Gold Fields mulls closure of Leeudoorn mine
By Melanie Cheary
JOHANNESBURG, July 10 (Reuter) - Gold Fields of South Africa Ltd said on Thursday that the Leeudoorn division of its Kloof Gold Mining Co Ltd (KLOF.J)could not continue to make a loss and closure was one of the alternatives it was mulling.
But it said consultation with the mineworkers' unions at the mine was crucial and no decisions would be taken before this.
``Obviously we can't continue to incur losses. Something has to be done. One of the scenarios would be closing this operation or we could combine it with the Kloof (division),'' said Keith Spencer, general manager of Gold Fields gold operations.
``We've got to make a decision as fast as we can but this will be with consultation with employees,'' he said at the group's second quarter gold results presentation.
The Leeudoorn division reported a second quarter loss of 29.34 million rand from the 5.64 million rand loss in the three months to end March 1997.
Gold Fields said in a statement that a major increase in unit working costs to 65,909 rand/kg from 55,020 rand/kg and a drop in gold output to 1,769 kg from 1,892 kg were the prime factors behind the increased loss.
But current weak gold prices are likely to pressure most South African gold mines in the current third quarter, cutting average gold price received substantially.
Gold Fields has a traditional policy of not hedging its gold production and analysts have said that only mines that have locked in gold prices better than spot are likely to weather the gold price fall.
Leeudoorn received an average gold price for the quarter of 49,324 rand/kg, which was less than the 52,042 rand/kg received in the preceding quarter.
``Investigations into the alternative options for this division are well advanced which could lead to substantial changes. In the interim, efforts to increase the tonnage milled will continue and the current yield is expected to be maintained,'' Gold Fields said.
The group was also looking at downscaling or rationalising the Leeudoorn operation.
The Leeudoorn division employs about 5,000 mineworkers.
The Kloof company's Libanon division also made a working loss with cost per kg for the quarter at 51,550 rand and revenue received 49,652 rand/kg.
``There is no reason why Libanon cannot make a profit even at the current gold price,'' Spencer said.
This could occur if the mine managed to increase its milling rate to 500,000 tonnes per quarter with an average grade of 6.0 grams/tonne. Libanon milled 402,000 tonnes in the second quarter and average grade was 5.9 grams/tonne.
But Spencer added that if the current sickly bullion price continued, Gold Fields would be forced to re-examine shafts at Libanon and consider downscaling.
The bullion price fell to 12-year lows last Thursday on news the Australian central bank had sold 167 tonnes of its gold reserves over the last six months. Bullion was last trading in London at $319.70/320.20.
Gold Fields posted a pre-capex net profit for the three months to end June of 192.34 million rand compared to 236.42 million rand in the preceding March quarter. |
