Johannesburg | Friday
SOUTH Africa’s big three gold miners — led by world number one Anglogold — are likely to post fairly good results for the second quarter, with only Gold Fields struggling, mining analysts said.
AngloGold Ltd is due to post results on June 30, followed by Harmony Gold Mining Co., South Africa’s number three gold miner, on August 1. Gold Fields, the country’s second-largest gold miner and world number three, is scheduled for August 2.
The weakness of the South African rand against the dollar in recent months probably benefited the companies, who sell their gold in dollars and pay costs in rand.
Johannesburg-based gold mining analysts agreed that Gold Fields would be affected by a week-long closure of two shafts at its Beatrix mine after an explosion killed 12 workers.
”The fatal accident at Beatrix that resulted in shaft closure will affect the quarter’s result,” said David Davis, an analyst at Standard Equities.
He forecast Gold Fields would post headline earnings per share — stripping out exceptional items and their tax effects — at 50-54 cents for the quarter ended June 30, compared with 53 cents in the March quarter.
Another analyst forecast a drop in EPS to 44 cents and another 43 cents.
”A lot of guys are quite negative on Beatrix. I don’t think we’ll see a massive fall in production from Beatrix because they made up a lot of production from other sources,” said Johan Odendaal, a Merrill Lynch analyst.
”Lower output levels were supplemented by above- surface material and you can expect a drop in grade because of that.”
AngloGold was seen posting improved results because it sold off two mines to Harmony for one billion rand, and its Morila and Geita mines in West Africa continued good performances.
”With Elandsrand and Deelkraal mines out of their system, their cash costs should improve. They also getting a billion rand onto their balance sheets. Morila and Geita should be steady,” said an analyst who declined to be named.
Davis said Morila and Geita should continue a stellar run that increased production in the first quarter by 13% to 64 000 ounces at Morila and to 60 000 ounces at Geita, with total cash costs of $90 and $141 an ounce respectively.
”I expect Morila and Geita to shine and possibly a little extra out of Sunrise Dam in Australia,” he said. ”Morila and Geita were building up their tons and their plants should be running at optimal capacity by now.”
Anglo was forecast by Davis to post a gain in headline EPS to 430-440 cents from last quarter’s 408 cents. Odendaal forecast 411 cents, and a third analyst expected 430 cents.
While Anglo’s total gold output probably declined from 113 000 ounces in the March quarter because the two mines it sold were off the books, its cash costs also should have declined because of the West African operations’ performance, an analyst said.
Davis said Harmony would turn in headline EPS of 70 cents, compared with last quarter’s 68 cents. ”Elandsrand and Deelkraal will deliver a good quarter. I expect those ex-Anglo mines will show a turnaround this quarter,” he said.
Odendaal said it was difficult to forecast Harmony because some analysts calculated headline EPS using the fully diluted number of shares or the average number of shares. Using the average number of shares he forecast 89 cents.
The three major miners’ results come amid a flurry of quarterly reports that have seen two small miners – Durban Roodepoort Deep and Avgold — move to earnings from losses. ”What I have noticed so far is a focus on production and more discipline coming through on the operational side… and it appears to be a good operational quarter,” Odendaal said. – Reuters