Gold Fields, a leading global gold producer listed on both the JSE and NYSE, has declared a steady total dividend of R7.45 per share for the year ending December 31, showcasing a solid financial performance with $703 million in attributable profit. This figure closely follows the previous year’s profit of $711 million, demonstrating the company’s resilience in a fluctuating market.
Despite narrowly missing its production target, Gold Fields reported a commendable 2.24 million ounces in group attributable production, slightly below the anticipated 2.25 to 2.3 million ounces. This performance is backed by improved all-in sustaining costs (AISC) of $1,295/oz, surpassing the projected range thanks to favorable exchange rates and a robust average gold price of $1,942/oz over the year.
CEO Mike Fraser highlighted the influence of the Australian dollar and South African rand’s performance, coupled with the strong gold price, as key factors in the company’s successful financial outcomes. Gold Fields’ ability to generate $1 billion in free cash flow during the reporting period, up from $855 million the previous year, enabled it to maintain its dividend level, reflecting a payout of 40.1% of its normalized earnings. However, the company faces challenges ahead, with a $320 million increase in net debt and concerns over fluctuating gold prices and exchange rates. Despite these hurdles, Gold Fields remains committed to delivering competitive returns and building a resilient business capable of weathering the industry’s cyclical nature.
Looking forward, Gold Fields is poised for significant growth. The company expects a 20% increase in production over the next two years, thanks to the ramp-up of the Salares Norte project in Chile and the South Deep mine in South Africa. Despite a slight dip in South Deep’s production due to a skills shortage, the mine’s adjusted free cash flow surged by 78% year-on-year, marking a fifth consecutive year of positive cash flow. The company’s Australian assets, anticipated to produce about one million ounces annually for the next decade, form the backbone of Gold Fields’ production base. However, challenges such as labor shortages and operational issues at the Gruyere mine have prompted plans for an accelerated business strategy to enhance performance.
In Africa, the Tarkwa mine in Ghana continues to be a steady performer, with plans to extend its life through a joint venture with AngloGold Ashanti. This collaboration is expected to significantly boost production levels in the coming years. Gold Fields is also exploring options for its non-core Damang and Cerro Corona mines to maximize shareholder value. Despite a decrease in Cerro Corona’s production, it managed to generate a notable adjusted free cash flow in the review period. The company eagerly anticipates the commissioning of the Salares Norte project, expecting it to contribute significantly to Gold Fields’ portfolio growth and value. With an estimated gold equivalent production of 250,000 oz this year and a projected 580,000 oz by 2025, Salares Norte represents a key growth opportunity.
As Gold Fields prepares for a productive year ahead, with an expected production of 2.33 to 2.43 million ounces and planned capital expenditures to support its ambitious growth targets, the company navigates leadership transitions and strategic investments. This strategic approach ensures that Gold Fields not only sustains its current success but also secures its position as a leading force in the global gold mining industry for years to come.
