INVESTORS AND MEDIA In the news
JOHANNESBURG (miningweekly.com) – Gold mining company Gold Fields on Thursday reported that its South Deep gold mine in western Gauteng had commenced a staged incremental ramp-up plan, which included recalling employees, making the mine safe and implementing Covid-19 standard operating procedures.
The initial plan would be to operate at employment levels of 50%, with employment levels beyond that being subject to further South African government restrictions being lifted.
Lost production at the mine was expected to be up to 32 000 oz, or 1 000 kg, over the entire period of the lockdown and ramp-up, should South Deep be allowed to build up to full production by the end of May.
South Deep, which produced 61 000 oz at an all-in sustaining cost (AISC) of $1 227/oz, or R592 925/kg, was continuing to perform ahead of expectations and was generating meaningful cashflow, the Johannesburg- and New York-listed company stated in a news release to Mining Weekly.
Gold Fields' group guidance for the year is marginally down to production of between 2.2-million ounces and 2.25-million ounces, at an unchanged AISC of between $920/oz and $940/oz. Only South Deep and Cerro Corona in Peru were expected to have Covid-19-related production losses, the release stated.
During the three months to March 31, Gold Fields, headed by CEO Nick Holland, recorded no fatal accident at its operations compared with one fatality for the 2019 full year.
Holland, CFO Paul Schmidt, chairperson Cheryl Carolus and other directors and executives have voluntarily donated one-third of their salaries or fees for a three-month period to South Africa's Solidarity Fund, which supports government programmes to fight Covid-19, as well as other pandemic relief programmes.
South Deep has contributed R15-million to the Solidarity Fund, with the mine executives and employees to date donating more than R1-million in their personal capacities.
While the total recordable first-quarter injury frequency rate regressed to 3.39, compared with the 2.19 average for 2019, this was the result of a higher number of less serious incidents. The number of serious injuries at two and the number of lost-time injuries at nine were significantly lower than the same category of injuries in the fourth quarter of last year.
Gold Fields described its first-quarter operational start as solid with all regions tracking the annual production and cost guidance.
While most of our operations had continued to operate largely as normal, production at South Deep and Cerro Corona would likely be impacted by Covid-19 stoppages in this current second quarter.
Group first-quarter attributable equivalent gold production was largely flat year-on-year at 537 000 oz at an all-in cost of $1 060/oz.
The Australian region produced 237 000 oz at an AISC of $876/oz. Ghana mines produced 194 000 oz at an AISC of $1 105/oz. Cerro Corona produced 62 000 oz at an AISC of $714 a gold equivalent ounce.
STRONG FINANCIAL POSITION
As at March 31, Gold Fields had $800-million in cash on hand and more than $1.5-billion of committed, unutilised debt facilities, with its net debt balance, excluding leases, decreasing to $957-million from $1 331-million at the end of 2019.
After the end of the first quarter, Gold Fields entered into two new R500-million revolving credit facilities with two South African banks that mature in April 2023 and replace the two facilities expiring next month.
To date, the impact of the pandemic had been operationally muted, with production only slightly affected, but with the possibility of further lockdowns, which might lead to production disruptions in future.
South Africa's lockdown had resulted in South Deep mine being placed on care and maintenance from March 27 to April 19, with the majority of home-based employees continuing to receive their base pay.
While the national lockdown was extended by a further two weeks to the end of April, mines were allowed to operate at a maximum capacity of 50% of employees.
Peru's two curfew extensions had restricted Cerro Corona to about 30% of the 700 workforce being focused on essential services and processing stockpiled material. Restrictions would likely result in 50% to 60% of the workforce being on site in May, increasing to 80% in June and returning to full capacity by the end of June. This would likely result in a gold equivalent production impact of 30 000 oz.
The Tarkwa and Damang mines in Ghana had continued to operate at normal levels and production had not been impacted, with partial lockdown now lifted.
While Australia was not under full lockdown and the mines operating a normal levels, interstate travel had been halted and flights within Western Australia restricted to a degree. Most employees living outside of Western Australia were now temporarily based in Perth, with flights being de-densified.
In Chile, a three-month curfew-based lockdown had not stopped camp expansion project activities at Salares Norte from continuing, but noncritical employees had been demobilised.
CORPORATE EMPLOYEES OPERATING FROM HOME
All corporate office employees would continue to work from home until South Africa's lockdown period was lifted while Gold Fields' operations around the world had contributed to campaigns to prevent Covid-19 spreading by funding government initiatives, continuing to support employees and suppliers, and investing in healthcare programmes in communities.
The mine has been on care and maintenance since the beginning of the lockdown in South Africa on March 27, which requires only about 7% of employees to be on duty for basic maintenance. The mine continued to pay base wages to all staff at a cost of R96-million and also paid R22-million to small contractors and service providers. It is continuing to pay the base wages to the 50% of the workforce that are not yet allowed back at the mine until end-April, at a further cost of R60-million, while small businesses are receiving a further R17-million during the last two weeks of April.
Gold Fields Ghana region has contributed over $830 000 in Covid-19 funding, its Australia, region $150 000 and its Peru region $162 000.