Bloomberg News

Biggest Africa Refinery Has $113 Million Less Gold Than in Books

July 25, 2014

Rand Refinery Ltd., processor of about a third of the world’s gold since 1920, found $113 million less physical metal than the company had booked in its accounts after adopting a new computer system.

The refinery in Germiston, a town 20 kilometers (12 miles) east of Johannesburg, has 87,000 ounces of physical gold less than the amount present in its accounting records after “implementation difficulties” with the new system, the company said in a statement today. That’s worth about $113 million at today’s price of $1,296 an ounce.

Rand Refinery’s shareholders, including AngloGold Ashanti Ltd. (ANG), Sibanye Gold Ltd. (SGL) and Harmony Gold Mining Co. (HAR), agreed to lend the company 1.2 billion rand to help make up the difference. Howard Craig resigned as chief executive officer in May and has been replaced by Mark Lynam, who is being assisted by management consultant Accenture Plc (ACN:US) in sorting out the issue.

Gold miners send bullion at about 80 percent purity to the refinery, which then treats it and boosts this to close to 100 percent. Rand, Africa’s biggest processing facility for the metal, has refined almost 50,000 metric tons of gold since 1920, according to its website.

The miners, customers of the refinery, have received the prices they were expecting, leading them to conclude it’s most likely an accounting problem rather than theft, James Wellsted, a spokesman for Sibanye Gold, said by phone.

AngloGold, Sibanye and Harmony made loss provisions of about $92 million between them as a result of the lost ounces. Rand Refinery has been unable to finalize its results for the year ended September 2013 because of the issue, it said.

To contact the reporter on this story: Kevin Crowley in Johannesburg at kcrowley1@bloomberg.net

To contact the editors responsible for this story: John Viljoen at jviljoen@bloomberg.net Ana Monteiro, Tony Barrett


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