Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
South African AngloGold Ashanti (JSE:ANG), the world’s third-biggest producer of the precious metal, logged Monday a first-half loss as costs related to planned layoffs and funds set aside for a class action suit related to fatal lung disease silicosis, took a toll on the company’s bottom line.
Company set aside $47 million to cover cost of axing up to 8,500 jobs at its loss-making mines in South Africa.
The miner, Africa’s top gold producer, reported a loss of $176 million in the six months to June 30, compared to a profit of $52 million in the same period last year, in line with the company’s guidance.
Earnings were hit by an $86 million post-tax impairment related to some of the company’s South African mines, which made their first loss since 2012 in the first quarter of this year, as costs surged 44% and output slid.
Results also were affected by a $47 million set aside to cover the cost of axing up to 8,500 jobs at its loss-making mines in South Africa, as well as by another $46 million reserved to settle a silicosis class action lawsuit brought against a group of major miners in AngloGold’s home country.
The company kept its full year guidance untouched which means it expects production to decline to 3.6-3.75 million ounces, while spending is projected at $950 million to $1.050 billion.
Investors reacted negatively to the miner’s result with the stock closing down 2.6% in Johannesburg to 13,118 rand. The ADR was also trading down in New York and had lost 7 cents by 11:48 AM ET.
2 Comments
PRINCE A D GAISIE
Obuasi mine is going to start but you left that from the report. It was closed to LOP in November 2014
Goldfinger
Where is the mention of the stellar results of developing mines in Colombia ?? I guess you dont talk about pissing away $600MM over 10 years to have nothing.