Goldfields sees profits shrink

Vancouver — Gold Fields (GFI-N) posted a 40% drop in profits between the 3-month period ended Sept. 30 and the previous quarter.

The world’s fourth-largest bullion producer earned US$61 million in the recent quarter (the first in the company’s fiscal year), down from US$114 million in the previous quarter.

Says CEO Ian Cockerill: “Results for the first quarter were negatively affected by above-inflation annual wage increases, lower underground yields at Beatrix [the company’s mine in South Africa’s Free State], other normal inflationary increases, and a marginally lower rand gold price received.”

Attributable gold production amounted to a little more than 1 million oz., down from 1.1 million oz. poured in the previous quarter, while cash costs rose 10.6% to US$282 per oz.

At the company’s chief operations, in South Africa, operating profits fell 66% between the two quarters, to 78.2 million rand. Underground grades at the Beatrix mine fell to 4.4 from 5.1 grams gold per tonne.

Based on the weak results, the company intends to slash production and close shafts at operations with weak gold content. However, it cautions that these measures will improve profit margins only gradually, especially if the local currency remains strong.