Gold Fields Reports Lower Profit in H1 Amid Operational Challenges

Gold Fields (NYSE:GFI,JSE:GFI) released its H1 financial and operational results on Friday (August 23), reporting a profit of US$389 million (US$0.43 per share), down from US$458 million (US$0.51 per share) last year.

During the first half of 2024, multiple operational challenges and production issues hindered the company’s targets, leading to declines in multiple areas of its portfolio. The company's gold production declined 20 percent year-on-year to come in at 918,000 ounces. Meanwhile, Gold Fields' normalized earnings decreased by 22 percent year-on-year to reach US$355 million (US$0.40 per share), down from US$454 million (US$0.51 per share) in the first half of 2023.

Gold Fields has attributed its H1 setbacks to several unforeseen events and disruptions.

South Deep, one of its major assets in South Africa, experienced backfill seepage and challenging ground conditions, which affected stope access and slowed down production. As a result, production at South Deep fell to 117,000 ounces of gold in H1, down substantially compared to the 152,000 ounces it put out during the same period last year.

Gruyere in Australia faced a six week suspension due to heavy rainfall, impacting both mining and processing activities. At the St. Ives mine, lower production in H1 was compounded by delays in the development of new open pits. Similarly, Cerro Corona in Peru encountered weather-related issues, resulting in a resequencing of mining to lower-grade areas.

Salares Norte in Chile, a key growth project, saw ramp-up delays due to the early onset of severe winter weather. Frozen material in the processing plant's pipes forced a temporary suspension of operations. The company is aiming to restart the plant by September 30, with expected 2024 production revised to 40,000 to 50,000 ounces.

CEO Mike Fraser expressed a commitment to improving Gold Fields' performance in the second half of 2024.

“I am confident of an improved performance in the second half of the year as we implement enhancements to our safety processes and systems, progress ramp up of Salares Norte and realize the benefits of operational recovery plans under way at South Deep, Gruyere, St Ives and Cerro Corona,” he said in a press release.

Gold Fields is also seeking to strengthen its safety strategy following two fatalities at South Deep in January and at St. Ives in April, both caused by mobile and mining equipment incidents. The company has since commissioned an independent review of its safety culture and practices, with a multi-year safety improvement plan now in place.

The company also continues to progress its decarbonization efforts. Renewable energy accounted for 17.1 percent of electricity consumption at the group level in H1, with multiple solar and wind energy projects under construction.

Looking ahead, Fraser expressed optimism about an improved performance in the second half of 2024. Key to this outlook are ongoing recovery efforts at South Deep and the planned restart of the Salares Norte plant.

Gold Fields also believes it is set to benefit from its acquisition of Osisko Mining (TSX:OSK,OTC Pink:OBNNF), which will consolidate the company’s interest in the Windfall project in Canada. Full ownership of the asset is expected to enhance flexibility and decision-making as the project advances toward production.

“Through continued investments in our existing assets, bolt-on acquisitions and exploration we are confident of further improving the quality of our portfolio,” Fraser added.

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.