2nd UPDATE: AngloGold Swings To Profit, Trims Output Guidance

AngloGold Ashanti Ltd. (AU), Africa's largest producer of the precious metal, swung to a profit in the third quarter as it benefited from stronger gold prices but said Thursday its annual output would be at the bottom end of its previous forecast range.

The company remains bullish on the bullion price and expects production in the coming year to top that of 2010 as it expands operations and develops new gold projects, Chief Executive Mark Cutifani said. The company last month exited its hedge book, which will mean that from next year it will benefit from the current positive gold price movements.

Output in the third quarter, while down on a year earlier, was up 3.3% on the previous quarter and ahead of the company's earlier guidance, but AngloGold said production was expected to dip during the final three months of the year.

The Johannesburg-based company said it swung to a third-quarter net profit of 443 million rand ($64.6 million) from a year-earlier loss of ZAR11.22 billion as its losses on commodity contracts were sharply narrowed. The improvement was despite spending $1.58 billion to cut its hedge book commitment, with a further $1.06 billion to be taken in the final quarter of 2010.

Revenue for the period rose 21% to ZAR10.67 billion from ZAR8.81 billion a year ago.

Production at 1.16 million ounces was down on almost 1.19 million troy ounces the year before, but the gold price AngloGold received for its metal jumped to $1,141/oz from $906/oz, excluding the cost exiting its hedge book. Spot gold is currently trading above $1,400/oz.

AngloGold, the world's third-largest gold producer after Barrick Gold Corp. (ABX) and Newmont Mining Corp. (NEM), said it expects to produce 1.14 million ounces in the final quarter and 4.5 million ounces for the year. In August it said it could produce as much as 4.7 million ounces in 2010.

"We are still very positive about gold," Cutifani told reporters during a conference call, adding the company expects a price of $1,300-$1,400/oz for the next 12 months and could see the market go higher.

AngloGold's production has been held back this year by problems at its operations in Ghana and a longer than expected shut down at its Savuka mine in South Africa, but like its South African peers is developing assets around the world to take advantage of the buoyant metal price. The company said its board has approved the development of its majority-owned Tropicana project in Western Australia, which is expected to pour its first gold in 2013 and produce 3.45 million ounces over 10 years.

Gold output in South Africa, which was the world's largest producer of the metal for most of the last century until 2006, has been declining and the country is now the fourth-biggest producer after China, Australia and the U.S. The country has the deepest mines, where gold is recovered from almost four kilometers below the surface.

The country's next-largest gold companies, Gold Fields Ltd. (GFI) and Harmony Gold Mining Co. (HAR.JO), had output of 908,000 ounces and 336,650 ounces respectively in the September quarter.

At 0938 GMT, AngloGold's shares were trading 2.9% higher at ZAR359.95 while Gold Fields was up 1.8% and Harmony up 1.2%.

-By Robb M. Stewart, Dow Jones Newswires; +27 11 783 7848; robb.stewart@dowjones.com

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