Gold Fields Seeks Options for Unprofitable South African Mine

JOHANNESBURG (Capital Markets in Africa) – Gold Fields Ltd.’s board has asked Chief Executive Officer Nick Holland and his managers to consider other options for its unprofitable South African mine should the latest turnaround plan fail.

After investing more than $800 million in South Deep, Gold Fields hopes that a fifth restructuring in 13 years will see the mine break even by the middle of the year. The company cut more than 1,500 jobs to reduce costs and lowered its output target for a mine that sits on the world’s second-largest deposit.

“The board has mandated management to investigate alternative options should it fail to deliver its key targets over the next year,” Chairwoman Cheryl Carolus said in Gold Fields’ annual report. She acknowledged shareholder “frustration” over years of losses at South Deep and stressed that the miner’s portfolio is now spread beyond South Africa, across three continents.

Gold Fields’ warning for South Deep comes in a week that saw Sibanye Gold Ltd. CEO Neal Froneman announce that his company won’t extend the life of Driefontein, once Africa’s largest gold mine. With most of South Africa’s gold operations unprofitable amid the geological challenges faced by the world’s deepest mines, the industry is braced for a further contraction.

Source: Bloomberg Business News