Production in 2013 was 4.1M oz. vs. 3.94M oz. in 2012, the first time yearly production increased since 2005; all-in sustaining costs for the year were $1,174/oz. vs. $1,251/oz. the previous year and costs dropped to $1,015/oz. by Q4.
Reports total attributable production of 106K oz. of gold at an average cash cost of $532m/oz. from its new Tropicana and Kibali projects in Australia and the Democratic Republic of Congo, respectively.
Forecasts production of 4.2M-4.5M oz. of gold during 2014 at a total cash cost of $750-$790/oz.; says 2014 capex would come down by nearly a third to ~$1.45B.
As equities open in a broad-based decline, precious metals miners show early strength: ABX +4.1%, NG +4.1%, EXK +3.7%, GG +3.7%, IAG +3.3%, SA +2.9%, AG +2.8%, SSRI +3.1%, AUY +2.7%, GOLD +2.5%, NEM +2.3%, MVG +2.3%, SLW +2.2%, PAAS +2.2%, AU +2.1%, KGC +2.2% (Briefing.com).
There was talk of labor strikes in the gold mines too, but the gold miners managed to avert that by challenging the AMCU labor union in court; any potential strike against gold producers is delayed until Jan. 30, and analysts say the union is looking to see how the platinum strikes go before moving forward.
Citi expects South African gold miners will have produced ~6% more gold Q/Q in December, mainly due to the inclusion of Gold Fields' (GFI +1.2%) recently acquired Yilgarn assets and the ramp up of AngloGold’s (AU +2.5%) Tropicana and Kibali projects.
But bearish fundamentals have not changed, Citi says, maintaining its Neutral rating on GFI but Sell ratings on AU, Harmony Gold (HMY +0.3%) and Sibanye Gold (SBGL +3.2%).
If Citi is right, the South African gold miners will continue to lose their equity value, although perhaps at a slower pace.
Gold futures settle at a four-week high, rising 1.4% to $1,246.90, as the surprisingly weak jobs report reopens debate over the pace of bond buying at the Fed; precious metals miners are far outpacing the broader market, with the top gold miner ETF (GDX) surging 3%.
The decision means Moody’s likely will take a harsher view of the prospects of the companies whose debt it rates, potentially leading to rating downgrades and higher borrowing costs for miners.
Moody's rates most of the largest gold producers including Barrick Gold (ABX -1.8%), Newmont Mining (NEM -1.6%), AngloGold (AU -2.1%), Goldcorp (GG -1.5%) and Kinross (KGC -1.1%); ABX and AU already are on a negative outlook from the agency.
Fundamentals "seem unfavorable over the next couple of years as the global economy maintains forward momentum, governments unwind various stimulus programs, and the threat of inflation remains subdued in most major economies," Moody's writes.
South African markets are calm following the passing of Nelson Mandela, who was instrumental in the country's peaceful transition away from apartheid.
One of Mandela's biggest achievements was enacting policies that paved the way for GDP to grow for 15 years, the longest period of expansion in South Africa's history. These policies included embracing the free market, cutting costs and attracting foreign investment.
The question is now that Mandela has passed on, whether South Africa will feel more free to abandon the policies and conciliation that he espoused. For example, the ANC's youth wing wants to nationalize banks and mines, policies that Mandela ditched in 1994.
There are also fears that Mandela's death could leave South Africa open to renewed racial and social tensions, such as those seen in the mine strikes over the past year or so.
The economy is already not in a good way: unemployment is 24.7% and there is a large inequality in earnings between blacks and whites.
The FTSE/JSE Top 40 is +0.3%, the South African 10-year bond yield is -2.5 bps at 8.16%, and the USD-ZAR is +0.2% at 10.4732 rand.
Output from the world's gold mines (GDX) is set to hit record highs this year, according to Reuters, disappointing bulls who are impatiently waiting for production cuts following this year's 24% plunge in prices.
Some miners such as Kinross Gold (KGC) have felt the price squeeze and have suspended marginal projects, but others are increasing output to maintain revenue and profit levels; the world's top three gold miners - Barrick Gold (ABX), Newmont Mining (NEM) and AngloGold (AU) - all reported higher production in the most recent quarter.
Analysts say long delays and time scales in mining mean it will take time - perhaps until 2015 - for the drop in prices to translate into lower mine output, but for now, miners are cranking up volumes to boost revenue and spread out their hefty fixed costs over a bigger base.
Randgold Resources (GOLD) +5.3% premarket after posting Q3 net profit of $81.3M, down from $103.3M in the year-ago quarter, and basic EPS of $0.88, down from $1.12 a year ago but above analysts' consensus estimate of $0.64.
GOLD produced 233,677 oz. in Q3, +14% Y/Y, while gold sales rose on the year to 348,688 oz., +9.5%; says it is on track to produce 550K oz. in Q4.
Forecasts the Kibali mine, a joint-venture with AngloGold Ashanti (AU) which began commercial production in September, will produce more than 30K oz. of gold this year and 550K oz. next year.
AngloGold's (AU) profit attributable to shareholders collapsed to $1M from $168M a year earlier, although the figure marked an improvement from Q2, when a writedown of $2.4B - a result of falling gold prices - caused the miner to make a loss.
Adjusted profit more than doubled to $576M.
Production +1.3% to 1.043M troy ounces; gold price received -19% to $1,327/oz.
AngloGold is exiting a number of exploration projects in 13 "non-core" countries as part of a restructuring. The company is "trying to close a sale" of its small Navachab operation in Namibia and it's cutting 430 positions at its troubled Obuasi mine in Ghana. (PR)