewhat on the payables side, but would want you to bear in mind, as costs are coming down, you're paying less. And so think about a sort of a reversion or a correction on payables and sort of continuation with inventory levels roughly where they are and then receivables doing what it will do based on gold price.

[Operator]

The next question we have is from Josh Wolfson of RBC.

[Joshua Wolfson, analyst]

First question, I guess, just on the capital allocation side. I understand the new dividend framework in place. Free cash flow this quarter was very strong. And when I look forward at what the net cash position is going to be, it will grow significantly even with this new dividend policy. When you start to think about further capital allocation measures beyond the dividend in the second half of this year and into next year, where is the company leading when you start to think about that excess cash balance being built?

[Alberto Calderon, executive]

Thanks, Josh. We said when we released the new policy that we understood that we would -- maybe in the future, if the gold price remains as strong, that we will be open to other avenues of returning cash to shareholders, including buybacks. This is the first quarter where we implement a new policy.

What we've passed is let us implement a new policy 1, 2 quarters, 3 quarters. But clearly, this year, again, if the gold price stays where it is, we'll have to look at other ways of redistributing. So at this stage, it's a discussion that we will have with the Board, what is the appropriate mechanism to do that. But yes, I just again underscore this is just the new policy, first quarter, first time we pay quarterly dividends. And yes, we'll get back to the market in due time.

[Joshua Wolfson, analyst]

Okay. Got it. And then on North Bullfrog and with some of the changes here on the permitting side. So first question I have is just on the historical CapEx guidance. How does this delay in the project affect the budget for the asset, I guess, in 2025 and '26?

[Alberto Calderon, executive]

Look, apart from inflation, yes, there's nothing -- there may be something with the tariffs. But we're not -- at this stage, we're focused on, as I said, of the permission for the BLM, and we don't think there's anything significant at this stage. And I just have to say, which is interesting, we valued that project at very conservative gold prices, but the long-term gold price keeps going up and on the long term, I'm talking about it.

And so the project, I would say that, if anything, maybe it has some more costs. But in terms of the IRRs that we have internal, we haven't talked about it, but NPVs,'s looking even better, even though it's small, but it's looking very well.

In terms of what we are spending on it, in guidance, it's $45 million in 2026. And then in 2026, probably it will be slower. We have talked about $300 million, and we expect to spend less in terms in 2026.

[Joshua Wolfson, analyst]

Okay. And then when you think, I guess, more broadly at the permitting outlook in Nevada here, my understanding was, at least based on some of the prior commentary, I think this was a more simplified permitting process through a more succinct EA. And the project permitting time line, I think, has been delayed 2 years thus far.

What does this sort of mean for the outlook at, I guess, the new Arthur project? And how are you looking at maybe potential pressure points with that permitting process, which will ultimately be, I think, a lot more complicated than North Bullfrog?

[Alberto Calderon, executive]

So I think that this North Bullfrog has been a very useful project from many points of view, but one of them important is how to navigate. This is the first time in years that we are navigating here and especially in Nevada. And so how to navigate with the BLM and all the permissions and communities that we are required.

So I think it's been a very useful process. As we look -- let me state 2 things. First, we are actively engaging with the authorities in Washington, the BLM senior management, Department of the Interior. And I have to say that the support that these projects, you've all heard about it publicly, but I probably can reiterate that privately, there's an enormous amount of support.

Of course, you have to do the right thing. You have to listen to the communities in a way, that's what we've done, and we found much more efficient ways of minimizing the use of water, which is a big thing for the North Bullfrog. And that will also be applied in Arthur.

But look, I don't think that the sort of general sort of views that we have of when Arthur will be in production, all of that, they have materially changed. We will talk about that when we finish the PFS at the end of this year, we will give much more probably a guidance to the market about the future of the project. It could be at the end of this year or in February of next year, depends when we finish it. So let me just summarize by saying we are quite encouraged for Arthur by a very clear pro-business support from the U.S. government and the BLM.

[Operator]

The next question we have is from Chris Nicholson of RMB Morgan Stanley.

[Christopher Nicholson, analyst]

I wondered if maybe you could make some comments on how these higher gold prices might impact the way you think about mine plans across the operation, whether it provides you additional scope or optionality to do things that you may not previously have done.

And then I think linked to that, could you comment the enhanced value on a stand-alone basis at Iduapriem, has any of that arisen due to maybe the optionality that the higher gold price can do?

And then the final one, you made some comments there, I think, around Cuiaba, maybe looking to expand production towards 300,000 ounces. Maybe provide a bit more detail as to how you're looking to get there?

[Alberto Calderon, executive]

Chris, could you maybe just repeat that first question? We lost you on the call. I got the first one in the question and the third one, gold price.

[Christopher Nicholson, analyst]

Sure. Yes, I'll repeat the question. I'm asking in respect of the higher gold price, how does that impact the way you think about your mine plans across the portfolio? Does it provide additional optionality. And then Iduapriem has, is the additional value you see on a stand-alone basis, has some of that arisen due to, I guess, the optionality a higher gold price provides you? And then also just Cuiaba, you made some comments around getting to 300,000 ounces. How -- kind of maybe some further detail on how you're looking to get there?

