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To: Richard Mazzarella who wrote (13926)	6/29/1998 7:42:00 AM
From: robnhood	Respond to of 116790

thread,,, zolatimes.com

To: Richard Mazzarella who wrote (13926)	6/29/1998 7:46:00 AM
From: Henry Volquardsen	Read Replies (1) \| Respond to of 116790

A weakening Rand keeps downward pressure on gold. South African mines costs of production are in Rand and as it weakens their dollar cost of production goes down. This will keep their mines profitable at lower dollar/gold rates. This will delay any mine closings.

To: Richard Mazzarella who wrote (13926)	6/29/1998 9:31:00 AM
From: goldsnow	Respond to of 116790

''The gold mining companies should show a nice profit on operating margins. We should see some good results this quarter and next,'' said a gold analyst with Standard Equities. ''They won't be too worried about the rand's depreciation.'' South African gold miners get boost from weak rand 08:57 a.m. Jun 29, 1998 Eastern By Luke Baker JOHANNESBURG, June 29 (Reuters) - South African gold mining companies are expected to turn in good performances in the third quarter of the year as the depreciating rand means increasing rand-denominated gold returns, analysts said on Monday. The rand has fallen by more than 26 percent against the dollar this year -- and by 13 percent since Thursday -- as speculators keep up a concerted attack on the ailing currency. The currency hit an all-time low of 6.1550 bid to the dollar on Monday. With gold traded and priced internationally in dollars, as the rand slides against the U.S. unit, the value of rand earnings increases. And since mining costs for local producers are borne in rand, a depreciating currency means higher margins of return. ''At the current exchange rate, no South African gold mining company should be making losses on a cash-cost basis,'' said David Hall, gold analyst at Merrill Lynch Smith Borkum in Johannesburg. With a recent wage agreement locking in mining salaries for at least another year, gold mining companies are not about to find their rand costs sharply upped by higher labour costs. ''Operating margins in the first quarter were 15.7 percent, which should rise to around 18.5 percent, and with hedging perhaps to close to 20 percent,'' said Hall. The rand value of gold rose to a high for the year of 1,806 rand per ounce on Monday, from 1,404 on January 1. For most South African gold miners the second quarter ended on June 21. The majority of the rand's depreciation has come in the past three days, meaning much of the benefit of the currency's slide will be reflected on third-quarter financial statements. ''The gold mining companies should show a nice profit on operating margins. We should see some good results this quarter and next,'' said a gold analyst with Standard Equities. ''They won't be too worried about the rand's depreciation.'' But while local earnings may be boosted by the rand's slide, the gold price remains slumped, denting investor confidence. ''Generally, South African gold shares follow the dollar gold price,'' said Hall, who warned that current negativity towards South Africa was spilling over to commodity stocks, denting share prices. ''But when you get such a dramatic potential increase in earnings, some of that has to come through on the bottom line.'' South Africa's stock market All Gold index jumped more than 30 points, or four percent, on Monday to 837 -- compared with other indices which slumped -- with shares in most major producers experiencing a boon. The gold index started the year at 801. Bullion was last trading at $293 an ounce, from a high for the year of $313.80 struck in April, when the gold index hit 1,101. All major gold produers also run heavy hedging books to protect themselves from fluctuations in the gold price. Some hedge in dollars others in rand. Those hedged in dollars will be feeling particularly comfortable as they eye the rand's most recent plunge, analysts said. ''The spot price average for the quarter would have added about one billion rand to the revenue stream of gold companies -- and that's prior to hedging,'' an analyst said, forecasting good results from the best-hedged major producers. Copyright 1998 Reuters Limited