Finance > Profit-loss

Gold Fields flags writedown, guidance beat

Gold Fields (SJ:GFI) has announced it will take a writedown on its South Deep operation in its upcoming 2017 results, which are also expected to see a fall in profitability and guidance beat on both gold produced and all-in costs.

Staff reporter

Finance > Profit-loss

Gold Fields flags writedown, guidance beat

Gold Fields (SJ:GFI) has announced it will take a writedown on its South Deep operation in its upcoming 2017 results, which are also expected to see a fall in profitability and guidance beat on both gold produced and all-in costs.

Staff reporter

Gold Fields flags writedown, guidance beat

Gold Fields has had problems with the initial ramp-up of its revised mine plan at South Deeps

Gold Fields

In keeping with its regulatory requirements in South Africa, the gold miner flagged it was expecting to report a basic loss per share of US$0.22-0.25 in 2017, down from earnings of $0.20/share in 2016.
 
One of the major reasons for the loss was the booking of a $278 million after-tax impairment of goodwill on its South Deep asset in South Africa. 
 
The company said the slow start to its rebase plan, announced a year ago, was expected to result in a more gradual ramp-up in the earlier years of its life. It reiterated that its steady-state production target of circa-500,000 ounces in 2022 has not changed. 
 
As recently as November, the company flagged potential issues hitting its annual target at South Deeps, saying it had experienced a difficult March quarter with two fatalities and a fall-of-ground incident.
 
Gold Fields' February 2017 plan for South Deeps envisaged the mine producing 315,000oz at an AIC of $1,280 per ounce in 2017, 358,000oz at $1,240/oz in 2018, 393,000 at $1,195/oz in 2019, 440,000oz at $1,020/oz in 2020, 495,000oz at $905/oz in 2021 and 497,000oz at $875/oz in 2022.
 
It also said the company had revised its gold price assumption used in the life of mine model at South Deep on the back of a change in the rand-denominated gold price. 
 
After the writedown, South Deep's carrying value was put at $1.96 billion.
 
On a more positive note, the company said attributable gold production for 2017 was expected to come in at 2.16 million ounces at an AIC of $1,088/oz, which beats previous guidance of 2.1-2.15Moz at an AIC of $1,170-1,190/oz.
 
The company expects to release its full-year results on February 14.

 

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