Power disruptions have negative effect on Gold Fields

JOHANNESBURG - Power disruptions in SA had “a significantly negative impact” on Gold Fields’ production and costs, the listed mining company said in its results for the March 2008 quarter released on Friday.

Another development, however, was the 29 percent increase in the average rand/gold price received from R170,488 to R220,612 per kilogram as a result of a 17 percent increase in the US dollar price of gold, combined with a 10 percent weakening of the SA rand quarter on quarter.

“Despite the negative impact of the power disruptions in South Africa, the Group margin increased from 38 percent in the December 2007 quarter to 42 percent in the March 2008 quarter,” Gold Fields said.

This showed the benefits of a higher gold price combined with the shielding effect of the weakening currency on Gold Fields’ earnings which “should enable Gold Fields to capture some of the higher price received for the benefit of shareholders going forward”.

Gold Fields reported headline earnings for the March 2008 quarter of R1,246 million, compared with headline earnings of R456m and R228m for the December 2007 and the March 2007 quarters respectively.

In US dollar terms headline earnings for the March 2008 quarter were US176m, compared with earnings of US67m and US32m for the December 2007 and the March 2007 quarters respectively.

The company expected to benefit over the next three quarters as production in the country normalised at stable power supply levels.

However, Gold Fields said that accidents at its mines had overshadowed its results.

“It is with deep regret that subsequent to quarter end three separate accidents resulted in the death of 14 of our colleagues,” chief executiveNick Holland said.

On April 28 a seismic event at Driefontein’s 10 shaft resulted in the death of four miners and at South Deep one miner lost his life in a fall of ground accident on April 29. On May 1 at South Deep nine colleagues died when a winder rope apparently broke and a conveyance fell 59 metres to the bottom of the 215 metre long ancillary ventilation raise hole between 100 and 110A levels.

“In all instances full investigations are currently underway. Gold Fields also intends to commission an external, full safety review at all its operations,” Holland said.

Sapa

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