Johannesburg - Gold producer AngloGold Ashanti’s shares leapt 3 percent on Friday after it said it expected to return to profit with a whopping leap of up to 177 percent in profit - boosted by a higher gold price and weaker currencies in the countries it operated in.
Mining companies have benefited from the surge in the price of gold since the beginning of the year.
Gold has jumped 25 percent this year as the Federal Reserve scaled back expectations for interest rate increases and demand for a haven rose, especially due to uncertainty linked to the UK’s vote to leave the EU.
In a trading statement, the company said headline earnings and headline earnings per share (HEPS) for the period were expected to be between 167 percent and 177 percent higher than for the six months to end June 2015.
Headline earnings were expected to be between $87 million (R1.2 billion) and $99m, with HEPS between 22 US cents and 24 US cents, it said.
In 2015, AngloGold Ashanti reported a headline loss and headline loss per share for the comparative period of $128m and 31 US cents, respectively.
It expected a net profit of between $45m and $59m for the period, compared with a net loss of $143m in the same period last year.
Basic earnings per share are expected to be between 12 US cents and 14 US cents from the previous interim period’s loss of 35 US cents per share.
AngloGold said it had lifted its forecast, among other reasons, due to the higher gold price, which averaged $1 222 an ounce in the first half of this year compared with $1 204 an ounce in the comparative period.
Weaker operating currencies in South Africa, Brazil, Australia and Argentina are also a factor. AngloGold Ashanti will report its results in mid-August.
Gold Fields said this month that its HEPS were expected to increase by 1 500 percent to 16 US cents from the previous 1 US cents when it reports its interim results.
AngloGold Ashanti closed 3.01 percent higher on Friday to close at R303.94 on the JSE.
Bullion producers are among the best performing equities, with the BI Global Senior Gold Valuation Peers index more than doubling in 2016 as the metal rallied to a two-year high.
They have also benefited from a lot of self help, as payback from years of cost-cutting and improving operations start to materialise.
Analysts agree that even though gold had its best start to the year since 1979, it is down 29 percent from its 2011 peak.
Eight months ago the precious metal was languishing below $1 050 an ounce at a five-year low, hurting profits and stressing balance sheets in an industry where many producers needed about $1 200 to break even.
Companies had racked up record debts in the dash to grow during a decade-long bull run and some new mines then struggled to make a profit.
* With additional reporting by Bloomberg
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