Gold Fields reports that basic earnings per share for the six months ended 30 June 2020 (H1 2020) are expected to increase by 90-110% from the basic earnings reported for the six months ended 30 June 2019 (H1 2019).
The increase in earnings for the period is driven largely by the increase in the gold price received.
Gold Fields is a globally diversified gold producer with nine operating mines in South Africa, Australia, Peru and West Africa, as well as one project in Chile.
The gold miner has total attributable annual gold-equivalent production of 2.2Moz, attributable gold-equivalent mineral reserves of 51.3Moz and mineral resources of 115.7Moz.
Headline earnings per share (HEPS) for H1 2020 are expected to be US¢19.5-20.5 per share, 290-310% (US¢14.5-15.5 per share) higher than the US¢5.0 per share reported for H1 2019.
Normalised earnings for H1 2020 are expected to be US¢35.5-38.5 per share, 137-157% (US¢20.5-23.5 per share) higher than the US¢15.0 per share reported for H1 2019.
For Q2 2020 attributable group gold-equivalent production was 550koz (Q1 2020: 537koz),with AISC of US$997/oz (Q1 2020: US$975/oz) and AIC of US$1,069/oz (Q1 2020: US$1,060/oz).
Attributable gold equivalent production for the six months ended 30 June 2020 increased marginally YoY to 1,087koz (H1 2019: 1,083koz), with the contribution from Gruyere (only commenced production in July 2019) and increased production days, largely offset by the impact of Covid-19 stoppages at South Deep and Cerro Corona as well as the impact of the lower copper price at Cerro Corona, which resulted in lower gold equivalent ounces.
The increase in production days relates to a decision that was taken, during Q2 2020, to align the production months with the calendar months, which resulted in an extra 10 production days in H1 2020.
These 10 extra production days also impacted Q2 2020. This once-off adjustment has no impact on H2 2020.
All-in sustaining costs (AISC) for the Group for H1 2020 is US$986/oz, compared to US$891/oz in H1 2019, an increase of 11% YoY, driven by an increase in net operating costs (mainly driven by a move of waste tonnes from capital to operating costs at Damang following intersection of the main orebody), sustaining capital expenditure and royalties (approximately US$15/oz) as well as lower by-product credits (due to the lower copper price).
Covid-19 related costs are estimated at approximately US$20/oz for H1 2020 and are embedded in the AISC.
All-in costs (AIC) for H1 2020 was 4% lower YoY at US$1,065/oz (H1 2019: US$1,106/oz) as project capital was US$137m lower in H1 2020 compared to H1 2019, which more than offset the increases relating to AISC, discussed above.
REVISED COST GUIDANCE FOR FY 2020
FY 2020 Production guidance, as updated with the Q1 2020 operating update, remains intact at between 2.200Moz and 2.250Moz.
In light of the increase in costs in H1 2020, the company is increasing its cost guidance for the year. AISC is expected to be between US$960/oz and US$980/oz (original guidance: US$920/oz – US$940/oz) and AIC is expected to be between US$1,070/oz and US$1,090/oz (original guidance: US$1,035/oz -US$1,055/oz). The revised cost guidance is based on an estimated rand exchange rate of R17.00 and A$ exchange rate of 0.70 for H2 2020.
Increased royalties (due to the higher gold price) account for US$15/oz of the cost increase, while Covid-related costs account for US$10/oz. Potential further Covid-19 related disruptions increases the risk to Group production and cost guidance.