JOHANNESBURG (miningweekly.com) – Gold mining company Gold Fields has a compelling investment case for its shareholders and any investor looking for exposure in a high quality and cash generative gold business, new CEO Chris Griffith said on Thursday.
Answering questions during a conference call following reporting an attributable equivalent first-quarter gold production of 541 000 oz, Griffith spoke of the many aspects that make Gold Fields a gold investment frontrunner.
“It’s simple, it’s pure play gold, with fantastic diversification in really good jurisdictions,” the former CEO of Anglo American Platinum, who took over the reins of Gold Fields from retiring CEO Nick Holland, told the conference that was covered by Mining Weekly.
All-in sustaining cost for the quarter was $1 078/oz, all-in cost was $1 249/oz, with Griffith highlighting the strong position of the balance sheet of the Johannesburg- and New York-listed company.
“If you think about the strategy of the company over a number of years, of moving away from labour-intensive, conventional mining, to focus on more mechanised openpit and mechanised underground operations that are safe and more productive, that has stood the company very well over the last number of years.
“Then Gold Fields has got great projects in the pipeline. We’ve got a world-class project in Salares Norte, which is consuming a bit of cash for this year and next year, but after that it’s going to start pumping out cash.
“We’ve got a great story for our own shareholders, and we’re working on ensuring that our shareholders get the full value of Gold Fields. It is always going to be the best value for shareholders if you are driving value out of owned assets and we’ll be looking at what opportunities are available that are strategy and value accretive to us,” said Griffith.
“Being in the seat for 36 days, confirmed my expectations that Gold Fields is well on its way to being a global leader in sustainable gold mining. The deliberate strategy of moving away from labour-intensive, conventional mining to focus on mechanised openpit and underground operations, with majority international exposure, has served the company well.
“In addition, the reinvestment programme over the past four years has placed Gold Fields in a position where it can maintain and even grow its production profile over the next decade,” he added in a media release.
VALUE ABOVE VOLUME
The new CEO made it clear that he would be prioritising safety and productivity issues and would always place value above volume.
“We are not going to radically change the main focus that Gold Fields has had over the year on quality assets, highly productive first-class mines that are mechanised and safer in jurisdictions that are fairly easy to operate in.
“That kind of focus, and the deliberate focus on value as opposed to just volume, that was my mantra in Anglo Plats and that will be my mantra in Gold Fields. The management team in Gold Fields have done a good job of focusing on the company delivering value and not more volume and that will certainly be at the core of the things that I’m looking at,” he added.
Griffith senses less upcoming disappointment from the mechanised, underground South Deep mine, with some of the underlying metrics beginning to show some positive directions.
“I say this with a big health warning because I have only been in the office for five weeks. I have already had three presentations from South Deep. First of all was just to understand the history and how the mining method has evolved from the very first time they got into the orebody.
“Having gone through that, I just generally get a feel that that we’ve got a much better handle on how we mine the orebody. The first observation I have is that the evolution of the mining method looks to me to be constructive and I think the team has got a much better handle on the better management of seismicity, the manner of mining the destress and the comfort they are taking in the destress
“All of those look, from the mining engineer’s point of view, like a lot of evolution from the blood, sweat and tears of the past and it looks to me as if they have got a much better handle on it.
“I think some of the underlying metrics are starting to show some positive directions. The team is much more focused on not chasing today’s production, because when you do that, you just get yourself into a muddle everywhere.
“What they’re doing is they’re having the sequences mined properly and that’s why you’re seeing the increase in square meters, the increase in development and you're also seeing the productivities.
“I’ve only been underground once and, of course, this is a very difficult time to go there and kick the tyres with the guys and get a feel for the right things happening, but overall I’m more positive than I expected to be.
“My philosophy around mining is that if you do the right things for long enough, you absolutely must be successful and it seems to be that they are doing the right things, and they’re sticking to their guns. The leadership team has been stabilised and we’ve got good quality people,” Griffith emphasised.
Gold mined at South Deep in the three months to March 31 increased by 2%, largely as a result of the increase in destress and reef access development and all-in cost decreased by 9% to $1 444/oz.