Gold Fields sticks to production guidance for 2019

Gold Fields stuck to its full-year production guidance, expecting a “strong” end to the year after a small slip in output during the third quarter. 

Gold Fields, which only has a single mine in SA that it is struggling to bring to account, has expanded its overseas footprint and is looking at bringing in a partner for its R11.6bn Salares Norte project in northern Chile.

In the September quarter, the company’s third, production fell 2% year on year to 523,000oz.

Gold Fields said the reason was there was a “lock up of gold” in two of its Australian processing plants, meaning the gold was not being recovered as quickly as it normally was.

Lower grades were also mined at the Damang mine in Ghana and the Cerro Corona mine in Peru.

At the South Deep mine in SA, which is tapping into one of the last major gold resources in the country, output increased to 61,000oz from 49,500oz the year before.

South Deep is closely watched by investors and analysts, having missed a slew of production targets over the past decade. Gold Fields has spent R32bn buying South Deep in 2006 and developing it as a mechanised mine operating 3km below surface.

Group all-in costs for the quarter fell 5% to $1,084/oz compared to a year earlier.

Gold Fields received $1,469/oz for its gold sales, up from $1,184/oz.

Net debt fell to $1.498bn, a $97m reduction from the end of June.

In line with strategies of its peers, Gold Fields is looking for growth and it has advanced work at the Salares Norte deposit to a point where it is now considering financing options to build a mine, including bringing in a partner, which decreases the cost and reduces the risk for Gold Fields’ shareholders.

Gold Fields may hedge, or set in place contracts to sell gold in the future, and gold production from Salares Norte as a way to secure the repayment of its investment in the project.

Gold Fields maintained its full-year production guidance and advised the market to expect output to come in at the upper end of its 2.13-million ounces and 2.18-million ounce range. All-in costs were set at between $1,075/oz and $1,095/oz.

“Gold Fields expects to end 2019 on a strong footing and we expect to achieve previous production and all-in cost guidance for the year,” the company said.

“This provides us with a solid base to grow production and reduce all-in costs into 2020, enabling the group to generate strong free cash flow,” it said.

In morning trade, Gold Field’s share price had slipped 4.02% to R78.32, leading the losses on the JSE’s gold miner index.

seccombea@bdfm.co.za