Business News of Fri, 9 May 20030
Gold Fields on serious business in Ghana
Tarkwa mine increases geographical spread
GOLD Fields, which yesterday reported earnings for the three months ended March 31, is to invest more than R1,1bn expanding its Tarkwa mine in Ghana.
This should ensure gold production well into the next decade, Gold Fields said. The company will spend R607m building a new carbon-in-leach facility (a sort of gold-processing plant) and will buy a fleet of mining and support equipment for R535m.
Work will start on the project in June and Gold Fields said it was aiming to have the mill commissioned by the end of next year.
The development will lead to an increase of 175 000 ounces a year in gold production from the mine and on completion Tarkwa's annual gold output will be 700 000 ounces.
"The Tarkwa expansion is excellent. It increases the (geographical) diversification and allows the company to add ounces through organic growth," said David Davis a gold analyst at SCMB Securities in Johannesburg.
Gold Fields' Ghanaian mines, which include Tarkwa and Damang, provided about 22% of the company's gold production, said Davis. Analysts have in the past expressed concern about the company's lack of a black economic empowerment equity component.
Gold Fields CEO Ian Cockerill said yesterday he was confident the company would have no problem fulfilling this requirement in adequate time to ensure conversion of Gold Fields' mining licences as will be required under SA's new mining legislation.
"They are under pressure (to carry out an empowerment transaction), but I don't think is important to do a deal for the sake of doing a deal," said Davis.
"I would speculate a deal could come in one of the larger areas the EBA area at Kloof, the extension of No9 Shaft at Driefontein or a possible partnership with Placer Dome and Western Areas on a Phase 2 development of South Deep, " he said.
Gold Fields said it was talking with potential partners.
"There are a couple of groups that we are having very intense discussions with.
"Those discussions have revealed a number of interesting opportunities," Cockerill said.
In the quarter, Gold Fields, the world's fourth-largest gold-mining company, reported a drop in net profit of 1,5% at R805m.
The decline was smaller than those recorded by rivals Harmony, which posted net income down 49%, and AngloGold, which recorded a 43% drop in profit for the first quarter of this year.
Gold Fields reported that earnings had been buoyed by income from the sale of shares it held in Eldorado Gold and Glamis Gold.
Unrealised gains on its currency hedges of R185m and on foreign debt of R55m also underpinned company profit.
Nick Holland, Gold Fields' chief financial officer, said that as a result of the strength of the Australian dollar against the US dollar, the company "should have another substantial gain for the rest of the quarter" on its currency hedges and foreign currency debt.
In line with other gold companies, the stronger rand has eaten into earnings and was expected to weigh down on profit in the next two quarters