Who Is AngloGold Ashanti (AU)?: Interpreting a “Cyclical Company” Driven by Gold Prices Through Operational Execution and Capital Discipline

* This report is prepared based on data as of 2026-01-07.

Business in middle-school terms: AU “mines gold and sells it”

AU (AngloGold Ashanti) makes money by mining gold across multiple countries and selling refined gold (e.g., bullion) into the market. It doesn’t sell branded products to end consumers; instead, it functions as a commodity supplier to professional counterparties such as refiners and distributors, trading houses, and financial players.

The profit model is simple: Profit = gold sales − costs such as mining, hauling, labor, fuel, and equipment maintenance. Put differently, the wider the spread between the “gold price” and the “cost per ounce mined”, the easier it is to earn attractive profits; when that spread compresses, profitability can deteriorate quickly.

Today’s core pillars—and what could matter next

• Stable operation of existing mines: Protecting production volumes, minimizing shutdowns and incidents, and keeping costs under control are the foundation of earnings.
• “Quality rotation” of the mine portfolio: Add higher-quality mines/tenements while considering divestitures of assets where operating difficulty is rising (selectivity and concentration).
• Potential future pillar: Beatty District, Nevada: Broaden development options through the Augusta Gold acquisition and advance the build-out of future production sources (less about near-term revenue and more about “planting seeds for the next mine”).
• Strengthening internal infrastructure: Upgrade mining, processing, and maintenance; use data and automation to support more stable operations and lower costs.

Analogy: AU is closer to a “gold farmer”

AU’s business is a lot like farming. The output (gold) sells at market prices, and profits come down to the spread between the “market price” and the “cost to produce.” Better “land” (higher-quality mines) and stronger execution translate into better results—but exposure to the price environment is unavoidable.

This company’s “type”: Cyclicals in Peter Lynch terms

Across Lynch’s six categories, AU most closely fits a core Cyclicals profile. The reason is straightforward: gold is a commodity, and results are heavily shaped by the gold price and the cost base—so profits can swing meaningfully even when you look across long time periods.

• Annual EPS includes both profitable and loss-making years, with results moving in a cyclical pattern (for example, loss years and profit years appearing alternately).
• Because earnings are set by the spread between an external price (the gold price) and costs, it’s hard to view the company as a Stalwart-style “steady every year” grower.

Note that long-term EPS CAGR (5-year and 10-year) cannot be calculated in this dataset, so EPS growth cannot be used to support a Fast Grower or Stalwart classification.

Long-term fundamentals: Over 10 years, not “linear growth,” but cycles plus asset management

Long-term view of revenue and cash generation (5-year vs. 10-year tell different stories)

Revenue CAGR is approximately +10.4% over the past 5 years versus approximately +1.6% over the past 10 years. Over a full decade, growth looks modest; the company reads less like a compounding growth story and more like a business that moves with the gold-price backdrop, production volumes, and portfolio rotation. The stronger 5-year growth also reflects the measurement window itself (including price phases and portfolio changes).

FCF (free cash flow) grows, but swings year to year

FCF CAGR is approximately +20.6% over the past 5 years and approximately +8.9% over the past 10 years. With FCF growing faster than revenue, the period likely includes phases where cash generation improved due to a better price environment and/or changes in costs and investment intensity. That said, there are also years of negative FCF, underscoring the cyclical nature of the model.

ROE and margins: Strong in some years, but “consistency” depends on the cycle

• ROE (latest FY) is approximately 15.2%, but there are also negative years over the long term.
• Operating margin includes negative periods depending on the year; the latest FY2024 is approximately 26.8%.
• FCF margin (annual) includes negative years, but FY2024 is approximately 15.2%.

As a result, it’s difficult to treat small margin moves as “structural change.” Margins are best interpreted alongside the cycle phase (price, operations, and investment burden).

Near-term (TTM / roughly the latest 8 quarters) momentum: Same “type,” with recovery-to-upcycle-like numbers

Recent growth momentum is categorized as Accelerating. The key point is that this looks less like “stable growth accelerating” and more like the familiar “everything improves at once” pattern you often see when a cyclical business moves into a stronger phase.

Revenue, EPS, and FCF are all up YoY

• Revenue (TTM): 8.575bn USD (YoY +37.7%)
• EPS (TTM): 4.44 (YoY +28.2%)
• FCF (TTM): 2.506bn USD (YoY +316.9%)
• FCF margin (TTM): approximately 29.2%

The long-term “type” (Cyclicals) aligns with the short-term numbers. In other words, the current strength is consistent with the company’s tendency to post strong growth in favorable phases. It’s prudent not to assume TTM strength is permanent, and instead to first frame it as a reflection of the current phase.

