Gold Fields profit jumps on surging bullion prices

South African miner Gold Fields reported a big jump in half-year earnings, benefiting from a surge in the price of gold.

Gold’s surge to record highs above $2,000 an ounce and a weaker rand have given the South African gold industry, which has produced a third of the bullion mined in history, a lifeline after the disruption caused by the coronavirus pandemic.

“A bittersweet respite for gold companies has been the rise in this safe haven metal to record levels,” said Chief Executive Officer Nick Holland, who will be stepping down in September 2021.

Holland, who has been an executive director at Gold Fields for 24 years and CEO for 13 years, will retire in line with the company’s compulsory retirement age, chairwomen Cheryl Carolus said, adding that a search for a replacement would start soon.

The announcement comes after rival AngloGold last month said its CEO Kelvin Dushnisky would step down due to family reasons.

Gold Fields headline earnings per share for the six months ended June 30 rose to $0.20 from $0.05 a year earlier, although the company said it remained “reasonably cautious” about the remainder of the year due to the COVID-19 crisis.

Gold Field’s production during the half-year edged up to 1.087 million ounces from 1.083 million a year ago.

Output from Gruyere in Australia, and an additional 10 days of production due to a realignment of its calendar, offset the impact of COVID-19 stoppages at its South African mine and the Cerro Corona mine in Peru, the company said.

It estimated 42,000 ounces of output was lost due to COVID-19-related stoppages.

Overall, the impact of the pandemic led to the contraction of South Africa’s mining output for a fourth consecutive month in June, down 28.2 per cent year-on-year, with gold production 17 per cent lower.

Gold Fields, which also has operations in Ghana and the Salares Norte project in Chile, lowered its 2020 production forecast to 2.20-2.25 million ounces from 2.275-2.315 million.

It declared an interim dividend of 1.60 rand ($0.093) per ordinary share, equal to the total dividends declared last year and up from the 2019 interim payout of 0.60 rand per share.

Holland said shareholders could expect dividend payouts at the top of the company’s policy range of 25 per cent to 35 per cent of normalised profit, if prices remained supportive.

“Higher prices mean we earn more, therefore we pay more,” said Holland. Reuters

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