CAPE TOWN (Business Day) -- Gold miner AngloGold Ashanti's June quarter profit will be hit by its decision to reduce its gold and uranium contracts but the moves will give it greater exposure to spot markets in future, it said yesterday.
The group, which successfully closed a $1,7bn rights issue 10 days ago, used part of the funds raised to reduce its gold hedge book, which represents the sale of future gold production at a price fixed well below current spot prices.
It said it had reduced its commitment by almost 40%, or 4,4-million ounces to 6,9-million ounces, at the beginning of this month and in the six months to December it planned to cut its committed ounces by another 46%.
AngloGold has also cancelled contracts to sell 1-million pounds of uranium at prices below spot. This move, together with other deliveries into contracts, has reduced its uranium commitments by a third.
After these moves, AngloGold expects to realise a gold price next year only 6% below the spot price and to be able to participate in the uranium spot market. But the immediate effect of the restructuring of the gold hedge book will be a pre-tax loss of about $1,1bn in the second quarter and the reduction in uranium contracts will result in a once-off pretax charge of $32m.
The group said its gold production in the second quarter was 3% better than previous guidance at 1,24-million ounces. Total cash costs would be 6,5% better than previous guidance at $434/oz.
In a separate announcement, Anglo Platinum, the world's biggest producer of platinum, said it expected headline earnings would rise between 15% and 25% in the six months to June compared with last year. Northam Platinum also advised its shareholders that its headline earnings for the 12 months to June would be between 10,7% and 17,8% higher than a year ago. Both companies said higher realised rand prices for platinum group metals would offset production shortfalls.
In the six months to June, the rand ranged between R6,70-R8,25 to the dollar while the platinum price was between $1500/oz and $2300/oz.
Angloplat reported in April that equivalent refined platinum production for the first three months of this year dropped 19% compared with the same period last year.
