Gold Fields to spend $1.4bn on Ghana mine

Johannesburg - Gold Fields [JSE:GFI], a South African producer of the metal with mines from Australia to Peru, will invest $1.4bn to extend the life of its Damang operation in Ghana by eight years.

The investment will allow the mine to keep operating until 2024, Johannesburg-based Gold Fields said in a statement on Monday. The money will be paid over the eight-year period, it said.

"This is a classic brownfields opportunity," chief executive officer Nick Holland said in an interview. "It makes logical sense from all angles for us to do this."

Damang has produced more than 4 million ounces of gold from several of its open pits since it began two decades ago, but output has been in decline since 2013 and Gold Fields has struggled to find the required grade of ore.

The company said it had considered closing the mine. Bullion has climbed 19% this year in London, rebounding from a three-year drop.

Gold Fields’ shares declined 5.5% to R58.01 a share by 10:06 a.m. in Johannesburg, cutting this year’s advance to 37%.

Damang’s extended life will produce 1.56 million ounces of gold at an all-in cost of $950 an ounce and support 1 850 jobs, the company said. The project will produce 225 000 ounces of gold a year.

Gold was at $1 265.50 an ounce in London today, according to Bloomberg generic pricing.

"This is a first step in what may well be a much longer mine life in time to come," Holland said. The project will extract less than half of Damang’s 4 million ounces of gold resources, he said.

Gold Fields’ production rose 1.5% to 537 000 ounces in the three months through September 30 from the previous quarter, with all-in sustaining costs steady at $1 026 an ounce.

It maintained its forecast for full-year output of 2.1 million to 2.15 million ounces.