Gold Fields beats COVID-19 restrictions in South Africa
Gold Fields’ South Deep operation was severely impacted by the COVID-19 pandemic and related lockdown restrictions during H1 2020, with most of the impact felt during the second quarter. The mine was placed on care and maintenance for the first month of Q2 2020 and operated well below its full labour complement for the remainder, in compliance with government-imposed restrictions.
Despite this, South Deep showed improvements in most measures during H1 2020 compared to H1 2019, largely due to the fact that H1 2019 was subject to organisational realignment post the labour restructuring and industrial action in H2 2018.
Gold production at South Deep increased by 10% to 3,123kg (100,400oz) in H1 2020 from 2,851kg (91,700oz) in H1 2019. All-in cost decreased by 6% to R654,537/kg (US$1,234/oz) in H1 2020 from R698,982/kg (US$1,529/oz) in H1 2019 driven by higher gold sold and lower capital expenditure.
Despite the impacts of the COVID-19 lockdown, South Deep generated a net cash inflow of R79m (US$5m) for the six months ended 30 June 2020 compared to an outflow of R238m (US$18m) for the six months ended 30 June 2019.
“Gold Fields welcomes the accelerated economic recovery strategy aimed at achieving higher levels of economic growth post COVID-19, published by Business for South Africa (B4SA) in July. We believe the emphasis should be on the SA government to provide the economic leadership in a social and economic compact with business and organised labour to create a more stable regulatory and operating environment that is conducive to private sector investment. For the mining sector this means providing clarity around key aspects of the Mining Charter and associated legislation,” said Gold Fields.
AUSTRALIA
Gold Fields’ Australian operations delivered another strong operational performance in H1 2020. Gold production increased by 14% to 494koz in the six months to 30 June 2020 from 435koz in the six months to June 2019, mainly due to the inclusion of Gruyere where commercial levels of production were reached at the end of September 2019.
All-in cost (which included capital expenditure on Gruyere) decreased by 13% to A$1,463/oz (US$960/oz) in H1 2020 from A$1,677/oz (US$1,185/oz) in H1 2019. The region reported net cash flow of A$317m (US$208m) for the six months ended 30 June 2020 compared with A$130m (US$92m) for the six months ended 30 June 2019.
SOUTH AMERICA
The Cerro Corona operation in Peru was significantly impacted by the COVID-19 pandemic during H1 2020, particularly during the June quarter. Equivalent gold production decreased by 31% to 108,700oz for the six months ended 30 June 2020 from 157,100oz for the six months ended 30 June 2019 underpinned by lower gold and copper grades processed due to the COVID-19 restrictions (18Koz), together with a lower price factor (13Koz), as well as lower grades mined in line with the current year plan.
All-in cost per equivalent ounce increased by 41% to US$984 per equivalent ounce for the six months ended 30 June 2020 from US$698 per equivalent ounce for the six months ended 30 June 2019 due to lower equivalent ounces sold and higher capital expenditure.
Despite the challenges, Cerro Corona generated net cash flow of US$49m for the six months ended 30 June 2020 compared to US$52m for the six months ended 30 June 2019.
