Nick Holland, CEO of Gold Fields
Gold Fields has reported a 7 percent increase in operating profit to US$311 million for the three months ended June 30.
The company’s revenue increased 4 percent quarter-on-quarter from US$715million in the quarter ended March 31 to US$747million, as a result of higher gold sales, which was partially offset by the lower gold price.
Net operating costs increased 3 percent from US$423million in the March quarter to US$436million in the quarter under review.
Normalized earnings from continuing operations for the three months amounted to US$25million, up from US$21 million during the March quarter, and losses of US$36 million for the June 2013 quarter.
‘During the June 2014 quarter, the group continued to focus on improving the execution and delivery at all the mines in the portfolio to improve margins and generate free cash flow.
‘This effort has achieved appreciable success in the Australia, West Africa and South America regions, while in the South Africa region there is on-going rebasing of South Deep to set it up for medium- term success,’ Nick Holland, Chief Executive Officer (CEO) Gold Fields said.
During the quarter under review, South Deep’s production declined 14 percent quarter-on-quarter from 59,200 oz in the three months ended March 31 to 51,100 oz owing to safety stoppages and an extensive ground support remediation programme.
Holland indicated that Gold Fields will, during the third quarter, focus on completing the support programme at South Deep and get the mine back to normal production levels during the fourth quarter.
South Deep is still expected to reach cash break-even during the first half of 2015.
Gold Fields exceeded this target for the first time by achieving a free cash flow margin of 18 percent, compared with 13 percent in the March quarter.
Holland noted that by generating a free cash flow margin of 15 percent, the company was effectively setting its break-even gold price at US$1,050/oz.
He added that should prices go up to beyond US$1,300/oz in future, the gold miner will keep its discipline and not be lured by the low-grade extra ounces that could be used.
Gold Fields declared an interim dividend of 20 cents a share payable on September 15.
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