HomeGoldAngloGold to wind up hedge book by 2014

AngloGold to wind up hedge book by 2014

The open pit at
AngloGold Ashanti’s
Geita mine in
Johannesburg, South Africa — MININGREVIEW.COM — 03 August 2009 – AngloGold Ashanti Limited “’ the world No.3 and Africa’s top gold producer “’ says it is planning to wind up its hedge book by 2014, and has trimmed its production target for this year due to stoppages.

AngloGold beat market consensus with an 11% jump in second-quarter earnings after output rose and the gold price gained.

In a statement released here the company announced an interim dividend of 60 South African cents per share, versus 50 cents last year.

CEO Mark Cutifani told a media teleconference that he was optimistic of an even stronger gold price, which he expected to trade between US$900 and US$950 for the rest of the year, and to rise to US$1 000 next year.

“We think it will most probably be stronger next year,” Cutifani said, citing the likelihood of a weaker dollar, which benefits gold by making it cheaper for other currency holders.

Reuters reports that analysts welcomed the hedge book cuts and improved output.

AngloGold’s adjusted headline earnings rose to a record US$167 million (R1.3 billion), or 47 U.S. cents a share, in the three months to the end of June, versus US$150 million (R1.2 billion), or 42 cents, in the first quarter.

An average estimate by five analysts had forecast adjusted earnings per share (EPS) of 37 cents, citing weaker profits on a stronger rand.

Cutifani, who has previously said he was not a fan of the hedge book, said he had whittled the company’s hedge book “’ one of the biggest among its peers “’ down by a further 1.4 million ounces, reducing the overall hedge commitment to 4.47 million ounces by the end of July.

He planned to slash forward sales by about 800 000 ounces a year, and wind up the hedge book by the end of 2014.

The group “’ which has about 20 operations in four continents “’ said safety stoppages and mill repairs had forced it to lower its full-year guidance to between 4.7 million and 4.8 million ounces, from its original target of 4.9 million to 5 million ounces. In 2008, AngloGold produced 4.98 million ounces of gold.

AngloGold said output had risen in the second quarter due to successful efforts to revive its Obuasi mine in Ghana and its Geita mine in Tanzania. Output had risen to 1.127 million ounces, while total cash costs came in at US$472 per ounce, against production of 1.103 million ounces at US$445 per ounce in the prior quarter.

AngloGold estimated that production would rise to 1.2 million ounces in the third quarter, while total cash costs would be about US$530 per ounce at an exchange rate of R8.10/dollar.