Falling Output hurts South Africa Gold Miners
South African gold producers are expected to report lower quarterly earnings with production knocked across the board as output-disrupting safety stoppages continue to sting, a Reuters poll of 7 analysts showed. A dip in the rand gold price is not expected to help either.
While the dollar gold price added 6.7% in the three months to the end of March, the average rand gold price fell 4% to R 421,000 /kg because of the local currency’s appreciation against the greenback.
The price of gold in rand has an especially big impact on the bottom line of Harmony Gold Mining Company [JSE:HAR] because it gets about 90% of its output from South Africa.
Bigger rivals AngloGold Ashanti [JSE:ANG] and Gold Fields [JSE:GFI] get about 40% and 50% respectively of their production from their domestic base.
All three have already flagged to the market their expectations for lower output.
AngloGold has said its production dropped 12% in the first three months of the year mostly because of output-disrupting safety stops.
The largest gold producer in Africa said safety stoppages resulted in a loss of 76,000 ounces.
AngloGold sees production for the three months to end-March at 980,000 ounces. This is against December quarter production of 1.11 million ounces and previous guidance of 1.03 million ounces.
Historical figures show an average of 11 mineworkers are killed in South African mines every month but fatalities are falling as the industry is subjected to a surge of inspections.
The clampdown by the Department of Mineral Resources is also partly behind the 18% fall in output at Harmony.
Harmony has also said the drop stemmed from a planned infrastructure upgrade at its Doornkop mine in South Africa and lower-than-expected grades at four of its other mines.
An output fall of 6% is expected from Gold Fields, the world’s fourth-largest gold miner, after it said March quarter production would be 827,000 ounces. Gold Fields is the last of the three producers to report with results due on May 17.
AngloGold will report on Thursday and Harmony will kick off on Wednesday. AngloGold’s numbers are its adjusted headline earnings per share in US cents.
Gold Fields’ numbers are adjusted earnings per share in South African cents.
Harmony’s numbers are headline earnings per share in South African cents.