AngloGold Halts Production At World’s Deepest Gold Mine, Due To Covid-19 Outbreak

Stock Market

AngloGold Ashanti (AU) has confirmed that operations at its Mponeng gold mine – which were running at 50% capacity – have been temporarily halted on a voluntary basis.

The company explains that this new ‘precautionary step’ will enable it to complete contact tracing, and to deep clean and sanitize the workplace and key infrastructure.

AngloGold Ashanti has conducted 650 Covid-19 tests since last Thursday, after a screening, tracing and testing program revealed several cases at the site in Merafong, in Gauteng Province, South Africa.

This process has indicated 164 positive cases with only a handful of tests left to process. According to AU, of the positive cases, the vast majority are asymptomatic.

“AngloGold Ashanti is committed to working with the South African government and other stakeholders to combat the spread of the virus and to deal with its after-effects” the company says, adding that it’s electronic tracking technology- normally used for underground workers- is helping locate primary, or close contacts.

RBC Capital analyst James Bell has a buy rating on the stock and $29 price target (14% upside potential). Shares are currently trading up 14% year-to-date.

He reiterated his buy rating following ‘difficult’ Q1 results, with both production and costs coming in weaker than forecast. However key asset sales remain on track- with AU on the cusp of selling its South African assets to Harmony Gold Mining for $300M.

“We continue to see asset sales as a key catalyst for the group so positive progress in the SA sale process, including competition commission approval, should be welcomed” said Bell, who believes that an early H2 closure may still be possible. (See AU stock analysis on TipRanks).

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