Commissioning delay pushes out first gold from Gold Fields Salares Norte to end-2023

Salares Norte, Chile

First gold from Gold Fields’ Salares Norte mine under construction in Chile will be delayed to the end of Q4, rather than the beginning of the quarter as previously announced.

The group said the mine is now 97% complete, with 1.6 million tonnes of ore and 380,000oz of gold stockpiled to date. However, certain parts of the plant need to be commissioned by the OEM vendor in order to validate the warranty, and there has been a delay in securing the OEM representative. This has created a delay of about two months in commissioning the mills and filter presses, so first gold production will also be delayed.

If first gold is produced on 1 December, production for the 2023 financial year is expected to be only 1,000 gold equivalent ounces, as opposed to the previous guidance of 15,000-20,000oz, Gold Fields said. That means 2024 production will only be about 400,000-430,000 gold equivalent ounces at an all-in cost of $900-860/oz, rather than the 500,000oz previously forecast.

If first gold is only produced at the end of December, production in 2024 will be 350,000 gold equivalent ounces at an all-in cost of $1,050/oz.

In either case, steady state production will be reached by the beginning of 2025, so planned production volumes for 2025 and 2026 remain unchanged at 600,000 gold equivalent ounces, Gold Fields said.

The later commencement date for first gold has also affected the capitalization of costs, so total capital project cost has risen by $20 million to $1.04 billion.

Since construction began in February 2021, Gold Fields has reported several delays, due to factors such as Covid-19 and severe weather. Capital costs have also increased from the first estimate of $860 million, due to the project delays and higher inflation than expected. Salares Norte was originally scheduled to begin production at end-2022.

Gold Fields shares slipped 3.22% to R229.26 on the JSE after the announcement, although the gold price was slightly firmer at $1,919/oz in early New York trading.