Gold Fields chief executive asks for more as investors get impatient
JOHANNESBURG - Gold Fields shareholders getting impatient over the company’s failure to stem losses at the huge South Deep deposit in South Africa shouldn’t lose hope, said Chief Executive Officer Nick Holland.
Gold Fields said in August it’s embarking on yet another turnaround plan at the operation, its only one left in South Africa. South Deep’s disappointing performance has been a drag on the company for years and management is aware that investors are getting fed up, Holland said in an interview.
“They are now very impatient, and one can understand it but I think we need to calmly look where we are and evaluate the best way forward,” he said. “There is a large resource base there, it’s well-drilled and we have spent a lot on infrastructure development costs. We are not far away, we just need more time.”
South Deep is the world’s second-largest known body of gold-bearing ore but output targets have been repeatedly missed. The company has sunk more than R9 billion into the mine in addition to the R22bn it paid to buy the asset in 2006.
The next milestone will be the announcement of a new plan in February and the company will probably need about 18 months after that to assess whether it’s working, Holland said.
To be sure, South Deep’s challenges aren’t unique in South Africa and other gold producers aren’t making money either thanks to persistently high costs, Holland said.
The country’s deep, aging mines and labour intensive mining methods keep pressure on expenses and South African gold production fell for a 10th consecutive month in July. The decline is being compounded by a shortage of investment in exploration, Holland said.