Drop in earnings forecast for Gold Fields

By Dineo Faku Time of article published Aug 5, 2019

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Gold Fields expects its earnings to decrease 15 percent in the six months to June, despite higher metal production after including Ghana’s Asanko Gold Mine in its numbers during the period under review.

JSE-listed Gold Fields, which operates the South Deep mine in Carletonville that has suffered operational difficulties, said on Friday that headline earnings per share for the period under review were expected to be up to 15 percent lower compared to the previous period last year.

It said basic earnings per share for the six months would jump by 122 percent following the basic loss of US45 cents per share reported for the comparative period last year.

Gold Fields said it would have reported a 9 percent year-on-year increase in equivalent gold production to 1083 ounces mainly due to output from Asanko Gold, acquired last year.

Gold Fields benefited from Asanko’s record gold production and record gold sales in the second quarter.

Asanko chief executive Greg McCunn said the second quarter had been the best performance for the Asanko gold mine to date, with record production, record sales and record gold proceeds, which enabled the mine to generate earnings before interest, tax, depreciation and amortisation of $35.2 million (R520.49m) and net income after tax of $13.6n, up from a loss of $14.1m in the first quarter this year.

“We are well-positioned to meet 2019 production and cost guidance as we enter the second half of the year and focus on maximising cash flow from operations,” said McCunn.

Gold Fields bought a 50percent stake in Asanko Gold Ghana’s 90 percent interest in the Asanko Gold Mine last year whose assets comprises two main deposits, Nkran and Esaase, and is estimated to have an average annual production of 253000 ounces of gold for the period between 2019 and 2023.

Gold Fields has surged 50 percent on the JSE to date thanks to the strong gold price, which rallied in June, breaking through $1400 an ounce for the first time since 2013 driven by expectations of lower interest rates, political uncertainty with support from strong central bank buying.

Alistair Hewitt, the head of Market Intelligence at the World Gold Council, said June was a big month for gold.

“The price broke out of a multi-year trading range to hit a six-and-a-half-year high and gold-backed ETF assets-under-management grew by 15 percent - the largest monthly increase since 2012. While the Fed’s dovish turn was a key driver for this, it also builds on a strong first half which saw gold demand hit a three-year high, underpinned by extremely strong central bank buying,” said Hewitt.

Gold Fields said costs were 5 percent lower year-on-year as project capital started to decrease. The company is scheduled to release its financial results for the period on August 15.


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