JOHANNESBURG (miningweekly.com) – Quarter-on-quarter gold production at the South Deep gold mine fell 43% in the first three months of 2017, when costs soared 56%, Gold Fields reported on Wednesday.

All-in costs (AIC) at the mechanised mine, located 45 km southwest of Johannesburg, rose to a high level of $1 821/oz in the first quarter, on a steep production fall to 45 800 oz.

Worse still, the mine suffered two fatal accidents, which Gold Fields CEO Nick Holland described as “tragic reminders” of the major safety task confronting the underground mine.

“Our sincere condolences go out to the family, friends and colleagues of Mr Bekwayo and Mr Mehlwana,” Holland stated.

A total of 20 900 oz of gold were lost as a result of the fatal accidents, as well as three falls of ground in the thinner more proximal part of the South Deep orebody.

An operational update for the three months to March 31 showed that the JSE- and NYSE-listed company experienced a poor start to 2017 across a broad front.

Quarter-on-quarter, the company’s mines in South Africa, West Africa, Australia and South America collectively reported 12% lower overall attributable equivalent gold production of 497 000 oz and 18%-higher AIC of $1 114/oz, on an average gold price of $1 216/oz.

A cash outflow of $35-million was recorded, compared with a cash inflow of $26-million in the comparable first quarter of 2016.

The net outflow and final dividend payment lifted the net debt balance to $1 241-million compared with $1 166-million as at December 31, 2016.

Gold Fields is now guiding attributable equivalent 2017 gold production of between 2.1-million ounces and 2.15-million ounces.

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

Investment of $120-million is under way at the Damang mine in Ghana, and $112-million is budgeted for a 648-room village at Gruyere, in Australia.

Former De Beers Consolidated Mines executive Martin Preece, who has had extensive experience in massive mechanised underground mining, has been appointed Gold Fields executive VP South Africa, effective from May 2.

“We believe that his experience will help drive South Deep to become an efficient, sustainable mechanised mine,” said Holland in a release to Creamer Media’s Mining Weekly Online.

On May 1, Dr Carmen Letton, Anglo American’s opencast mining head with more than 30 years’ experience in leadership and technical roles, joins the Gold Fields board as an independent nonexecutive director.