Gold Fields to post flat earnings for 2023 despite project delay

GOLD Fields is expected to report largely flat basic earnings year-on-year as lower write-downs in the year to December 2023 offset a one-off break-fee payment in 2022.

Normalised earnings are expected to come in between $0.98 and $1.04/sh (from both continuing/discontinuing operations). This would imply normalised share earnings of 47 to 53c in the second half compared to 51c in the first six months and higher than the 41c/s estimate of Scotiabank.

Commenting in a trading statement on Tuesday, Gold Fields also said production for the 12 months ended December would be 4% lower at some 2.3 million ounces.

BMO Capital Markets said in a note the trading statement represented a deterioration in performance in the final quarter of the year as costs were reported to be easily beating its guidance. The bank also expected higher gold production.

All in sustaining costs would be $1,295 per ounce, 17% higher year-on-year and within the range of market guidance. Allowing for exceptional items, such as an adjustment on the value of stockpiles at its Ghana mine Damang, royalties linked to the gold price, and exchange rate movements, AISC would be higher at $1,317/oz but within the guidance range, which was $1,300 to $1,340/oz.

The outcome for Gold Fields was basic earnings of between 76 and 82 cents per share which compares to 80c/share in the firm’s 2022 financial year. Write downs in the year came in at $157m compared to $380m in 2022 but 2022 saw a $202m net break-fee payment related to the failed takeover of Yamana Gold.

The year under review had transactional highs, and some operational lows. On the upside, Gold Fields announced investments in Windfall, a gold resource in Canada owned by Osisko Mining, and a joint venture with AngloGold Ashanti in Ghana – the latter still requiring the approval of the West African government.

Operationally, however, the company twice missed production commissioning deadlines for its Salares Norte amid an increase in total capital expenditure to over $1bn. First meaningful production from Salares Norte is now due in April which means production for the year will be about 100,000 oz less than in its last guidance.

The company also announced in November the appointment of Mike Fraser, the former COO of South32 as its CEO, replacing interim CEO Martin Preece, who stays on. Gold Fields is scheduled to announce its numbers on February February 22.

“The key focus when the company reports later this month will be the update on Salares Norte,” said BMO in its notes. It estimated 2024 AISC of $1,394/oz.