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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."
