Gold miner Gold Fields delivered solid operating results for the six months ended June 30, despite various challenges.
The company’s attributable production decreased by 4% year-on-year, in line with expectations, while all-in sustaining costs (AISC) increased by 3%, the company stated on August 17.
During a conference call to discuss the company’s unaudited interim results for the six months, interim CEO Martin Preece stated that the lower production was mainly owing to a dip in production from the Damang mine, in Ghana, which is near the end of its mine life.
“We’ve reported a financial adjusted pre-cash flow of $140-million, and all-in costs are only up by 10%, year-on-year. Gold Fields CFO Paul Schmidt – who has announced his intention to proceed on early retirement – has done a great job in helping contain our costs.
“For our balance sheet, we’ve seen a $24-million increase in net debt, largely driven by the Windfall initial payment of $222-million, and then the dividend payment of $215-million.
“We’ve also seen a slight increase in our debt to earnings before interest, taxes, depreciation and amortisation (Ebitda) ratio from the end of the year, which is 0.42. This assures me that we’re working hard to decrease this ratio by the end of this year,” he added.
He also enthused that Gold Fields declared an interim dividend of R3.25 a share, equating to 35% in normalised earnings.
JOINT VENTURES
Preece also stated that Gold Fields has initiated the proposed Tarkwa/Iduapriem joint venture (JV) in Ghana with its partner gold miner AngloGold Ashanti.
Once this JV is approved by the Ghanaian government, it will result in a material increase in Gold Fields’ production and a reduction in AISC.
“We are engaging with the government of Ghana. AngloGold Ashanti is reviewing the two operational teams, and the technical and finance teams are making progress.
“In our initial talks with government, we hope that eventually we’ll be able to report on progress with that. We also announced the partnership with Osisko Mining to develop the Windfall project in Canada in May, which we’re pleased with as it’s a foothold into the Canada market. We will commence and finalise permitting hopefully by the fourth quarter of next year, and then we can start building that into production,” Preece noted.
An environmental-impact assessment was submitted in March this year, and is expected to take 12 to 18 months to be approved.
Preece also pointed out that the company was expecting first production from its Salares Norte project, in Chile, during the fourth quarter of this year, ramping up next year.
The project’s capital expenditure remains on track to meet revised guidance of $1.02-billion.
ESG AND TAILINGS STANDARDS
Preece confirmed that earlier in August, Gold Fields submitted its first Global Institute of Tailings Management (GISTM) report, which the company had committed to implementing at its tailings dams.
This includes three dams at the Tarkwa mine, which have a ‘very high’ consequence classification, and one dam at the Cerro Corona mine, which has an’extreme’ consequence classification.
The disclosure reports show that all four of Gold Fields’ priority tailings storage facilities partially conformed to the GISTM.
Gold Fields has addressed all elements related to material dam safety and the environment, but has also identified areas for further improvement, the company stated in a release on August 17.
The areas for improvement are related to community engagement and consultation and addressing human rights risks with respect to emergency response and preparedness.
“We are proud of the work our teams on the ground and our technical teams have done with those reports, and they’re happy to report that there’s no material dam safety compliance issues.”
In terms of other environmental, social and governance (ESG) elements, he also noted that Gold Fields did report one fatality and three serious injuries during the first half of this year.
The fatal incident involving a contractor happened at Tarkwa mine in the first quarter of this year.
“This is certainly front and centre for us. We have deliberated on this incident at Perth with our board as to how we reverse this trend.”
CFO RETIREMENT
Gold Fields has confirmed that Schmidt has advised the board of directors of his intention to retire. He has, however, agreed to remain with the company while the board undertakes a recruitment process to identify and appoint a successor.
Schmidt joined Gold Fields in 1996 and was appointed CFO in 2008. He joined the board as an executive director in 2009.
“We thank Schmidt for 27 years of long and dedicated service. During his tenure we’ve seen remarkable transformation of this company from a South Africa-focused gold miner to a global miner operating in multiple continents, and certainly in a very different place to when Paul started here.
“Without his guidance and support, this would have been far more difficult. He carries an immense amount of knowledge of this business and has been invaluable in helping steer us into what’s been a fairly good position over the last eight to nine months”.
“We’re proud of our teams on the ground, despite strong inflation pressures. We’ve had some challenges with production, particularly at the South Deep mine, but have managed to improve this.
“We’re managing to keep our guidance for production in line for the year. We are making progress on the important ESG metrics that we’ve discussed, so that is something we believe is a differentiator and something to be proud of,” Preece noted.
