Gold Fields says weathering coronavirus lockdown despite output dip

The company’s shares were up 11.9% to R149.54 at 1015 GMT.
Image: Supplied

Gold Fields expects to lose 32 000 ounces of production at its South Deep mine in South Africa due to a nationwide lockdown, but has otherwise seen little impact from measures to contain the coronavirus pandemic, it said on Thursday.

The miner, which also operates in Chile, Peru, Australia and West Africa, said group gold production for the quarter ended March 31 was 537 000 ounces, down from 542 000 ounces a year earlier, with all regions tracking the annual guidance.

“The impact of the pandemic has been relatively muted on our operations, with production only slightly affected. However, the situation is fluid and there is the possibility of further lockdowns and restrictions in the countries in which we have a presence which may lead to production disruptions in future,” Gold Fields said.

The firm said most of its mines were operating largely as normal, but production at South Deep as well as Cerro Corona in South America would likely be affected by coronavirus-related stoppages in the second quarter.

“Gold Fields had a decent operational update this morning, it looks like they are expected to make more money than they thought,” said Gerhard Parking, portfolio manager BP Bernstein.

The company’s shares were up 11.9% to R149.54 at 1015 GMT.

Gold Fields said it had reduced net debt $1.260 billion at March 31 from $1.664 billion at December 31, 2019.

It has approximately $800 million in cash on hand and in excess of $1.5 billion of committed, unused debt facilities.

South Africa said last week it would allow mines to operate at up to half capacity, after previously ordering most underground mines and furnaces to be put on care and maintenance, apart from coal mines supplying state power utility Eskom.

Gold Fields said it had begin resuming operations at South Deep, and planned to run it with employment levels at 50% with coronavirus-related safety procedures.

The lockdown, which started on March 27 and has been extended until the end of April, has hit some global commodities markets since several South African miners have cut their production plans or declared force majeure, which exonerates them from contractual obligations.

However, Gold Fields said stronger gold prices were expected to boost its earnings.

It also said top executives would donate a third of their salaries for three months to a government fund to fight the pandemic, while South Deep would contribute R15 million and employees a further 1 million.

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