Anglogold reported on Thursday that its headline earnings for the quarter ended June 30 had dropped by 11% to $66-million.
Chairman Russell Edey and chief executive officer Bobby Godsell said the recently concluded biennial wage agreement would have the effect of increasing employment costs at South African operations by approximately 10% per annum.
Management remained committed to ensure that the increase would not lead to a material increase in unit labour costs through continuing productivity improvement programmes which had seen individual employee productivity improve by 18% over the last five years.
They termed the quarterly results ”operationally sound,” with gold production 2%higher despite expected lower grades at many operations.
Again this quarter, the company’s results were adversely affected by local currency strength in seven of the eight countries in which it did business.
Total cash costs rose 6% to $223/oz and operating profit was 4% lower at $140-million.
”The effects of the lower grade and stronger currencies were moderated by a higher received price for gold, which was 3% higher, at $354/oz, despite the marginal decline in the average spot gold price for the quarter,” they said.
”Going forward, we expect the company’s prudent management of its hedge book, which declined by a further 610 000oz this quarter, to ensure that the price we receive for gold will continue to be close to the dollar spot price.”
The board had decided to change the targeted level of hedging commitments from 50% to 30% of five years’ production.
”It was also confirmed that management would continue to have the latitude to put new contracts in place where circumstances make this prudent.”
They added, ”Looking ahead to the operations for the rest of the year, we expect performance to improve as the grade at Geita strengthens and production levels at CC&V increase during the third and fourth quarters.” – Sapa