Vancouver – A 4% jump in gold production helped South African based Gold Fields (GOLD-Q) post a profit of US$24 million, or $0.05 per share in the latest quarter ended Sept. 30. The gain reverses a US$195-million, or $0.43-per-share loss tallied in the June quarter.
“The September Quarter exemplified our strategy to grow Gold Fields,” says the company’s CEO, Chris Thompson. “The first leg of that strategy is to continuously improve our existing operations and we are particularly pleased to see the positive trends that started to come out of both Kloof and Driefontein during the latter part of the September quarter and continued into the December quarter.”
Driving the production gains continued to be a strong performance from the Tarkwa operation in Ghana. Gold production hit 150,000 oz. during the recent quarter, a 28% increase over the previous quarter. Cash costs came in at US$163 per oz., a slight improvement over the US$169 recorded in the previous three-month period.
The company’s South African mines posted a mixed performance. The Kloof operation saw a 6% rise in gold output, producing 279,000 oz. in the quarter, compared to 264,000 oz. in the June quarter. Cash costs declined to US$210 per oz., compared to US$216 per oz. in the previous quarter. At Driefontein gold production in the quarter came in basically flat at 324,000 oz., compared to 322,000 oz. in the June quarter. Cash cost increased to US$189 per oz., from last quarter’s $178 per oz. The increase in costs is attributed to lower surface output due to plant maintenance and upgrades. In the Free State, production at the Beatrix operation fell 2,000 oz. to 145,000 oz. Lower grades at the Beatrix 4 shaft, which averaged 4.1 grams gold per tonne from 5.2 grams gold in the earlier quarter, are cited for the shortfall. At St. Helena, cash costs to produce an oz. of gold soared as production shrank to 32,000 oz. from 38,000 oz. recorded in the June quarter. Lower output resulted in cash costs of US$306 per oz., from US$255 tallied in the earlier quarter.
Looking into the future, Thompson stated, “`The second leg of our strategy is to grow and diversify Gold Fields through value enhancing acquisitions.”
Near the end of September, Gold Fields picked up the St Ives and Agnew gold mines in Western Australia from WMC (WMC-N). The deal has Gold Fields paying US$180 million in cash, and issuing US$52 million in shares. WMC retains a royalty based on future gold production. The transaction is slated to be complete before the end of the year. Based on past production, the acquisition should increase Gold Fields’ production to 4.5 million oz. per year.
The major also proposed to acquire the Damang gold mine in Ghana from Australian-listed Ranger Minerals. Gold Fields, along with Repadre Capital (RPD-T) signed a memorandum of understanding paving the way for the sale of Ranger’s 90% stake in Abosso Goldfields, which holds the Damang mine. Under the deal, Gold Fields will pay A$63 million in cash and Repadre will contribute 4 million Repadre shares. On completion of the transaction Gold Fields will own a 71.1% interest in the company.
“The proposed acquisition of St Ives and Agnew from WMC and Damang from Ranger will, based on historical performance, add over 800,000 oz. of net production to Gold Fields per year and add to earnings, cash flow and net asset value per share,” states Thompson.
Gold Fields produced 3.8 million oz. of gold for the year ended June 30, 2001 from its Driefontein, Kloof and Free State operations in South Africa and its Tarkwa operation in Ghana.
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