Gold Fields Limited
) reported second-quarter 2013 adjusted (barring one-time items)
loss from continuing operations of 5 cents a share, in contrast
to the prior-year quarter's earnings of 15 cents.
On a reported basis, the company posted a net loss
(attributable to Gold Fields stockholders) from continuing
operations of $128.5 million or 18 cents per share in the quarter
as compared with a net income of $105 million or 15 cents per
share a year ago.
The sharp loss was a result of lower gold price, lower gold
sold and the negative gold price adjustment of $13 million
associated with prior and present concentrate shipments at Cerro
Corona. Gold Fields also incurred losses resulting from
non-recurring items of $143 million, out of which $127 million
was related to impairment charges at Tarkwa and Damang. The
impairment was due to the decision to curtail all heap leach
activities at Tarkwa and a revaluation of the ore stockpiles at
Revenues decreased about 22.6% year over year to $637.1
million in the quarter from $823 million registered in the
year-ago quarter. Average gold price declined 13.3% to $1,372 per
ounce from $1,582 per ounce recorded in the second quarter of
Gold Fields' attributable gold production was 451,000 ounces
in the quarter, down 10.3% from 502,900 ounces of gold produced
in the prior-year quarter. The decrease in the production was due
to the illegal strike at Tarkwa and Damang, partially offset by
an increase in production at South Deep. Gold sold declined 11.2%
to 464,000 ounces from 522,000 ounces sold in the prior-year
Net operating costs rose 1.2% to $397 million in the second
quarter. Total cash cost for Gold Fields amounted to $857 per
ounce, up 12.7% from $760 per ounce in the previous-year quarter,
resulting from lower production and higher net operating
costs. All-in sustaining costs for the quarter stood at
$1,416 per ounce.
Operating profit also declined 44.3% to $240 million due to
increased costs and reduced production. Operating margin
decreased to 38% in the quarter from 52% in the second quarter of
Cash and deposits decreased 27% to $442.7 million as of Jun
2013, from $606.3 million as of Dec 2012. Net debt (long-term
loans plus the current portion of long-term loans less cash and
deposits) increased to $1,656.4 million as of Jun 2013, from
$1,262.5 million as of Dec 2012.
BARRICK GOLD CP (ABX): Free Stock Analysis
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As of Jun 2013, Gold Fields registered cash outflow from
operating activities from continuing operations of $42 million,
compared with a cash inflow of $229 million as of Jun 2012. Lower
operating profit resulting from deflated gold price led to the
cash outflow. Capital expenditure declined to $187 million as of
Jun 2013, from $310 million as of Jun 2012.
Gold Fields' Board did not announce an interim dividend owing to
the current lower gold price environment. The Board is concerned
about the gold price volatility in the near term.
On Aug 22, Gold Fields entered into an agreement with
Barrick Gold Corporation
) to acquire three of the latter's Australian mines for a total
consideration of $300 million.
The Australian mines, collectively known as the Yilgarn South
Assets, include the Granny Smith, Lawlers and Darlot gold mines.
These mines produced 452,000 ounces of gold in 2012 at all-in
sustaining costs of $1,137 per ounce and contained proven and
probable reserves of 2.6 million ounces as of Dec 31, 2012. Gold
Fields holds an option to deliver up to 50% of the consideration
in its own shares to Barrick, in addition to an equivalent amount
of cash consideration at the transaction's closing, which is
expected on Oct 1, 2013.
Gold Fields, which is one of the major South African gold miners,
Harmony Gold Mining Company Limited
Sibanye Gold Limited
), expects its attributable gold production for the year ending
Dec 2013 to be within 1.83 million equivalent ounces to 1.90
million equivalent ounces, excluding the discontinued operations
- KDC and Beatrix.
Gold Fields revised its full-year 2013 guidance for total cash
cost to $830 per ounce from $860 per ounce. Notional cash
expenditure (NCE) is now expected at $1,240 per ounce, down from
previous estimate of $1,360 per ounce.