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Gold Fields project in 23% cost hike Posted: Thu, 15 Nov 2007 [miningmx.com] -- GOLD Fields' Peru copper/gold project, Cerro Corona, faces a four month delay following technical difficulties, a development that will result in a 23% project cost hike, the compan said. Total capital costs to complete the mine are now estimated at $421m including a $20m additional contingency. The project was originally costed at $343m. "This does not change the overall attractiveness of the project," John Munro, Gold Fields business development director said in an interview. Adjusted capital cost increases were equal to $84/oz compared to $68/oz previously. "Remember we bought into this project at about $10/oz," he said. Gold Fields' share price was 2.72% weaker in Johannesburg and was last trading at R119.65/share. But it's not believed this is related to the project overrun. AngloGold Ashanti was 3.5% weaker and Harmony Gold was 2.8% lower, all on the softer gold price which has slipped below the psychological $400/oz level. Gold Fields said there had been an underperformance of the contractors working on the site. But the main technical difficulty has been construction of the tailings dam, the feature where waste rock is deposited after processing. Munro said poor rock quality in the project quarries was behind slow progress in the construction of the tailings dam. 'Inadequate' material delivery rates for the construction of the tailings feature were also required. Treatment of ore from Cerro Corona is scheduled to begin towards the middle of the June quarter next year, Gold Fields said. Questions There may be questions about Gold Fields' ability to operate outside of South Africa/Africa following its decision in October to relinquish operating control of the Choco 10 mine in Venezuela. Gold Fields said on October 12 that it would sell its Venezuela mine to TSX Venture Capital-listed Rusoro Mining for $532m. The deal was partly consummated with shares providing Gold Fields with 38% of Rusoro and exposure to the project. However, Munro said Cerro Corona's problems could not have been anticipated by anyone. "We could have spent an additional year drilling out the rock, but that was not feasible. The problems couldn't have been avoided by spending a few more weeks on the project," he said. Click Here to subscribe to our daily
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