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S&P sounds warning on AngloGold

Oct 18 2012 07:40 Sapa
AngloGold Ashanti

AngloGold Ashanti mineworkers gather on a hill at the Mponeng mine in the North West. (Sapa)

Company Data

ANGLOGOLD ASHANTI LIMITED [JSE:ANG]

Last traded 185.80
Change 3.15
% Change 0.02
Cumulative volume 882439
Market cap 74.91bn

Last Updated: 23/04/2014 at 04:27. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg - Ratings agency Standard & Poor's on Tuesday warned it could downgrade the credit rating of AngloGold Ashanti [JSE:ANG].

"We believe that country risk for South African gold miner AngloGold Ashanti Ltd (AngloGold) has increased in light of continuing strike action in South Africa and the possible implications of increasing social tensions for the mining industry," the agency said in a statement.

It had placed the gold miner on "CreditWatch negative".

AngloGold currently had a BBB- rating, meaning it was at the lowest investment grade for market participants. The CreditWatch placement meant there was a 50% chance it could move one notch down to BB+, or being considered speculative grade.

The CreditWatch placement also reflected a potential rise in the company's unit cash cost, which S&P already considered comparatively high. There was a risk costs could increase due to wage increases, or general inflationary pressure.

On average in 2011, AngloGold's unit cash cost was $728 per ounce of gold, compared with the industry average of $600 to $650.

The unit cash cost in the second quarter of 2012 was $801 per ounce.

"We aim to resolve the CreditWatch placement by the end of December, after meeting with management and gaining further insight into the company's ability to reduce its exposure to country risk or better manage its cash cost."


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