South Africa's biggest gold producer AngloGold Ashanti's forward sales contracts forced it to sell at an average price of $644-oz, a 26 percent discount to the average spot price of $869-oz during the September quarter.
Instead of benefiting from contracted prices when the gold price crashed from $986-oz to $742-oz, the hedge-book AngloGold's new management got saddled with caused its average sales price to dive 10 percent from the previous quarter.
Competitors selling at spot prices averaged a 3-percent revenue decline.
AngloGold Ashanti retained its title as the world's cheapest producer despite cash costs rising 12 percent to $486-oz. It did not make a profit, however, once the capital expenditure on developing Australia's largest gold mine Boddington and other costs were factored in. AngloGold's notional cash expenditure including expansion was $772-oz, which would have made for a profitable quarter if it had been able to sell gold at the spot price.
September marked AngloGold's fifth consecutive quarter of headline losses, bringing the nine months total for this financial year to R16,09 per share.
Its losses have been narrowing, and chief financial officer Srinivasan "Venkat" Venkatakrishnan said the group should return to profit next year. Lower fuel prices should bring cash costs down to $460-oz this quarter while revenue should rise as the group winds down its hedge book.
Mark Cutifani, AngloGold's chief financial officer, predicted gold will go back over $1 000 in the near term because years of under-investment has resulted in declining gold production worldwide.