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AngloGold Ashanti boss expects gold price to climb higher

Last updated: 04:16 08 Nov 2012 EST, First published: 05:16 08 Nov 2012 EST

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Africa’s largest producer predicted gold prices would continue to rise next year in an otherwise gloomy update on its third quarter progress.

AngloGold Ashanti’s (LON:AGD) chief said gold would average between US$1,700 – US$1,800 for the remainder of 2012 and rise by an additional US$150-200 per ounce in 2013.

The gold price has been strong since the US unleashed its latest round of quantitative easing in September and Mark Cutifani, Anglo’s chief executive, said that the re-election of President Obama would also be “good for people in gold”.

He also revealed a 50% dividend cut and plans to cut spending by US$ 200 mln as AngloGold struggles to cope with the wave of industrial unrest affecting South Africa.

Profits tumbled to US$ 235 mln from US$457 mln in the three months to Septmber reflecting the closure of all of its South African mines at one point due to strike action. All but one, Mponeng, have re-opened.

Production fell during the quarter to 1.03 Moz at a total cash cost of $866/oz, compared with guidance of 1.07Moz to 1.1Moz at $835/oz-$865/oz.

As well as the problems in South Africa there was also lower-than-anticipated production from the Obuasi mine in Ghana, where a planned underground development has now been cancelled.

AngloGold's capital expenditure budget for this year is now estimated at between $2bn and $2.1bn.

The group has also launched a study of its corporate costs that will focus on drawing fewer, higher-quality ounces from its South African mines and putting a number of projects under review including Sadiola Deeps project in Mali and the Mongbwalu project in the Democratic Republic of Congo.

Mark Cutifani said: “It’s been a tough period for the industry here, but we’ve taken decisive action on a number of fronts to stay the course. 

“Our major projects are on track and we’re making the decisions to ensure we maintain a lean, fit business that will continue delivering strong returns."


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