Despite Yamana focus in 2022, Gold Fields exceeds its output guidance

A mine worker is seen underground in Gold Fields' South Deep mine outside Johannesburg. Photo: File

A mine worker is seen underground in Gold Fields' South Deep mine outside Johannesburg. Photo: File

Published Feb 24, 2023

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Gold Fields said despite the Yamana deal occupying management's time, it had exceeded its upper end of the 2022 production guidance, which remained unchanged throughout the year.

In its reviewed results for the 12 months ended December 31, the gold miner said it exceeded guidance of between 2.31 million and 2.36m ounces.

Last year, Gold Fields lost a $6.7 billion (R122bn) bid for Canadian Yamana Gold to two companies. Later, its CEO Chris Griffith resigned from his position.

Gold Fields interim CEO Martin Preece said: “I think the lessons that we learned through the transaction (Yamana deal) is that the market doesn't like a significant premium being paid on a transaction. They weren't favourable to the large transformational transaction.

“I think the other important lesson for us is that we maintained our discipline and didn't get into a bidding war,” he said.

Preece said while Gold Fields hasn't found any opportunities to invest in yet, it would keep looking.

“When it involves M&A (merger and acquisitions), we certainly are going to be a little bit more circumspect. I think we are looking at more incremental growth, focusing on our regions rather than big, large transformational projects. That's something I think Gold Fields has done over many years, very successfully. It's something we know and understand,“ he said.

He said the company's focus would be to look for the right opportunities at the right price and maintain discipline.

“We're not looking for ounces. We're looking for profitable ounces and ounces that are going to upgrade our portfolio not chasing ounces for the sake of chasing ounces.“

Gold Fields reported that headline earnings rose by 19% to $1.06bn, but normalised earnings were 7% lower year-on-year at $860 million.

The company declared a final dividend of 445 South African cents a share, which resulted in a total dividend payment declaration for the 12-month period of 745 SA cents a share. About half of a $200m break fee paid by Yamana to Gold Fields was forwarded to the dividend.

The group reported that for its South African operations, Gold Fields’ managed production increased by 12% to 327 900 ounces, with production from South Deep having increased by 12% to 316 200 ounces.

“South Deep continued to show pleasing operational improvements during 2022, with gold production increasing 12% to 10 200kg (328koz) in 2022 from 9 102kg (293koz) in 2021,” it said.

Gold Fields said its Australian operations delivered another strong operational performance in 2022, once again surpassing the 1Moz annual production level. Gold production increased by 4% to 1061koz in 2022 from 1019koz in 2021.

Preece said the group had a solid production base underpinned by its Australian region, which was expected to produce about 1 million ounces a year, for at least the next ten years.

Gold Fields said its operations in Chile made significant progress by the team at Salares Norte since construction began in 2020.

“Our focus for 2023 remains on delivering first gold at Salares Norte and then building up towards full production in 2024. Indications are that there will be a potential further three-month delay in the start-up of production, with first gold now expected in the fourth quarter of 2023,” Preece said.

Gold production at Asanko, in Ghana, decreased by 19%, on a 45% basis to 76 700 oz, on a 45% basis.

Looking ahead, Gold Fields said 2023 was going to be another significant capital expenditure as a result of the remaining project capital at Salares Norte, as well as the elevated level of sustaining capital expenditure across the portfolio to maintain the production base of the group.

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