Higher gold price supports payout from Gold Fields


Higher gold price supports payout from Gold Fields

Published Date: 2021-02-19 | Source: Stephen Gunnion | Author: Stephen Gunnion

Higher gold price supports payout from Gold Fields

The gold mining company has trebled its annual dividend as CEO Nick Holland prepares to retire.

Gold Fields says it would have beaten its original production guidance for 2020 had it not been for the impact of Covid-19 on its global operations. As it stands, it met its revised targets after guidance was trimmed to account for the loss of production from South Deep in SA and Cerro Corona in Peru after both mines were impacted by lockdowns. And it's benefitted from a big increase in the gold price.

In CEO Nick Holland's final results before he hands over the reins of the gold mining company to former Anglo American Platinum CEO Chris Griffith at the end of next month, he said it had adapted successfully to what appeared to be the new normal, while growing production.

Production for the year to end-December increased by 2% to 2.24 million ounces, near the top end of its revised guidance for the year. All-in costs for the year were 1.4% higher at $1,079 an ounce, in the middle of its revised guidance range.

Headline earnings rose more than fourfold to $729 million or 83c per share and normalised earnings for the year more than doubled to $879 million or $1 per share. In line with its dividend policy of paying out 25% to 35% of normalised earnings as dividends, it declared a final dividend of 320 SA cents per share. This takes its total dividend for the year 200% higher to 480 cents per share. For the period, it booked a loss on hedges (forward gold sales) of $240 million including realised losses of $417 million, partially offset by unrealised gains and prior year mark-to-market reversals of $177 million.

Gold Fields said 2021 was going to be a big capital expenditure year, given the peak spending at its Salares Norte project in Chile as well as the increase in sustainable capex for the group. This increase in sustaining capex would enable it to spend on key projects that would allow it to sustain its production base of 2-million to 2.5-million ounces for the next 8-10 years. For 2021, its expected attributable gold equivalent production to be between 2.3-million and 2.35-million ounces, with all-in costs expected to be $1,310/oz to $1,350/oz.

Gold Fields' shares fell 3.6% to R125.79 yesterday.

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