Anglo-Gold Ashanti (JNB:ANG) this morning hailed the elimination of the company’s hedge book, though it reported a quarter-on-quarter drop in earnings.
Net profit fell $9 million to $294 million in the final three months of the financial year. On an underlying basis Anglo-Gold made progress as third quarter profits were boosted to the tune of more than $80 million by a one off tax credit.
Gold producers have been caught on the wrong side of hedge positions as prices have risen, and Anglo is no exception. According to reports it has spend $6 billion eliminating forward sales contracts that forced the company to sell its gold below the market price.
Today chief executive Mark Cutifani said: "As long as the hedge book was in place, we were fighting with one hand tied behind our backs.
"Now that we're selling our gold at spot prices and entrenching business improvements across the organisation, we're spinning off significant cash flow."
Quarterly production was 1.148 million ounces in the three months to December 31, while the cash cost of that output was $672 an ounce.