Smelting poured to box at gold room in the G- Resources Group Ltd. Martabe gold and silver mining site at stock pile area in Batang Toru, North Sumatra province, Indonesia, on Wednesday, Febuary 13, 2013. The project started in July 2008 and is expected to commence production in the last quarter of 2011. Photographer: Dadang Tri/Bloomberg

Johannesburg - Sibanye Gold, the world’s best-performing major producer of bullion in 2014, said first-half profit dropped 36 percent on the lower gold price and an impairment on its investment in Africa’s biggest refinery.

Headline earnings, which exclude one-time items, declined to $61.2 million in the six months to June 30, compared with $96.1 million (R1 billion) the same period in 2013, the Westonaria, South Africa-based company said today in a statement.

The company will pay a half-year dividend of 0.5 rand a share.

Gold traded at an average of $1,290 an ounce in the first half, 15 percent lower than a year earlier, hurting miners such as Sibanye.

The company increased the amount of metal produced 8.5 percent to 711,900 ounces from a year earlier while reducing all-in costs 16 percent.

There’s “noise” in the headline earnings due to one-off events such as the writedown of the investment in Rand Refinery and the creation of the company last year, chief executive Neal Froneman said by phone.

Rand Refinery, processor of about a third of the world’s gold since 1920, found $113 million less physical metal than the company had booked in its accounts after adopting a new computer system, it said on July 25.

Sibanye, which has a 33.1 percent interest in the facility, recorded a $14 million impairment because of this.

Sibanye’s stock has more than doubled this year, making it the best performer in the Bloomberg Industry Senior Gold Index, as the company cut costs while increasing production at its three mature mines in South Africa.

Chief executive Neal Froneman is seeking to buy platinum assets in the country to sustain the company’s dividend as its gold mines reach the end of their lifespans.

Gold production is forecast to increase to about 1.61 million ounces this year, higher than the previous estimate of 1.4 million ounces, because of the acquisition of the Cooke operations, Froneman said.

All-in costs will range from $1,070 an ounce to $1,085 an ounce, the company said.

Capital spending is estimated at $320 million. - Bloomberg News