Gold Fields shrugs off falling gold price to post profit

GOLD FIELDS said yesterday that net earnings attributable to shareholders improved considerably in the second quarter of 2015 to R155 million compared with a net loss of R180m in the first quarter after it sold 10 percent more gold, despite this being at a lower price.

Gold Fields, which will pay an interim dividend of four cents on September 14, said revenue in the quarter to June rose 8 percent to $660 million.

“While the fall in the gold price in recent weeks is of deep concern, we do not believe that Gold Fields needs to make structural changes to our business at this juncture,” chief executive Nick Holland said, adding that currency weakness provided some respite.

Gold Fields said normalised earnings for the second quarter improved to $22m from a loss of $13m in the preceding quarter.

The company sounded an optimistic note on South Deep, its sole remaining gold mine in South Africa, where it said “green shoots were starting to emerge” after a “planned slower start to the year”.

After a difficult 2014 and the introduction of a new management team, the company said it had decided at the start of this year to “take a step back and get the basics right at South Deep to ensure a much stronger foundation for sustainable growth in the future”.

Gold production at South Deep increased by 7 percent from 36 300 ounces in the March quarter to 38 700 ounces in the June quarter.

Bucking the trend of declining employment in the mining industry, the company said it had identified the need for an additional 160 skilled employees across all levels at South Deep.

About 75 percent of these employees had already been recruited by the end of June.

Another “positive development on the labour front” was the signing of the threeyear wage deal until March 2018, “which should give South Deep a degree of stability as the mine builds up”.

The group maintained its full year production guidance of about 2.2 million ounces, but cut its production target for South Deep mine to around 6 500kg from 7 100 kg, principally due to the deliberate focus to “fix the base for a sustainable longterm future”.

The company appears to have escaped US sanction over its R2.1 billion black economic empowerment deal. – ANA