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Gold Fields cuts output forecast as SA mine struggles

Nov 09 2018 09:35
Felix Njini, Bloomberg

Gold Fields [JSE:GFI] has lowered 2018 output forecasts after workers at its South African mine embarked on a go-slow and a strike protesting the producer’s plans to cut jobs as part of a restructuring.

Production is now expected at 2 million ounces from an earlier forecast of as many as 2.08 million ounces to 2.10 million ounces, the Johannesburg-based company said in a statement on Friday.

Gold Fields’ plan to cut more than 1 500 jobs to restructure its struggling South Deep gold mine in South Africa met with opposition after workers embarked on a crippling strike on November 2.

Key insights

The workers had already started a go-slow before the company announced a plan to restructure the mine.

South Deep production is now forecast at 154 000 ounces this year from 244 000 ounces, “assuming that the strike continues until the end of November with the consequence of no further production from November onwards”.

Gold Fields initially aimed to produce 321 000 ounces from South Deep in 2018.

The producer has constantly revised downwards output targets at South Deep, the world’s world’s second-largest gold deposit.

It’s proving difficult to exploit, and has been a drag on the company’s performance. International operations will continue to buoy Gold Fields output, with production expected to rise to 1.85 million ounces from an original estimate of 1.75 million ounces. Output in the quarter ending September rose to 533,100 ounces from 523,200 ounces in the preceding three months.

Reinvestment project at Damang is on track while construction at Gruyere has made progress, with the mine due to start producing in the second quarter of 2019.

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