Do or die for South Deep
Gold Fields hopes the restructuring of the operation will put it back in the black — but some investors are sceptical
South Deep, Gold Fields’ last remaining SA asset, has hurt it yet again.
The company and its longsuffering investors hope it will be for the very last time.
In its results for the year ended December 2018, released last week, Gold Fields said production across the global gold mining group slipped 3%, while revenues were 7% lower.
Losses for the year slid to $348.2m, compared with $19m the year before.
Much of it has to do with South Deep. Though it has one of the world’s largest gold deposits, the mine hasn’t reached production targets for a long time and has proved to be a black hole for
Gold Fields cash, guzzling about R100m a month.
The mine was massively restructured in 2018 — a painful and costly process — and Gold Fields expects to see the benefits, soon.
This involved retrenching 1,100 employees and as many as 500 contractors.
It also resulted in the closure of some lower-grade areas.
“It is the first time we’ve done something like this at South Deep and we believe it’s set us up to have a new start at the asset,” said longtime Gold Fields CEO Nick Holland at the results presentation.
For the SA operation, it’s do or die now.
All Gold Fields wants from South Deep in 2019 is that it breaks even.
But what if it doesn’t, analysts asked Holland at the presentation.
“We’ve asked ourselves that question, our board has asked us that question,” he said. The major restructuring — which has never been done before — has left Gold Fields feeling like it has to give it a go. “But that’s not to say we can continue just putting money into this month after month,” he said.
“I have no appetite to do that.
I’m also a shareholder in this company. And if we’re going to have a repeat of that, there won’t be a future. There has to be a step change, and soon.”
Gold Fields says it will implement a number of initiatives at
South Deep including improved drilling and blasting, rigorous