Nick Holland, CEO, Gold Fields
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Gold Fields' safety drive cuts production
Allan Seccombe
Posted: Fri, 01 Aug 2008

[miningmx.com] -- GOLD Fields drive for safety will knock 13% or 72,000 oz off September quarter gold production in South Africa as new CEO Nick Holland drives home his message that no workers will be killed or hurt at its mines.

Holland’s first day as CEO was marked by the death of nine workers at the South Deep mine in a shaft accident. He has said there will be no mining if it is not safe to do so.

“At the South African operations gold production is forecast to decrease by 13 percent due to the safety intervention at Kloof and the rehabilitation at South Deep,” Holland said.
safety intervention
“At the international operations production should increase by 9 percent mainly due to the first production from Cerro Corona,” he said.

September quarter cash costs are estimated at $570/oz.

“It is anticipated that production will be at around an annualised 4 million attributable ounces by early in calendar 2009. South Africa will contribute approximately 2.30 million ounces, dependant on the outcome of the Kloof Main shaft rehabilitation,” Holland said.

The main impact of the safety drive will be felt at the Kloof main shaft, where operations will be suspended for six months to replace steelwork below 17 level and rehabilitate infrastructure, reducing output at the mine by between a quarter and a third.

Kloof produced 179,300 oz (5,577 kg) at a total cash cost of $477/oz or R119,240/kg in the June quarter.

The outlook for September shows production falling to 3,910 kg and total cash costs bouncing up to 190,000/kg, as reduced output, higher wages and winter power prices drive up the price of producing gold.

“Kloof’s production should be restored to 2,000 kilograms per month by February 2009,” Holland said in a statement in the group’s June quarter and year-end results. June quarter operating profits were up six percent at 2.7bn, generating normalised earnings of R911m.

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Production at Driefontein, the largest mine in the group, will fall by 400 kg in the September quarter as catch-up work is done in improving secondary support that had fallen behind Holland has said.

Driefontein will return to 6,800 kg gold per quarter by the December quarter. The mine will produce 6,400 kg in the September quarter.

Production at Beatrix is forecast to drop slightly in the September period to 3,650 kg.

The outlook at the South Deep mine, which Gold Fields classifies as a development project, is rosier towards the end of the year after gold production will fall to 980 kg in the September quarter and costs balloon to $1,200/oz.

The gold price is currently $912/oz. Output is expected to rise to 1,500 kg in the December period.

In the year to end-June, Gold Fields’ South African mines lost 200,000 oz in production because of the power shortage that shut mines for a week in January. The mines produced 2.42 million oz.

The group as a whole saw gold production come down eight percent to 3.64 million oz. The international operations saw gold come down to 1.46 million oz from 1.58 million oz.

The South Deep mine added R530m in operating costs during 2008, which increased to R14bn from R11.7bn the previous year. Above-inflation wage increases and high input costs contributed to the rise.

Annual operating profit increased to R9bn from R7.7bn.