JOHANNESBURG (REUTERS) -
Africa's second largest gold producer Gold Fields is expected to report a sharp drop in earnings for the quarter to end-September owing to lower output, rising costs and write-downs, analysts said.
Bigger rival AngloGold Ashanti should see a return to profit, having taken a knock in the previous quarter from a one-off loss for selling a big part of its gold hedge early, but production is expected to be almost flat.
Harmony Gold should boost output markedly and lift profits after accounting for big write-downs last quarter.
Cash costs were seen higher for all three companies due to a rise in wages, higher winter electricity tariffs and the impact of increased power tariffs from state utility Eskom [ESCJ.UL]. The gold price would benefit the companies less as it fell 3 percent quarter-on-quarter to an average of $872/ounces.
Analysts said they were keen to see how the global credit crunch may affect planned projects for the three mining firms.
Gold Fields, the world's No. 4 producer, will post weaker adjusted headline earnings per share of 9 South African cents in its first quarter to end-September, versus 140 cents in the June quarter, an average of seven analysts estimates' showed.
Gold Fields earnings are adjusted to exclude the effects of financial instruments and foreign debt.
The company's production is seen 8 percent lower at 798,000 ounces from the June quarter due to safety repairs at key mines and slower output ramp-up at its new Cerro Corona mine in Peru.
Earnings forecast were depressed further on an expected write-down on its stake in Rusoro Mining, while cash costs could rise 23 percent to $618 per ounce, analysts said.
An average of estimates by six analysts surveyed by Reuters showed AngloGold, the world's No. 3 producer, will post adjusted headline earnings per share of 26 U.S. cents in its third quarter to the end of September, versus a re-stated headline adjusted loss per share of 306 U.S. cents in the June quarter.
The company incurred a huge one-off loss in the June quarter after the restructuring of 4.4 million ounces of its forward sales, of which it has one the biggest among its peers.
CASH COSTS UP
AngloGold's output would rise one percent to 1.27 million ounces, with total cash cost up 13 percent to $490 an ounce. "Total cash costs for the quarter are expected to be unusually high," JP Morgan analysts Allan Cooke and Stephen Shepherd said in a note.
Harmony, the world's No. 5 producer, will see headline earnings per share jump to 59 South African cents for its first quarter, which runs to the end of September, from 38 cents in the June quarter, an average of estimates by seven analysts. Headline earnings is the key profit measure in South Africa, stripping out capital, non-trading and some extraordinary items.
Harmony's production is seen rising around eight percent to 406,000 ounces, but cash costs would also see a 10 percent jump to 152,804 rand ($13,520) per kg, JP Morgan analysts forecast. Below are the analysts earnings forecasts, in South African cents per share for Gold Fields and Harmony and in U.S. cents per share for AngloGold.
COMPANY AVERAGE RANGE JUNE QTR
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ANGLOGOLD 26 6 to 25 -306 (restated)
GOLD FIELDS 9 3 to 31 140
HARMONY 59 27-100 38
(Reporting by James Macharia; Editing by Sharon Lindores)
