With gold at $US1200 or less, profit margins are being constrained for the major producers around the world, in the face of increasing costs to produce the gold.
During the past 30 days, gold has gone from a $US1270 high to about $US1183 on Sunday, and had since climbed back, trading around $US1205 in New York yesterday.
Craigs Investment Partners research on gold producers results, for the quarter to September, singled out Oceana, PanAust and Alacer Gold as likely to have improved quarterly production results, while disappointment was likely from Newcrest Mining and St Barbara.
Craigs broker Peter McIntyre said the decline in commodity prices during the past two weeks had further highlighted the importance of focusing on companies with robust margins and consistent, predictable operations.
''In the upcoming quarterly reports we will be focused on companies that can improve balance sheets by generating cash sustainably,'' Mr McIntyre said.
Oceana, which has hedging polices in place covering a range of gold prices, was in the enviable position of having copper by-product from its Didipio gold/copper mine in the northern Philippines to sell and off-set the rising production costs of gold.
Mr McIntyre expected Oceana to report a stronger quarter, particularly at Didipio with mining returning to the higher grade zones early in the period.
''Combined with a lower strip ratio, this should see unit costs fall significantly.''
Following the weaker production result in the quarter to June, Mr McIntyre expected a rebound for both gold and copper output during the quarter to September.
Craigs forecast 42,400oz of gold from New Zealand operations; down 8% quarter on quarter, but that decline was ''more than accommodated'' by a 60% increase in gold production expected from Didipio to 23,600oz.
''The stronger performance at Didipio is driven by the return of better gold and copper grades, combined with a lower strip ratio,'' Mr McIntyre said.
Oceana was likely to record very low group cash costs, driven by strongly negative cash costs at Didipio. Craigs forecast all-in sustaining cash costs in New Zealand of $US1086 per ounce, down 3% quarter on quarter, but offset by negative $US663-per-ounce all-in cash costs from Didipio, down 161% quarter on quarter.
''The weighted average of cash costs for the group is therefore expected to be $US460 per ounce,'' Mr McIntyre said.
Craigs forecast September quarter earnings before interest, tax, depreciation and amortisation of $US46 million, up from $US30 million the previous quarter, and after tax profit of $US14.4 million.
Better results from Alacer Gold and PanAust were expected from respectively higher gold grades and increased copper production, while Newcrest had flagged expectations of lower gold grades and St Barbara output to weaken, from a slower-than-expected mine ramp-up, and lower gold grades elsewhere.
