Gold Fields (South Africa, NYSE:GFI; JSE:GFIELDS) mines in South Africa, Ghana (Tarkwa and Damang), Australia and Venezuela with projects in Peru, the Dominican Republic, Kyrgyzstan, Burkina Faso and Congo (Kinshasa). The company produces about 4,1 million oz annually from its operations.
Gold Fields issued 145 million shares to buy out Barrick in the South Deep mine project in South Africa and to raise $1.2 bn to fund the project and others. South Deep has 28 million oz of gold. Gold Fields said in December, 2007, its total attributable ore reserves, including copper as gold equivalents, fell by 2% as of June 30 from Dec. 31, 2006, to 91.6 million oz.
The company said the updated ore reserves reflect increased costs and a higher gold price. Attributable depletion accounted for 2.2 million ounces, while lower pay limits, limited remodelling and discoveries contributed an additional 0.3 million oz. Gold Fields estimated total resources of 252-million oz of gold in 2007.
Canadian-listed Rusoro Mining agreed to buy Gold Fields' Venezuelan assets including the Choco 10 mine for $150m in cash, $30m in a convertible vendor loan and 140 million Rusoro shares in October, 2007.
Choco 10 is Gold Fields' smallest operation and has had operational problems recently. Gold Fields bought the mine for $360m from Canada's Bolivar Gold in March 2006.
Following the transaction, Gold Fields will own 38% of Rusoro, a junior gold producer with a large land position in the major mining districts in Bolivar State, Venezuela. Gold Fields also sold its 60% stake in the Essakane gold prospect in Burkinp Faso in 2007 to Orezone for $200m and will use the funds to pay down debt and inject into its large capital expenditure programme.
Posted: Thu, 31 Jan 2008
[miningmx.com] -- SOUTH African gold output at Gold Fields will be reduced by up to 164,250 oz worth R1bn at current prices because of the power crisis in that country amongst other issues, CEO Ian Cockerill said on Thursday.
A 10% reduction in power usage by mines demanded by South African power utility Eskom will reduce gold production and lead to shaft closures and restructuring, Gold Fields said in December quarter results, which showed a three percent decline in output, tightly contained costs and a massive leap in net earnings.
Eskom on 25 January declared force majeure on its power supply, causing mines across the country to shut their operations. Power has been steadily increased to the mines since then and is currently between 80% and 90% of normal usage.
lead to shaft closures and restructuring
"At the South African operations, subject to the availability of power, which at the time of writing is 80%, production is likely to be about 20 to 25% lower than the December quarter," Cockerill said in the results.
"This is due to various factors, the slow start up after the Christmas break, the week-long stoppage due to the power shortage in January, and production losses across all the South African operations due to continued power shortages." An analyst pointed out that holiday breaks during the March quarter generally resulted in a reduction of between eight and 10% reduction in output anyway. "It puts that figure from Gold Fields into perspective and I think this is the company preparing for a round of retrenchments," the analyst said.
Production at the South African operations decreased to 657,000 oz from 689,000 oz in the September period. Attributable international output increased to 303,000 oz from 297,000 oz.
Eskom and the mining industry have agreed that the mines, amongst the largest users of power, will cut their demand by 10%.
“The 10% reduction by Eskom will impact on gold production and may regrettably lead to shaft closures and restructuring,” Cockerill said. “Current power shortages in South Africa will impact production in the March quarter and into the foreseeable future.”
“The ongoing power shortages in South Africa will require a combination of aggressive energy saving and energy efficiency projects to achieve a 10 per cent reduction in electricity use, and possible participation in Eskom’s Emergency Demand. “
Gold Fields’ net earnings shot up to R1.94bn in the quarter against the previous quarter’s R429m and R767m in the same period a year earlier.
Gold output was down three percent to 960,000 oz, mainly because of reduced output from the South African operations offsetting a net recovery in the offshore mines.
“During the December quarter we saw a welcome recovery at our international operations. Regrettably the South African operations, in particular Driefontein, were adversely affected by a number of safety related work stoppages,” Cockerill said.
Total cash costs were up just three percent in the quarter.
Cockerill said of the outlook for the international operations in the March quarter: "Production is forecast to increase marginally and costs will be slightly higher due to increases in power and diesel input costs."
Gold Fields lifts stake in Canadian explorer to 10,85%
Gold major Gold Fields announced on Wednesday that it had upped its stake in Canadian explorer GoldQuest Mining, which is searching for gold and copper in the Dominican Republic, to 10,85%.
This was after it excercised its options to acquire a further 1,2-million common shares in the firm for US30c a common share, amounting to $360 000, for the additional 2,24% in the company.
Gold Fields Exploration, a wholly owned subsidiary of Gold Fields, originally acquired the GoldQuest warrants on August 8, 2005, as part of a private placement.
“While Gold Fields Exploration has no current intention to acquire additional securities of GoldQuest in the immediate future, it may increase or decrease its interest in GoldQuest at prices which it determines to be attractive at any time,” the gold major said in a statement to shareholders.
GoldQuest is an exploration company focused on the Dominican Republic.
Through regional grass-roots generative exploration and new geological models, the company has built a portfolio of new gold and copper discoveries.
Gold Fields signs options to earn into Carlin Trend prospects
A subsidiary of the group, Gold Fields Netherland Services, can earn an initial 60% in Vancouver-based Redstar Gold's Richmond Summit and Dry Gulch properties over four years, by making cash payments of $480 000 and spending a total of $5,5-million on exploring and development the properties.
Gold Fields, which has committed to spend $1,4-million on exploration in the first year of the agreements, can also earn a further 10% interest in the properties by spendign a further $7,5-million at Richmond Summit, and/or $5-million at Dry Gulch.
Both properties are located on Nevada's reknowned Carlin Trend, which has already produced more than 50-million ounces of gold.
"These agreements with Redstar present Gold Fields with exciting opportunities to develop and test high quality exploration targets within the prolific Carlin Trend,” Gold Fields exploration VP Tommy McKeith said in a statement.