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Gold Fields doubled its interim profit and paid shareholders a dividend equivalent to that for the entire previous year as new production and a higher gold price offset disruptions to its mines from the Covid-19 pandemic.
Gold Fields reported after-tax profit of $161m (R2.77bn) for the six months to end-June 2020, compared with $79m for the same period a year earlier.
It declared an interim dividend of R1.60 a share, which was the same as the R1.60 for the entire 2019.
Gold Fields benefited from a higher gold price during the period and expects the record-high dollar price of more than $2,000/oz in recent weeks to feed into its full-year financials.
“We expect to use the strong cash flows generated by the business to continue to de-lever the balance sheet, pay dividends in line with our policy and fund the construction of Salares Norte,” it said of its new project in Chile.
Gold Fields raised $250m in an equity issue to fund Salares Norte.
Full-year production guidance was lowered by 65,000oz to 75,000oz.
Output is expected to be between 2.275-million oz and 2.315-million oz because of the pandemic’s disruption to mines in SA and Peru.
Gold Fields kept group production steady at 1.087-million oz year on year as the new Gruyere mine in Australia reached commercial production levels in September 2019. Gold Fields owns 45% of the mine.
Australian production grew by 14% to 494,000oz, by far the biggest source of gold for the company.
Gold Fields switched the production month-ends of all of its mining operations to coincide with calendar months instead of using the global industry-standard production month-ends of the 20th day of each month.
This meant the interim reporting period included an extra 10 days of production as it adjusted its method in a one-off process that changed nothing apart from the way of reporting on its output for the future. It will not be repeated in the second half.
These 10 extra days came from December 21 2019 year to year-end to establish a base for the future.
This adjustment added 45,000oz of gold production to the group’s reportable output, offsetting the 42,000oz lost to disruptions from Covid-19 at its South Deep mine in SA and the Cerro Corona mine in Peru, which shed 24,000oz and 18,000oz respectively in the six months.
The cost of the pandemic added $20 per ounce to all-in sustaining costs, which increased by 11% for the interim period to $987/oz.
Gold Fields lowered its full-year output at South Deep by one tonne to seven tonnes of gold because of disruptions to staffing levels at the mine, difficulties in returning employees from neighbouring countries and infection rates.
Interim revenue grew to $1.75bn from $1.38bn. Net debt fell to $1.24bn from $1.66bn.