Phase framing as “recovery to upcycle-like” (not a definitive call, but a description of the state)

On a TTM basis, revenue, profit, and FCF are all positive, and YoY comparisons are also positive. On an FY basis, the latest FY is profitable as well (FY2024 net income of 1.004bn USD). Because peaks in commodity businesses are hard to identify in real time, we do not call a peak; however, recognizing cycle positioning matters to avoid misreading valuation metrics such as PER.

Financial soundness (bankruptcy-risk view): Interest coverage and a cash cushion look solid today

For cyclical companies, bankruptcy risk is less about “whether things look good right now” and more about “whether the structure can survive a bad phase.” With that in mind, the latest FY figures do not suggest an unusually heavy debt load, and interest-paying capacity appears adequate.

• Debt-to-equity (latest FY): approximately 0.32
• Net Debt / EBITDA (latest FY): approximately 0.28x
• Interest coverage (latest FY): approximately 11.4x
• Cash ratio (latest FY): approximately 0.99

Accordingly, the key question is less “financial distress” and more how much cash generation swings with the gold price, operating performance, and investment intensity.

Dividends as capital allocation: Material, but not a “stable dividend” profile

AU is not a stock where dividends are an afterthought. The latest TTM dividend yield is approximately 3.69% (based on a share price of 88.47USD), and the dividend history spans 26 years. Still, as a cyclical business tied to the gold price, it shouldn’t be evaluated like a utility-style “steady dividend” payer.

Dividend level and where it sits versus history

• DPS (TTM): 2.565 USD
• Dividend yield (TTM): approximately 3.69%
• 5-year average yield: approximately 1.44% (current is higher vs. the past 5 years)
• 10-year average yield: approximately 1.16% (current is higher vs. the past 10 years)

How to read dividend growth: Big growth, but assume cycle effects

• DPS growth (5-year average): approximately +40.7%
• DPS growth (10-year average): approximately +29.8%
• Most recent 1-year (TTM) dividend growth: approximately +313.5%

The most recent 1-year increase is exceptionally large. However, for cyclical companies, dividend levels and payout ratios can shift materially as the cycle turns, so it’s not appropriate to infer permanence from a single year’s growth.

Dividend coverage (TTM): Look at both earnings and FCF

• Earnings-based payout ratio (TTM): approximately 57.8%
• FCF-based payout ratio (TTM): approximately 51.9%
• FCF dividend coverage (TTM): approximately 1.93x

On the latest TTM, the dividend is covered by FCF at above 1x. At the same time, coverage is not so large that it can be described as “very high,” and dividend sustainability likely remains sensitive to the balance between cash-flow volatility and investment needs.

Dividend track record: Long history, short streak of consecutive increases

• Years of dividends: 26 years
• Years of consecutive dividend increases: 1 year
• Most recent year in which the dividend decreased (or qualifies as a cut): 2023

There appears to be a “culture of paying dividends,” but “consistent dividend growth” is better viewed as more cycle-exposed. Note that we do not claim any industry ranking here, as peer data is not included in these materials.

Where valuation stands today (company history only): Placing today’s level across six metrics

Here, without comparing to the broader market or peers, we simply map where the current level sits relative to AU’s own historical ranges (primarily 5 years, with 10 years as a supplement). The goal is not to label it “good” or “bad,” but to confirm positioning.

PER (TTM): Above the 5-year range, within the 10-year range

• PER (TTM): 19.92x (at a share price of 88.47USD)
• Versus the 5-year normal range (20–80%): 8.59–17.43x, the current level is above the range
• Versus the 10-year normal range (20–80%): 9.54–37.11x, the current level is within the range

For cyclical names, PER can look very different depending on the phase. The key is to avoid drawing conclusions from PER alone and to interpret it alongside cycle framing.

PEG: Below the normal range for both 5 years and 10 years

• PEG: 0.0071
• Versus the 5-year and 10-year normal ranges, it is below the range in both cases

Because PEG can mechanically screen as very low when growth rates are elevated, we treat it here strictly as “positioning information.”

FCF yield (TTM): Within the 5-year range, but toward the low end

• FCF yield (TTM): 5.61%
• Within the 5-year normal range (20–80%): 5.52%–14.14%, the current level is toward the low end

Because yield reflects the interaction of share price and FCF, we keep this to its intended role: confirming “where it sits” versus the historical range.

