Salares Norte lifts Gold Fields as other mines falter

Gold Fields (JSE, NYSE: GFI) is leaning on its newest operating mine, Salares Norte in northern Chile, to offset weaker expected production at Gruyere in Australia and Tarkwa in Ghana as the South African miner targets the upper end of its 2026 output guidance.

Salares Norte, which began commercial production in 2024 following the difficult relocation of endangered short-tailed chinchillas from the site, is expected to exceed its full-year guidance, Gold Fields said in its first-quarter results. That would help lift group production towards the upper end of its 2.4-million-oz. to 2.6-million-oz. forecast.

The performance comes despite another harsh start to the South American winter, with heavy snowfall disrupting power supplies across the region. The conditions forced Lundin Mining (TSX: LUN) to suspend copper production at its Caserones copper-molybdenum operation, while Antofagasta (LSE: ANTO) paused mining and processing for several days at Los Pelambres.

Salares Norte’s resilience is particularly important after freezing conditions disrupted its ramp-up in 2024. Pipes froze during an early spell of sub-zero weather in the Atacama just as the mine was transitioning from development into a critical production ramp-up, contributing to missed Gold Fields production targets during CEO Mike Fraser’s first year in charge.

Mine risks

This year, the pressure has shifted to other parts of Gold Fields’ portfolio. The company flagged risks to production guidance at its Gruyere mine in Western Australia after declining productivity and under-utilization of the mining fleet, which it attributed to high employee turnover.

Tarkwa also faces production risks after a slow start in the first quarter, despite a recovery during the second quarter, the miner said. The Ghanaian operation carries additional uncertainty as Gold Fields could potentially lose the operation next year.

The contrasting performances make Salares Norte increasingly important to the group’s near-term outlook. A stronger-than-expected contribution from Chile would give Gold Fields room to absorb weakness elsewhere while maintaining its overall production target.

Gold Fields’ financial position has also strengthened as higher gold prices and increased sales volumes boosted cash generation. Net debt fell 34% year on year to $1.3 billion (C$1.8 billion) at March 31 from $1.98 billion a year earlier, despite payment of a $1.23-billion final dividend in March.

Net debt to adjusted earnings before interest, taxation, depreciation and amortisation fell to 0.19 times from 0.26 times at the end of 2025.

Free cash flow before discretionary spending such as exploration is expected to roughly double to between $2.39 billion and $2.64 billion. Headline earnings per share for the interim period are forecast to rise 72% to 90% year on year to between $1.98 and $2.18.

The company allocated $100 million to a share buyback program in February under its revised capital allocation framework, although repurchases have been limited amid market volatility since the start of the US-Iran war.

Shares in Gold Fields rose 1.6% to $40.93 apiece Wednesday afternoon in New York, giving the company a market value of about $36 billion.

Windfall watch

Attention is turning to Gold Fields’ 300,000-oz.-a-year Windfall project, Canada’s second-largest undeveloped gold mine by value, where project capital could reach the upper end of the company’s previously adjusted $1.7-billion to $1.9-billion forecast.

Environmental permitting remains incomplete, leaving uncertainty around the project’s final investment decision and construction schedule.

“Gold Fields will provide a further update once the EIA is approved and FID is confirmed, together with an updated project execution schedule and capital estimate,” the company said, describing Windfall as a future “cornerstone” asset.

All-in sustaining costs are forecast at $1,800 to $2,000 per oz., while all-in costs, including non-sustaining growth capital, are expected at $2,075 to $2,300 per ounce.