AngloGold returns to profit

book and said it expects slightly higher output in the current three months.
AngloGold has closed out instruments it used to hedge against the price of gold, allowing it to increase its exposure to big rises in the spot price of gold, boost its cash flow and profit margins and push ahead on some growth projects.
The first-quarter numbers were in line with the company’s forecast given last week.
AngloGold took the unusual step of providing a detailed forecast as it was its first set of full results since the elimination last year of its hedgebook.
“The business is generating strong, steady cash flow now that we are capturing this higher gold price,” chief executive officer Mark Cutifani said in a statement.
Shares in the company were up 2,7 percent to 319,63 rand, compared with a 0,84 percent rise in Johannesburg’s top 40 index of blue chips.
AngloGold said adjusted headline earnings per share for the January-March quarter were 53 US cents compared to a loss of 199 cents in the previous one.
Headline EPS, which excludes certain one-time items, is the main profit measure in South Africa.
The elimination of its hedge book – which involved gold sold forward or covered by derivatives – reflected the company’s confidence in the gold price, a view that has been borne out by bullion’s record surge in recent weeks.
Gold rallied to record highs in the first quarter, boosted by declines in the dollar and concerns over widening unrest in the Middle East and North Africa.
It has since extended those gains further, breaking through the US$1 500 an ounce level. Spot gold was at US$1 523,20 an ounce.
AngloGold said last year that the unwinding would add some US$500 to US$600 million to its bottom line and it would use the cash to develop some of its pending projects.
The company said it had produced 1,039 million ounces of gold in the quarter, down from 1,148 million ounces in the previous three months.
Total cash costs were at US$706 per ounce, up from US$672 in the previous quarter.
The March quarter is traditionally a tough one for South African gold miners because of the slow reboot after the Christmas shutdown though AngloGold has a far bigger percentage of its operations outside of the country than its two main rivals, Harmony Gold and Gold Fields.
AngloGold said it expects output to rise slightly in the second quarter to 1,09 million ounces at total cash costs of US$760 per ounce, a projection some analysts found disappointing.
“The kicker, I think, is disappointing guidance for Q2 – flat production with costs up 8 percent,” said Leon Esterhuizen, an analyst with RBC Capital Markets in London.
AngloGold said strong performances in its operations elsewhere in Africa and in the Americas helped it regain some of the 20 000 ounces of production lost due to unprecedented rainfall at its Sunrise Dam mine in Australia.
The company added rising costs in the quarter would stem from stronger local currencies and higher fuel and power costs.
First-quarter uranium output stood at £365 000. – Reuters.