Gold Fields shrugs off credit crisis

JOHANNESBURG (Reuters) - Africa's second biggest gold producer, Gold Fields (GFIJ.J) said on Thursday it has not been affected by the global credit crisis, and that it was "always" on the prowl for acquisitions even in these hard times.

Gold Fields Chief Executive Nick Holland told Reuters in an interview that the group's projects were fully funded and the company was in a liquid cash state and had low gearing.

The group was on track to increase output from various new projects and expansions as well as the return to service of its mines now under safety maintenance, he said.

"There is no impact on us (from the credit crisis). Our projects are largely funded and are ramping up as projected," Holland said.

"We are very liquid and not over-geared. production is ramping up and cashflow generation should be reasonably in shape during this period and onwards."

To stress this point, Holland said he was seeking acquisitions at a time when other global players were wary.

"We are always looking for acquisitions," he said.

Global miner Xstrata (XTA.L) recently dropped plans for a $10 billion bid for No. 3 platinum producer Lonmin Plc (LMI.L), citing financial turmoil and difficult debt terms.

Holland said he saw a stronger gold price, citing strong fundamentals for the metal. He forecast gold would rise to $1,000 to $1,200 per ounce in the next six to 12 months, partly on lower supply of the commodity and a weaker dollar.

"I still think this projection is sound," he said.

Gold slid more than 2 percent, with money moving back to stocks following a worldwide cut in interest rates by governments and central banks to ease the credit squeeze.

Gold hit an intra-day high of $908.90 an ounce, close to a 1-week high of $920 hit on Wednesday, before slipping to around $889.30 an ounce by 1452 GMT as stock markets gained.

Holland said global gold output will take a hit as the credit crisis forces smaller miners to shelve new projects.

"A number of projects won't take off, a variety of them won't have the capital required and costs are escalating," he said. "That's good for the gold price."

PRODUCTION TARGET

Holland reiterated that Gold Fields, the world's No. 4 gold producer, would achieve its short term target of a production rate of some 4 million ounces of gold per annum at an all-in cost of $700 to $725 per ounce by March, 2009.

Output would be boosted by output from South African mines that are now partially shut, the new $550 million Cerro Corona mine in Peru, expansions at its St Ives mine in Australia and a doubling of milling capacity at the Tarkwa mine in Ghana.

Attributable gold production for Gold Fields fiscal year to June this year was at 3.64 million ounces.

Holland said the company's key Kloof mine in South Africa would complete safety improvements by year-end as planned.

The closures at Kloof and Driefontein for safety measures represented the bulk of the company's safety interventions.

Gold Field's South Deep mine was set to produce some 800,000 ounces by 2014, at a cost of 6 billion rand ($660.2 million).

Gold Fields would cut its own electricity consumption to cope with a power shortage in South Africa, and Holland said so far it was coping well under "stable but tight" conditions.

(Reporting by James Macharia; editing by Michael Roddy)