Gold Fields returns to profit as it extends life of Ghana mine

Gold Fields is set to restructure its giant loss-making South Deep mine in Gauteng. (Photo: File, Netwerk24)
Gold Fields is set to restructure its giant loss-making South Deep mine in Gauteng. (Photo: File, Netwerk24)

Gold Fields returned to a profit of $70.5 million in the six months through June, after a loss in the year-earlier period.

The Johannesburg-based producer maintained its output guidance of 2.13 million ounces to 2.18 million ounces for the full year. The company also announced that it plans to extend life of operations at its jointly held Asanko Gold mine by eight to 10 years as it bolsters its position in Ghana.

Key Insights

Apart from returning to profit, investors will also note that Gold Fields turned net cash flow positive in the first half, earlier than originally anticipated. That follows spending to boost output at Damang in Ghana and Gruyere in Australia.

While output at its South Deep mine in South Africa jumped in the second quarter, the company is a long way off from recouping its investment in the operation.

Still, increasing production in Ghana and elsewhere means Gold Fields is slowly shedding its South African risk.

Gold Fields also undertook gold price hedging to secure short-term cash flow and protect its balance sheet as the company completes its project ramp up.

The miner may now turn its attention to developing Salares Norte in Chile as it expands its geographical footprint. That will require an investment of least $835 million.

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