(Clarifies number of job cuts in paragraph five to 40 percent
of 2,000, not 2,000 job cuts)
* Q2 headline loss per share $0.35 vs yr-ago profit
* Books impairment of $2.4 billion after gold price drop
* Shares hit 12-year low
JOHANNESBURG, Aug 7 AngloGold Ashanti
promised to cut more costs after it swung to a second-quarter
loss, dragged lower by a plunging gold price that has forced it
to reduce staff and scrap its quarterly dividend.
Shares in the world's third-largest bullion producer by
output were down almost 6 percent by midday on Wednesday after
touching a more than 12-year low.
Gold prices have fallen by almost a quarter since January,
the sharpest drop in a generation that has forced large miners
from Barrick Gold to Newmont to write down the
value of their assets.
AngloGold, whose operations stretch from South Africa and
the Democratic Republic of Congo to Australia, had warned it
would be forced to follow suit and on Wednesday took a $2.4
Africa's largest gold producer also followed peers across
the mining industry with promises of more cost cuts, including
plans to shed 40 percent of its 2,000 management jobs globally.
Randgold Resources said on Wednesday it would cut
costs and raise production over the rest of the year to counter
plunging bullion prices which triggered a 62-percent slump in
the African gold mining group's second-quarter profit.
"We've taken the decision to prepare our business for a
volatile gold price environment," AngloGold Chief Executive
Srinivasan Venkatakrishnan said.
Venkatakrishnan, a company veteran and former chief
financial officer known as Venkat, was appointed to the top job
in May, after his boss Mark Cutifani left to run diversified
miner Anglo American.
Venkat aims to more than halve 2014 corporate costs, helped
by the job cut plans. Spending on exploration for 2013 has also
been more than halved.
Total cash costs - a measure closely watched in an industry
that has seen costs soar over the past decade and remain
stubbornly high - came in at $898 an ounce in the second
quarter, in line with its target and just below the previous
But Venkatakrishnan acknowledged that "all-in" costs - which
would include $1 billion of capital primarily for its Tropicana
and Kibali mines - would be "well above spot" prices, currently
around $1,280 an ounce.
"If you look at a lot of the miners right now, a lot of
their costs are almost close to the current gold price so a lot
of producers are still going to struggle in this environment,
especially with the very high cost structures that they have in
place, said Paul Chakaduka, a trader at Global Trader in
Like many South African miners, AngloGold has also been
weighed down by rising costs and labour disputes at home.
The miner said it would cut marginal projects in South
Africa, which accounts for around 40 percent of its global
"We're phasing some of our expenditure on projects in South
Africa and have reduced this year's total capital budget by
about $150 million, to $1.95 billion," said Venkatakrishnan.
The group said it was "difficult" to contemplate wage
increases, as the South African industry hammers out pay deals
Negotiations are progressing under the auspices of a
mediator after unions last month declared an official wage
The miner posted an adjusted headline loss of $0.35 in the
April to June period compared with earnings of $0.29 in the
previous three months and $0.70 a year earlier.
Production rose 4 percent to 935,000 ounces in the quarter.
The company reduced its 2013 target to between 4 and 4.1 million
ounces after revising its mine plans. It previously forecast a
range of 4.1 million ounces to 4.4 million ounces.
(Reporting by Sherilee Lakmidas, additional reporting by Benon
Oluka; Editing by Clara Ferreira-Marques and Erica Billingham)