Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Gold Fields will not be pursuing big acquisitions following its failed bid to buy Canada’s Yamana Gold last year, executives said on Thursday.
The world’s top gold producer Newmont’s $16.7 billion bid for Australia’s Newcrest has raised expectations of a wave of mergers and acquisitions in the sector.
Last November, Gold Fields’ attempt to buy Yamana was scuppered by a rival offer from Agnico Eagle and Pan American Silver Corp.
Gold Fields’ interim chief executive officer Martin Preece said that while the company still wanted to expand its assets, it would not just add ounces “just for ounces’ sake.”
“We’re going to be a little more circumspect, look at more incremental growth, rather than big transformational projects,” Preece said during an investor call.
Preece added that adverse market reaction to the Yamana bid, which saw Gold Fields’ shares plunging 20%, showed investors were averse to paying significant premiums.
Gold Fields chief financial officer Paul Schmidt said the miner would revert to its strategy of picking up development projects and operational mines that fit into its portfolio.
“We continue with our normal way of incrementally adding ounces, maybe the $400-$500 million type of transactions like what we’ve done in Australia,” Schmidt said during the call.
Gold Fields shares fell 5% on Thursday after it flagged a further delay at its Salares Notre project in Chile, impacting its 2023 gold production.
Salares Notre, initially expected to produce its first ore in the first quarter of 2023, now expects to deliver its first gold in the final quarter.
Gold Fields said covid-19, severe weather and skills shortages were delaying the project, which is expected to produce at least 450,000 ounces of gold per annum.
The company’s gold production is now expected to be 2.25 million to 2.3 million ounces this year, down from 2.4 million ounces in 2022.
A $202 million break fee payment from the failed Yamana bid drove Gold Fields’ headline annual profit 19% higher, offsetting cost pressures.
Headline earnings per share (HEPS) – the main profit measure in South Africa – rose to $1.19 in 2022 from $1.00 the previous year.
Gold Fields declared a final dividend of 4.45 rand ($0.2443) per share, bringing its total payout for 2022 to 7.45 rand.
($1 = 18.2117 rand)
(By Nelson Banya; Editing by Jason Neely and Mark Potter)
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