Anglo-South African gold producer AngloGold reported a solid profit rise in the last three months of 2001.

The success comes despite falling gold output due to the decline of two mines in North America and South Africa.

In an attempt to boost its output, AngloGold was trying to buy Australia's Normandy Mining but lost the bid to an American company earlier this month.

Although gold production was almost 4% less, headline earnings rose 13% to $286m (�202m) during 2001 compared to the previous year.

Disappointed by the lost acquisition

The earnings rose 16% to $88m in last three months of the year compared to the previous quarter.

This was mainly due to a 20% devaluation of the South African rand during the same period and tight cost controls introduced by the company.

"With the 20% fall of the rand over the quarter, dollar-denominated total cash costs were dramatically reduced by $17 per ounce to $159 an ounce," Bobby Godsell, the company's chief executive said in a statement.

With gold output expected to fall 25% next year, AngloGold said it would continue to look for opportunities to grow through asset purchases, corporate mergers and acquisitions.

The Johannesburg-based company expressed its disappointment at losing its bid for Normandy in its results statement.

The two companies' fierce four-month-long takeover battle was brought to an end when AngloGold threw in the towel.

As a result of the deal between its rivals, AngloGold has lost its status as the world's largest gold producer to Newmont.

Rand's fall

Analysts said the results were ahead of expectations.

"These are definitely excellent results, especially on the cost side. This puts it in the competitive park of North American producers," said UBS Warburg analyst Leon Esterhuizen.

Although the rand's slide fuelled the company's operating profits, it has made the forward sale of its South African production in rand denominated contracts less profitable.

The firm commented that it did not anticipate the very sharp drop in the rand value against the dollar and the current situation requires active management of that portion of the hedge book priced in rands.

AngloGold said its hedge book was now less exposed to further declines in the local currency.

Shares in AngloGold rose 0.2% to 468.80 rand in early trade as the strong results had already been priced in.