Gold Fields Limited has announced what it described as normalised earnings from continuing operations for the December 2013 quarter of US$14 million compared with US$12 million in the September 2013 quarter and US$127 million in the December 2012 quarter.
In Rand terms, the normalised earnings for the December 2013 quarter was R145 million compared with R120 million in the September 2013 quarter and R1,080 million in the December 2012 quarter.
A final dividend of 22 SA cents per share (gross) is payable on March 10, 2014, giving a total dividend for the year ended December 2013,an amount of 22 SA cents per share (gross).
Key achievements during the December 2013 quarter
In mid-2012, Gold Fields embarked on a fundamental shift in strategy away from an emphasis on ounces of production, to a primary focus on driving margins and cash flow.
To this end, and to sustain our business in the long-term, the company embarked on a process to engineer a sustainable and structural shift in the Group’s cost and production base.
This process continued through the December 2013 quarter and will be carried on throughout 2014.
During the December 2013 quarter the Group made meaningful progress on all fronts of this process.
The Group achieved further success in its efforts to engineer a sustainable and structural shift in its cost base.
The Group’s all-in sustaining costs of US$1,054 per ounce for the quarter reflected an improvement of three per cent on the US$1,089 per ounce achieved in the September 2013 quarter and a 24 per cent improvement on the US$1,383 per ounce reported in the December 2012 quarter.
The Group’s total all-in cost of US$1,095 per ounce for the quarter reflected an improvement of seven per cent on the US$1,176 per ounce achieved in the September 2013 quarter and a 32 per cent improvement on the US$1,621 per ounce reported in the December 2012 quarter.
Seven of the company’s eight mines – including the newly acquired Darlot, Lawlers and Granny Smith mines (the “Yilgarn South assets”) – achieved an all-in cost of below US$1,265 per ounce, which is the average gold price for the quarter.
These are Cerro Corona (US$207 per ounce); Granny Smith (US$888 per ounce); Agnew/Lawlers (US$929 per ounce); St Ives (US$1,091 per ounce); Tarkwa (US$1,096 per ounce); Darlot (US$1,132 per ounce); and Damang (US$1,261 per ounce).
During the quarter, Damang and Darlot implemented a range of operational improvements, which have significantly reduced their costs and enabled them to return to profitability.
South Deep’s all-in cost of US$1,436 per ounce (R466,908 per kilogramme) was 10 per cent lower than the US$1,599 per ounce (R513,149 per kilogramme) achieved in the September 2013 quarter and 41 per cent lower than the all-in cost for the quarter ended 31 December 2012 of US$2,436 per ounce (R679,026 per kilogramme).
Production was up by 21 per cent at the Yilgarn South assets. Attributable production for the December 2013 quarter increased by 21 per cent from 496,000 gold equivalent ounces in the September 2013 quarter to 598,000 ounces.
This total includes a maiden contribution of 114,000 ounces during the quarter, at an aggregate all-in cost of less than US$1,000 per ounce, from the Yilgarn South assets in Western Australia.
These assets, which in a short period of time have been restructured to lower their costs in line with the Group objectives and have been fully integrated into the portfolio, are expected to contribute approximately 400,000 ounces during 2014 at US$1,000 per ounce.
Revised production build-up profile for South Deep
At the South Deep project in South Africa, the comprehensive project review announced on August 22, 2013 was concluded and based on the progress made to date and a reassessment of the key inputs into the future mine production schedule, a revised production build-up schedule has been determined.
Production is expected to increase to a run-rate of between 650,000 and 700,000 ounces per annum, at an all-in cost (including sustaining capital) of approximately US$900 per ounce, by the end of 2017, (assuming an exchange rate of R9.50=US$1.00).
Improvements in Damang’s performance
The much needed turnaround at Damang commenced during the quarter through a series of strategic interventions aimed at optimising costs, grade, strip ratios, plant recovery and throughput.
Damang increased its production by 39 per cent from 32,600 ounces in the September 2013 quarter to 45,400 ounces in the December 2013 quarter and reduced its all-in sustaining costs by 27 per cent from US$1,727 per ounce to US$1,261 per ounce.
Damang is expected to continue its turnaround through 2014 and build on the sound base created in the December 2013 quarter.
At a US$1,300 per ounce gold price, Damang has economic Mineral Reserves of one million ounces with Mineral Resources of 6.6 million ounces thus providing significant upside potential and optionality.
Key achievements during 2013
2013 cost and production guidance exceeded – A key feature of our operations during 2013 was that the Group’s overall operational performance has generally been more consistent and predictable than in previous years, and better than the guidance for 2013.
The Group’s attributable production for the full year of 2.02 million ounces is 6 per cent higher than the upper end of the original guidance of between 1.83 and 1.90 million ounces provided on February 27, 2013 and 1 per cent above the upper end of the revised guidance of between 1.92 and 2.00 million ounces provided on November 20, 2013, after the acquisition of the Yilgarn South assets.
The Group’s total cash cost for the full year 2013 was US$803 per ounce, 7 per cent lower than the guidance of US$860 per ounce, provided on February 27, 2013 and re-affirmed on November 20, 2013. The Group’s NCE for the full year 2013 was US$1,146 per ounce, 16 per cent lower than the guidance of US$1,360 per ounce provided in February 2013.