Gold Fields recorded 2.23 million attributable ounces during the year ended December 2020, a 2 percent year-on year increase and within the revised guidance range of between 2.2 million ounces and 2.25 million ounces. Photo: Reuters
Gold Fields recorded 2.23 million attributable ounces during the year ended December 2020, a 2 percent year-on year increase and within the revised guidance range of between 2.2 million ounces and 2.25 million ounces. Photo: Reuters

Gold Fields plans to hike capex to $1.18bn

By Dineo Faku Time of article published Feb 19, 2021

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JOHANNESBURG - GOLD FIELDS expects to increase group capex to almost $1.18 billion (about R17.22bn) in 2021 as spending towards the construction of the Salares Norte mine in Chile peaks and sustainable group capex increases.

Gold Fields expects a total group capex for the year of $1.177bn, and sustaining capital of $538 million, with non-sustaining capex expected to be $639m.

“The largest component of the capex budget for the year is Salares Norte, with the $508m expected to be spent. We expect Salares Norte to be at 70 percent completion by the end of 2021,” said Gold Fields.

The other increases are driven by specific projects, including the tailings facility expansion and underground infrastructure expenditure at South Deep, outside Johannesburg, the second decline at the Wallaby Underground mine at Granny Smith in Australia, and plant modifications at Agnew, also in Australia.

“This increase in sustaining capex will enable us to spend on key projects that will allow us to sustain our production base of 2 million ounces to 2.5 million ounces for the next eight to 10 years,” said the group.

Construction of the Salares Norte mine began last year and was unaffected by the Covid-19 pandemic. The group expects to produce between 2.3 million attributable ounces and 2.35 million ounces in 2021 with aIl in sustaining costs forecast at between $1 020 an ounce and $1 060 an ounce.

Gold Fields recorded 2.23 million attributable ounces during the year ended December 2020, a 2 percent year-on year increase and within the revised guidance range of between 2.2 million ounces and 2.25 million ounces.

In May last year, the group downgraded its original guidance after Covid-19 disruptions weighed heavily on South Deep and the Cerro Corona mine in northern Peru.

In tandem with its gold peers, Gold Fields recorded bumper earnings in 2020 with headline earnings surging by more than fourfold to $729m, or $0.83 per share, from $163m, or $0.20 per share in 2019.

A final R3.20 per share dividend was declared, taking the total dividend declared for the year to R4.80 per share up from R1.60 per share a year earlier.

Cash inflow from operating activities jumped 41 percent to $1.257bn in 2020 compared with $893m in 2019, driven mainly by higher profit before royalties and taxation. However, the second wave of Covid-19 infections, which started in late 2020, took a terrible toll at Gold Fields.

“As at February 15, 2021, nine of our employees or contractors have passed away as a result of their Covid19 infections, eight of them at South Deep,” said the group.

In addition, Josephat Zvaipa, the chief operating officer, at Galiano Gold, joint venture partners in the Asanko mine in Ghana, died after contracting the virus.

Gold Fields said so far 2 705 employees had tested positive for Covid19, of which 170 were currently active cases, with 5 receiving care in hospitals.

Gold Fields share price closed 3.61 percent lower at R125.79 on the JSE yesterday.

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