Gold Fields rides the bullion rally

The gold producer will report a strong rise in interim earnings as it maintained production amid a rising gold price.

Gold Fields says its first-half headline earnings per share are likely to quadruple after it received a higher price for its metal and suffered only minor disruptions as a result of Covid-19.

In a trading statement, the gold miner said production rose marginally to 1.09 million ounces in the six months to end-June. The contribution from its Gruyere joint venture in Australia, which commenced production last July, and more production days largely offset the impact of Covid-19 stoppages at its South Deep mine in SA and Cerro Corona in Peru. The price of gold has risen about 35% so far this year, crossing above $2,000 an ounce this week.

The company recorded 10 extra production days after it decided to align production months with calendar months, which added days to the second quarter. It said the once-off adjustment would have no impact on the second half of its financial year.

All-in sustaining costs (AISC) for the period increased by 11% to $986 an ounce, driven by an increase in net operating costs, sustaining capital expenditure and higher royalties due to the stronger gold price. It also booked Covid-related costs of about $20 an ounce.

Headline earnings per share (EPS) for the period are expected to be 290-310% higher than the 5 US cents reported last year, while normalised EPS are likely to rise by 137-157% from the 15c previously reported.

The company maintained its full-year production target at 2.2-2.5 million ounces. It raised its AISC guidance to between $960 and $980 an ounce.

Its interim results are scheduled for release on 20 August. Its shares closed 7.8% higher at R246.25 yesterday.

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