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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Bobby Yellin who wrote (38550)	8/7/1999 4:55:00 PM
From: goldsnow	Respond to of 116764

Looks like things look exceptionally well for the North American producers... (ABX, NEM, PDG) ANALYSIS-S.Africa gold mines face tough qtrs ahead 08:02 a.m. Aug 06, 1999 Eastern By Darren Schuettler JOHANNESBURG, Aug 6 (Reuters) - South African gold companies, having just delivered a mixed bag of June-quarter results, are bracing themselves for the next six months when record low gold prices are expected to really bite. The world's biggest gold mining industry is in survival mode after Britain's announcement in May that it would sell more than half its gold reserves sent bullion tumbling to 20-year lows. The full impact of the May announcement and first auction of UK gold on July 6 will be felt in the September quarter, analysts said. ''The industry is looking at a 3,000 rand ($486) per kg drop in the gold price. Obviously, that will impact on all those companies that are largely unhedged,'' said Tony Cadle, a mining analyst with Rice Rinaldi Turner in Johannesburg. South Africa's seven major gold companies received an average gold price of 56,723 rand per kg in the June quarter, down from 57,917 rand per kg in the March period. London gold was trading at $255 an ounce on Friday, up from recent lows, but still more than $30 below the price in May, when Britain rocked the market with its gold sales programme. ''Things are looking a bit bleak at the moment. If the gold price is at these levels by the end of the (September) quarter, you will see plans put into action,'' Cadle said. Most companies have already moved to tighten their belts. Gold Fields, which wrapped up the quarterly reporting season on Thursday, is retrenching up to 3,700 miners, cutting back on exploration and capital spending, and drawing up contingency plans for a $230 an ounce gold environment. ''I think (the contingency plan) is being pragmatic in view of what is happening with the gold price at the moment,'' said Merrill Lynch analyst Dave Hall. Durban Roodepoort Deep on Wednesday announced the closure of three money-losing shafts at its West Wits mine, affecting 260 workers. Avgold last week cancelled a major financial deal, eliminated exploration spending and slashed head office jobs. It has also put its high-cost Harties mine up for sale. The bullion slump has led gold executives to take a hard look at the value of mining assets and reserves. Gold Fields wrote down 875 million rand on asset value of its Oryx mine, while Harmony Gold took a 112 million rand adjustment on some of its Free State operations. Gold Fields also expects to be the first major gold miner to restate its gold reserves in view of the lower gold price -- a move other miners will have to follow, analysts said. Cadle said the June quarter results were a mixed bag with two companies, AngloGold and Harmony Gold, performing the best in the quarter. AngloGold, the world's biggest gold producer, reported a slight decline in gold output and a modest increase in headline earnings thanks to its hedging programme. Cadle said AngloGold's forward sales give it about six months of breathing space before managers would have to think about making tough decisions. Harmony, which does not hedge, saw its gold price received drop 2,000 rand per kg to 54,913 rand per kg. But this was offset by a 17-rand-per-tonne drop in cash operating costs to 230 rand per tonne. South Africa's seven major gold companies averaged cash costs of 50,264 rand per kg in the June quarter, up from 47,506 rand per kg in the previous period to March 31. Output edged up to 3.58 million ounces from 3.56 million ounces in the previous quarter. Copyright 1999 Reuters