Gold Fields lists good and bad news
● Bullion producer Gold Fields poured its first gold from the Salares Norte mine in Chile this week, but warned that severe weather conditions in Australia and Peru, coupled with operational challenges in SA, impacted production in the first quarter of 2024.
The group expects lower-than-planned gold production of between 460,000oz and 470,000oz in the first quarter of 2024, after the weather-related events abroad and a fatality that impacted “operational momentum” at South Deep outside Johannesburg.
Gold Fields said all the Australian operations were impacted by the recent severe weather conditions, but Gruyere, 200km east of Laverton in Western Australia, had been particularly hard hit.
“Rainfall in the region resulted in the damage and closure of the Laverton Shire roads, which provide access to the mine.”
Operations at Gruyere, a 50-50 joint venture with Gold Road Resources in Western Australia, were suspended on March 5 and the plant continued to process lower-grade stockpiles until March 28.
“The access road remains closed with no firm date on when it will reopen. Gruyere has opportunistically brought forward a three-day shutdown ... and is assessing options to bring fuel and supplies in via alternative routes to enable a resumption of the operations,” the company said.
In Peru, production at Cerro Corona was also affected by inclement weather that impacted the north wall of the pit.
Despite the challenges, Gold Fields said 2024 annual group production and cost guidance for 2024 remained unchanged at between 2.33Moz and 2.43Moz of gold production, while all-in-sustaining costs were expected to be $1,410 to $1,460 an ounce over the year ahead.
It said the first gold production from Salares Norte was a milestone given that the group had taken the mine from discovery through exploration and development to production over the past 13 years.
CEO Mike Fraser said Salares Norte was a world-class project with one of the industry’s lower cost profiles and a payback period of less than three years at current gold prices.
“It presents significant growth and value uplift for our portfolio and adds meaningfully to the cash flow profile of Gold Fields over the next few years,” Fraser said.
The production at Salares Norte comes after several delays since its construction including the impact of Covid, adverse weather conditions, supply chain constraints and construction labour scarcity.
According to the 2023 integrated annual report released this week, Gold Fields spent capex of $398m (R7.4bn) on Salares Norte in 2023, up from $297m a year earlier, mainly on processing plant construction activities. The group expects the mine to ramp up to steadier levels by early 2025, and production of 250,000oz in 2024 and 580,000oz in 2025.
While Salares Norte is expected to bolster Gold Fields’ production, Australian assets were expected to continue producing 1Moz a year until the end of the decade. According to the annual report, group-attributable mineral resources declined to 30.3Moz from 31Moz in 2022, primarily due to depletion and cost inflation.
The group’s largest mine, Tarkwa in Ghana, is expected to continue delivering about 500,000oz a year for at least the next 10 years.
Gold Fields said it was making progress in negotiations with the Ghanaian government for the approval of the proposed Tarkwa/Iduapriem joint venture with AngloGold Ashanti
“If approved, we expect to further leverage operating efficiencies to unlock higher production rates and grades to extend the life-of-mine of the combined operation to at least 18 years, making this a cornerstone asset in our business,” it said.
Gold Fields shot the lights out in 2023 on the back of a gold price that has been rising steadily since 2015 and has been on an upward spike since 2019.
The gold price ended 2023 at just over $2,078 an ounce, a record-high year-end close. By late March 2024, gold was trading at levels of over $2,200 an ounce. In 2023 Gold Fields’ normalised earnings climbed 5% year on year to $900m.