Gold Fields, the international gold miner, continues to showcase exceptional production performance from its South Deep mine in South Africa, which unfortunately could not compensate for a portfolio of struggling assets and financials in the company’s December 2015 quarter.
There has been a decrease in normalised earnings of US$15 million for the December 2015 quarter compared with $22 million for the September 2015 quarter and US$17 million for the December 2014 quarter.
Net losses attributable to Gold Fields' shareholders for the quarter is $258 million compared with net earnings of $18 million for the September 2015 quarter and net losses of $26 million for the December 2014 quarter.
“2015 was another challenging year for the gold industry, with the US$ gold price peaking at around $1 300/oz in January and then falling approximately $250/oz through the course of the year, with much volatility, to close 2015 at the $1 050/oz level,” says Gold Fields’ CEO Nick Holland.
Q4, 2015 attributable equivalent gold production was 566koz (up 2% quarter on quarter), with all-in sustaining costs (AISC) and all-in costs (AIC) down 2% quarter on quarter to US$929/oz and US$942/oz, respectively.
Production from South Deep was 24% higher quarter on quarter at 68 000 oz), on the back of a 42% quarter on quarter increase in Q3, 2015.
For FY15, attributable equivalent gold production for the group was 2.16 Moz (FY14: 2.22Moz), within 1% of the original guidance provided in February 2015.
AISC and AIC came in below 2014 and better than both the original (February 2015) and revised (November 2015) guidance at $1 007/oz (FY14: US$1 053/oz) and $1 026/oz (FY14: US$1 087/oz), respectively.
Strong end to the year at South Deep
South Deep’s improved quarter was driven by an increase in tonnes (+20% quarter on quarter) and head grade from underground sources (+4% quarter on quarter).
Q1, 2016 is expected to be lower quarter on quarter due to the Christmas holidays, however, it is expected to be better than Q1, 2015 as a result of the back to basics approach adopted during the past year.
2016 guidance and outlook
For 2016, we expect attributable equivalent gold production of between 2.05 Moz and 2.10 Moz, with decreases in the international operations partly offset by the growth in production at South Deep.
Notable changes in 2016 include a reduction in production from the Australian region to around 905 000 oz; the negative impact of the lower copper price on Cerro Corona’s equivalent gold production (reduction to around 260 000 oz); lower production from Damang given the review currently underway; and a 30% increase at South Deep to around 257 000 oz.
This increase is expected to be driven mainly by an increase in available working places; an increase in productivity; fleet expansion; and grade improvements.
"For Gold Fields, weakening commodity currencies provided some offset to the weaker US$ gold price. Combined with on-going cost saving initiatives and efficiency improvements, the Group generated net cash flow of $123 million for the year. This performance, driven by our strong international portfolio, has enabled Gold Fields to meet its commitments of paying dividends and improving the balance sheet,” Holland states.