ROE (latest FY): Upper part of the 5-year range, near the upper bound on a 10-year view

• ROE (latest FY): 15.15%
• Within the 5-year normal range (20–80%): 3.35%–17.60%, it is in the upper part
• On a 10-year view, it is near the upper bound of the normal range

FCF margin (TTM): Above the normal range for both 5 years and 10 years

• FCF margin (TTM): 29.22%
• Above the upper bound of the 5-year normal range (17.94%) and above the range
• Also above the upper bound of the 10-year normal range (15.58%) and above the range

Because cyclical companies can swing materially with the price environment and investment intensity, we again limit this to confirming the fact that it is “outside the historical distribution.”

Net Debt / EBITDA (latest FY): As an inverse metric, “outside on the low side”

Net Debt / EBITDA is an inverse metric: the smaller it is (the more negative it is), the stronger the net cash position and the greater the financial flexibility.

• Net Debt / EBITDA (latest FY): 0.28x
• Slightly below the lower bound of the 5-year normal range (0.30x) and below the range
• Also below the lower bound of the 10-year normal range (0.64x) and below the range

This is simply positioning information—“leverage is lower than it has been historically”—not an investment conclusion.

Cash flow tendencies (quality and direction): Strong near-term cash conversion, but pair it with “investment burden”

To understand AU, you can’t ignore how effectively it converts accounting earnings into cash (FCF)—and whether that cash is being boosted by pushing investment out.

• In the latest TTM, FCF (2.506bn USD) and FCF margin (approximately 29.2%) are strong, and cash generation is improving alongside revenue and EPS.
• At the same time, mines inevitably require sustaining capex, and 2025 disclosures also discuss higher sustaining capex, inflation pressure (labor and contractors), and higher gold-price-linked royalties as cost-side drivers.

So while today’s FCF strength is clearly a positive, the forward-looking question for cash-flow quality is “to what extent rising investment and costs become ‘hard-to-reverse costs.’”

Success story: Why AU can win (execution, not product)

Gold is essentially a homogeneous product, so this is not a business where companies can command premium pricing through product differentiation. AU’s underlying value is its operating capability to mine consistently across multiple countries and multiple sites.

• Operational reliability: Safety, maintenance, and on-site discipline—“not stopping”—build credibility.
• Cost discipline: Avoid letting costs run away in good phases and build resilience to survive bad phases.
• Portfolio rotation and development pipeline: Tilt toward better mines and secure future production sources (e.g., Beatty District).

Barriers to entry are high, rooted in “real-world constraints” such as permitting, large capital requirements, long development timelines, and the know-how required for safe operations. The flip side is that operational missteps can be costly.

Is the recent story consistent with the success pattern (narrative continuity)?

Over the past 1–2 years, the narrative has become clearer—not just that “things are improving,” but what is driving the improvement. Specifically, the emphasis has shifted toward operational improvement + portfolio rotation (additions).

• Operations: Production and grade improvements across multiple mines, with a narrative of sequential output increases.
• Assets: Steps that expand “future supply capacity,” such as integrating Sukari and broadening development options at Beatty District.
• Costs: Inflation, royalties, and higher sustaining capex remain parallel upward pressures, making it easy for the message to become “improving, but headwinds remain.”

This is consistent with the long-term type (cyclical volatility) and reinforces the idea that “even in an upswing, the quality of the internal drivers still matters.”

Quiet Structural Risks: The stronger it looks, the more it deserves scrutiny

Here we outline “weaknesses that may not break the numbers immediately, but can become important as they accumulate.”

• The biggest dependency isn’t customers—it’s the gold price: Even with diversified buyers, unit-price risk doesn’t go away, and earnings can compress quickly if the spread between price and costs narrows.
• Competitive pressure shows up less as ‘price cuts’ and more as cost inflation: Labor, contractor, and materials costs, along with tighter regulation and royalties, can quietly squeeze industry margins.
• Because differentiation is execution-driven, incidents and shutdowns can erase advantages quickly: Safety failures, deferred maintenance, or grade misreads can rapidly undermine performance.
• Supply-chain dependence: Heavy reliance on external procurement—fuel, explosives, parts, heavy equipment, contractors—means constraints or price spikes can pressure margins.
• Cultural deterioration tends to show up with a lag: It often appears first as slippage in safety, quality, and maintenance before turnover, and later feeds back into production and costs.
• In strong phases, early signs of profitability erosion are harder to spot: Higher sustaining capex and rising unit costs can remain downward-sticky into the next phase.
• Even if the balance sheet looks healthy, reversals can be fast: While interest-paying capacity exists today, “apparent strength” can change quickly when the cycle turns.
• Community, security, and regulation: In Ghana’s Obuasi mine, a fatal incident related to clashes with illegal miners was reported in January 2025, which could raise operating difficulty through investigations, administrative responses, security costs, and related factors.

