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South Africa’s Rand-Fueled Gold Earnings Buck Trend in U.S.

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Feb. 2 (Bloomberg) -- South African gold companies are set to report gains in quarterly earnings, benefiting from the largest slump in the rand in three years, as North American peers contend with a decline in prices.

Harmony Gold Mining Co., a Johannesburg-based miner, may post adjusted earnings of 1.49 rand ($0.19) a share for the last quarter, up 57 percent from the previous three months, according to the average estimate of four analysts surveyed by Bloomberg. Gold Fields Ltd. and AngloGold Ashanti Ltd. may say profit rose 29 percent and 1 percent, respectively.

Gold companies in South Africa, the continent’s largest producer of the metal, gain from a weaker rand because they sell much of their output for dollars and pay most costs in rand. The nation’s currency fell 13 percent during the quarter from the previous three months, its biggest decline in 12 quarters and the largest among the 16 major currencies tracked by Bloomberg.

North American gold companies are set to report weaker earnings than their South African counterparts after bullion prices fell 1.2 percent in the fourth quarter from the third. Canada’s Barrick Gold Corp., the biggest producer, and Newmont Mining Corp., based in Greenwood Village, Colorado, are expected to post a decline in quarterly profit, analyst estimates show.

South Africa Gains

By contrast, South African competitors saw a 12 percent jump in the local price of gold as the rand lost value. Harmony, the country’s third-largest producer, gains most from a weaker rand as it mines about 90 percent of its gold in South Africa. AngloGold, the biggest, benefits least, with only about 40 percent of its output in the country. Gold Fields, the nation’s No. 2 producer, mines half of its metal in South Africa.

The weaker rand will be “beneficial,” Percy Takunda, an analyst at Imara S.P. Reid, said yesterday by phone from Johannesburg. “I expect them to make strong statements on dividends.”

AngloGold, which said Nov. 9 it will start paying dividends quarterly, may declare a payout of 90 cents a share for the fourth quarter, according to a forecast compiled by Bloomberg. That would boost its dividend for the year by 85 percent to 2.70 rand. Gold Fields may propose a 1.80-rand dividend, boosting the annual total by 79 percent to 2.80 rand, the projections show.

Gold Fields will probably say on Feb. 17 that quarterly adjusted earnings rose to 3.67 rand a share from 2.84 rand, according to the average estimate of four analysts. AngloGold may post earnings of 9.04 rand a share on Feb. 15, up from 8.95 rand, five estimates show. Harmony is due to report on Feb. 6.

Analysts who track South African gold producers measure quarter-on-quarter earnings excluding one-time items.

AngloGold led gains in the past six months, rising 23 percent to 355.89 rand by the close in Johannesburg trading today. Gold Fields rose 19 percent to 128 rand over that time, while Harmony declined 1.5 percent to 95.10 rand.

To contact the reporter on this story: Carli Lourens in Johannesburg at clourens@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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