OPINION

Work ethic re-think

Nick Holland.jpg

The Christmas break directly impacted gold production in South Africa and resulted in a 25% quarter-on-quarter decrease in gold production during the first quarter of 2015.

In essence, in South Africa, the March quarter is only two months. And of course allied to the lack of face flexibility, given the mine stoppage for four months last year, we knew that this was going to impact the first half of the year.

What we’ve asked the team at South Deep to do is make sure that we improve the operating culture on the mine as a basis for providing a more sustainable foundation. That means we’ve had to stop and fix particular areas of the operation and get the right culture and discipline in place. Often that has a short-term impact that will give us the benefits in the longer term.

Turning to West Africa, a decline in production at Damang was partially offset by an increase at Tarkwa. But overall our West African operations were slightly down, about 3% quarter-on-quarter. Our all-in costs in West Africa were up by 15% to US$1 299. This was mainly due to the US$46 million once-off cost of fleet replacement that we had to incur this quarter on 18 new trucks.

If we look at Peru, lower gold and copper head grades were treated and this resulted in a 21% decrease in attributable gold production at Cerro Corona. This was exacerbated by a lower copper price compared to previous quarters. And this was in line with mine sequencing and where we are in the pit.

The production plan for the March quarter mirrors what we actually saw in performance this quarter. The rest of the year, we believe, is going to track the guidance we’ve given to you earlier. All-in costs per gold equivalent ounce were marginally lower at US$671 per ounce.

Gold production at the Australian operations was down to 241 000 ounces for the quarter with lower production at all of the operations except St Ives. St Ives had a really good quarter, recovering from some of the previous quarter’s production issues. And it is good to see they made almost 100 000 ounces in the quarter.

All-in costs for the region increased by 14% to US$978 per ounce – still below US$1 000 per ounce – which was mainly due to lower gold sold, and a gold inventory charged to cost at St Ives, given the processing of large stockpiles that we mined at Neptune in the previous year.

Gold Fields chief executive officer, Nick Holland

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