Gold Fields’ Holland calls for patience and calm on struggling South Deep

Gold Fields CEO, Nick Holland. Pic: Martin Rhodes

GOLD Fields CEO, Nick Holland, urged investors in his company to be patient as it attempted to restructure its struggling South African mine, South Deep, yet again. He called for calm.

“They are now very impatient, and one can understand it but I think we need to calmly look where we are and evaluate the best way forward,” said Holland in an interview with Bloomberg News. “There is a large resource base there, it’s well-drilled and we have spent a lot on infrastructure development costs. We are not far away, we just need more time.”

In August, Gold Fields announced a restructure of South Deep, Gold Fields’ only South African mine, cutting 1,560 permanent and contractor jobs, potentially slashing gold output, and impairing the mine by R4.8bn.

Gold Fields is due to unveil another new plan for South Deep in February when the firm publishes its annual production and financial numbers. It would then take 18 months to see if the plan was working, Holland told Bloomberg.

Said Goldman Sachs at the time of the announcement: “We believe that the company is likely to face increased pressure to either turn the mine around or shut it down given the continued cash burn”.

The bank forecast production of some 210,000 ounces from South Deep this year which compares to Gold Fields previously guidance of 321,000 oz for the period.

“With output of less than 15% of the total production base, the loss of South Deep, would not break the company. On the contrary, we believe the stemming of the cash flow bleed from South Deep should be welcomed, but only if the mine was at least brought to a point where it might have been a saleable asset,” said Leon Esterhuizen and Arnold van Graan, analysts for Nedbank CIB on the restructuring.