[Alberto Calderon, executive]

Okay. Thank you. Look, the reality is that we have kept our reserve price still basically like most of the market and very low at $1,650 and are the 2 ones so that's way below the consensus pricing. I'd probably add something more in all of our operations where we are plant constrained, we keep at the lowest end of that one, because our main focus is on increasing the margin. And that's why you can see we've done so well in cash flows. There is no point in processing, let's say, when you have your plant full in opening the flood gates for lower grade ore.

So my point is we are very deliberate and focused on keeping costs under control and on keeping the margin the widest possible to have the highest free cash flow. I'll tell you one metric that underpins this. Look at our free cash flow per ounce in the first quarter, it was in the $600, that's higher, for example, than our 2 largest peers in the industry. So that just underpins we are not changing the core sort of -- the core prices that we use for operations, for resource or reserve, and we're maintaining them way, way below the current gold price.

And that then answers your second question, which is Iduapriem. No, it has nothing to do with the gold price. This is about our understanding. We've done a lot of work at the whole company in the last years in understanding the horizons of the different assets, let's say, in a 5-, 10- and 20-year window. We've actually going to start talking in the next quarters of each asset.

Let me give you probably a preview of that, probably the one that we will talk. We are seeing like an incredible long-term future for Geita, even higher than it is today and going way into even the end of 2030. So we've done that across the whole company. And when Iduapriem, we understood the potential of Iduapriem, that's when we said, okay, this makes sense that we continue this path on our own.

We'll give you more color on that when we have -- we've just taken this decision, and I can give you more color on how we're going to get to 300,000. But at this stage, it's early stages. We know the potential we have. We just have to unlock with more studies, how are we going to get that potential. But if you ask me about...

[Gillian Doran, executive]

Yes, Cuiaba.

[Alberto Calderon, executive]

I'm sorry. I thought it was Iduapriem. So Cuiaba, it's the same. But Cuiaba, we are already at 260,000 270,000. So it's just going to be that the average grade is going to be pushing into the 6 and higher. And yes, that's what we understand probably much better how we get to 300,000. We -- I think that all the studies and all of that underpin that we should be there in 2 years or something like that, maximum 3, but I think 2 years, we'll get at the 300,000 level [indiscernible] higher grade.

[Operator]

The next question we have is from Adrian Hammond of SBG Securities.

[Adrian Hammond, analyst]

Firstly, yes, well done on a good quarter, particularly that your cost management is very disciplined in spite of record gold prices, which is contrary to the past. So well done there.

But I'd just like to ask a bit about Sukari, great performance on costs, down 24% year-on-year. So what's driving that? Where have you managed to yield a change at Sukari?

And then following our visit there earlier this year, there was certainly some prospects around connecting to the grid that could have meaningful change to the costs further. Any progress there? And any progress on the draft mining code that included value share that was expected to come through?

[Alberto Calderon, executive]

Okay. So I'll ask Gillian to give you the details on the first question on Sukari. But there was a different classification of what they put in cash costs we put in basically growth capital. You remember that was an issue in the last quarter when there was a surprise of why the numbers were higher in capital, and it was related to that. So there's a definition -- just a different definition that we use. But on top of that, they are, again, very good in terms of higher production and cost control. So there's a real reduction in cash cost per ounce, but part of that explanation is that. Gillian, if you...

[Gillian Doran, executive]

That's exactly right. So it's actually waste stripping slightly better grade and then yes and the definitions between AGA and Centamin. So the higher grades coming through on higher production, there's a change in waste stripping. And I think probably the most important piece to note is this is pre sort of full potential work that's going to happen later on this year. So we're really happy, and we see a further opportunity there as well.

Okay. And then connecting to the grid. So that is going to happen. We -- there was some issues on the contract that we wanted to clarify. So we've worked a bit on the terms of the contract and all of that. But I think that, that is proceeding well.

[Alberto Calderon, executive]

Comes in line in '26. And then one thing probably to -- that came clear, it was defined by the way it's now signed and is a tax extension for the next 15 years in Egypt, the draft mining code.

[Gillian Doran, executive]

Yes. On the draft mining code, that's gone to the cabinet and it's also gone presidential approval, and we're just waiting for that application for sign. So I think we position that to come through in the next quarter.

[Adrian Hammond, analyst]

And then just on your assets in general, Tier 1 versus Tier 2, do you think there are any Tier 2 assets that could become Tier 1 assets in your portfolio get the sense that you're looking more inward versus asset sales previously given the price?

And then for Gillian, any chance you might want to switch to a semiannual top-up that may perhaps control the lazy balance sheet, if so it became a criticism from the market.

[Alberto Calderon, executive]

So I think that there are 2 assets. We've announced one, but the second one, it will take us some time, but I think it has the potential to become Tier 1, and that means low cost and significant production. So the first one is Cuiaba, the second one is Siguiri.

