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As the company reaps the benefits of its $500m investment plan, it remains firmly on track to deliver 2-million ounces of gold in 2019
Gold Fields will reach its 2-million-ounce gold production target in 2019 as it reported a jump in first-quarter output and as new projects and partnerships delivered metal.
Gold Fields, which is domiciled in SA but has just one mine in the country, has spent $500m over the past two years on its Damang mine in Ghana and Gruyere in Australia to reach the 2-million-ounce target and to lower group production costs.
In the first quarter of 2019, Gold Fields lifted gold output to 542,000oz compared with 490,000oz in the same period a year earlier.
Total all-in costs fell to $1,080/oz from $1,150/oz. The average received gold price was $1,298/oz, little changed from a year earlier.
Gold Fields was on track to meet its forecast increase of between 4% and 7% in gold output for the year, targeting between 2.13-million and 2.18-million ounces at an all-in cost of up to $1,095/oz.
“The year will, however, be one of two halves, with both production and cash flow being weighted to the second half of 2019,” it said.
In its quarterly update, which gave a snapshot of production performance and did not include any financial information, Gold Fields noted its net debt had stabilised at $1.6bn, the same as at the end of 2018.
Gold Fields expects the all-in costs for the group to fall to $900/oz by 2020/2021, “a level which we feel is required to be competitive on a global scale”, said CEO Nick Holland.
“The key motivation behind the investment focus is to ensure that our portfolio of mines continues to generate cash sustainably into the foreseeable future, while at the same time lowering our costs and extending mine life,” he said in a statement.
In addition to the existing portfolio, Gold Fields will make a decision by mid-2020 on whether to build an R11.6bn mine at Salares Norte in Chile.
The closely watched South Deep gold mine in SA, the most difficult asset in the group, generated 34,000oz in the quarter, which Holland said was in line with the group’s plans for the mine for 2019.
At Damang, a remaining $46m needs to be spent during the course of 2019, with the bulk due to be spent in the second quarter. Damang produced 57,000oz of gold at an all-in cost of $1,027/oz.
Damang is ramping up and it generated 40,000oz of gold in the December quarter at an all-in cost of $1,601/oz. All-in costs include capital expenditure.
The Gruyere mine Gold Fields shares equally with Gold Road Resources in Australia was on track to pour its first gold in the June quarter. The mine will cost A$621m.