AngloGold Cuts Forecast, Writes Down Assets, Plans BondsThomas Biesheuvel
AngloGold Ashanti Ltd., the world’s third-biggest producer of the metal, cut its output forecast for this year and will write down the value of assets by as much as $2.6 billion after reducing gold-price forecasts.
The company will produce 4 million to 4.1 million ounces, less than the 4.1 million to 4.4 million ounces previously expected, Johannesburg-based AngloGold said in a statement yesterday. It will take an impairment of $2.2 billion to $2.6 billion after revaluing its assets and ore stockpiles.
“Over the remainder of 2013, all business plans, associated reserves and resources will be revised and optimized to reflect lower gold-price assumptions, associated mitigation measures and management initiatives to improve margins and cash flow,” the company said.
Gold mining companies have announced at least $11 billion in charges during the past two months, after the precious metal’s steepest quarterly drop in at least 90 years. Barrick Gold Corp., the biggest producer, said June 28 it expects to write down the value of a delayed Latin American project by as much as $5.5 billion and is reviewing other assets for potential charges. Australia’s Newcrest Mining Ltd. said last month it might take a charge of as much as A$6 billion ($5.5 billion).
AngloGold fell 3.3 percent to 121.40 rand at 9:15 a.m. in Johannesburg today, heading for the lowest closing level since April 23, 2001. Gold declined 23 percent in the second quarter, reaching a 34-month low of $1,180.50 an ounce in London on June 28.
The company produced 935,000 ounces of gold at cash costs of $900 to $920 an ounce in the second quarter.
David Haughton, a Toronto-based analyst at BMO Capital Markets, had estimated output of 939,000 ounces at costs of about $872 an ounce, he said in a note yesterday. BMO is expecting 3.9 million ounces at about $845 an ounce for the full year, he wrote.
AngloGold has asked Citigroup Inc., Deutsche Bank AG and Goldman Sachs Inc. to arrange meetings with bond investors in Europe and the U.S. as the company plans to sell dollar-denominated debt in 2013, it said in a separate statement.
A possible notes offering may be considered to refinance near-term debt, Haughton said.
Yields on AngloGold’s dollar bonds due in August 2022 fell three basis points, or 0.03 percentage point, to 7.15 percent in London yesterday, paring the advance this year to 236 basis points. That compares with an increase of 171 basis points in the average yield for emerging-market metals and mining companies to 6.85 percent, according to JPMorgan Chase & Co. indexes.
Moody’s Investors Service cut AngloGold’s debt rating by one step to to Baa3, the lowest investment grade, last week.
Gold operators in South Africa, the world’s sixth-biggest producer of the metal, have faced demands from some labor unions to at least double pay of entry-level workers, even after the price slump.
AngloGold also said Anthony O’Neill has resigned as an executive director after five years at the company. O’Neill, who leaves July 19, was acting joint interim chief executive officer earlier this year before Srinivasan Venkatakrishnan replaced Anglo American Plc-bound Mark Cutifani as CEO.