Monday, September 04, 2006

Gold production in the world's largest gold producer South Africa rose 1 percent to 2.21 million ounces (68,685.9 kg) in the second quarter compared with the first three months of 2006, the Chamber of Mines said on Monday.

But output dipped 6.4 percent when compared with the same quarter in 2005, the industry group added in a statement.

Mining firms milled 8.5 percent more ore in the second quarter compared with the first quarter, but the average grade dropped by 7.5 percent to 4.59 grams per tonne.

The sector, which had been struggling for three years as a strong rand cut export earnings of dollar-denominated gold, has benefited this year from a combination of higher metals prices and a weaker local currency.

But the knock-on effects of restructuring and closures of loss-making mines have still had an impact this year.

The dollar gold price jumped by 38 percent to an average of $591 per ounce in the quarter versus the same period last year, while the domestic gold price shot up by 47.5 percent to 129,789 rand per kg, the chamber said.

The number of mines that were in the red or close to making losses fell from nine accounting for 48.2 percent of production in the second quarter of 2005 to four mines with only 10.1 percent of output this year.

"From an average gross loss before capital expenditure in the second quarter of 2005 the industry was able to fully cover capital expenditure and be in the black a year later," it added.

South Africa's three biggest gold producers accounting for the bulk of output are AngloGold Ashanti Ltd, Gold Fields Ltd and Harmony Gold Mining Company Ltd.