JOHANNESBURG (Reuters) - Gold Fields hopes to reach full production at its only gold mine in South Africa by the end of May, its chief executive said on Thursday, as it forecast limited impact to its global output from the coronavirus pandemic.
Gold Fields operates the South Deep mine near Johannesburg and brought it to profitable production last year after making losses for many years due to challenging geology 3 kms (2 miles) below the surface.
The company had to shut the mine after President Cyril Ramaphosa declared a five-week lockdown in Africa’s most industrialised country from the end of March to contain the spread of the pandemic. The government has since said mines can operate at up to half capacity.
“I would expect us to get back to production by end of the week,” CEO Nick Holland said in a conference call after announcing first quarter results.
The company expects to reach 100% production in 5-6 weeks, assuming the government allows a ramp up of mines beyond 50%, Holland said.
It expects to lose 32,000 ounces of production at the mine, according to current estimates.
The miner, which also operates in Chile, Peru, Australia and West Africa, said group gold production for the quarter ended March 31 was 537,000 ounces, down from 542,000 ounces a year earlier, with all regions tracking the annual guidance.
“The impact of the pandemic has been relatively muted on our operations, with production only slightly affected,” it said.
“The situation is fluid and there is the possibility of further lockdowns and restrictions in the countries in which we have a presence which may lead to production disruptions in future.”
The firm said most of its mines were operating largely as normal, but production at South Deep and Cerro Corona in South America would likely be affected by coronavirus-related stoppages in the second quarter.
“Gold Fields had a decent operational update this morning, it looks like they are expected to make more money than they thought,” said Gerhard Parking, portfolio manager BP Bernstein.
The company’s shares closed up 17.47% at 156.94 rand.
Graphic - Gold Fields share vs gold spot price:
Gold Fields said it had reduced net debt to $1.260 billion at March 31 from $1.664 billion at Dec. 31, 2019, and that it expected higher gold prices to boost earnings.
It has approximately $800 million in cash on hand and in excess of $1.5 billion of committed, unused debt facilities.
The company also said top executives would donate a third of their salaries for three months to a government fund to fight the pandemic, while South Deep would contribute 15 million rand and employees a further 1 million.
Reporting by Tanisha Heiberg and Promit Mukherjee; additonal reporting by Tumelo Modiba; editing by Jason Neely and Mark Potter
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