JOHANNESBURG (Business Day) -- Gold Fields managed to deliver a small increase in production and curb cost increases in the year to June, despite Harmony's hostile bid for the group and an erosion of income due to the strong rand.
Headline earnings fell to 59c a share from 157c last year and a dividend of 70c (80c) a share was declared.
Net earnings fell to R179,7m from R767,6m previously, partly because of the R316m bill for defending itself against Harmony earlier this year and a R58m charge for the failed IAMGOLD transaction.
Harmony's hostile bid, which dragged on for eight months amid considerable press controversy, has now been put behind Gold Fields, CEO Ian Cockerill said yesterday.
Harmony was opposed to Gold Fields' plans to merge its non-SA operations with IAMGOLD of Canada, which it said was "value destroying". The IAMGOLD merger proposal was narrowly defeated by Gold Fields' shareholders.
Attributable gold production in the year to June rose 2% to 4,22-million ounces from 4,16-million ounces last year. There was a marginal increase in SA gold production as a result of higher grades, but a 3% increase in international production as Ghana's Tarkwa commissioned new growth projects.
Although revenue was marginally lower in rand terms at R11,8bn, it was 11% higher in dollars as the average rand gold price achieved was R84218/kg, slightly below last year's R85905/kg.
In the June quarter a 3% fall in production in SA was partly offset by a 4% increase in production from international operations. In SA, Driefontein and Beatrix increased production, but Kloof suffered from lower grades.
Although the dollar price of gold was almost unchanged throughout the quarter, a weakening of the rand resulted in a higher gold price realised.
Earnings for the quarter rose to R135m from R9m in the March quarter.
An analyst said it was a very good set of numbers, especially considering the effect of lower grades at Kloof.
Gold Fields has decided to undertake the large-scale cutback of the Danang pit at the Danang Mine in Ghana at a cost of $44m as the original pit reached the end of its life in the March quarter. The cutback will deliver 710000oz of gold to the Danang mill over five years.
The group is working on advancing the project at Cerro Corona in Peru, strengthening relations with the local community, and expects to make a decision in the last quarter of this year. It is also continuing with exploration projects in Burkina Faso, Guinea, the Democratic Republic of Congo, Australia and China.
With major shareholder Norilsk Nickel on board, Cockerill said Gold Fields has identified Russia as a potential hunting ground for ore replenishment.
It could form partnerships with Norilsk to buy or develop projects in Russia.
Gold Fields said output for the September quarter is expected to be lower than in June and operating costs could be higher because of wage increases taking effect from July 1.
There is some uncertainty about predictions as an industry strike over wage negotiations could affect production
