JOHANNESBURG (miningweekly.com) – Dual-listed Gold Fields will oppose the new Mining Charter Three “with everything it's got” as the mining industry stands firm in the standoff with the Department of Mineral Resources (DMR).

Backing the action taken by the Chamber of Mines (CoM), Gold Fields CEO Nick Holland on Thursday said that, unless the new charter was taken off the table, there would be no further discussions.

“Industry has unified in its view that the charter that has been tabled is not appropriate for the industry and is actually going to bring the industry to a quicker demise,” he told media during a roundtable in Sandton prior to the release of the group’s interim results.

“There is no choice but to fight it,” he stressed.

In June, Mineral Resources Minister Mosebenzi Zwane gazetted the 2017 Mining Charter, generating significant industry backlash and uproar and sparking legal action from the CoM to halt its implementation.

Zwane and the CoM have been at odds ever since, with the DMR, in an answering affidavit in the High Court of South Africa, countering what it described as “fallacies” put forth by the CoM.

“We were not consulted on it, despite what the Minister is saying, and we will oppose it with everything we have got,” Holland said, adding that the industry was 100% unified.

He maintained that there was a lot of ground to oppose the charter and it was “really” time to “stand up now and speak out”.

“We have done a lot in this industry over the last 20 years to transform it. The statistics speak for themselves,” he commented, highlighting the billions of rands spent every year on a variety of projects, the training of people, creating pipelines, supporting tertiary institutions, spending on community development and the significant empowerment deals undertaken as an industry.

“We have put billions [of rands] into this and we just think that this is not a fair situation. It is not equitable.”

“Unless there is a softening of position and a willingness to take this off the table and start discussions afresh, then we have no choice and we will continue to fight it,” Holland assured.

In the group’s financial statements for the six months to June 30, the company noted a preference to “craft a solution through a win-win outcome for all”; however, the current envisaged charter rendered this impossible.

“Gold Fields supports achieving a solution that is viable to support economic growth and create a sustainable mining industry in South Africa in which investment is encouraged,” it said.

FINANCIAL RESULTS
During the six months under review, Gold Fields achieved normalised earnings of $77-million, a contraction on the normalised earnings of $103-million reported in the prior corresponding period.

Normalised earnings a share of 10c were reported for the period under review, a marginal decline on the 13c posted in the six months to June 30, 2016.

The decline was attributed to the impact of stronger exchange rates on converting local currency costs and amortisation to the dollar, as well as an increase in amortisation at the Tarkwa mine, in Ghana, linked to the new reserves published in March.

Gold Fields reported a net cash outflow for the interim period to June 30 of $102-million, compared with an inflow of $60-million in the first half of the year before, mostly owing to the growth capital spent at the Gruyere mine, in Australia, the Damang mine, in Ghana, and Salares Norte, in Chile, during the six-month period.

“Stripping out the project capital of $141-million at these three projects, the net cash flow would have been an inflow of $39-million. Consequently, the net debt balance increased to $1.36-billion, from $1.16-billion at the end of the 2016 financial year, with the net debt to earnings before interest, taxes, depreciation and amortisation ratio edging higher to 1.12 times, from 0.95 times as at December 31, 2016,” Holland said.

In addition, the company had forecast a gold price of $1 100/oz for this year, with the average gold price received of $1 232/oz during the interim period having positively impacted the results and assisted the company in maintaining a strong balance sheet during a period of high capital expenditure.

Gold Fields declared an interim dividend of 40c in South African currency.

Meanwhile, Gold Fields’ output remained stable at 1.47-million ounces of attributable gold production during the six months to June 30, with all-in sustaining costs (AISC) declining from $992/oz in the first half of 2016 to $980/oz in the first half of the current financial year.

All-in costs (AIC) rose from $1 024/oz in the six months of last year to $1 103/oz during the period under review, owing to increased growth capital.

OUTLOOK
Gold Fields has maintained its 2017 full-year guidance of attributable equivalent gold production of between 2.1-million ounces and 2.15-million ounces, with AISC of between $1 010/oz and $1 030/oz.

Owing to the increased project capital spend, AIC is expected to be between $1 170/oz and $1 190/oz.