By: Matthew Hill
1st August 2008
The move would cost it in the order of 500 kg/m of gold, while the company would lose a further 400 kg production of the yellow metal this year at its biggest mine, Driefontein, also owing to safety related measures.
On top of this, the company had put on hold 130 000 oz/y of gold production from pillars-and-remnant areas at its two biggest mines, with further cutbacks a possibility after it had completed a review on this type of mining at the end of the month.
Gold Fields’ stock had fallen by 7,9% at 14:19 to trade at R81,50 a share, after hitting a new 12-month low of R80,15 a share earlier in the day.
CEO Nick Holland told reporters and analysts that the measures it was taking to improve secondary support at Driefontein, which would lead to the production reduction, would continue until the end of the year.
“By December, we should be over the worst of that,” he said in Johannesburg.
Meanwhile, the replacement of the aged steel structures at the Kloof main shaft would take around six months to complete, at a cost of up to $5-million, or around R37-million.
Outgoing Gold Fields COO Terence Goodlace said that the shaft was over 40-years old, and had probably only been designed for a life of some 25 years.
Holland noted that the company had appointed Du Pont as the auditors to conduct its group-wide safety audit that it announced it would embark on earlier this year.
He reiterated that he meant it when he said that Gold Fields would not mine if it could not do so safely, and was already taking serious actions in this regard.
On the pillar-and-remnant mining front, the company had reduced by one-quarter these operations at Driefontein, and had pulled out of 50% of these areas at Kloof, detailed Holland.
All these measures led Holland to push back Gold Fields’ four-million ounce a year production target, which it had hoped to achieve this year, by “a couple of months”.
Production in the current quarter, ending September 30, would drop by 5%, increasing to just shy of one-million ounces in the next three months, as its new Cerro Corona mine in Peru ramped up production. Total production for the 2009 financial year would be four-million ounces, which Holland stressed was a “shoot-the-lights-out” figure, adding that he preferred to underpromise and overdeliver, rather than doing the opposite.
He said that the company had decided to take the short-term production pain to improve its safety record, as the company had to “tackle this head-on”.
Edited by: Mariaan Webb