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Gold Fields committed to SA (for now)

‘Our focus at the moment is to deliver further operational improvements…but we’ll see,’ says CEO Nick Holland.

NOMPU SIZIBA: Gold Fields released their annual financial results for the year ended December 2019. They reported full-year net income $161.6 million. They also reported that full-year gold output rose to 2.2 million ounces – that’s up 7.8% on the previous year. And they’re going to be placing new shares on the market to raise R4 billion.

Earlier my colleague, Ryk van Niekerk, spoke to the CEO, Nick Holland.

RYK VAN NIEKERK: Nick, thank you for joining me. Sixteen tonnes of gold – is this a production record for Gold Fields?

NICK HOLLAND: This is getting pretty close. Obviously we used to have Driefontein, Kloof and Beatrix, so we were mining more than that. But under the new Gold Fields this is pretty much the highest we’ve had. So, yes, and thanks for reminding us about that.

RYK VAN NIEKERK: Well, the results were much better than in 2018. Your share price also doubled or virtually doubled. You must be pretty happy with both the operational and share price performance.

NICK HOLLAND: Look, I think certainly it’s been a lot of hard work in getting us to this point. There’s more hard work ahead. The gold price has helped us, but the good thing is we’ve actually delivered the gold price to the bottom line, as you say. So bringing Gruyere into production in Australia has been fantastic. The turnaround of South Deep, after a very difficult 2018, with big labour issues, is also nice to see. But we’ve got to build on that.

And, you know, we’ve scored early in the game, but we’ve got a consolidate the position and get another try.

RYK VAN NIEKERK: Your share price nearly doubled, as I said, but it outperformed virtually all other gold mines in South Africa and internationally. Why do you think you have outperformed to such an extent?

NICK HOLLAND: I think we’ve probably come off a lower base, maybe. Given the South Deep restructuring last year, I think there was quite a lot of pessimism that we’d be incurring further losses.

We were also involved in a heavy capital programme, and we’d said that for two years we wouldn’t make any money because we were reinvesting. Well, now we’ve actually finished the reinvestment. We are flagging that things are turning around. Also our balance sheet is looking much better and Salares Norte has just come through as well for Chile. That’s a new project we’ll be building. So there was quite a lot of positive momentum that all helped, I think. There’s not one specific thing, Ryk, but a number of things.

RYK VAN NIEKERK: The prospects for the gold mining industry in South Africa have changed since last year, mostly due to the higher gold price. But how do you regard the regulatory and operational environment, especially the impact of the electricity-supply problems? In what state do you think the gold mining industry in South Africa currently is?

NICK HOLLAND: I don’t think it’s in great shape because Eskom is going to be a real handbrake. And I think we’re being drip-fed the bad news. There’s a lot more to come.

The entrenched inflation in the mining industry is quite high, relative to other countries. No unions have tended to push for higher increases and lower working hours, so there is a whole bunch of challenges here. The rand goal price, of course, has helped. But I think if we don’t sort out some of these regulatory issues around BEE ownership deals done 10, 15 years ago, which are now being challenged, another Mining Charter III, and 15 years where we don’t have this elsewhere – I think it just scares people away. That’s a pity because I think we all want to do something better here. So I do hope President Ramaphosa has an eye on this in the State of the Nation Address.

RYK VAN NIEKERK: Are you looking at exiting South Africa, like Anglogold did yesterday?

NICK HOLLAND: We don’t have any plans on the table. Our focus at the moment is to deliver further operational  improvements. Obviously, we watch what happens around us. These kind of decisions are very big decisions, very complex decisions, but we’ll see. There’s no, as I say, prospects at this stage, but we’ll see.

NOMPU SIZIBA: Our thanks to Nick Holland.

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2.2 million ounces? Unpopular opinion but gold is not as scarce as people think. BTC is what the kids all want, up 45% this year, gold clinging to 3 %. Gold mining bad for the environment and coveted by dying boomers. Gold is boring and gains are WEAK. Change my mind lol

Eish – no mention of Southdeep – or are they also still looking over their shoulders (like Investec)to see what summons are heading their way – ex Kebblegate?

The ”elephant in the room” will not leave – maybe it is time to make like ”Donald and Duck”?

End of comments.

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