South African miner Gold Fields announced its Q1 2018 results, reporting a drop in production and ongoing issues at its problematic South Deep mine.
South Deep is the company’s last South African asset, and it has experienced a string of operational obstacles in a tough geological setting. In 2017, South Deep saw a loss of US$27 million, and the downfall has continued into 2018.
“South Deep had a tough start to 2018, with production in Q1 2018 4 percent higher year-to-year but 41 percent lower (from the previous quarter) at 48,000 ounces,” the company said.
The mine, which is located west of Johannesburg, has persistently missed targets set by the company, causing Chief Executive Nick Holland to state that Gold Fields will consider undefined “alternatives” if losses are not halted.
According to the report, gold production dipped to 490,000 ounces for Q1 2018 compared to 497,000 ounces in 2017.
The top gold producer added that seasonal holidays and labor restructuring had an impact on production, and output was also reduced from a change in shift arrangements. The change was originally supposed to lift productivity but had an adverse effect instead.
“Although necessary to create a platform for sustainable and consistent performance, these changes have inevitably created workforce uncertainty and a disruption of operations,” the company noted.
Looking forward, Gold Fields expressed production guidance concerns, stating, “[w]e do not expect the production guidance provided at the start of the year to be achieved and we are currently forecasting production of 244 ounces for the year.”
As of 1:22 p.m. EST on Wednesday (April 25), shares of Gold Fields were down 4.93 percent, trading at 4,662 rand.
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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.