Gold Fields cuts production outlook on Chilean mine disruptions

Gold Fields’ Salares Norte Project in Chile. SUPPLIED.

Gold Fields’ Salares Norte Project in Chile. SUPPLIED.

Published Jun 14, 2024


Production from Gold Fields’ Salares Norte Project in Chile has been disrupted by adverse weather conditions, while the suspension of dismantling of a rocky portion of the area has been suspended by a further 120 days, forcing the company to cut its production outlook.

This prompted an 8.7% fall in the company’s stock price on the JSE to R266.04 per share in afternoon trade yesterday.

Prior to this, JSE-listed Gold Fields had rallied by as much as 3.8% in the past seven days.

Gold Fields yesterday reported that the ramp-up of production at the Salares Norte Project had been “negatively impacted by the early onset of winter events in Chile, which have persisted” in recent weeks.

“These weather events resulted in the freezing of material in the piping of the process plant causing temporary shutdown of the plant,” said Gold Fields in a statement.

“These impacts have been greater than planned owing to the early onset and extended duration of winter conditions during the commissioning and ramp-up phase.”

As a result of this, Gold Fields had reduced its anticipated production for 2024 and raised its cost approximates for the period.

The company now expects lower production, ranging from 2.2 million to 2.3m ounces for the 2024 year.

Previously, the company had set a target estimate of 2.33m to 2.43m ounces.

Gold Fields’ all-in sustaining costs (AISC) guidance has also been adjusted, rising from between $1 410 (R25 879) and $1 460 per ounce, to between $1 470 to $1 530 per ounce.

Despite the disruptions, the plant at Salares Norte has since been restarted, although commissioning and ramp-up during the winter period is expected to continue to be challenging.

This would likely create further uncertainty on production levels during the winter months, forcing the company into its decision to revise production outlook for the current year.

The bottom end of the new production range at 90 000 ounces is largely independent of weather events until late August 2024 and assumes that there will be no production until the end of winter.

The top end of the range at 180 000 ounces assumes that the ramp-up programme at the mine resumes tomorrow (June 15) and that there are no significant weather events that result in multi-day stoppages for the rest of 2024.

Gold Fields yesterday also issued an update on the Chinchilla capture and relocation programme from the mining area. Chinchila are an endangered rodent species.

Last month, Gold Fields advised shareholders that Salares Norte had received an urgent and transitionary measure from Chile’s Superintendence of Environment (SMA) ordering temporary suspension of the dismantling of Rocky Area No 3 as part of its approved Chinchilla capture and relocation plan on June 5 this year.

Salares Norte has now received an updated notice from the SMA extending the suspension of dismantling R3 for a further 120 days.

However, “mining operations and project activities are continuing, and focus remains on ramp-up of the project, respecting the buffer zones established to avoid any potential disturbance to the Chinchilla and complying with all other regulatory requirements” established by the authority.

Gold Fields said it continues to engage with the SMA to progress the Chinchilla capture and relocation programme.

“The company is committed to the safe capture and relocation of the protected Chinchilla species and Salares Norte continues to work with the SMA and independent environmental experts on all aspects of this programme,” it said.