Johannesburg, South Africa — 08 August 2013 – AngloGold Ashanti Limited, the third-largest producer of the precious metal, posted a loss in the second quarter and suspended its dividend after bullion suffered a record three-month drop. Its shares slid to a 12-year low.
Bloomberg News quotes a company statement issued here as saying that the adjusted headline loss, excluding one-time items, was UD$135 million in the quarter, from a profit of US$113 million in the previous three months. The shares dropped as much as 6.5% and traded 5% lower at R115.89 in Johannesburg, the lowest intra-day level since April 2001.
AngloGold, with 21 operations in 10 countries, is cutting jobs, capital expenditure, exploration and slowing production at higher-cost mines as it adjusts to a gold price down 24% this year. The company, which plans to begin mining gold at two low-cost mines in the Democratic Republic of Congo and Australia this year, suspended its dividend to conserve cash.
“There are going to be two more tough quarters in 2013 as we make these changes, but going into 2014 we will see the full benefit of the two new projects and the cost savings and capex savings come through,” CEO Srinivasan Venkatakrishnan said on a call with reporters.
AngloGold plans to trim its all-in costs to US$1,200/oz this year and US$1,000/oz in 2014, Venkatakrishnan added. AngloGold’s break-even costs were US$1,634/oz in the first quarter, in part due to investment in its two new mines, according to David Davis of SBG Securities Limited in Johannesburg.
Gold slid 0.2% to US$1,280.73/oz today and averaged US$1,633/oz in the first quarter and US$1,417/oz in the second.
AngloGold suspended its dividend, taking a “sensible and cautious approach” given the drop in prices and pressures on the company, Venkatakrishnan said in a separate interview.
“What you don’t want to do is keep borrowing from the banks while paying a dividend,” he added. The CEO said he was “optimistic” that cash flows would improve, while declining to comment on future dividends as they were decided by the board. The company would review its dividend at the end of this year.
AngloGold produced 935,000oz of gold in the second quarter, in line with the forecast published July 15, and 4% more than in the first three months of the year.
Production will total from 4 million to 4.1Moz this year, down from a previous forecast of 4.1 to 4.4Moz, the company said in July.
Source: Bloomberg News. For more information, click here.