Gold Fields posted a 62% quarter-on-quarter increase in net earnings
Gold Fields, the world's fourth largest gold producer, on Thursday showed it had translated the higher gold price to its bottom line by posting a 62% quarter-on-quarter increase in net earnings.
Net earnings for the three months to end September came in at R2.1 billion rand, or 284 cents a share, compared to R1.3 billion, or 175 cents a share, in the three months to end June. Net earnings trebled from the same quarter a year ago when the figures were R701 million, or 99 cents a share.
Headline earnings were 284 cents a share from 176 cents a share the previous quarter.
Production was 3% higher at 900,000 ounces from 872,000 ounces in the June quarter. It was, however, fractionally lower than the 908,000 ounces produced in the September quarter last year.
At the South African operations, production decreased by 4% from 447,000 ounces to 428,000 ounces mainly due to a six day wage strike during the quarter.
Production at Cerro Corona in Peru also decreased by 6% to 92,000 ounces as a result of the lower copper-gold price ratio.
The group's west African assets did well with an increase of 26% in attributable gold production to 211,000 ounces. Gold Fields said most of this increase was a direct result of its buyout of minority shareholder Iamgold in Tarkwa and Demang. The group now holds a 90% stake in the two operations with the Ghanaian government holding the balance.
Output in Australia was up 6% to 169,000 ounces due to improved underground grades mined and processed.
Gold Fields, like all other gold producers, cashed in on a higher gold price with the precious yellow metal up 14% in US dollar terms and 18% in rand terms.
The average received gold price was US$1,702 an ounce, compared to US$1,496 in the June quarter and US$1,223 in the September quarter last year.
Received rand prices were almost R1000,000 more per kilogram year on year with the average price at R385,684/kg from R326,206/kg in June and R289,329/kg a year ago.
In the meantime, total cash costs climbed to US$851 from US$815 in June and US$697 an ounce in September last year. In rand terms this equated to R192,997/kg from R177,934/kg in June and R164,898/kg in the corresponding period last year.
Notional cash expenditure (NCE), which is the all in costs of producing gold or the operating costs plus capital expenditure, increased to US$1,212 an ounce up from US$1,178 an ounce or to R274,615/kg from R256,692/kg.
The NCE margin increased to 29% in the September quarter, well ahead of the June quarter's 21% and the group's long-term target of 25%.
"During the September quarter significant progress was made in support of our growth strategy to achieve five million quality gold equivalent ounces, in production or in development, by the end of 2015, while at the same time diversifying our production base across the globe," said CEO Nick Goodwin.
The group said its production guidance for the year ending December 2011 remained unchanged despite the recent wage-related industrial action and higher than expected safety-related stoppages which disrupted the SA operations.
Equivalent gold production is estimated at 3.5 million attributable ounces with total cash costs seen at US$810 per ounce or R187,000/kg and the NCE US$1,200 per ounce or R277,000/kg for financial 2011.
This article was originally posted on Africa Oil & Mining Network
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