Gold Fields: no capex change

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IOL BR mining PIC001 Reuters.

Gold Fields, the world's fourth-largest gold producer, will stick to its project pipeline and capital expenditure plans even as other global miners trim back, provided gold stays over $1,500 an ounce, its chief executive said on Thursday.

BHP Billiton, the world's biggest miner, will likely delay at least two mega projects after the icing of an $80 billion plan to grow its iron ore and other operations in the face of cooling commodity prices.

Gold has not been spared the commodity sell-off, hitting 4-1/2 month lows on Wednesday which took it further from the record peaks over $1,900 an ounce it scaled last year.

But it remains over $1,500 an ounce and Gold Fields' chief executive Nick Holland said a 14 billion rand ($1.69 billion) capex plan for this year remained in place as a result.

Gold rose more than 1 percent on Thursday to hit a session high of $1,557.56 an ounce as weaker prices attracted new physical buyers.

“We are using $1,500 an ounce as a long-term price for our project evaluation and nothing has changed to indicate that we should use anything different,” he told Reuters after the group unveiled first-quarter profits that fell from the previous quarter but beat forecasts.

“If we are using what I believe are reasonably conservative gold prices against that then I think we are going to be okay.”

The group's project pipeline includes developments in Peru, Ghana and the Philippines and a platinum prospect in Finland that Holland said might eventually produce 300,000 to 400,000 ounces a year in platinum group metals.

Gold Fields on Thursday reported an 18 percent fall in quarterly earnings as output and the bullion price in South African rand both fell.

TAX BENEFIT

But it became the latest South African gold producer to beat expectations as it reaped the benefit of a change in the tax formula for the industry that has seen the marginal rate fall to 34 percent from 43 percent.

Chief Financial Officer Paul Schmidt told journalists the group benefited by almost 1 billion rand because of the tax change in the quarter but most of that was cancelled out by higher rates in Ghana, leaving an effective net gain of 255 million rand.

The group's adjusted earnings per share fell 18 percent to 300 cents from 368 cents in the previous quarter, above a Reuters poll of seven analysts that had forecast 273.7 cents.

The group's 2012 production target is 3.5 million ounces.

Earnings were constrained by the rand gold price.

While the dollar gold price added 6.7 percent in the period, the average rand gold price fell 4 percent because of the local currency's appreciation against the greenback. Cash operating costs rose 13 percent to $830 an ounce. - Reuters


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