Africa's top three gold producers are expected to report big jumps in earnings and cash flow for their quarters to March, largely boosted by a stronger gold price, which outweighed lower output and higher costs. The price of gold in the quarter averaged $908 per ounce, up 14 percent on the previous quarter. "We expect a very strong showing from the South Africa gold producers for (calendar) Q1 2009," said Leon Esterhuizen, a London-based precious metals analyst at RBC Capital Markets. Looking forward, analysts were concerned about rising costs, especially in view of a less bullish outlook for gold in the comings months. South Africa's mineworkers' unions have demanded a 15 percent rise in wages, well above inflation at 8.5. Labour costs make up about half of gold producer's costs, while the falling costs of fuel and steel have yet to make a dramatic impact in whittling down overall costs. GOLD FIELDS Gold Fields (GFIJ.J), the No. 4 producer in the world and No. 2 in Africa, is expected to post an adjusted headline earnings per share of 201 South African cents in its third quarter, according to a Reuters poll of five analysts, versus 83 cents in the December quarter. Analysts generally expect Gold Fields' total cash costs for the three months to the end of March to be three percent lower than $470 per ounce in the previous quarter They were disappointed when Gold Fields announced in March that it had revised its production target for the quarter to 871,000 ounces from 960,000 ounces, due to problems at some of its mines. "The key thing we want to see is what action has the group taken to boost output at its Beatrix (South Africa) and Tarkwa (Ghana) mines, which missed their targets," said Shoaib Vayej, a Cape Town-based gold analyst at Sanlam Investment Management. Headline earnings are the key profit measure in South Africa, stripping out capital, non-trading and some extraordinary items. Gold Fields earnings are adjusted to exclude the effects of financial instruments and foreign debt. HARMONY Harmony (HARJ.J), which is the No.5 producer in the world and No.3 in Africa, will see its headline earnings per share jump to 141 cents for its third quarter to the end of March from 101 cents in the previous quarter, according to a Reuters poll of five analysts. "We forecast a 5 percent fall in Harmony's gold production to 344,000 ounces at cash operating costs of $545 ounces, up three percent," JP Morgan analysts Allan Cooke and Steve Shepherd said in a note. Sanlam analyst Vayej said that with output not hitting the expected level, Harmony may have to push forward its target of producing 2.2 million ounces a year by 2012. Analysts said they were keen to see if the company had managed to improve output at its struggling Elandsrand and Target mines. ANGLOGOLD AngloGold (ANGJ.J), the world's No. 3 and Africa's top producer, is expected to post adjusted headline earnings per share of 42 U.S. cents in its first quarter to the end of March, versus a loss of 5 cents in the previous quarter, according to the average of estimates from five analysts in a Reuters poll. AngloGold, which has sold some of its mines to boost its balance sheet, will be reporting its first quarter after terminating half the hedge book in 2008. "We believe further asset sales and even further hedge book reductions to be high probabilities," RBC analyst Esterhuizen said. Analysts will be eager for news on whether AngloGold will revamp or sell its underperforming Geita mine in Tanzania. AngloGold has forecast a 13 percent fall in output to 1.1 million ounces from the previous quarter, partly due to problems at Geita, and for total cash costs to be up 8 percent to $455 per ounce. Below is a summary of 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 DEC QTR RESULTS -------- ------- --------- --------------- GOLD FIELDS 201 149 - 203 83 HARMONY 141 129 - 160 101 ANGLOGOLD 42 33 - 51 -5

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