South Deep strike weighs on Gold Fields

print

South Deep strike weighs on Gold Fields

Published Date: 2019-02-07 | Source: Stephen Gunnion | Author: Stephen Gunnion | Comments

South Deep strike weighs on Gold Fields

The 45-day strike hurt fourth-quarter production at the mine, which has been restructured in an attempt to make it profitable.

Gold Fields expects to report a basic loss for 2018 and much lower headline earnings after a strike at its South Deep mine negatively affected production for the year.

In a trading statement, the gold producer blamed a basic loss per share of between $0.40 and $0.44 - from a $0.02 loss in 2017 - on lower revenue and higher non-recurring costs over the period. These were partially offset by lower cost of sales.

Workers at South Deep went on strike in the fourth quarter of last year for 45 days over retrenchments as Gold Fields restructured the mine to make it profitable. In December, it was estimated that the strike had cost the company R360 million in lost revenue. It embarked on a business restructuring and Section 189 retrenchment process at South Deep in mid-August due to continued high financial losses of around R100 million a month. At the time it said it could no longer sustain losses at the mine, which has cost it R32 billion so far.

Revenue was also affected by the exclusion of its Darlot mine in Australia, which it sold in 2017. The rest of its operations exceeded guidance for the year, it said.

Non-recurring costs were affected by a higher impairment charge at South Africa. It impaired the value of South Deep by a further $359 million after tax in the first half of the year, with no additional impairment at year-end. It also faced higher retrenchments costs, mainly at South Deep and its Tarkwa mine in Ghana, where it has converted to contractor mining.

For the fourth quarter, gold equivalent production is expected to come in 4.5% lower at 509,000 ounces, with all-in sustaining costs of $1,016 per ounce. For the year, production is expected to reach 2.04-million ounces, down from 2.16-million in 2017 but still beating revised guidance of 2-million ounces.

Headline earnings per share (EPS) for the 12 months to end-December are expected to decline by between 65% and 81% from a year earlier to between $0.05 and $0.09. Normalised EPS of between $0.01 and $0.05 will be 74% to 95% lower.

Its shares fell by 1.6% to R49.59 yesterday.





Similar Stories