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Gold Fields swings to loss on lower bullion price

Johannesburg - Gold Fields [JSE:GFI], reported a fourth-quarter loss as it booked impairments on operations in Ghana and Australia.

The headline loss was $54m in the three months to December 31, compared with a profit of $21m the previous quarter, the Johannesburg-based company said in a statement on Thursday. Gold Fields recognised $300m of writedowns in the period, related to the outlook for its Damang mine in Ghana and Darlot in Australia, investments and tax.

“2015 was another challenging year for the gold industry, with the US dollar-gold price peaking at around $1 300 an ounce in January and then falling approximately $250 an ounce through the course of the year,” Gold Fields said in the statement.

With only one mine in South Africa, Gold Fields benefited less from the rand’s 10% depreciation against the dollar in the fourth quarter than local rivals Harmony Gold [JSE:HAR] and Sibanye Gold [JSE:SGL]. The company was also hurt by the falling copper price, which reduced revenue at its Peruvian operations.

Gold Fields produced 566 000 ounces of bullion in the quarter, with all-in sustaining costs of $929 an ounce. Production was up 1.6% on the previous quarter while costs declined 2%.

South Deep, a development mine in South Africa described as the company’s “kingpin asset” on its website, made progress in the period, with all-in costs down 19% to $1 156/oz and production up 24% to 68 100 oz.

Gold Fields forecasts attributable equivalent production of 2.05 million ounces to 2.1 million ounces for this year, with decreases in production in Australia, Ghana and Peru being offset by a 30% advance in South Deep production. All-in sustaining costs are seen at $1 000 to $1 010/oz, while capital expenditure will be $602m.

Gold Fields goes shopping to cope with commodities ‘bloodbath’

“There’s a lot of good stuff out there that we can buy,’’ Gold Fields chairperson Cheryl Carolus told a private-equity conference near Cape Town on Wednesday after attending the gold miner’s board meeting. Some of it may be in Australia, where the company “made some very smart acquisitions’’ last year, she said in an interview following her remarks.


“Gold Fields has shifted its strategy from greenfields to brownfields, which is one of our responses to cope with the general bloodbath in the commodities markets,” Carolus said. ‘‘We are obviously looking at low-hanging fruit, and the jurisdictions where we already have a good footprint are an obvious choice.’’

The mining industry suffered as demand from China, the biggest buyer of raw materials, waned last year, with gold an exception in recent months as investors sought more of the precious metal as a haven during market turmoil. Gold Fields’ share price has more than doubled since reaching a 14-year low on November 18.

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