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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.
Gold Fields flags writedown, guidance beat Gold Fields flags writedown, guidance beat Gold Fields flags writedown, guidance beat Gold Fields flags writedown, guidance beat Gold Fields flags writedown, guidance beat

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

Staff reporter

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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