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Gold Fields to seek new gold beyond 2024 when production begins to decline - Miningmx

Thursday, 19 August 2021

GOLD Fields will seek ways to maintain gold production which is set to peak at 2.7 million ounces in three years time, said Chris Griffith, CEO of the Johannesburg-listed miner.

In his first comments on company strategy some four and a half months after his appointment, Griffith declared himself happy with the company&'s strategic direction. But he flagged the decline in gold production after 2024 as a consideration.

"We have a solid production profile above two million ounces a year for the next decade," he said in comments to the firm&'s interim results announced today.

"However, during that time we anticipate that our annual production will grow to 2.7 million oz by 2024 before declining as some of our mines come to the end of their lives. We believe that we must now start looking at ways of preserving the value we have created beyond 2024," he said.

As guided in a July 30 update, Gold Fields produced strong first half numbers reporting a normalised profit of $430.5m, a 33% year on year improvement largely informed by a 10% increase in the gold price received.

Gold Fields runs an active gold hedging book from which it booked a $274m loss in the six months ended June 2020. In the period under review, the losses on financial instruments as a whole reduced 81% to $53m of which $14m were realised losses.

An operational negative was an 11% increase in all-in sustaining costs (AISC) to $1,093 per oz which Gold Fields said was a result of the improvement in host country currencies against the US dollar. In the case of the South African rand, there was a 12% appreciation against the dollar during the six month period.

Production for the first half of this year came in at 1.1 million oz, about 4% higher year on year. Guidance of 2.3 million to 2.35 million oz has been maintained which will be produced at an AISC is expected to be between $1,020/oz and $1,060/oz.

Net debt was at $1.097bn as of June 30 compared to $1.24bn at the close of the interim period in the previous financial year.

The bottom line for shareholders was an interim dividend announcement of 210 South African cents per share compared to 160 cents/share in the previous interim period. The payout was in terms of the firm&'s policy of distributing 25% to 35% of normalised dividends.

In general, Griffith declared himself happy with Gold Fields&' direction. "A large part of my time in recent months has been focused on interrogating the strategy of the company. I&'m pleased to say, that, as I anticipated, the business is in a strong position," he said.

Salares Norte

Gold Fields operates in Australia, Ghana, South Africa and Peru. It also has a project in Chile, the $860m Salares Norte project which the company said today continued to "track well" against its project schedule.

Some $230m had been spent on the project to date of which $75m was spent in the second quarter. However, severe weather and the effects of the Covid-19 pandemic had resulted in delays such that the percentage completion is expected to be at about 65% ‘total project&' completion at December compared to 70% previously guided.

Another focus point for Gold Fields is the performance of its South African mine, South Deep. After years of loss-making, the mine began to make money about 18 months ago following a restructuring undertaken by Griffiths&' predecessor, Nick Holland.

The mine generated a net cash inflow of R406.9m compared with an inflow of R79.3m last year. The increase is mainly due to higher gold sold.

Gold Fields said today production at the mine is expected to be about 9,300 oz lower than guided at around 280,000 oz owing to the effects of the Covid-19 pandemic.

Gold production at Gold Fields&' Peru mine, Cerro Corona is expected to be 20,000 oz lower at 110,000 oz although copper production would remain at similar levels, it said.

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