Gold Fields to pay out dividend despite sharp drop in profit
Difficulties at the South Deep mine — which is in development — were a blot on the miner’s interim results
Gold Fields declared an interim dividend of 40c per share despite a steep drop in interim profit as the company advanced its capital projects in Ghana as well as Australia.
The only asset in SA, the South Deep mine, which is ramping up to full production over the next five years, had a poor start to the year. But CEO Nick Holland reiterated the company’s commitment to keeping the mine, which has absorbed R29bn and needs R2bn more to complete it.
News that “de-stress mining”, which eases rock pressures in working areas, had improved in the second quarter compared with the first, leading to management guiding towards a better second-half operational performance was “positive for sentiment”, said Royal Bank of Canada analyst Richard Hatch.
Production guidance for 315,000oz for the year “continues to look a stretch”, he said.
Gold Fields recorded net profit of $58.6m for the six months to the end of June, from a net profit of $121m a year earlier.
Revenue was little changed at $1.33bn, while operating profit fell to $627m from $639m.
Gold output for the period rose slightly to 1.047-million ounces, with South Deep in SA and the Darlot mine in Australia producing less gold.
Darlot has since been sold. The full-year production forecast was kept steady at 2.1-million to 2.15-million ounces.
The all-in costs for the year shot up to $1,170-$1,190/oz, with increased capital spending on its Gruyere project in Australia and Damang in Ghana.
South Deep’s output fell 15%, to 119,300oz, sending costs soaring at the mine, which is being developed.
The all-in sustaining costs increased 6%, to R646,526/kg, while the all-in cost ballooned to R662,973/kg, meaning the mine posted an operating loss of R33m, compared with an operating profit of R668m from a year earlier.