After production delays and fatal accidents, the plunging price of bullion is making Africa’s richest gold deposit the biggest burden for owner Gold Fields. And the bond market is taking note.

The 81-million-ounce resource at South Deep, near Johannesburg, is still burning cash after Gold Fields bought it for $3-billion in 2006. The mine has helped lift the company’s breakeven price to $1 105/oz, according to Moody’s Investors Service. Yields on the company’s bonds climbed to a six-month high during July as gold fell 6.7% to $1 093/oz.

“You’ve got a perfect storm now, with a low gold price environment and the potential for South Deep to continue to consume cash,” says Douglas Rowlings, a Dubai-based analyst at Moody’s. “The question on everybody’s mind is how much more cost can sustainably be taken out of South Deep and other mines?”

Failure to exploit South Deep profitably is hastening the decline of South Africa’s gold-mining industry, which has produced a third of all the world’s bullion over 120 years. The country is today ranked sixth in the world among gold producers, down from first just eight years ago.

South Deep, with the potential to produce 700 000 oz/t at a cost of as little as $900/oz for the next 70 years, may change that. Yet its complex orebody has so far proved too difficult for Gold Fields to extract profitably, even after $1-billion of investment over nine years.

The mine was closed temporarily last year after two workers died in accidents in the space of a fortnight. Nine employees died when a cage lift cable snapped in 2008.

Yields on Gold Fields’ $1-billion of bonds due in July 2020 climbed four basis points to 8.23% last week. The yield’s 113-point rise in the past month compares with a 59-point increase for emerging-market mining companies, JPMorgan Chase Indexes show. Gold fell to $1 091/oz on July 23, the lowest since 2010.

The company in February abandoned its target to produce 700 000 oz by the end of 2017, which was already two years behind schedule. As the only large-scale mechanised gold mine in South Africa, Gold Fields struggled to find the right skills and mining techniques, CEO Nick Holland said in May.

With a new manager and mining method, it wants to bring South Deep to breakeven by the end of 2016. The mine produced 36 300 oz at $1 640/oz in the first quarter. The company agreed on a three-year wage deal with unions at South Deep in April, providing certainty for investors, says spokesperson Sven Lunsche.

“We’re comfortable with our debt levels and maturities, and can operate at these gold price levels for a sustained period of time,” says Lunsche. “Without South Deep, our costs would be $1 000/oz to $1 050/oz.”

Even with the challenges, Rowlings sees Gold Fields holding onto its credit rating because it has a proven record of cutting costs. The company, which also has mines in Peru, Ghana and Australia, has a Ba1 credit rating, one level below investment grade, with a negative outlook. It reduced all-in costs by 7% in 2013, even after inflation and agreeing to wage rises in South Africa.

“Even at $1 100/oz gold, we are still comfortable that Gold Fields will take the necessary measures that [it] needs to in order to keep [its] credit profile in line with the ratings guidance we set,” Rowlings says. These measures include replanning mines, cutting capital spend and, if necessary, reducing its dividend.