PRODUCTION at South Deep, Gold Fields’ sole South African mine, increased 6 percent quarter-on-quarter to 61 000 ounces. Reuters
JOHANNESBURG – South African gold producer Gold Fields’ 2019 production guidance remained unchanged despite undershooting output in the September quarter. 

But Gold Fields chief executive Nick Holland said on Friday that he was bullish about 2019 production and the group expected output to be at the upper end of the previously announced range of 2.13million to 2.18million ounces. 

Holland said the group expected its all-in sustaining costs to be $980 (R14565) an ounce based on an exchange rate of R14.50 to the dollar.

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“Gold Fields expects to end this year on a strong footing, and we expect to achieve previous production and all-in cost guidance for the year. This provides us with a solid base to grow production and reduce all-in costs into 2020, enabling the group to generate strong free cash flow,” said Holland.

Gold Fields said output had declined 2percent year-on-year and was 3percent lower quarter-on-quarter to 523000 ounces. 

The group attributed the decrease in production to lower grade mined at Damang in Ghana and Cerro Corona in Peru, and an unusually high lock-up of gold in the circuit at two of its Australian operations.

Production at South Deep, its sole South African mine, increased 6percent quarter-on-quarter to 61000 ounces, up 23percent year-on-year.

South Deep was expected to exceed its production guidance for the year by between 5 and 10percent. The AIC guidance is expected to be achieved.

Holland said the group had moved to cut net debt by $97million in the quarter under review, and announced it would not undertake any other hedging activity for next year and beyond. The group, which has operations at South Deep in South Africa, Damang in Ghana and Salares Norte in Chile, said net debt stood at  $1.4billion (R20.76bn) from $1.49bn at June 30 this year.

Holland said Gold Fields had entered into select tactical hedges for 2020 during the first half of 2019.

“The hedges were entered into to underwrite real net debt reduction of $300m to $400m by the end of 2020. We do not plan to undertake any other hedging activity for 2020 or beyond,” Holland said.

However, in line with the company’s hedging policy, Gold Fields could look at hedging production at Salares Norte to underwrite the payback for the project, he said.

Salares Norte is a high-grade, open pit, gold-silver project in Chile discovered by Gold Fields in 2011.

Gold Fields fell 6.31percent to R76.45 a share on Friday in line with its gold producing peers on the JSE due to the the gold price dipping 0.7percent to $1 458 an ounce. Seleho Tsatsi, an investment analyst at Anchor Capital, said the gold sector as a whole was down on Friday due to the softer gold price.

“Gold Fields has obviously benefited from the run-up in the gold price this year. About 9 percent of Gold Fields’ production comes from South Africa, so they have not really benefited from the year’s rand weakness.”


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