JOHANNESBURG (miningweekly.com) – Gold Fields chairperson Cheryl Carolus has said that the fundamental recalibration of the company’s business model to focus on innovation has, fortuitously, positioned the miner well for the lower gold price currently seen in the industry.
Gold Fields management had, in 2012, under the leadership of CEO Nick Holland, initiated research into the factors preventing gold mining companies, in general, and Gold Fields, in particular, from capturing the decade-long bull market in their share prices.
Holland subsequently espoused that, for the company to be successful in creating shared value for all stakeholders, it should refocus its business model on cash generation and not on “ounces-for-ounces” sake.
“As a result, during the second half of 2012, Gold Fields engaged in a comprehensive review of its portfolio – both its producing mines and growth projects – to give teeth to the principles put forward in the presentation.
“The key outcomes of this review have fundamentally changed the structure of Gold Fields and the way in which it operates, leading it to slim down its corporate and regional structures, trim its exploration expenditure and to stop mining marginal ounces,” Carolus said during an address at the company’s annual general meeting on Thursday.
This review culminated in the unbundling of Sibanye Gold earlier this year, which Carolus said would enable Sibanye, with its significant cash generation capability, to pay dividends and extend the productive lives of its mature Kloof, Driefontein and Beatrix mines.
Despite the current slump in the gold price, she remained optimistic about the future of gold, as well as of the company.
“We believe that gold remains a very relevant commodity and, with the changes that we have made to our strategy, operating model and structures, that we are now well positioned to benefit from the upturn when it again arrives,” Carolus commented.
These reassurances came as the company battled several challenges in recent months, including a protracted strike at its South African mines late last year and the collapse of the gold price from more than $1 600/oz to $1 450/oz in recent weeks.
She added that, while the company was “acutely” aware of its shortcomings, it would distinguish itself by continuously adjusting to the changing social and economic environment in which it operated, and by anticipating challenges ahead of time.
“Gold Fields certainly hasn’t survived for 125 years by remaining static and inflexible,” said Carolus.