AngloGold to spend R4bn on operations
February 2, 2004
By Sherilee Bridge
Johannesburg - AngloGold, the world's second-largest gold producer, said on Friday that it would be spending R4.1 billion on its mines this year.
This is after the company laid out R2.7 billion in 2003 and R2.8 billion in 2002.
Assuming an exchange rate of R7 to the dollar, the company said it expected capital expenditure to increase to $589 million following the completion of its merger with Ghana's Ashanti Goldfields in April.
The $1.5 billion merger was given the green light by European Union (EU) competition authorities on Friday.
Approval by the EU's Brussels-based competition watchdog, the European Commission, comes just days after authorities at the US Securities and Exchange Commission confirmed that the new AngloGold shares could take advantage of an exemption from registration.
Bobby Godsell, chief executive of AngloGold, said approvals from Ghana's parliament and government were anticipated within the next fortnight.
Godsell believed everything should be done by April.
This is expected to provide a timely boost for AngloGold's 2004 output to 6.6 million ounces, up 18 percent from 2003's production of 5.6 million ounces.
The global gold producer posted better-than-expected numbers on Friday despite the slip in net profit to R611 million, or R2.74 a share, from R729 million, or R3.27 a share, in the September quarter.
Bloomberg's survey of five analysts showed a median estimate of R533 million, or R2.39 a share, had been predicted.
AngloGold declared a final dividend of R7.10 for the financial year to December 2003. That was 47 percent below 2002's R13.50.
Gold output for the December quarter was almost unchanged at 1.39 million ounces.
Delivery into its hedgebook slowed during the quarter but Godsell said AngloGold had already taken 10 million ounces out of its hedge and would continue to reduce the book on confidence in the gold price rising further.
Total net delta tonnage of the hedge book was 8.59 million ounces on the last day of December, representing a negative R3.1 billion.
One of a dying breed of gold hedges, AngloGold's well-managed hedgebook has proved a vital buffer in lean quarters.
Kelvin Williams, the marketing director at AngloGold, said the company remained committed to its policy of only hedging forward a maximum of 30 percent of expected five-year gold output.
But this figure automatically lifts to 40 percent over five years once Ashanti's onerous hedge book is combined with that of AngloGold.
Ashanti has 67 percent of its expected production hedged forward and Kelvin said AngloGold planned to adjust Ashanti's exposure "as promptly as possible".
AngloGold stock firmed 89c to R287.02 on Friday.
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