JOHANNESBURG (miningweekly.com) – South African gold-mining major Gold Fields put R1,4-billion of free, unencumbered cash into the till in the March quarter, achieved its best-ever safety performance, fixed production on a firm upward trajectory and cut costs by 2%, Nick Holland, who celebrated his first full year as Gold Fields CEO, announced on Thursday.

Presenting an excellent set of March quarter results, Holland gave guidance of another production uplift to 900 000 oz for the upcoming June quarter, after announcing a dramatic 72% safety improvement.

Holland, who said on assuming office a year ago, that “if we can’t mine safely, we will not mine at all”, quickly took 1,5-million ounces out of the company’s gold reserves in order to lower fatalities.

For the ten months of the financial year up to April and including the first week of May, fatalities have declined from 47 to 13 for the “the best safety year by far for Gold Fields in its history”.

“But we are going to continue relentlessly with our quest for zero,” Holland vowed.

Gold Fields has increased its gold production for the second quarter in a row, going from 839 000 oz to 871 000 oz, on the back of a 5% increase in the previous quarter, taking the increase to 10% in six months.

In lowering costs by 2%, Gold Fields has reduced notional cash expenditure (NCE), or the all-in cost of production – by 14%.

Gold Fields is the only company that reports NCE.

“I believe that the gold-mining industry has not reported the full picture to market. A lot of companies talk about how good their cash costs are, but they don’t tell you how much they have to spend on capital.

“A lot of the capital expenditure you see there is ongoing capital expenditure that is needed to maintain the operation.

“That’s why I am saying that the only true measure is to look at NCE and our NCE is down 14% to $668/oz.

“That’s very significant, because one of the other things I said a year ago, was that our strategy is to generate real value for shareholders, and there’s only one way of generating real value and that’s cash in the till and we’ve made cash this quarter.

“On the back of $668/oz NCE, the achieved gold price was $906/oz and you can see we’ve made cash. We have generated very significant cash from our operations. In fact, we’ve made R3-billion of cash from our operating activities and, after all capital expenditure, we’ve made R1,4-billion of cash flow for the quarter, and that’s what this industry is all about, generating returns for shareholders.

“In the quarters that follow, I expect us to continue to increase production and I’ve given a guidance of around 900 000 oz for the next quarter, which is around 3,4% up from the March quarter.

“We expect to see South Deep gather momentum over fiscal 2010, which begins on July 1 and I feel much more confident that South Deep can now show an appreciable 50% increase in production in fiscal 2010,” Holland added.

Gold Fields anounced that its head of international operations, Glenn Baldwin, would be relocating to Perth for the purposes of strengthening the company's Australasian gold-mining portfolio.

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