Gold Fields announced that it had swung to a loss in 2017 amid a $278million (R3.32 billion) impairment at South Deep.

South Deep, based outside Johannesburg, is the company’s only remaining South African asset.

The R3.32bn South Deep impairment related to the lower gold price assumptions and the slower gold price.

The ramp-up in gold production would now be more gradual and the steady state production target of 500000 ounces in 2022 had not changed, the company said.

The JSE- and New York-listed gold producer said it had swung to a $35m net loss, or US 4cents per share, in the year to December 2017 compared with a profit of $163m in 2016.

Gold Fields also paid shareholders a dividend of 90 SA cents in 2017 compared with 110c in 2016.

Commenting on the results, Momentum SP Reid analyst Sibonginkosi Nyanga said that South Deep’s performance had been a disappointment.

“While South Deep failed to deliver, its South American assets did very well, mainly due to higher copper prices, higher gold head grades and higher gold recovery,” said Nyanga.

Gold Fields said South Deep had been unable to recover from the tough first quarter of 2017 in which it reported two fatalities and three falls of ground incidents.

South Deep’s production for the year was 11percent below original guidance.

The company needed to simplify the mine’s organisational structure and had completed management level restructuring.

Gold Fields chief executive Nick Holland said South Deep’s production was below expectations.

“2017 was below where we wanted to be,” conceded Holland, adding that the focus was not the ore body, but about getting people to work in an effective way. “It is a journey that will take four to five years,” Holland said.

Asked about whether Gold Fields had been approached by prospective buyers of South Deep, Holland said the sale of the mine was not on the table.

“We have not had definitive conversations regarding the asset at this stage. South Deep is seen as part of a long-term future of Gold Fields,” he said during a results presentation.

The group delivered on its production guidance after producing 2.16million ounces, up 1percent year on year.

Headline earnings for 2017 declined to $194m or 24 US cents a share, compared with headline earnings of $208m, or 26c a share in 2016.

The group expects 2018 gold production of between 2.08 million ounces and 2.1 million ounces, with the main difference between 2017 and 2018 due to the sale of Darlot mine.

Gold Fields said it had committed “high” capex again in 2018, as its Gruyere operation in Western Australia and Damang in Ghana were nearing completion.

It expected all-in sustaining costs of between $990 an ounce and $1100 an ounce.

Gold Fields shares declined 3.69percent to close at R46.42 on the JSE yesterday.

– BUSINESS REPORT 

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