Competitive landscape: The contest isn’t “gold quality,” it’s “mine quality × operations that don’t stop”

AU doesn’t compete like a consumer brand; it competes on mine portfolio + operating capability. That means owning good mines, mining safely and to plan, investing appropriately in sustaining capex, and managing cost inflation even in an inflationary environment. Do that well, and you generate the financial capacity to pursue the next tenement or mine—creating a reinforcing loop.

Key competitors (asset and operating competition among majors)

• Newmont
• Barrick Mining（former Barrick Gold）
• Agnico Eagle
• Gold Fields
• Kinross
• (Supplement) Mid-tier and regionally concentrated players such as Orla, Northern Star, and Endeavour Mining

Competition map (where competition occurs)

• Stable operations at existing mines: Differences show up in utilization, downtime, plan-achievement rates, and unit costs.
• Exploration and tenement acquisition: Geological judgment, funding capacity, permitting visibility, and experience in community engagement matter.
• Portfolio rotation (M&A, divestitures, JVs): Whether integration translates into better operations, and whether overpaying can be avoided.
• Concentration in “good jurisdictions”: Regions with relatively lower political, security, and permitting risk have limited assets, making acquisition competition more likely.
• Operational digitalization: The tools can be copied; differentiation comes from execution on site (embedding into decision-making).

How to think about switching costs (capital, not customers)

Customer switching costs are low (gold is nearly identical regardless of source). What matters is capital switching costs. If credibility is damaged by incidents or shutdowns, financing can tighten, potentially constraining sustaining and growth investment.

What is the moat, and how durable is it likely to be?

AU’s moat isn’t product-based; it primarily comes down to two factors.

• Physical barriers to entry in mine development: Permitting, massive capital, long timelines, safe operations, and community engagement.
• An operating playbook (safety, maintenance, process): The more it can be standardized and deployed across multiple mines, the more differences in utilization and costs can compound over time.

That said, this moat can thin if sustaining capex and discipline are disrupted. Consolidation around Beatty District (securing development options) and operational improvements across multiple mines are positioned as factors that can help keep the moat thick.

Structural position in the AI era: Not revenue magic—AI supports “uptime” and “waste reduction”

AU is not an AI infrastructure provider; it’s positioned to adopt AI advances as an operator in the field (the application layer). Gold is a commodity with limited network effects, and data advantages are unlikely to become an “exclusive data moat.” Still, AI can directly influence utilization, safety, and maintenance at the site level.

• Network effects: Limited. That said, rolling out improvements across multiple mines can accumulate into a meaningful efficiency gap.
• Data advantage: Data matters but is difficult to monopolize; differentiation comes from the “operating capability to turn data into decisions.”
• AI integration level: Less on the revenue-facing surface, more likely in exploration, planning, maintenance, safety, grade estimation, and process optimization.
• Mission criticality: High. Avoiding shutdowns, managing grade, and optimizing processes directly impact profitability.
• Relationship to barriers to entry: The core barriers are physical; AI can reinforce the moat by improving repeatability and standardization, but AI itself is unlikely to be the primary source of the moat.
• AI substitution risk: Low risk of the business being replaced, but meaningful automation pressure at the function level. Competition is likely to converge not on “having AI,” but on “implementation capability that reduces downtime and lowers unit costs.”

Management, culture, and governance: Operations-first “discipline” as the organizing principle

CEO’s definition of the winning path: cash conversion and capital discipline

The CEO (Alberto Calderon) message aligns with the realities of a commodity, operations-heavy business. The goal is to convert favorable gold-price phases not just into “accounting profit,” but into cash, while balancing shareholder returns with future investment. The stated path to winning repeatedly emphasizes operational improvement, cost discipline, portfolio prioritization, and disciplined capital allocation.

In addition, the investor narrative explicitly references “narrowing the valuation gap versus North American peers,” with the approach centered on operational improvement, cash conversion, extending mine life, and capital discipline.

What tends to happen culturally (generalized patterns from employee reviews)

Because there isn’t enough reliable primary information to generalize cultural change, we frame here the issues that often show up at mining companies as “patterns to watch” (not as asserted facts).

