Assessing the financial performance of AngloGold Ashanti (2001 - 2006)

Abstract: 

AngloGold Ashanti (AGA) is engaged in the mining and processing of gold ores and the exploration and development of gold properties in several countries across the globe, and in hedging activities in connection with its gold production. The study revealed a significant increase in current assets, especially inventories and debt due within 1 year. Generally, ROAs were low, indicating that the company has over-invested in assets. W The return on equity (ROE) for the company from 2001 to 2006 followed the same downward trend as the return on assets (ROA). Using the ALTMAN’s Z-score model, values ranging between 22.5 and 91.04 and averaging 54.26 were obtained, indicating that the financial strength of the company is very encouraging. Owing to the several risks faced by mining companies which take a heavy toll on their profitability, the study has recommended AGA to take pragmatic measures to counteract these risks, where possible. AGA should accelerate its exploration programmes, particularly at Obuasi and Siguiri, Guinea, and must have land positions in some of the most prospective regions in the world. Artisanal mining (popularly referred to as “galamsey”) is one of the negative practices that have bedevilled the operation of AGA for a long time. The spate of artisanal mining activities in recent times has escalated to the point where pragmatic steps must be taken to prevent such activities from bring the company down on its knees.

 

Authors: 

Nimako-Mensah, Francis

 

Place of publication: 

A Thesis submitted to the Department of Banking and Finance, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirements for the degree of Masters in Business Administration

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