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South Deep soars, Gold Fields spawns $123m cash, ups dividend - Mining Weekly

Thursday, 18 February 2016

JOHANNESBURG  Production at the South Deep gold mine rose 24% in the last three months of 2015 to almost double the output for the corresponding period of the previous year, Gold Fields said on Thursday.

In presenting yearly as well as fourth-quarter (Q4) financial results, Gold Fields reported a half-year production leap at South Deep of 71% compared with 2014.

The JSE- and New York-listed company announced normalised earnings of $15-million for the December quarter compared with $22-million for the September quarter.

A final dividend of 21c a share will be paid on March 14, giving a total 25c a share dividend for the year, which Gold Fields CEO Nick Holland described as “challenging”, owing to the dollar gold price falling $250/oz through the course of the year, to close at the $1 050/oz level.

However, weakening commodity currencies provided some offset, which combined with ongoing cost-saving initiatives and efficiency improvements to enable the company to generate net cash flow of $123-million for the year.

Holland singled out South Deep for making good Q4 progress in producing 68 000 oz, or 2 119 kg, of gold, driven by a 20% increase in tonnes and 4% better head grade from underground sources.

As a result, South Deep’s Q4 all-in costs (AIC) fell 19% to $1 156/oz with more improvement guided in the first quarter of this year.

Group attributable equivalent gold production for the year was within 1% of original guidance at 2.16-million ounces, which was down on 2014’s 2.22-million ounces, and all-in sustaining costs (AISC) and AIC bettered guidance at $1 007/oz and $1 026/oz.

Group AISC decreased by 2% quarter-on-quarter to $929/oz and AIC by the same percentage to $942/oz.

South Deep’s AISC fell 14% to $1 095/oz, or R495833/kg, on higher gold sold.

In the West Africa region, AISC and AIC fell 4% in Q4 but in the South America region, AISC soared 72% to $1 285/oz on less gold sold, the copper price decrease and higher capital expenditure.

Total AIC per equivalent ounce increased 47% to $1 073 per equivalent ounce for mainly the same reasons.

Ghana’s attributable Q4 gold production fell 3% to 174 000 oz on lower production at both Tarkwa and Damang. However, AIC was 4% lower quarter-on-quarter at US$925/oz.

Tarkwa had a difficult year-end, following a fatality, and various options are being evaluated for Damang for reporting before mid-year.

Australia produced 6% more Q4 gold at 263 000 oz on better output at St Ives and Agnew/Lawlers, pushing AIC down 5% to $819/oz.

The Australian region generated $86-million of net cash flow, up from $64-million in Q3.

Production at St Ives rose 20% and production at Agnew/Lawlers by 14%.

Lower grades mined at Granny Smith resulted in a 12% gold production fall while production at Darlot was 3% lower.

The Australia region increased its exploration spend to A$91-million as part of a three-year strategy to increase reserves and resources at the various operations.

In additional to exploration drilling to increase current orebodies, activity was also focused on developing new targets on the prospective leases.

Group net debt has been lowered to $73-million and guidance for 2016 is gold production equivalent of between 2.05-million ounces and 2.10-million ounces, with decreases in the international operations partly offset by the growth in production at South Deep.
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