SA fatalities and heavy rains in Australia sink Gold Fields’ March quarterly production

Published May 8, 2024


Fatalities at Gold Fields’ South African and Australian operations, as well as weather-induced disruptions, impacted the company’s attributable production for the first quarter of the current year, prompting it to initiate a group safety review that will be completed before the end of June.

In January, Gold Fields reported a fatality in South Africa when an employee was fatally injured in an underground incident at the South Deep mine.

Last month, a contracted employee was killed at Gold Fields’ St Ives mine in Australia.

Gold Fields yesterday said its production of 464 000 ounces for the quarter period to the end of March was impacted by the fatality incidents.

This means that the gold miner’s production for the quarter plunged by 18% on a year-on-year basis, and by 22% compared to the previous quarter.

“Production for the quarter was severely impacted by weather-related events and operational challenges particularly at the Gruyere, St Ives, South Deep and Cerro Corona mines, resulting in group attributable equivalent gold production (being lower),” Gold Fields CEO Mike Fraser said.

Shares in Gold Fields slumped 4.7% on the JSE to R291.61 just after 4pm yesterday as investors digested the lower output and pacing up costs.

Analysts said this was in response to the company missing production targets and rising costs, which appeared to be galloping faster than the rise in the price of gold.

As a result of the fatalities at its South Africa and Australia operations, Gold Fields has initiated an independent review of its group safety culture, processes, systems and practices.

The review, being carried out by DSS+, formerly Du Pont, commenced in February this year and is expected to be completed before the end of June.

Gold Fields employs as many as 23 000 employees across its South Africa, Australia and Peru operations, among other jurisdictions.

In South Africa, the South Deep mine “had a challenging quarter” with operational momentum, initially impacted by the fatal incident, “compounded by reduced stope access owing to increased backfill rehandling and slow drilling” through crushed ground.

This had resulted in slower stope turnaround.

Output from South Deep for the quarter under review fell by 34% on a year-on-year basis to slightly above 56 000 ounces.

Backfill rehandling was “currently presenting the most impactful challenge to production” at South Deep.

Nonetheless, the miner had developed a recovery plan to address this, which includes increasing backfill tipping points and addressing backfill rehandling as well as backfill leakages.

The company is also improving ventilation, road conditions and service utilities underground at South Deep.

In the 2024 full year, Gold Fields has projected South Deep to produce between 9.5 tons and 9.7 tons of gold, largely in line with gold mined in 2023.

South Deep’s all in sustaining cost guidance for 2024 is expected to be higher than initial guidance, mainly as a result of the lower production volumes.

“With its significant resource endowment and long life, the focus for South Deep is currently on setting the mine up for longevity, quality ounces and incremental and sustainable production increases,” said Gold Fields.

At the company’s other operations such as Gruyere, attributable gold production at 32 200 ounces was 22% lower year on year and 14% softer on quarter-on-quarter basis.

The company attributed the lower production from Gruyere to “a significant rainfall event in March 2024, which resulted in the damage and closure of the roads that provide primary access” to the mine.

At the St Ives mine, production at 69 000 ounces was 26% below the previous year’s same quarter, negatively impacted by a decrease in ore mined and lower grades.

Ore mined from the underground mine reduced to 407 000 tons in the quarter compared to 449 000 tons in the same quarter the previous year.

Gold Fields had net debt of $1.1 billion (R20.2bn) at the end of the quarter compared to $1bn at December 31, 2023.

However, the company believes its balance sheet remains strong, with $500 million currently outstanding in bonds becoming redeemable on May 15, 2024.

It said the bond will be redeemed using a portion of Gold Fields’ $1.2bn revolving credit facility.