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South Africa's newest gold company sees earnings holding up

Wednesday, 23 Oct 2013 | 5:54 AM ET

JOHANNESBURG, Oct 23 (Reuters) - South Africa's Sibanye Gold , spun off earlier this year by Gold Fields, expects earnings to be similar in the second half of the year to the first, assuming its forecast holds for the bullion price to stay around current levels.

Sibanye said on Wednesday it expected headline earnings per share for the final six months of 2013 to be 120 cents - the same as the first half - if the gold price averages 410,000 rand a kilogramme from Oct. 31 to Dec. 31.

This would be a doubling from the same period last year, when headline earnings for the firm's operations - then part of Gold Fields' South African stable - were calculated at 62 cents per share.

During that period the mines that now form Sibanye were shut for several weeks by a wave of wildcat strikes that swept the sector and cost producers heavily.

Sibanye's share price was up over 2 percent in late morning trade, outperforming Johannesburg's All-share index, which was down almost 0.5 percent.

Gold's spot price is currently $1,331.00 an ounce, around 419,000 rand a kilogramme at the current exchange rate, so slightly above the Sibanye forecast.

"If the gold price remains in the range they are calling, they should achieve the forecast results," said David Davis, investment banking analyst at SBG Securities.

It is highly unusual for a South African gold producer to provide such a forecast before the end of the reporting period in question but Sibanye only publishes financial results every six months unlike its peers, which do so on a quarterly basis.

Sibanye was created in February from the bulk of Gold Fields' operations in South Africa and has positioned itself as a company with mature assets that can generate solid dividends. It is aiming to produce around 1.3 million ounces of bullion this year.

(Reporting by Ed Stoddard; Editing by Mark Potter)

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