Vancouver — Despite a US$19-million gain in equity investment sales, South Africa’s second-largest gold producer earned 6% less in the recent first quarter than in the corresponding period of 2002.
However, profits rose 12% compared with the US$83 million earned in the fourth quarter of 2002, reflecting a US$19 million gain from the partial sale of the company’s equity stakes in
CEO Ian Cockerill says the company has done well “despite challenges posed by the extended number of public holidays and the strengthening of the rand.”
Gold production in the first quarter was essentially flat at 1.1 million oz., while total cash costs jumped to US$225 per oz., compared with US$160 in the year-earlier period. The higher costs are a direct result of a 17% appreciation in the rand against the U.S. dollar. Like most South African mining companies, Gold Fields received a lower gold price of R95,068 per kg, compared with R100,969 per kg a year earlier, as the rand advanced to an average of 8.38 to the dollar from 9.77.
The major’s Australian production was steady, while output in Ghana increased.
In South Africa, production increased at both the Kloof and Beatrix operations, owing to increased underground tonnage. However, the gain was offset by lower production at the Driefontein mine.
The strength of the rand and its effect on profitability remain primary concerns in the second quarter.
Says Cockerill: “The June quarter is posing even greater challenges, what with an increase in public holidays and the ever-strengthening rand.”
Meanwhile, the company plans to spend US$160 million on a 4.2-million-ton-per-year mill and carbon-in-leach facility at its Tarkwa mine in Ghana, along with a new fleet of mining equipment. These improvements should boost the mine’s annual gold output to more than 700,000 oz. from the current 525,000 oz.
The expansion will occur between June 2003 and December 2004.
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