[miningmx.com] — THE good times continue to roll in the South African gold industry with the latest September quarterly numbers from Gold Fields, showing record net earnings of R2bn (June quarter: R1.3bn) which compares with just R701m in the September 2010 quarter.
These follow the record quarterly earnings and cash flow numbers released on Wednesday by AngloGold Ashanti, which also announced it was instituting a quarterly dividend payment scheme.
The positive news from Gold Fields is that its attributable gold production rose 3% to 900,000oz for the September quarter (872,000oz) and the NCE (notional cash expenditure) profit margin jumped to 29% (21%).
The NCE margin takes into account the full costs of producing an ounce of gold, unlike the “cash cost’ and “total cash cost’ calculations which leave out various elements of the capital expenditure needed for exploration and development.
The negative news is this rise in production is thanks mainly to the 26% jump in attributable gold production from the group’s West African operations to 211,000oz (168,000oz).
That resulted from the increase in Gold Fields’ stake in these mines to 90% (71.1%) following the buyout of the non-controlling minority interests on June 25.
This – plus a 6% rise in production from the Australian mines to 169,000oz (159,000oz) – was more than enough to offset drops at Cerro Corona in Peru and, in particular, in South Africa.
South African production fell to 428,300oz (497,000oz) because of wage-related industrial action, safety stoppages and a slight drop in grade.
Particularly sharp drops in output took place at Beatrix and, more worringly, at South Deep. This is the mechanised, deep-level operation which is slowly ramping up production and on which Gold Fields’ long-term future in South Africa depends.
On the exploration front, Gold Fields has moved to increase its exposure to the Philippines, making a second down-payment of $66m in terms of its agreement to take a 60% stake in the gold-copper FSE deposit.
But CEO Nick Holland has also reported the group has bought an option to purchase Asean Copper Investments (Asean), which controls the Manyakan copper-gold deposit situated about 4kms east of the FSE deposit.
Gold Fields has paid an up-front, non-refundable fee of $7m securing an option to buy Asean for $63m which it must exercise before end-January 2013.
– The writer owns shares in Gold Fields.
