africa special articlesAFRICA NEWS

About Africa News

Africa News features dayly news focusing on current and relevant business and financial issues affecting Africa.

Africa News

Gold Fields Ltd. Faces 15% Rise in Costs


Africa’s second-largest miner of gold, Gold Fields Ltd., said costs will increase 15 percent during the third quarter because of the strengthening of the rand and increases in labor and power charges.

 

According to the company, cash costs in the fiscal first quarter will rise from $512 per ounce to $590 an ounce. In addition, the company’s largest operating cost, wages, will increase between 9 percent and 10.5 percent because of labor unions.

 

Producers are increasing gold output as prices climb because investor demand for gold as a store of value is increasing. Gold Fields expects to produce between 3.7 million ounces and 3.8 million ounces during the 2010 fiscal year as output increases from the company’s Driefontein and Kloof mines in South Africa.


Gold Fields Ltd., Africa’s second- largest miner of the metal, said costs will rise 15 percent during the next quarter because of a stronger rand and increases in labor and power charges.

 

Cash costs in the fiscal first quarter will climb to $590 an ounce from $512 an ounce the previous quarter, Johannesburg- based Gold Fields said in a statement to the city’s Stock Exchange News Service today.

 

Eskom Holdings Ltd., the largest power supplier to South African mines, is boosting tariffs 31 percent in 2009, while payments to workers, Gold Field’s largest operating cost, will jump between 9 percent and 10.5 percent after a wage agreement with the country’s largest labor unions. South Africa’s inflation rate dropped to 6.9 percent in June.

 

While gold is rising for a ninth consecutive year in dollar terms, it’s declining in rand, which strengthened 19 percent in the June quarter, according to Bloomberg data.

 

Gold Fields said it posted a net loss of 46 cents a share for the three months through June, compared with a profit of 1.95 rand the previous quarter.

 

The company took total impairments of 1.25 billion rand ($156 million), of which 1.1 billion rand related to its investment in Rusoro Mining Ltd. owner of the Choco10 mine in Venezuela. “This is the main contributing factor towards the net loss during the quarter,” Chief Executive Officer Nick Holland said in the statement.

 

Increased Production

Excluding one-time items, Gold Fields made a profit of 1.40 rand per share, compared with 2.04 rand the previous quarter. That missed the 1.52-rand median profit forecast of six analysts surveyed by Bloomberg. South African analysts compare quarterly earnings with the previous three months rather than year-earlier figures.

 

Producers are increasing gold output as prices climb because of investor demand for the metal as a store of value. Bullion for immediate delivery in London has rallied for the past eight years, and has gained 9.3 percent so far this year.

 

Gold Field’s so-called attributable output rose 4 percent during the quarter to 906,000 ounces, it said. The company’s South African output climbed 2 percent while production from outside the country, including Australia, Peru and Ghana, gained 6 percent.

 

Gold Fields expects to produce between 3.7 million ounces and 3.8 million ounces during the 2010 fiscal year as output increases from the company’s Driefontein and Kloof mines in South Africa, Holland said in a presentation in Johannesburg.

 

Gold Fields gained 2.53 rand, or 2.5 percent, to 102.03 rand in Johannesburg.


read source articleread source article
Back to the front page