Picture: THINKSTOCK
Picture: THINKSTOCK

GOLD Fields is reining in spending as its adapts to a lower gold price environment and adjusts to being a far smaller group without three South African mines.

Gold Fields posted net earnings from its continuing operations of R236m in the March quarter, down from R376m in the previous quarter and lower than the R381m recorded in the same period a year earlier.

Headline earnings per share fell to 34c, from a restated 107c and 55c in the December and March 2012 quarters respectively.

Its gold production fell to 477,000oz from a restated 534,000oz and 498,000oz in December and last March respectively.

"The quarter also saw significant further progress made on the restructuring and refocusing of the group for cash generation," Gold Fields said.

Gold Fields is scaling back its Johannesburg head office of 100 staff, either redeploying people to its operations in Ghana, Australia or Peru, or allowing employees to take voluntary retrenchment packages. The head office should be cut down to about 60 staff.

Gold Fields has slashed exploration expenditure and it is closing down marginal production at Tarkwa in Ghana and the St Ives and Agnew mines in Australia. The group’s lower production in the quarter stems in large part from these decisions.

Notional cash expenditure (NCE), which includes the capitalised costs for projects in the growth portfolio — and is the true measure of the cost of producing an ounce of gold — decreased by 2% from R377,663/kg in the December quarter to R369,050/kg in the March quarter, Gold Fields said.

"This decline was due to lower operating costs, referred to above, as well as reduced capital expenditure during the quarter, partially offset by lower production," it said.

Its operating profit fell 17% from the December quarter, to R3.6bn.

Gold Fields forecast it would produce between 1.825-million and 1.9-million ounces of gold in 2013 at a total cash cost of R250,000/kg or $860/oz. Its NCE is forecast to be R395,000/kg or $1,360/oz, which includes $40/oz for exploration costs and its growth projects .

In the March quarter, Gold Fields notched up nonrecurring expenses of R390m, lower than the R986m recorded in the December period. Included in the March numbers was the R323m cost of unbundling the Kloof, Driefontein and Beatrix mines into newly listed Sibanye Gold. It paid R47m in restructuring its business at South Deep, its remaining mine in South Africa, and Tarkwa.

Gold Fields’ net debt grew to R13.1bn by the end of March from R10.8bn at the end of December.