JOHANNESBURG (miningweekly.com) – Johannesburg- and New York-listed Gold Fields came within a hair’s breadth of breaking even in the March quarter, when it narrowed the high $491-million net loss position of the December quarter to $0.3-million.

Normalised earnings from continuing operations were up $7-million to $21-million for the three months to March 31, compared with $14-million in the December quarter but $68-million in the corresponding March quarter of 2013, as it continues to focus on cutting net debt, nudging South Deep to cash break-even point and disposing of noncore projects.

Excluding South Deep – Gold Fields’ only remaining South African mine which has not yet achieved commercial levels of production – the all-in cost (AIC) was $1 053/oz and the free cash flow margin 18%.

A team of Australians has been brought in to debottleneck South Deep, which a recent review cautions will only achieve steady state production of between 650 000 oz and 700 000 oz a year by the end of 2017, at an AIC of $900/oz.

Slimmed-down under CEO Nick Holland, Gold Fields is also consolidating the turnaround of the Damang mine in Ghana and striving to get the best out of the newly acquired Yilgarn South assets in Australia.

On the 524 800 oz of gold sold in the three months to March 31, all-in sustaining costs (AISC) of $1 066/oz outdid AISC guidance by 5% and AIC of $1 114/oz outdid AIC guidance by 3%.

Gold Fields presented its March quarter results a day after consultancy Metals Focus cautioned that gold could test a new four-year low of $1 100/oz this year, as safe-haven buying tapers on the back of a recovering US economy and the expected eventual de-escalation of tension in the Ukraine.

Non-free cash flow from Gold Fields’ operating activities during the quarter was $54-million, a 42% increase on the $38-million generated in the December quarter.

Had the gold price averaged $1 300/oz in the March quarter, the company would have been only 2% away from its medium-term objective of generating a free cash flow margin of at least 15%, at a $1 300/oz gold price.

AISC improved 18% and AIC 25% when compared with the March 2013 quarter and gold production 17% from 477 000 oz to 557 000 oz, boosted mainly by Yilgarn.

Gold Fields said it remained on track to achieve full-year AISC of $1 125/oz and AIC of $1 150/oz on attributable production of 2.2-million gold equivalent ounces.

The priority of the focus on cash generation is to reward shareholders with dividends of between 25% and 35% of normalised earnings.

Net debt was cut to $1 686-million in the quarter, which is at a ratio of 1.5 to earnings before interest, tax, depreciation and amortisation.

Most of the key infrastructure to take the fully mechanised but still struggling South Deep mine to full production is completed, along with a large proportion of the underground horizontal capital development required to access the new mine below 95-level, north of the Wrench Fault.

Holland said that South Deep employees and their representative organisations had largely embraced mechanisation and greater stability, and improved productivity could be expected during the second half of the year.

However, as a result of the temporary disruption and loss of momentum caused by the implementation of the transformation process, production for the full year was expected to be 10% lower than the full-year guidance of 360 000 oz.