Gold Fields profit jumps on gold price

Gold Fields, the world’s number four gold producer, posted a 67% rise in quarterly headline earnings on the back of soaring prices for the metal, but production fell on South Africa’s power crunch.

Gold Fields said on Friday its adjusted headline earnings per share for the third quarter to the end of March rose to 155 cents from 93 cents in the second quarter.

Headline EPS are adjusted to exclude the effects of financial instruments and foreign debt. JP Morgan has expected Gold Fields to post adjusted headline EPS of 146 cents.

Like its peers in South Africa, which have also suffered production losses owing to a power crisis, production fell by 14% to 827 000 ounces, as South African mining output was scaled back due to inadequate power supply since January.

Gold Fields’ output was hit as state-owned power utility Eskom struggled to provide sufficient power to the mines, after a near collapse in the electricity grid in January led to a five-day countrywide mine shutdown. Eskom has since then supplied around 90% to 95% to mines in the country.

The group’s new chief executive officer Nick Holland cited two key factors that affected the group.

“The first was the power disruptions in South Africa which had a significantly negative impact on group production and costs ...
The second was the 29% increase in the average rand/gold price received to R220 612 per kilogramme from R170 488 per kg,” he said.

The gains resulted from a 17% increase in the US dollar price of gold, combined with a 10% weakening of the South African rand quarter on quarter, Holland said.

An interim dividend of 65 cents per share would be payable on June 2, the company said. Shares in Gold Fields closed at 104,67 cents on Thursday. - Reuters

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