Gold Fields stock slips on update

Gold Fields expects earnings for the year to end-December to plunge as much as 81% as a result of a damaging six-week strike at its South Deep mine.

Gold Fields expects earnings in the year to end-December to plunge as much as 81% as a result of a damaging six-week strike at its South Deep mine.

The miner expects headline earnings per share for the year to end-December of 5-9 US cents. This sent the company’s share price as much as 4% lower, before losses were pared.

Gold Fields had reported at the time that it was losing R6m a day as a result of the strike at South Deep, which is its only asset in SA. The strike in November by the National Union of Mineworkers was prompted by the miner’s ongoing restructuring at the mine.

The company had announced retrenchments as it grappled with a mine that was losing R100m a month. Gold Fields CEO Nick Holland said after the strike ended in December that the company was in a position to “significantly reduce” monthly cash losses at the mine.

A R481m impairment at South Deep had also weighed on results, the company said on Wednesday, as had retrenchment costs related to South Deep. An impairment refers to the negative revaluation of the value of an asset.

Gold Fields, however, reported that its production of 2.04-million ounces had exceeded its November forecast of two-million ounces. It had produced 2.16-million ounces in its 2017 financial year.

All in sustaining costs were expected to be $981/oz in the year to end-December, compared to the prior comparative period’s $955/oz. The gold price was depressed during the company’s financial year ending 2018, 1.54% weaker than it had started, at $1,282.53/oz.

A weaker rand had, however, lifted many mining stocks on the JSE in 2018, falling 13.75% against the dollar in the course of the year.

Gold Fields share price closed 1.59% lower at R49.59 on Wednesday, having gained 0.51% so far in 2019.