South Africa produces less gold (August 04, 2003)

South African gold production in the first quarter of 2003, at 2,963,824.9 oz. was down 2.7% compared with the corresponding period of 2002. Moreover, production was down 6.8% from the quarter ended Dec. 31, 2002.

On a quarter-over-quarter basis (when comparing the quarter ending in March of each year to the quarter ending in December of the preceding year), there has been an average decline of 7.2% in production over the previous 5-year period. Most of the decline is attributed to the impact of the year-end holiday period, combined with numerous public holidays in the first quarter.

For members of the South Africa Chamber of Mines, production in the March 2003 quarter was up 0.3%, year over year, to 2,627,536.9 oz., mostly as a result of Armgold’s becoming a full member. Despite a 2.3% year-over-year decline in tonnes of ore milled, the average grade recovered increased by 2.5%, to 4.12 grams per tonne, in the first quarter.

The rise in the average grade mined reflects the industry’s response to an 11.9% decrease in the rand gold price, which fell to R94,607 (US$12,300) per kg (US$383 per oz.) in the first quarter of 2003 from R107,385 (US$13,960) per kg (US$434.89 per oz.) in the corresponding period last year. Cash operating costs rose by some 15.4% to R65,359 (US$8,500) per kg (US$264.80 per oz.) when comparing March 2003 quarter with the corresponding period in 2002.

Total operating costs (including capital expenditures) rose by 12.4% to R82,409 (US$10,700) per kg (US$334 per oz.) with a related decline of 65% in total profit per kilogram before tax and dividends to R8,822 (US$1,150) per kg (US$35.90 per oz.) in the March 2003.

— The preceding is contributed by the South Africa Chamber of Mines. U.S.-dollar calculations are based on US13 per rand.