Shares of precious metals miner AngloGold Ashanti (NYSE:AU) rose roughly 10% on Monday. The big news was the company's third-quarter operating results. As the stock gain suggests, the reading was pretty good.
AngloGold announced that it produced roughly 837,000 ounces of gold in the third quarter, up from 825,000 ounces in the same period of 2019. That's notable because during the first six months of 2020, the miner's production declined 5.5%. That drop was largely the result of the coronavirus, so the third quarter was a clear sign that the company is moving past the production disruptions it faced from the pandemic. That said, all-in sustaining costs were higher by around 1%, driven by coronavirus-related spending that the company pegged at about $51 an ounce.
Despite the higher costs, the company's free cash flow increased 290% year over year thanks to a 30% increase in its realized price for gold. That in turn led to a change in the company's dividend policy. AngloGold will now pay dividends two times a year, up from once per annum. And it will increase the payment from 10% of free cash flow to 20%. That's obviously good news for shareholders.
The company also highlighted that adjusted EBITDA was up 72% year over year and that the company's adjusted net debt dropped by nearly 50%. All in, the update was very positive and investors reacted accordingly.
Precious metals are notoriously volatile commodities, so investors shouldn't take one quarter as a long-term sign. In fact, precious metals and precious metals miners are probably best viewed as diversifying assets. So while AngloGold Ashanti definitely had a good quarter, there are broader investment considerations for investors to think about before jumping aboard the stock.