Nick Holland, CEO, Gold Fields
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Beatrix remains core to Gold Fields
Brendan Ryan
Posted: Wed, 29 Oct 2008

[miningmx.com] -- GOLD FIELDS CEO Nick Holland said he did not intend "giving up" on the Beatrix mine despite its long track record of underperformance.

The commitment to the future of the mine was given at Wednesday’s September quarterly results briefing, at which a 14% drop in gold production from Beatrix was reported.

While the mine is profitable on a “cash cost” basis, it is losing money on Gold Fields’ newly-introduced “notional cash expenditure (NCE)” basis which calculates an all-in cost of production.

The all-in cost includes capital expenditure, development and exploration costs which are excluded from the “cash cost” calculation.

Beatrix’s cash cost jumped 27% to $607/oz for the September quarter (June quarter - $478/oz) while the NCE cost went up 24.8% to $830/oz ($665/oz).

That meant Beatrix was marginally profitable during the September quarter when Gold Fields earned an average of $874/oz on gold sales, but it is losing money at current gold prices of about $740/oz.

Gold Fields vice-president for SA operations, Vishnu Pillay, said Beatrix’s performance had been “something of a disappointment” but he believed the mine had plenty of potential.

That is what various Gold Fields executives have been saying about Beatrix for years and the group, under previous CEO Ian Cockerill, declared the mine was not for sale even at the height of the recent uranium boom.

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The Beatrix No 4 shaft was originally Gencor’s Beisa uranium mine which was brought on stream in 1982 as SA’s first primary uranium producer and then closed down in 1984.

Holland said Beatrix was a shallow mine exploiting an ore body containing some seven million to eight million oz of gold, which represented a significant resource by international standards.

Gold Fields is targeting a rise in production from Beatrix to 3,450kg of gold in the December quarter from 3,156kg in the September quarter.

It is also forecasting a drop in the NCE cost to R195,000/kg for the December quarter, compared with R206,622/kg for the September quarter.

Holland said: “I believe we can get NCE costs down to R180,000/kg. The problem is that the mine call factor is not being achieved and that is something we must focus on.

“The current gold price is around R250,000/kg. We will make a lot of money out of this operation,” he said.