Bloomberg

LOCAL gold producers look set to report gains in quarterly earnings, benefiting from the largest slump in the rand in three years, as North American peers contend with a drop in prices.

Harmony Gold may post headline earnings of R1.49 a share for the three months to December 2012, up 57 percent from the September quarter, according to analysts surveyed by Bloomberg. Gold Fields is expected to report a 29 percent lift in profit, but AngloGold Ashanti’s profit should rise just 1 percent.

Gold companies are gaining from the weaker rand because they sell much of their output for dollars and pay most costs in rand.

The local currency fell 13 percent during the quarter from the previous three months, its biggest decline in three years and the largest among the 16 major currencies tracked by Bloomberg.

North American gold firms are set to report weaker earnings than their South African counterparts after bullion prices fell 1.2 percent quarter on quarter.

Canada’s biggest producer, Barrick Gold, and US-based Newmont Mining are expected to post a drop in quarterly profit, estimates show.

By contrast, their South African competitors saw a 12 percent jump in the rand price of gold.

Harmony gains most from a weaker rand as it produces about 90 percent of its output in South Africa. AngloGold benefits least, with about 40 percent of its output in the country, and Gold Fields produces half of its metal locally.

“The weaker rand will be beneficial,” Imara SP Reid analyst Percy Takunda said. “I expect them to make strong statements on dividends.”