• The more emphasis placed on safety and procedural rigor, the more likely the workplace is viewed as repeatable and reliable.
• The stronger the cost discipline, the more likely it is perceived as approval-heavy and less flexible.
• Organizations spanning multiple countries and multiple mines tend to produce more varied experiences due to site-by-site differences (equipment, security, labor).
• In phases where production and cost targets are emphasized, narratives tend to shift toward higher on-site burden (shifts, staffing, contractor management).

For investors, it’s more useful to monitor whether signals are increasing that tie directly into the causal chain “erosion in safety culture and discipline leads to shutdowns and higher costs,” rather than relying on the tone of reviews.

Governance observation points (fact-based)

• Updates to the board and committee structure are ongoing.
• In October 2025, a new independent director with extensive mining experience was appointed, with involvement in HR and sustainability-related committees.

Without making claims about effectiveness beyond that, the practical takeaway is that long-term investors can more readily verify that core mining-company priorities—“safety, ethics, and community engagement”—are explicitly positioned as oversight topics.

A KPI tree investors can use: Which variables drive AU’s enterprise value?

If you want to understand AU through a Lynch-style lens, the goal isn’t “forecasting,” but building an observation set that reduces the risk of misreading the phase. Below is the KPI tree distilled into investor-relevant essentials.

Ultimate outcomes

• Cash generation (FCF) and control of its volatility
• Earnings level and capital efficiency (ROE)
• Cycle resilience (ability to sustain investment and returns even when the cycle turns)
• Long-term supply capacity (whether production sources that can keep mining and selling continue without interruption)
• Continuity of shareholder returns (dividends)

Intermediate KPIs (value drivers)

• Revenue = gold price × sales volume (production volume)
• Production volume and operating stability (no stoppages, plan achievement)
• Unit costs (labor, contractors, fuel, materials, maintenance) and operating margin
• Cash conversion (whether earnings are turning into cash)
• Capex quality and level (balance of sustaining capex + growth capex)
• Financial flexibility (debt burden, interest-paying capacity, cash cushion)
• Mine portfolio quality (results of rotation) and development pipeline (next mines)

Constraints (where friction comes from)

• Dependence on the gold price (unit-price risk)
• Cost inflation pressure such as inflation, royalties, and contractors
• Inevitability of sustaining capex (if cut, payback effects can emerge later)
• On-site dependence of operations (grade, equipment, process, people) and uncertainty such as non-operated JVs
• Community, security, and regulatory responses; supply-chain dependence
• The fact that differentiation is operations-driven (can reverse with shutdowns)

Bottleneck hypotheses (monitoring items)

• Whether production improvements are concentrated in specific mines (concentration can make localized underperformance propagate to the whole)
• Whether there are deterioration signals in on-site KPIs for shutdown avoidance, maintenance, and safety (leading indicators of cultural deterioration)
• Whether “hard-to-reverse costs” are increasing within the cost inflation breakdown (royalties, labor tightness, contractors)
• Whether the level of sustaining capex is consistent with operating stability (whether near-term numbers are being supported by deferral)
• Whether the gap between earnings and cash is widening (investment burden and working-capital effects)
• Whether integration of portfolio rotation is being embedded into the operating playbook (not “buy and done”)
• Whether community, security, and regulatory response costs are increasing (rising operating difficulty)

Two-minute Drill: The “investment thesis skeleton” for evaluating AU long term

AU is less a company that “bets on the gold price” and more a cyclical business where the question is whether—accepting gold-price volatility as a given—it can manage that volatility through operating execution and disciplined capital allocation, and compound cash over time.

• Core of the company: The operating capability to keep multiple mines running (safety, maintenance, process) and maintain cost discipline.
• Current facts: On a TTM basis, revenue (+37.7%), EPS (+28.2%), and FCF (+316.9%) are all strong at the same time, consistent with a recovery-to-upcycle-like phase.
• Long-term story: Whether it can secure future production sources through portfolio rotation and the development pipeline (including Beatty District), while embedding capital discipline that avoids overspending even in good phases.
• Biggest watch-outs: Quiet structural risks center on “price dependence,” “downward-sticky costs,” “shutdowns/incidents,” and “community/security/regulation.” The better the phase, the more these can matter later.
• Observation design: Regularly track the unit-cost breakdown (hard-to-reverse costs), sustaining capex levels, concentration of shutdown/grade risk by mine, consistency between earnings and FCF, and shifts in financial flexibility such as Net Debt/EBITDA.