Richard, I am not sure that anti-Gold people fully realise what is going on in the industry...Any productivity gains and streamlining that they boost would simply pale in comparison to the mining industry..more so if POG ends-up below $250, most of their portfolio would be de-cemated (cataclysmic event prompting CB's to sell) and Gold still would buy much more than currency at this level, especially outside USA and some would surely move to say Australia to the Beach House..:)
Driefontein posts sharp Sept turnaround
06:32 a.m. Oct 21, 1998 Eastern
By Darren Schuettler
JOHANNESBURG, Oct 21 (Reuters) - South
Africa's Driefontein Consolidated Ltd reported a
dramatic turnaround on Wednesday, with quarterly
profits soaring on the back of a diving rand and higher
gold output.
Driefontein, one of South Africa's premier gold mines,
also warned that its restructuring will continue with a
''critical review'' of two shafts and a planned reduction
in throughput.
Distributable income soared to 139 million rand
($24.14 million) in the quarter to September 30 from
8.5 million rand in the previous three-month period.
Gold output improved by seven percent to 11,524 kg,
while production costs dropped three percent to $192
an ounce, despite a nine percent wage increase.
The results beat analysts' expectations, but failed to
impress investors who pushed Driefontein's stock
down two rand to 33.40 rand on the Johannesburg
bourse.
''They were ahead of expectations by quite a bit,'' said
Greg Hunter, a mining analyst with Deutsche Morgan
Grenfell in Johannesburg. He had forecast earnings per
share of 48-50 cents compared to the company's 68
cents for the quarter.
Driefontein is the latest South African gold producer to
report sparkling results for a quarter in which the local
rand currency slumped by 20 percent against the
dollar.
South African mining firms sell their bullion for dollars,
but pay costs in rand.
The company also announced a deal to exchange
mineral rights in two areas with major shareholder
AngloGold. AngloGold and Gold Fields Ltd, the
world's two leading gold producers respectively,
together own 60 percent of Driefontein.
The gold giants ended months of bitter wrangling in
July and agreed to share Driefontein, the country's
most coveted mine, through a 60-40 joint venture that
favours Gold Fields. However, the companies have
not yet made an offer to buyout minority shareholders.
Under the mineral rights deal, Driefontein and
AngloGold's Western Deep mine will exchange rights
on two areas estimated to contain over 13,500 kg of
gold resources each.
The areas border the common boundary between
Driefontein and Western Deep and effectively
redefines the mining boundary along geological lines
instead of old farming boundaries.
AngloGold chief executive Bobby Godsell said the
rights exchange would release gold reserves that could
have remained locked underground indefinitely.
''Co-operative deals like this...are putting South
Africa back on the map in the minds of international
investors,'' Godsell said.
On the production side, Driefontein benefited from a
reduced amount of uneconomical ore mined during the
quarter. The No. 1 and No. 7 shafts are under review
because 70 percent of the ore mined at these shafts is
below the pay limit at current gold prices.
The company's productivity jumped by 16 percent in
the September quarter. Management trimmed 400
conractors from the payroll since June.
Suspended work on Number Nine and 10 shafts cut
capital spending by 28 million rand to 105 million rand.
Driefontein expects capital spending to rise to 274
million rand over the next six months from 238 million
rand in the past half year.
During the quarter, the board completed a review of
the mine's capacity and decided to cut throughput to
300,000 tonnes per month during the next three to five
years.
Plans to upgrade the metallurgical plant to boost gold
recoveries and productivity will be finalised in 1999.
($1 - 5.757 South African Rand)
Copyright 1998 Reuters Limited. All rights reserved.
Republication and redistribution of Reuters content is
expressly prohibited without the prior written consent
of Reuters. Reuters shall not be liable for any errors or
delays in the content, or for any actions taken in
reliance thereon.
Search |
