AngloGold Production Falls After Worker Deaths

AngloGold Ashanti (AU), the South African mining concern, saw production decline in its first quarter after accidents that killed two workers forced a three-day shut down of its entire South African division.

Though the company led its first-quarter earnings release with assurances that safety has improved, four workers have already died in the company's second quarter.

"Safety remains the company's top priority," AngloGold said in a statement, "and operational management continued to make good progress on all fronts during the past year, recording the lowest ever number of lost-time injuries and a 58% decline in the fatality injury frequency rate. Regrettably, the second quarter thus far has been disappointing with four fatalities."

In other news, the company profited from its decision a year ago, along with the rest of the industry, to reduce its hedge book -- in which it takes short positions with forward sales contracts. As gold prices have increased -- up 14% in the quarter from a year ago -- those hedges would have lost money, cutting into the company's profit margins.

As it stands, AngloGold said, it turned in adjusted earnings of $150 million, or 42 cents a share. A year ago, the company was in the red, losing 17 million, or 5 cents a share.

The company cut its hedge positions to 5.84 million ounces of gold, down 50% from a year ago.

Gold production fell 13% to 1.1 million ounces compared with the year-ago period. AngloGold blamed the falloff on the shutdowns for safety after the deadly accidents and to do maintenance work.

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