“Since we took full ownership of the mine, we have essentially built most of the mine and key infrastructure to support the build-up to full production. In September 2009, we stopped all conventional hand-held mining and converted South Deep to a fully mechanised operation,” said [DATA GFI:Gold Fields Limited] chief executive, Nick Holland.
“Central to the transformation process is the introduction of a team of mechanised mining specialists from Australia, to assist South Deep to transform itself into a world-class mechanised mine.”
(READ MORE: S.Africa mining sector could see increased mechanising)
Holland added that the South African gold miner’s employees at South Deep have largely embraced the change and that the early signs are encouraging.
“South Deep is the most important value driver in the Gold Fields portfolio. We have a critical understanding of this project's value proposition; a sense of urgency for the execution and delivery of the project and are resolute and confident in our commitment to make it work within the new timeframe,” he explained.
“We expect that the transformation process will continue to gain traction through the June quarter and should result in greater stability and improved productivity during the second half of the year. This should provide a strong foundation for improved performance from South Deep and de-risk the momentum and sustainability of the new build-up plan.”
Gold Fields, which reported its first quarter results on Thursday, saw gold production at South Deep decrease by 26 per cent to 1,840 kilograms in the quarter ending 31 March 2014 from 2,471 kilograms in the December quarter.
According to the company, this was mainly due to a decrease in reef tonnes mined and processed as a result of the extended Christmas break and transformation implementation disruptions.
Operating profit at the mine decreased from 24 million US dollars in the December quarter to 11 million US dollars in the March quarter while group operating profit decreased from 312 million US dollars to 291 million US dollars.
(READ MORE: Gold Fields production up 21 per cent due to a shift in strategy)
Group revenue dropped to 714 million US dollars in the March quarter from 780 million US dollars in December.
Gold Fields also reported profit before taxation of 30 million US dollars in the March quarter from a loss of 654 million US dollars in the December quarter and headline earnings from continuing operations of four million US dollars from a loss of 23 million US dollars.
“The group reaffirms the guidance provided on 13 February 2014. Attributable equivalent gold production for the group for the year ending December 2014 is forecast at around 2.2 million gold ounces,” said Holland.
“Attributable gold only production for the group, for the year ending December 2014, is forecast at around 2.1 million gold ounces. Capital expenditure for the year is forecast at 693 million US dollars, in line with guidance.”