Gold Fields Returns to Profit and Plans Ghana Investment

(Bloomberg) -- Gold Fields Ltd. returned to a profit of $70.5 million in the six months through June, after a loss in the year-earlier period.

The Johannesburg-based producer maintained its output guidance of 2.13 million ounces to 2.18 million ounces for the full year. The company also announced that it plans to extend life of operations at its jointly held Asanko Gold mine by eight to 10 years as it bolsters its position in Ghana.

Key Insights

• Apart from returning to profit, investors will also note that Gold Fields turned net cash flow positive in the first half, earlier than originally anticipated. That follows spending to boost output at Damang in Ghana and Gruyere in Australia.
• While output at its South Deep mine in South Africa jumped in the second quarter, the company is a long way off from recouping its investment in the troubled operation. Chief Executive Officer Nick Holland said Gold Fields will hang on to the asset as the mine’s “trajectory has changed.”
• Gold Fields undertook gold price hedging to secure short-term cash flow and protect its balance sheet as the company completes its project ramp up.
• Toward the end of next year, the miner may start developing Salares Norte, a Chilean mine that could cost $835 million. Gold Fields is considering a range of funding options from bringing in a partner to raising debt and metals streaming, the CEO said.

Market Reaction

• Gold Fields shares dropped 5% as of 2 p.m. in Johannesburg trading, paring this year’s gain to 73%.

Read More

• Gold Fields Returns to Profit in 1H; Keeps FY Guidance Unchanged
• Gold Fields Trims Vision in Final Bet on South African Mine
• South African Gold Industry Enters Final Phase of Slow Death

To contact the reporter on this story: Felix Njini in Johannesburg at fnjini@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Dylan Griffiths, Alastair Reed

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