Gold Fields looks abroad as strong rand pushes up costs
October 20, 2003
By Bloomberg
Toronto - Gold Fields, the world's fourth-largest gold producer, is looking outside South Africa to replace gold reserves because the rand's rise against the US dollar is making operations in the country too expensive.
Johannesburg-based Gold Fields has taken equity stakes in about a dozen other exploration companies including Sino Gold, which operates in China, and Bolivar Gold, which has land in Venezuela.
Craig Nelsen, the president of the Denver-based exploration unit of Gold Fields, said the strengthening rand had pushed costs up.
"When you have a currency that strengthens as the rand has strengthened over the past year, about 50 percent against the US dollar, that really hits your costs very, very hard," he said.
Gold Fields, South Africa's second-biggest gold producer, reported in the quarter to June 30 that the average cost to mine an ounce of gold rose to $255 an ounce from $225 a year earlier. The company pays South African workers in rands and sells gold for US dollars.
Shares of Gold Fields have lagged those of other big miners, falling 15 percent in Johannesburg this year even as the price of gold rose 5.3 percent.
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