Workers seen underground in Gold Fields' South Deep mine outside Johannesburg. Picture: Supplied.
Gold Fields chief executive Mike Fraser is pinning hopes of a rebound in the company’s production for this year in the second half to December after the company’s output fell 20% in the interim period to June, driving down earnings and dividends.
Stocks in the company fell 7.8% to R261.64 per share on the JSE on Friday, after Gold Fields paid a lower interim dividend of 300 cents compared to 325 cents per share in the previous contrasting period.
The share losses in the company on Friday were in extension of its stock’s 9.58% and 11.64% in the past seven and 30 days respectively amid record high gold prices.
Softer gold production marked Gold Fields’ undoing in the half year under review, with output falling by 20% to 918 000 ounces.
Fraser attributed this to “unplanned events, the delayed ramp-up at Salares Norte and the backfill issues at the South Deep” operations. He is, however, hopeful that in the second half year to December, Gold Fields will turn around the lower performance.
“I am confident of an improved performance in the second half of the year as we implement enhancements to our safety processes and systems, progress ramp-up of Salares Norte and realise the benefits of operational recovery plans under way at South Deep, Gruyere, St Ives and Cerro Corona,” said Fraser in an interview with Business Report.
Gold production during the interim period to June had been impacted by weather-related events and operational challenges, he added.
Moreover, for Gold Fields, the lower gold output also significantly impacted unit costs. All-in costs (AIC) for the company soared by 47%, compared to the previous same period, to $2 060 (R36 482) per ounce.
All-in sustaining cost also surged 44% year on year to $1 745 per ounce.
The gold miner, however, expects both these cost indicators to improve in the second half of the year on the back of expected delivery of higher production volumes. This would subsequently likely result in an uplift in the company’s earnings.
In the half-year period to June, normalised earnings in Gold Fields were lower by 22%, at $355 million or $0.40 per share, compared to $454m or $0.51 per share a year earlier.
Gold Fields recorded adjusted free cash outflows of $58m, after accounting for costs and project capex, compared to an inflow of $140m in the previous contrasting period.
The company’s mines generated adjusted free cash flow from operations of $321m compared to $482m a year ago.
“Our balance sheet remains robust with a net debt to EBITDA ratio of 0.53x at the end of June 2024,” said the company.
However, net debt increased by $129m to $1.153b, driven by $42m in Windfall pre-construction capital and the $199m final dividend payment.
In May 2024, Gold Fields repaid its $500m 2024 bond using a combination of cash and undrawn facilities, leaving it with a capital structure consisting of a $1.2bn sustainability linked revolving credit facility of which $534m is undrawn, a $500m bond, which matures in 2029, and $528m in cash.
BUSINESS REPORT