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Gold Fields safety drive cuts deaths from 13 to 2

By unknown | Oct 30, 2008 | COMMENTS [ 0 ]

Robert Laing

Robert Laing

A focus on safety saw Gold Fields cut its fatalities from 13 to two during the September quarter.

Replacing the steelworks in Kloof's main shaft and other safety-related projects brought the group's gold production down 8 percent to 24817kg (798000 ounces) from the June quarter.

Nick Holland, Gold Fields chief executive, described September as a "clean-up quarter" and warned December would be one too.

"To get an idea of what is involved in refurbishing Kloof," he said, "the main shaft has a depth of seven Eifel Towers.

"The project is proceeding well and will be completed by the end of the year so the mine can start full production again after the Christmas break."

The March quarter should see the group's gold production return to more than one million ounces.

"I'm relieved we spent the money we had to before this financial turmoil hit," Holland said.

He predicted the gold price would rise thanks to supply pressure because many of the new gold producers slated to enter the market will now be unable to secure the money they need.

Profitability was squeezed by the average gold selling price dropping 4 percent to $874-oz while cash costs jumped 23 percent to $617-oz.

Contributors to higher operating costs included a 10 percent wage increase for miners, Eskom's winter tariffs along with high inflation for electricity and mine chemicals.

Gold Fields differs from other gold miners in that it reports a figure called "notional cash expenditure" which adds capital expenditure to cash costs. This raised the group's overall costs to a loss making $909-oz, mainly because of two high capital expenditure projects.

South Deep, which Gold Fields expects to spend R1 billion a year on for the next six years, produced gold at a notional cash expenditure cost of $2 328-oz.

The group's Peruvian mine Cerro Corona produced its first gold during the quarter at a notional cash expenditure cost of $2289-oz.

The group's best performer using this accounting system is Australia's Agnew at $588-oz followed by Driefontein at $680-oz.

Holland said notional cash expenditure gives investors a clearer picture if a mine is really profitable, and more mining houses should adopt it.

His goal is to bring the group's overall notional cash expenditure down to $725-oz.


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