AngloGold Makes Third-Quarter Loss as Metal's Price Falls 5.8%

  • Production 2.5% higher than estimated, costs 4.5% lower
  • Lower gold price causes adjusted headline loss of $52 million

AngloGold Ashanti Ltd. climbed the most in two months after the world’s third-biggest bullion miner said third-quarter production costs and output beat its forecasts.

The miner produced 974,000 ounces in the three months ended Sept. 30, 2.5 percent higher than the top end of a previous guidance, the Johannesburg-based company said in a statement Monday. Cash costs were $735 an ounce, 4.5 percent below its best-case forecast.

AngloGold, with 19 operations in nine countries, has outperformed most rivals this year by selling assets and cutting its debt to combat slumping gold prices. The metal has slid 43 percent since reaching a record in 2011 and is trading near a five-year low.

“The industry and every company is running up an escalator that’s coming down," AngloGold Chief Executive Officer Srinivasan Venkatakrishnan said on a call with reporters. "The advantage of doing that obviously is it enables you to be fit, and exploit that when the gold price actually goes up."

The stock jumped as much as 9.4 percent, the most since Aug. 28, and traded up 5.1 percent at 102.87 rand a share by 10:03 a.m. in Johannesburg. The company has climbed 2.1 percent this year, compared to a 35 percent decline in a gauge of 15 gold miners tracked by Bloomberg Intelligence.

Headline Loss

AngloGold reported an adjusted headline loss of $52 million in the third quarter amid a lower gold prices and an accounting charge related to a strengthening U.S. dollar. That compared with a profit of $26 million in the previous quarter. The company’s average gold price received fell to $1,123 an ounce in the quarter, down 5.8 percent from the previous three months.

Production was 20 percent lower than planned in South Africa due to a "very bad" safety performance, with five employees killed in the quarter, Venkatakrishnan said.

"The 3Q results will provide ammunition for both the bears and the bulls," Andrew Byrne, a London-based analyst at Barclays Plc, wrote in a note. "The strong performance of the international portfolio, which accounts for about 75% of group production, was undermined by safety challenges in South Africa and one-off finance charges."

Selling its Cripple Creek & Victor mine in Colorado for $820 million this year allowed AngloGold to pay off most of a high-yield bond that paid 8.5 percent interest. That caused the company’s net debt to decline 25 percent to $2.32 billion at Sept. 30.

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