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Gold Fields on track with 2022 guidance despite global challenges

GOLD Fields CEO Chris Griffith said: “As we finally seemed to have overcome the worst of Covid-19 around the world, the invasion of Ukraine by Russia has had a material impact.”

GOLD Fields CEO Chris Griffith said: “As we finally seemed to have overcome the worst of Covid-19 around the world, the invasion of Ukraine by Russia has had a material impact.”

Published May 6, 2022

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Gold Fields yesterday flagged a 7 percent increase in its first-quarter production with its guidance for the year unchanged.

This despite higher inflation, driving up costs, amid global challenges.

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Gold Fields, which operates gold mines across three continents, said in its operational update for the quarter ended March 31, 2022 that output rose to 580 000 ounces from 541 000 ounces compared to the previous year.

While its Ghana operations reported a decline of 5 percent in production, its South African, Australian and Peruvian operations increased production.

The Australian region produced 258 000 ounces, up 10 percent year on year (y/y). Production at Cerro Corona in Peru was 56 000 ounces (gold equivalent), up 21 percent y/y, and South Africa continued the strong momentum from second half 2021, with first quarter 2022 production of 78 000 ounces and 31 percent higher y/y.

Gold Fields CEO Chris Griffith said: “As we finally seemed to have overcome the worst of Covid-19 around the world, the invasion of Ukraine by Russia has had a material impact. Despite the devastation caused by any form of war, the world is being plagued with heightened inflation, driven by high oil and gas prices and more broadly, higher commodity prices.”

The company said its all-in sustaining cost (AISC) was $1 150 (R18 134) per ounce, up 7 percent from a year earlier.

“High commodity prices have driven inflation in energy costs, logistics and consumables. While we expected the mining sector to be challenged by high inflation at the start of the year, the impact has been worse than initially expected,” Griffith said.

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Gold Fields said its net debt at the end of the quarter was $984 million, compared to $969m at the end of December 2021, primarily driven by the payment of the final dividend of $153m and a non-controlling interest holder’s dividend of $14m.

“The group generated free cash flow of $161m in quarter one 2022. The net debt to earnings before interest, taxes, depreciation, and amortisation (Ebitda) at the end of the quarter was 0.39x, largely unchanged QoQ (quarter on quarter),” Griffith said.

The company said its balance sheet remained in a very strong position.

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Gold Fields said in April that ratings agency Moody’s Investor Services had affirmed its Baa3 issuer rating and changed the outlook to stable from negative following the rating affirmation of South Africa’s Ba2 government rating and change of outlook to stable from negative.

Gold Fields said its Salares Norte project in Chile, which is behind schedule due to Covid-19-related absenteeism, remained on track for first gold production at the end of Q1 2023.

It said $77.5m was spent on the project during the quarter, comprising $6m in capex, $9.2m in exploration, $4.3m in investment in working capital and $2.8m in other cost, partially offset by a realised gain of $1.8m on the forex hedge.

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The company said given the solid operational performance in quarter one 2022, it was on track to achieve its production guidance for the year provided in February 2022.

“As indicated earlier, inflation has been higher than initially expected as shown, however, the higher-than-expected copper by-production credit has partially offset the higher cost inflation. Consequently, we leave our cost guidance for the year unchanged,” it said.

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