=DJ S African Gold Miners Eye Solid Earnings On Rand Fall
22 Jan 05:38
By Adam Aljewicz
Of DOW JONES NEWSWIRES
JOHANNESBURG (Dow Jones)--Profits for South Africa's biggest gold miners in
the quarter to December are seen coming in sharply higher on the previous
quarter, with most producers expected to deliver huge increases in earnings due
to a weak rand and a stronger gold price, local analysts said Monday.
Analysts' estimates are based on the gold price the producers receive in
local currency terms, which they say will go straight down to the bottom line
for South Africa's big three gold producers.
"The bulk of the earnings growth will be down to the rand/gold price and the
depreciation of the rand, but it's also been a very good performance on an
operational level," said one gold analyst, who asked not to be named.
Producers are expected to receive just over ZAR91,000 ($1=ZAR11.4900) a
kilogram of gold in the three months to the end of December, up from an average
price of ZAR74,000/kg in the quarter to September.
The rand fell by around 40% against the U.S. dollar in 2001, with the bulk of
the losses incurred between September and December.
Around 1030 GMT the rand was trading at ZAR11.4738 to the dollar, well off an
all-time low of ZAR13.8500 hit Dec. 21.
Analysts say the best performer for the quarter will either be Gold Fields
Ltd. (GOLD), South Africa's number two producer, or Harmony Gold Mining Co.
Ltd. (HGMCY), the country's third-biggest gold miner.
However, given its strong link to the gold price through its policy of being
unhedged, analysts believe Gold Fields has the most potential to shine when it
reports on Feb. 4.
Net earnings a share are seen coming in between ZAR1.30 and ZAR1.50, up from
45 cents a share during the September quarter.
Harmony, which reports its results on Jan. 28, is expected to deliver net
earnings a share of between ZAR1.60 and ZAR1.90, up from 64 cents a share.
AngloGold Ltd. (AU), which is still smarting from its thwarted bid for
Australia's Normandy Mining Ltd. (A.NDY), reports its figures on Jan. 31, and
is expected to post earnings of between ZAR8.50 and ZAR9.50 a share, up from
ZAR5.95 a share it achieved between June and September.
"The (earnings) numbers for all of the gold miners is going to be impressive
this quarter," said Greg Hunter, a gold mining analyst at Deutsche Bank based
in Johannesburg.
"We're looking for Harmony's earnings to increase 190% on the quarter, and
for Gold Fields' earnings to increase 210%," he said.
However, many analysts say most of the good news is in the price for many of
South Africa's leading gold producers.
Even though the rand's weakness against the dollar has continued into 2002,
they say it's uncertain whether the gold miners' impressive earnings growth can
be sustained this year given their huge run-up in valuations during 2001.
"There have been monumental returns in the gold sector this year but it's
uncertain whether this will continue in 2002," said Dave Davis, a gold analyst
at Standard Corporate and Merchant Bank based in Johannesburg.
AngloGold hit a high of ZAR482.0 in 2001 from a 12-month low of ZAR208, while
Harmony touched ZAR88.00 a share from a year's low of ZAR30.80 and Gold Fields
hit ZAR63 from an annual low of ZAR23.75.
On the JSE Securities Exchange South Africa at 1030 GMT, AngloGold was down
2.0% at ZAR440.00, Gold Fields 1.8% lower at ZAR65.20 and Harmony down 0.8% at
ZAR78.90.
-By Adam Aljewicz, Dow Jones Newswires; 27-11-783-7848;
adam.aljewicz@dowjones.com
(END) DOW JONES NEWS 01-22-02
05:38 AM |
