FOCUS-AngloGold hits investment sector for gold woes
12:30 p.m. Apr 30, 1999 Eastern
By Darren Schuettler world's biggest gold producer, on Friday blamed the
investment community for prolonging the current gold malaise by urging their clients to
sell whenever bullion rallies.
''There is an attitude...that every rally should be used as an opportunity for clients to
sell their metal,'' AngloGold executive director Kelvin Williams said at a briefing for
the company's March quarter results.
Physical off-take of gold in the world was reassuring, with signs of a recovery in
South-East Asia and the Middle East, the Johannesburg-based company said.
Proposed gold sales by Switzerland and the International Monetary Fund (IMF) had
been discounted and were unlikely to have a significant impact on prices.
''This is the most positive position we have faced from this sector of the gold market
in the past decade,'' AngloGold said.
''The reasons for the malaise in the gold price appear to lie elsewhere, in a banking
and investment sector which seems to ignore any and all good news on gold and
which follows a policy of recommending selling on every improvement in the gold
price, no matter how modest,'' the company said.
AngloGold said it was on track to produce seven million ounces of gold this year
after emerging from a first quarter hit by operational problems.
It reported a 29 percent jump in attributable profit to 611 million rand ($101 million)
in the three months ended March 31.
After stripping out exceptional items, including 460 million rand in deferred tax and
the writing off of goodwill related to the Minorco deal, AngloGold's earnings slipped
three percent to 493 million rand.
''In light of the operational problems we have had, they are good results,'' AngloGold
executive director of finance Jonathan Best told analysts at a results briefing.
AngloGold said production at its core South African operations
fell five percent to 45.5 tonnes, reflecting a series of seismic
and infrastructure problems in the March quarter.
''The results were generally okay, but we were a little disappointed with the
performance of the South African operations,'' a mining analyst said.
Investors pushed AngloGold's shares up 13.40 rand, or nearly five percent, to
286.40 rand on the Johannesburg bourse.
The March results included for the first time production from the North and South
American mines acquired from sister-company Minorco SA (MNRJ.J) (MNOR.LU)
for $550 million earlier this year.
Output from the mines in the United States, Brazil and Argentina boosted
AngloGold's total gold output by eight percent to 53,711 kg from 49,914 kg in the
previous December quarter. This was ahead of the company's revised output
forecast of 52,000 kg for the March quarter.
''Management remains confident of achieving the targeted production levels for the
year of seven million ounces, at cash costs of around $210 per ounce,'' said
AngloGold chief executive Bobby Godsell.
The Minorco mines also helped trim AngloGold's cash costs to $209 per ounce from
$224 an ounce in the December quarter. Best said the company would focus on
dollar cash costs in the future.
When it was originally formed 18 months ago through a merger of Anglo American
Corp's (AACJ.J) bullion assets, AngloGold executives set a cash cost target of
40,000 rand, or $250 per ounce, for all its operations.
At current exchange rates, the target is now $200 per ounce and mine managers will
be pressed to meet that target, said Alan Smith, executive director of South African
operations.
((Johannesburg newsroom, 27 11 775 3155, newsroom+reuters.co.za))
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