Johannesburg, South Africa — 16 July 2013 – AngloGold Ashanti Limited “’ the world’s third-biggest producer of the precious metal “’ has cut its output guidance for this year and is to write down the value of assets by as much as US$2.6 billion after reducing gold-price forecasts.
Bloomberg News quotes a company statement as saying that the company will produce 4 to 4.1Moz “’ less than the 4.1 to 4.4Moz previously expected. It will take an impairment of US$2.2 to US$2.6 billion after revaluing its assets and ore stockpiles.
Gold companies that spent US$195 billion on acquisitions in a decade-long price boom are at risk of taking write-downs after the precious metal’s steepest quarterly drop in at least nine decades. Australia’s biggest producer, Newcrest Mining Limited said last month that it might take a charge of as much as US$5.5 billion, the largest in gold-mining history.
AngloGold fell 3% to US$12.37 by 11:30 a.m. yesterday in New York trading. The stock has slumped 60% this year. Gold lost 23% in the second quarter, reaching a 34-month low of US$1,180.50/oz on June 28.
Gold operators in South Africa, the world’s sixth-biggest producer of the metal, have faced demands from some labour unions to at least double pay of entry-level workers, even after the precious metal’s price slump is on record.
“Over the remainder of 2013, all business plans, associated reserves and resources will be revised and optimised to reflect lower gold-price assumptions, associated mitigation measures and management initiatives to improve margins and cash flow,” the company said.
AngloGold revealed that it had produced 935,000oz of gold with cash costs of US$900 to US$920/oz in the second quarter.
The company has also asked Citigroup Incorporated, Deutsche Bank AG and Goldman Sachs Incorporated to arrange meetings with bond investors in Europe and the U.S., as the company plans to sell dollar-denominated debt in 2013, it said in a separate statement.
Yields on AngloGold’s dollar bonds due in August 2022 fell three basis points, or 0.03 of a percentage point, to 7.15% in London, paring their advance this year to 236 basis points. That compares with an increase of 171 basis points this year in the average yield for emerging-market metals and mining companies to 6.85%, according to JPMorgan Chase & Company indexes.
Moody’s Investors Service cut AngloGold’s debt rating last week by one step to Baa3, the lowest investment grade.
AngloGold also announced that Anthony O’Neill had resigned as an executive director after five years at the company. O’Neill, who leaves on July 19, was acting joint interim CEO earlier this year, before Srinivasan Venkatakrishnan replaced Anglo American plc-bound Mark Cutifani as CEO.
Source: Bloomberg News. For more information, click here.