Ian Cockerill, CEO, Gold Fields

Buying Barrick stake is a possibility - Ian Cockerill, Gold Fields CEO

In an interview on 702 @ 18:50 on Thursday, 3 August 2006

[miningmx.com] -- IAN Cockerill, Gold Fields CEO, conceded that buying Barrick Gold's 50% stake in the South Deep gold mine was one of a number of options open to the company.

"This is a possibility. We have to look at it as with any acquisition opportunity," said Cockerill when asked whether he'd consider the move. Gold Fields owns 18.9% in Western Areas which owns the other 50% in South Deep.

South Deep is a gold mine on the west rand of Johannesburg with a nameplate capacity of 720,000 oz/year, gold reserves of 30 million oz, and many more ounces in the resources (economically unproven) category.

"When an opportunity comes to buy assets in one's own neighbourhood that is of a Gold Fields franchise we'd have to look at it. We've demonstrated that by buying 18.9% stake," he said.

"It shows a commitment to the asset and to the country."

Speaking on the Moneyweb Power Hour, Cockerill said that a major challenge for the company's management was to control the urge to spend the additonal cash flow it had received from the improved gold price, a situation he termed a 'Hollywood Problem'.

"The biggest challenge is to stop people getting carried away. You can't confuse good fortune with good management," he said.

Speaking on SAFM, Gold Fields chief financial officer, Nick Holland, said another major challenge was to haul in mining costs.

"We've got to counteract price increases with initiatives of our own," said Holland who added that diesel and cyanide costs had increased 28% in Ghana where it operates the Tarkwa mine.

"We made R159m in contractual savings of which R95m has contributed to cash flow," said Holland. Gold Fields was hoping to install a performance based project with an explosives supplier.