Shares of gold miner AngloGold Ashanti (AU +6.55%) rallied 6.1% on Tuesday as of 12:23 PM EDT.
The gold mining stock released third-quarter earnings this morning. While revenue actually slightly missed expectations, and earnings per share only met expectations, the stock rallied on solid production numbers and excellent cost control. Gold prices were little changed on the day, hovering just a bit below last month's all-time highs.
AngloGold shares had sold off in the weeks leading up to earnings as investors booked profits after a monster gain this year. Therefore, the results, which were strong in and of themselves even if not quite matching high analyst expectations, enabled shares to bounce back to highs last seen a month ago.
NYSE: AU
Key Data Points
AngloGold rides the 2025 gold boom, with efficiency
In the third quarter, AngloGold grew revenue 61.2% to $2.37 billion, slightly missing expectations, while adjusted (non-GAAP) earnings per share rose 136% to $1.32, which met expectations.
While the top line technically "missed," it was still a tremendously impressive performance. AngloGold was able to boost gold production by 17% in the quarter, taking advantage of higher prices, while keeping cash costs in check. Cash costs per ounce grew only 5%, even as the Q3 price of gold was 40% higher than the year-ago quarter. As a result, operating cash flow and free cash flow surged 94% and 141%, respectively.
The company also raised its dividend. AngloGold pays a minimum $0.125 cent dividend every quarter and then devotes half of free cash flow to a regular dividend, which added up to $0.91 in the third quarter. The company also noted that it usually pays the "extra" dividend at year's end but that since the balance sheet and cash flows were so strong, it was accelerating the payment.
With the rest of the cash flow, management noted the company had flipped from a net debt position to a net cash position at the end of Q3, to the tune of $450 million.
Image source: Getty Images.
Gold has been the trade of 2025, in addition to AI
Gold prices are up a whopping 58% year to date, rising on the back of geopolitical instability and inflationary fears caused by the trade war, government deficits, and a flight-to-safety mentality. Gold remains good portfolio insurance against inflation or geopolitical stress.
Gold miners, with their fixed costs, will generally see their earnings and cash flows fluctuate by multiples of the movement of the price of gold -- both to the upside and to the downside. So while high-executing companies like AngloGold have shown outsize appreciation this year, their future earnings and stock price will be highly dependent on demand for gold.
