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GOLD Fields on Tuesday warned of further production difficulties at its $1.2bn Salares Note mine in Chile which it said was ramping up slower than anticipated.
Production guidance for this year has been reduced to between 220,000 to 240,000 ounces of gold while all in cost guidance increases to $1,800 to $2,000/oz.
These numbers compared to previous guidance for Salares Norte, made in February, of 250,000 oz in production and AIC of between $1,790 and $1,850/oz. Commenting in a first quarter production report today, Gold Fields CEO Mike Fraser blamed the disappointing ramp-up on the onset of early winter weather in the South American country.
Weather also played an extraordinary role in Gold Fields first quarter production at its Australian mines. As previously flagged, Gold Fields said St Ives and Gruyere were negatively affected by heavy rainfall with normal production at the latter only resumed in late April.
There were also mining issues at South Deep, the group's South African mine. Rehandling of backfill resulted in 56,300 oz production for the period – 34% less year-on-year. A recovery plan has been implemented, but production for 2024 has been revised down to 305,000 to 310,000 oz – the same as achieved in 2023.
All in all, group first quarter gold production of 464,000 oz is 19.6% lower year-on-year and 24% lower quarter-on-quarter. All-in sustaining costs (AISC) of $1,738/oz are 50.8% higher year-on-year and and 27% higher quarter-on-quarter.
Despite this ills, which constitute a very awkward start to Fraser's first full quarter at Gold Fields, the group has kept full year production guidance of between 2.33 and 2.43 million oz unchanged, “albeit gold production will be weighted to the second half of 2024”. AISC guidance of U$1,410/oz and $1,460/oz is consequently unchanged.
But Fraser rang in the changes in Gold Fields' management structure. Executive vice presidents for Gold Fields' Australia and African divisions have been removed as he centralises the structure to head office and mines which will report to Martin Preece who becomes Gold Fields' COO.
Preece, who was interim CEO until Fraser's appointment in November, was credited with improving the fortunes of South Deep.
In another management change, Gold Fields' CFO Paul Schmidt has retired, as previously communicated. A new CFO appointment would be made “in the coming months”, Gold Fields said.
Whoever is CFO will be keeping an eagle eye on Gold Fields' balance sheet. Net debt crept up $1.14bn from $1.02bn at the previous quarter's close. While leverage was comfortable, the company confirmed it would redeem a $500m bond, due on May 15, by drawing on its $1.2bn revolving credit facility.
In another development, Gold Fields said there had been progress in discussions with Ghana regarding its equity in a proposed merger of the firm's Tarkwa mine with neighbouring Iduapriem, owned by AngloGold Ashanti. Fraser said previously Ghana's complex political environment, troubled with sovereign debt concerns, would be an obstacle, and so it has proved as the deal was first announced in March last year.
