Gold Fields ruled out the fire sale of South Deep mine, the group's sole South African operation.  Photo: Reuters
Gold Fields ruled out the fire sale of South Deep mine, the group's sole South African operation. Photo: Reuters

Gold Fields to keep revived South Deep

By Dineo Faku Time of article published Feb 14, 2020

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JOHANNESBURG - Gold Fields ruled out the fire sale of South Deep mine, the group's sole South African operation, as the company yesterday reported that the mine had made money for the first time in a long time during the year to December 2019.

South Deep generated net cash of R221million compared to an outflow of R1.92billion a year earlier when it faced a protracted strike and retrenchments in a bid to turn its fortunes around. Speaking during the financial results presentation for the year to December 2019 in Johannesburg yesterday, Gold Fields chief executive Nick Holland ruled out the possibility of a fire sale for the mine.

“I want to rule out any panic sale and clarify that our options are open. We will reassess them with the board later this year,” Holland said.

“Our focus at the moment is to improve the performance of South Deep that will inform us of our options down the road,” said Holland, adding that South Deep would make good money again in 2020.

South Deep was restructured in 2018, resulting in the axing of 1500 employees.

The restructure was necessitated by the mine’s struggle to transition to a mechanised operation from a conventional operation since Gold Fields acquired it in 2006 for R22bn.

“The restructuring was a pivotal moment for us. We have never gone through a massive retrenchment process.

"We retrenched 1500 people, shut down a third of our footprint This is not rocket science, we are doing the right stuff and doing it safely,” said Holland.

Production at South Deep jumped by 41percent to 222100 ounces in 2019 up from 157100 ounces in 2018 as production recovered from the strike and the restructuring process.

In terms of the group, Gold Fields said attributable equivalent gold production increased by 8percent to 2.19million ounces in 2019 from 2million ounces in 2018 due to an increase in production at South Deep, and a full year of production at the Asanko mine in Ghana and Gruyere in Australia coming into production.

On Wednesday, Gold Fields announced that given the healthy position of the company, the board had approved the construction and development of the Salares Norte project in Chile.

“The project is expected to meaningfully change the future profile of Gold Fields, providing growth in production and a reduction in group All In Costs. The project capital is expected to be funded from the capital markets, the strong operational cash generation and existing debt facilities, if required,” said the company.

Gold Fields said it planned to place new shares to raise about $269m (R3.98bn) to help fund its new Salares Norte mining project.

Group profit for the year was $343m compared with normalised profit of $27m for the year ended December 2018.

The company said it would reward investors with a final dividend of R1 a share, which was payable next month, giving a total dividend for the year of R1.60 a share.

It said it had declared $48m in dividends for 2019 compared with $55m in 2018.

Gold Field shares closed 0.68percent higher at R93.62 on the JSE yesterday.

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