NEWLY appointed Gold Fields CEO Mike Fraser is embarking on a major restructuring pinning the group’s future on four long-life mines which will “anchor” future operations while he is putting others on the block for disposal.
Fraser laid out his strategy for Gold Fields in the group’s interim results statement for the six months to June published today which reported a 20% drop in production to 918,000oz of gold because of a delayed ramp-up at the Salares Norte mine and production problems at South Deep.
The four, long-life assets are the St Ives mine in Australia; Tarkwa in Ghana, South Deep in South Africa and the Windfall mine in Quebec which Gold Fields is about to develop following the takeover of Osisko announced on August 12 for $1.6bn.
Fraser said he expected these assets “to form base production for multiple decades” but the Windfall mine has yet to be built while South Deep has a chequered operating history and Tarkwa is still awaiting approval from the Ghanaian government for its merger with the neighbouring Iduapriem mine.
While South Deep owns a huge gold resource the mine has been persistently dogged by operating problems since Gold Fields acquired it some 20 years ago.
South Deep has been profitable for the past few years but the June quarter saw renewed setbacks because of “backfill rehandling challenges and poor ground conditions” resulting in a revision of 2024 production guidance to between 250,000oz and 264,000oz from the previous 305,000oz to 312,000oz.
According to Fraser, “South Deep is making progress accelerating backfill placement to address the historic backfill leakage and is assessing various solutions to reduce backfill leakages going forward. Other recovery activities are focused on improving long hole stope drilling and overall productivity.”
Fraser expects an improved performance from South Deep in 2025 commenting that, “improvement measures are focused on being sustainable so that the mine is set up for longevity and quality ounces.”
In March last year Gold Fields announced a proposed joint venture between Tarkwa and AngloGold Ashanti’s neighbouring Iduapriem mine but, so far, the transaction has not been approved by the Ghanaian government.
The merger is expected to increase operating efficiencies, unlock higher grades and enable an extension of life to at least 18 years.
Fraser commented “extensive engagement” had taken place with the Government of Ghana and ”while significant progress has been made, final Parliamentary approval has not yet been finalised. We continue to actively pursue completion of the joint venture.”
On the chopping block are the Damang mine in Ghana and the Cerro Corona mine in Peru. Gold Fields this year has already sold its 24% stake in Rusoro Mining and its 45% stake in the Asanko gold mine as well as its 40% holding in the Far Southeast asset in the Philippines.
Fraser said Gold Fields was assessing its options over Damang because, “although there is a sizeable resource below the current Damang pit, a further cutback will entail material capital investment and we do not believe that this is the most optimal use of our capital.
“We are exploring alternative options for the asset but will only do so in a responsible and sustainable manner.”
Turning to Cerro Corona, Fraser said 2025 will be the operation’s last year of mining and it will only process stockpiles from 2026 onwards.
He commented, “while it will continue to produce gold and generate cash flow until 2031, we have begun to consider options for Cerro Corona’s future.”
According to Fraser, “Gold Fields has a healthy pipeline of attractive growth opportunities which will enhance the quality of the overall portfolio by lowering average AIC (all-in costs) and increasing the free cash flow generation of the business.”
