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.
South Africa’s Gold Fields Ltd said on Friday its full-year profit slumped 73 percent, dented by a decline in bullion production led by its South Deep operations.
Headline earnings per share (HEPS) fell to $0.07 per share, for the full year ended Dec. 31, 2018, from $0.26 in the previous year.
HEPS is the main profit measure used in South Africa that strips out certain one-off items.
Revenue dropped 7 percent to $2.58 billion in 2018 from $2.76 billion in 2017 due to the lower ounces sold, the firm said.
Bullion production slipped 6 percent to 2.036 million ounces in 2018 from 2.160 million ounces in 2017 due to a decline in production at South Deep, Gold Fields said.
While South Deep had a difficult year, the large-scale restructuring completed at the end of 2018, places the mine on an improved footing from which to gradually build up production
South Deep, the company’s last South African asset, has lost money over the past five years and Goldfields has been working to mechanise operations in the face of challenging geology 3 kms (2 miles) below the surface.
Production at the South Deep in 2018 was affected by a slow build-up after the seasonal holidays in the first quarter, labour restructuring, safety stoppages and a six-week strike, the gold miner said.
“While South Deep had a difficult year, the large-scale restructuring completed at the end of 2018, places the mine on an improved footing from which to gradually build up production,” said Chief Executive Officer Nick Holland in a statement.
Gold Fields, which employs about 3,600 people in South Africa, said last year it would restructure its South Deep operations and cut about 1,100 jobs, nearly a third of the workforce, to save money. In response, the National Union of Mineworkers (NUM) went on strike at the mine on Nov. 2.
The firm has declared a dividend of 20 cents per share, making the total dividend for the year at 40 cents ($0.0283) per share, compared with 90 cents a year ago.
(By Tanisha Heiberg; Editing by Shreejay Sinha and Sherry Jacob-Phillips)
