Gold Fields’ earnings nearly triple (February 04, 2002)

With a weakened South African rand and a month’s production from the recently acquired St Ives and Agnew mines in Western Australia, South Africa’s Gold Fields (GOLD-Q) has reported record earnings of US$67 million for the three-month period ended Dec. 31, 2001.

The earnings, which translate into US15 per share compare with earnings of US$24 million (or US5 per share) in the three-month period ended Sept. 30. Revenue during the recent quarter amounted to US$287 million, up from the previous quarter’s US$250 million.

Attributable gold production climbed 11% to 984,000 oz. Cash costs fell to US$169 per oz. from US$200 per oz. thanks to increased production at the Beatrix and Kloof operations in South Africa, the weakening of the rand, and the inclusion of production from the Australian operations at a cash cost of US$161 per oz.

The South African operations contributed an increase of 33,000 oz. or 3% of the total production increase as a result of additional tons milled and an improvement in yield. Beatrix chipped in 22,000 oz. and Kloof 11,000 oz. The new Australian operations added 68,000 oz. during December alone.

The company averaged US281.61 per oz. for its quarterly production. The period’s average gold price was US$279 per oz., up US$5 per oz., quarter on quarter. Cash flow from operations soared to US$126 million from US$45 million, resulting in a cash balance at the end of the quarter of US$74 million, triple that held at the end of the previous quarter.

At the end of 2001, Gold Fields’ debt stood at US$165 million, relating to the acquisition of the Agnew and St Ives operations from WMC Resources (WMC-N).

Looking ahead, the company has appointed Steve Banning to the position of Managing Director of Australia to head up exploration at both St Ives and Agnew over the next 18 months.

The company also looks forward to a full quarter of production from the Australian operations and two months from the new Damang gold mine in Ghana. Damang hosts reserves of 15.32 million tonnes averaging 2.36 grams gold per tonne, and there are satellite resources and reserves elsewhere on the property. During the financial year ended June 31, 2001 the mine processed 4.54 million tons averaging 2.42 grams gold per ton to produce 322,046 oz. of gold. Total cash costs were US$208 per oz.

Goldfields acquired a 71% stake of Ranger Minerals’ 90% interest in Abosso Goldfields, which held 100% of the Damang gold mine. Repadre Capital (RPD-T) got Ranger’s remaining 18.9%. The Ghanaian government retains a 10% stake.

Chris Thompson, Gold Fields’ CEO said in a prepared statement, “For the calendar year ahead we will continue to look for acquisition opportunities. We hope that after the Normandy takeover battle pricing expectations have not risen to prohibitive levels. Real value creation remains the key to our strategy.”

The company has declared an interim dividend of R90 cents per share payable to shareholders of record on Feb. 15, 2002.