We're very excited by the future of Siguiri. It will take us some time. But not only the potential for a -- there's no question on the resource. There's no question that we can sustain very high levels of production, 400 on 1,000 plus for decades. We just -- there's still question marks about how we do that. There's -- we've done a lot of progress with communities. I have to say the government, the new Minister of Mines, we think is exceptional, and we are receiving a lot of support, and we're quite happy there. But -- so there are issues to be worked. But in terms of potential, Siguiri has all the potential to be Tier 1 and Cuiaba is already a Tier 1.

Probably I'll add something in your question. We said we are working, I said 3 months ago on about 2 or 3 disposals. They're obvious, but I wasn't saying the names. We completed 1 already in the first half, and I would expect to complete another one in the second half. We're not going to -- if we don't find an appropriate buyer, we won't do it. But -- but I think that there are some interesting possibilities of continuing this disciplined approach to portfolio management.

[Gillian Doran, executive]

And sorry, Adrian, I kind of understood your question to be similar to the one Alberto answered on dividend allocation policy. So just the fact that we were -- we continue to review -- we've implemented the quarterly dividend, and we're open to revising options or whatever towards the end of the year. I mean that's indirectly what you asked. I think...

[Adrian Hammond, analyst]

Not exactly. It's the same policy you have. You're just paying it more frequently.

[Gillian Doran, executive]

Yes.

[Alberto Calderon, executive]

It just -- look, that's -- right now, we're just implementing the policy. We'll discuss with the Board if we do something at the half year instead of at the end of the year. But the policy is the end of the year, but it's in discussion. We can't discuss it.

[Stewart Bailey, executive]

Great. We're going to take some questions from the webcast. So 2 questions from [indiscernible] at Investec. For Alberto and Gillian, at these price levels close to record highs, has hedging and locking in some of these higher prices increased in appeal, first one. The second one is just your view on M&A at this point in the cycle.

[Alberto Calderon, executive]

Thank you. So our policy is, as a rule is not to hedge. There's always exceptions like in the case we talked about in Brazil. But no, I can probably just guess the amount of sort of profit impact of hedging of some of our peers, like it's a very -- it's just playing lottery. So we don't do that. We're naturally hedged and we won't hedge as a policy.

So M&A, I'll probably go back to what we've said in the past. We're very focused internally. We're very focused on discipline. The business development group is mainly focused on divestitures, as I said before. They always have a mandate to look at opportunities, but that's always complicated. And yes, that's part of the job. But if you ask me, the focus of the company is internally full asset potential, discipline, integrating Sukari, and that's the main area of our focus.

[Stewart Bailey, executive]

Good. Thanks, Alberto. Then good to see David Holton back from Global Mining Research. David, your questions on Iduapriem options and also potential other assets to be rationalized, I think, have been answered, but thanks for those.

There's another one from Tanya Jakusconek from Scotia. Tanya has a question on North Bullfrog saying, given the new permit time frame, does it mean production now expected in around 2028?

[Alberto Calderon, executive]

Yes, that's -- that's right. That's the expectation is closed in 2028.

[Stewart Bailey, executive]

Great. Tanya, your question on whether the permitting delays impact Arthur Gold, I think it's similar to the one Josh asked, so that's answered. One for Gillian on guidance. Just guidance is second half weighted. Are you looking at 45-55 H1, H2? And what about capital over that period of time?

[Gillian Doran, executive]

No. So I think it's far more balanced than in previous periods and probably against our peers, I think it's more 48-52 in aggregate. And then teams are making good progress on same business capital spend. So no real swings. We always have to kind of go the rush at the end of the year to get orders for things in place, et cetera, but not anything sort of out of the ordinary. We're thinking quite balanced across the year.

[Stewart Bailey, executive]

Great. Thanks, Gillian. I think that's it from the webcast. I see there are no other questions on the queue. So, Irene, I'm going to quickly just hand over to Alberto for a couple of closing comments.

[Alberto Calderon, executive]

Thank you, Stewart. I'd like to take a minute before signing off to recognize the enormous contribution that Richard has made to us over about 15 years at AngloGold Ashanti. Richard George is on our COO role.

Aside from the incredible stability and predictability you see in the portfolio at the moment and the fact that we closed the cost gap with most of our peers, he has had a far more profound impact over the long-term fortunes of the business. It was Richard who mastered mined the pivot to hybrid mining at Obuasi, and it's Richard who has evangelized the use of RC drilling for underground grade control, both of which will add shareholder values for decades to come. He's also been a wise counsel to me since I started here, when he was a GM at Geita, and I'm very fortunate that he will remain available to me in that advisory role even after his retirement. I'd like to offer Richard our deep gratitude and wish him a good rest and all the very best in this new chapter.

[Stewart Bailey, executive]

Thanks very much, Irene, and thank you, everybody, for joining us on today's call.

[Operator]

Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your lines.