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Monday, 2nd February 2004 (4309 views)

Following the approval of a $1.5 billion merger by the EU on Friday, AngloGold has announced it will be investing even more money into gold this year.<BR/><BR/>After already laying out R2.7 billion last year, the world's second largest gold producer said it will spend a further R1.4 billion on its mines this year.<BR/><BR/>The merger with Ghana's Ashanti Goldfields is hoped to be completed by April and is set to increase the company's capital expenditure to $589 million.<BR/><BR/>Chief executive of AngloGold, Bobby Godsell, told Business Report that approvals from Ghana's parliament and government were expected within the next fortnight.<BR/><BR/>The global gold producer posted better than expected results despite a slip in net profit from R729 million to R611 million, and the merger is set to boost the company's 2004 output to 6.6 million ounces, up 18 per cent on last year.<BR/><BR/>For the financial year to December 2003, AngloGold declared a final dividend of R7.10 a share and gold output was almost unchanged at 1.39 million ounces.<BR/><BR/>Although delivery into its hedge book slowed during the quarter, Mr Godsell claimed that AngloGold had already taken 10 million ounces out of its hedge, and on confidence that gold prices would rise further would continue to reduce the book.<BR/><BR/>Reportedly AngloGold's well-managed hedge book has provided a vital defence in lean quarters.<BR/><BR/>Marketing director at AngloGold, Kelvin Williams, said the company would only hedge forward a maximum of 30 per cent of expected five year gold output, remaining committed to its policy.<BR/><BR/>However, this figure will automatically lift to 40 per cent once both Ashanti and AngloGold's hedge books are combined together.<BR/><BR/>With Ashanti having 67 per cent of its expected production hedged forward, Mr Williams said that AngloGold planned to adjust Ashanti's exposure 'as promptly as possible'.

 

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