Overseas projects keeping Gold Fields on track

11 December 2010 | 03:03 Code : 20305 Geoscience events
Gold Fields, the world’s fourth-largest listed gold producer, said international operations....

Gold Fields, the world’s fourth-largest listed gold producer, said international operations would help it meet production targets, after first-quarter profit fell partly due to the strong rand.Gold Fields Chief Executive Nick Holland said projects in Africa, including Ghana and Mali, and the Philippines would keep the company on track to reach its aim to produce 5 million ounces a year by 2015.Sasha Naryshkine, an analyst at Vestact in Johannesburg said: "They will have a big benefit when they grow overseas and on the balance things look pretty fine for them."Lower production costs at its businesses outside South Africa, will likely help the miner reach its production target, he added.The strong local currency is a problem for South African miners, which sell metals in dollars but pay their costs in rand , which has risen nearly 30 percent since the start of 2009.Gold Fields reported headline earnings of 99 cents per share in the July-September first quarter, down by a third from 147 cents in April-June.A Reuters survey showed the strong rand would weigh on earnings in the September quarter at South Africa’s top three gold producers, even as the price of gold has hit a record high.Headline earnings, the main profit gauge in South Africa, strip out certain one-time items. Earnings were also hit by a $30 million once-time taxation in the September quarter.South Africa producers face high production costs because they have some of the deepest mines in the world and profits have also recently been hit by power increases by state power utility Eskom.The price of gold in the three months to September averaged a record $1,246 per ounce, up $51 per ounce or 4 percent on the previous quarter.The company’s attributable gold output during the period totaled 908,000 ounces -- a two-year high -- compared with 898,000 ounces in the April-June quarter.Gold Fields forecast attributable equivalent gold production of between 3.5 to 3.8 million ounces for the year to end-June 2011.The company said revenue increased to $1.23 billion in quarter from $1.17 billion three months earlier.The rand gold price rose to 289,329 rand per kilogram from 287,454 rand per kilogram, while the total cash cost decreased to $697 per ounce, compared with $688 per ounce in the previous quarter.The company said it would not need any more funding after a $1 billion 10-year bond issue this year.The latest funds will also enable Gold Fields to restructure some of its existing debt, it said.Gold Fields shares were up 2.8 percent at 1522 GMT compared with a 1.9 percent rise in the JSE’s Top-40 Index.

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