* CEO says South Africa gold industry in crisis
* Gold Fields posts loss on Ghana writedowns, spot price
* Share price down over 10 percent, biggest 1-day fall since
By Ed Stoddard
JOHANNESBURG, Aug 22 South African miner Gold
Fields on Thursday announced a major restructuring to
restore profits, hollowed out by the plunging price of gold.
It said it was not afraid of closing mines to make money,
including its Damang operation in Ghana, and would revamp its
business to generate profit at a spot gold price of $1,300 an
Gold Fields has already spun off the bulk of its assets in
South Africa where labour, power and other costs are escalating
in the world's deepest shafts.
Labour and political risks are also high in South Africa, a
point underlined this week by a new gold strike threat from the
country's largest miners' union.
Gold currently trades around $1,370 an ounce, compared with
a record peak of over $1,920 two years ago and a figure of
$1,500 which Gold Fields anticipated in its 2012 business plan.
"We will go through this restructuring now in terms of
redoing all of our technical models at $1,300 (an ounce). That
is going to culminate in a news business plan that we will
finalise in three months," Gold Fields' chief executive Nick
Holland told journalists.
"And that will tell us what the profile is going to look
like in order for us to make money. We're not afraid to cut
production to make money," he said.
Gold Fields' shares posted their biggest one-day fall in
five years as the company reported a second-quarter loss, hit by
$270 million of writedowns at Damang and its other Ghana
operation Tarkwa related to curtailing processing activities.
Holland said Tarkwa remained viable but there were question
marks over Damang.
"Can we come up with a longer-term plan that works for the
operation? Or do we have to accept that it has to be put on care
and maintenance?", he said, using a phrase that normally means
closing a mine indefinitely.
The loss of $129 million in the three months to the end of
June compared with a net profit of $27 million in the previous
quarter and $105 million in the same quarter last year.
This made for a net attributable loss of 18 U.S. cents per
share, compared with net earnings of 4 cents per share in the
previous quarter. The company dropped its interim dividend.
At the same time, Gold Fields said it had bought three
Australian mines from top producer Barrick Gold in a
$300 million deal which will be 50 percent payable in shares.
The company said the acquisition will add 452,000 ounces to
its annual production and make it Australia's third largest gold
producer. The company expects to produce between 1.83 and 1.9
million ounces of gold this year.
Barrick, which recently posted a $8.7 billion writedown, is
focusing on lower cost mines.