By Alexandra Wexler
JOHANNESBURG--AngloGold Ashanti Ltd. (ANG.JO), the world's No. 3 gold producer, reported that its South African operations struggled in the first quarter, though international mines helped the overall group remain in the black.
In a limited quarterly market update on Monday, AngloGold reported a gross profit of $135 million in the 3 months ended March 31, down 30% from the same period a year earlier.
Gold production fell 3.6% from the first quarter of 2016 to 830,000 ounces at a total cash cost of $813 an ounce, versus $702 an ounce a year earlier, thanks to lower grades, a slow seasonal ramp up, heavy rains and some fractured ground at older, deeper South African mines.
In addition, a significantly stronger South African rand and other emerging-market currencies helped drive up local costs. International operations now account for about 75% of production.
"Our strategy is steady as she goes," said Chief Executive Srinivasan Venkatakrishnan. "It's been a tale of two portfolios."
Mr. Venkatakrishnan said brownfields expansion projects are progressing well, particularly at the international mines, while South Africa got off to a "rockier" start in 2017.
Gold prices are still down sharply from 2011 highs above $1,900 an ounce, but AngloGold and other miners have used the intervening years to cut costs aggressively.
AngloGold increased its capital expenditure to $216 million in the first quarter of 2017, up 69% from capex spending in the first three months of 2016. In its annual results in February, AngloGold declared its first dividend since 2012.
The company maintained its full-year production guidance of 3.6 million to 3.75 million ounces of gold. AngloGold also reported its first-ever fatality-free March quarter.
Write to Alexandra Wexler at [email protected]