Our opinion on the current state of GFIELDS(GFI)
Gold Fields (GFI) is a relatively high-cost international gold mining house with a single mine in South Africa, South Deep. Acquired by Gold Fields in 2006, South Deep has struggled to achieve profitability, with the company investing a total of R32bn (R22bn for the purchase and R10bn for development) over the past 14 years. Brett Kebble famously described South Deep as "The world's most expensive long drop..." due to its challenges, being 3 kilometres deep and technically complex. Despite these difficulties, South Deep holds the second-largest unmined gold resource in the world, which is why Gold Fields continues to invest in it.
Gold Fields is collaborating with an independent power producer (IPP) to build a 50MW power project in South Africa. Additionally, the company has invested 502m over the past two years to ensure that its international operations, particularly at Damang and Gruyere, would sustain a production of 2 million ounces annually for the next decade. Recent developments at South Deep have led to a reduction in costs by R800m and a decrease in capital expenditure by R400m.
The company is also focused on bringing the new Salares Norte gold mine in Chile into production. On 11th July 2022, Gold Fields announced that it would list on the Toronto Stock Exchange and adopt a dividend policy of paying between 30% and 45% of profits. The protracted investment in South Deep is beginning to pay off, with output expected to increase by approximately 25% over the next four years. On 12th August 2024, Gold Fields announced the acquisition of the remaining 50% of Osisko Mining for 1.57bn (R29bn).
In its results for the six months ending 30th June 2024, the company reported a 20% decline in attributable production, down to 918,000 ounces. The all-in sustaining costs were $2060 per ounce, while earnings per share (EPS) dropped by 22% to 40c (US), compared with 51c in the previous period. The company noted that "Group performance in H1 2024 was impacted by weather-related events and operational challenges at some of our assets."
Technically, the share is very volatile and subject to fluctuations in the international price of gold, but it has been in an upward trend over the past five years. It remains a volatile commodity play.
Gold Fields is collaborating with an independent power producer (IPP) to build a 50MW power project in South Africa. Additionally, the company has invested 502m over the past two years to ensure that its international operations, particularly at Damang and Gruyere, would sustain a production of 2 million ounces annually for the next decade. Recent developments at South Deep have led to a reduction in costs by R800m and a decrease in capital expenditure by R400m.
The company is also focused on bringing the new Salares Norte gold mine in Chile into production. On 11th July 2022, Gold Fields announced that it would list on the Toronto Stock Exchange and adopt a dividend policy of paying between 30% and 45% of profits. The protracted investment in South Deep is beginning to pay off, with output expected to increase by approximately 25% over the next four years. On 12th August 2024, Gold Fields announced the acquisition of the remaining 50% of Osisko Mining for 1.57bn (R29bn).
In its results for the six months ending 30th June 2024, the company reported a 20% decline in attributable production, down to 918,000 ounces. The all-in sustaining costs were $2060 per ounce, while earnings per share (EPS) dropped by 22% to 40c (US), compared with 51c in the previous period. The company noted that "Group performance in H1 2024 was impacted by weather-related events and operational challenges at some of our assets."
Technically, the share is very volatile and subject to fluctuations in the international price of gold, but it has been in an upward trend over the past five years. It remains a volatile commodity play.
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