FOCUS-Gold Fields(GFLJ.J)swings back to June profit
08:37 a.m. Jul 27, 1998 Eastern
By Darren Schuettler
JOHANNESBURG, July 27 (Reuters) - South Africa's Gold Fields Ltd, the
world's second largest gold producer, reported sharply higher earnings
on Monday and said it expects continued profits growth into the next
quarter.
Gold Fields, born earlier this year from a gold merger of two South
African mining houses, is also eyeing a New York listing to broaden its
shareholder base and raise capital.
The company rebounded with headline earnings of 46.6 million rand in the
quarter ended June 30, from a 120.6 million rand loss in its maiden
March quarter.
Operating profit soared to 207 million rand -- from 17 million rand in
March quarter -- with all operating companies in the black.
''This is not related to the gold price. What this is based on is the
drive to reduce working costs,'' managing director Tom Dale told
analysts at a results presentation.
Cash costs in Gold Fields' core operations -- Kloof, Beatrix and a 38
percent stake in Driefontein (DRFN.J) -- fell to $223 per ounce in the
June period from $255 an ounce in the March period.
Costs are seen falling further in the quarter ended September when Gold
Fields also gets the full benefit of a surge in the rand price of gold
caused by a depreciating rand against the U.S. dollar.
''The fact that we're unhedged at the moment will give a tremendous
impetus to the company's performance in the September quarter,'' Dale
said.
Gold production rose four percent to 23,589 kg in the June quarter. The
average spot rand gold price received in the quarter was 49,400 rand per
kg, compared to the current rand gold price of 57,700 rand per kg.
Other South African gold companies are expecting a buoyant September
quarter as well.
The rand has lost 25 percent of its value against the dollar since late
May when foreign speculators started to attack the currency.
With gold traded and priced internationally in dollars, the value of
rand earnings increases as the rand slides against the U.S. currency.
In a bid to raise capital and its international profile, Dale said Gold
Fields is pondering listings on other major exchanges, including New
York.
Rival Anglogold Ltd (ANGJ.J), the world's number one gold producer, is
in the midst of finalising a New York listing.
Gold Fields' goal is to become a world class producer in terms of market
value, production costs and gold output.
''Once the market is fully informed about the assets and the strategy,
we will be valued properly,'' Dale said.
Investors ignored the company's swing back into profit on Monday and
took direction from weaker world bullion prices. The stock fell 55 cents
to 30.25 rand as bullion fixed at $290.75 per ounce, down from a
previous fix at $294.60.
''There doesn't seem to be much interest in the market with all the
(stock) indices down. Bullion is looking weak,'' a trader said on
Monday.
While all Gold Fields' operating companies turned a profit, the future
of some operations remains uncertain.
Kloof's troubled Libanon and Leeurdoorn mines, which were threatened
with closure early in the year, continued to improve with higher
production and lower working costs.
Dale said a final decision on Libanon's inclusion in the new Gold Fields
has not been made, but he said Leeurdoorn ''has every chance of becoming
part of the long-term portfolio.''
Oryx is also expected to be a core asset, but Dale said they are
studying bids for Toronto-listed Eldorado Gold (ELD.TO) with a decision
expected soon.
((Johannesburg newsroom, 27 11 482 1003, newsroom+reuters.co.za))
Copyright 1998 Reuters Limited. |
