Johannesburg, South Africa — MININGREVIEW.COM — 05 May 2009 – Africa’s top three gold producers are expected to report big jumps in earnings and cash flow for the first quarter of 2009, largely boosted by a stronger gold price, which outweighed lower output and higher costs.
The price of gold in the quarter averaged US$908 per ounce, up 14% on the last three months of 2008.
“We expect a very strong showing from the South Africa gold producers for the first quarter of 2009,” said Leon Esterhuizen, a London-based precious metals analyst at RBC Capital Markets.
Reuters reports that, looking forward, analysts were concerned about rising costs, especially in view of a less bullish outlook for gold in the coming months.
South Africa’s mineworkers’ unions have demanded a 15% rise in wages, which is well above current inflation at 8.5%. Labour costs make up about half of gold producer’s costs, while the falling costs of fuel and steel have yet to make a dramatic impact in whittling down overall costs.
Gold Fields Limited – the No. 4 producer in the world and No. 2 in Africa – is expected to post adjusted headline earnings per share of 201 South African cents in the first quarter of this year, according to a Reuters poll of five analysts, versus 83 cents in the December quarter.
Analysts generally expect Gold Fields’ total cash costs for the three months to the end of March to be three percent lower than US$470 per ounce in the previous quarter.
Harmony Gold – which is the No.5 producer in the world and No.3 in Africa – will see its headline earnings per share jump to 141 cents for the quarter to the end of March from 101 cents in the previous quarter, according to the Reuters poll of five analysts.
AngloGold Ashanti – Africa’s top producer and the number 3 in the world – is expected to post adjusted headline earnings per share of 42 U.S. cents in its first quarter of 2009, versus a loss of 5 cents in the previous quarter, according to the average of estimates from five analysts in the Reuters poll.
AngloGold, which has sold some of its mines to boost its balance sheet, will be reporting its first quarter after terminating half the hedge book in 2008.