Business Context and Reporting Period
Company: Gold Fields Limited
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Date: March 17, 2008
Context: The filing reports on a significant operational development regarding power supply for Gold Fields' South African operations. The company is a major unhedged gold producer with operations in South Africa, Ghana, and Australia, and a developing mine in Peru.
Key Financial and Operational Metrics
The filing does not provide specific financial statements, revenue, profit, cash flow, or debt figures for the reporting period. Key operational metrics disclosed include:
- Power Allocation: An additional 26 MW of power was granted by Eskom (national utility) for the Kloof and Driefontein mines.
- Total Power Availability: Total power available to South African mines increased to 566 MW, representing 95% of the historical average consumption profile.
- Production Capacity: Attributable production exceeds 4 million ounces per annum.
- Reserves: Total attributable ore reserves of 92 million ounces; mineral resources of 252 million ounces.
- Workforce: Approximately 53,000 permanent employees.
Material Changes and Operational Impact
The primary material change is the resolution of a critical power constraint that had previously forced production stoppages and downsizing at specific shafts.
- Operational Recovery: The additional power allows the company to re-examine the future of Nos. 6 and 7 Shafts at Driefontein and Nos. 3 and 8 Shafts at Kloof, which had been downscaled or stopped since January due to power shortages.
- Job Preservation: Management stated the power grant will help save jobs at Driefontein and Kloof.
- Limitations: No additional power was allocated to the Beatrix or South Deep mines. However, these operations can function at current levels due to their shallower depth and ongoing restructuring.
Guidance, Outlook, and Risks
Production Outlook: Despite the positive power allocation, management explicitly warned that the additional power will not prevent forecast production losses of more than 20% in the current quarter (Q3F08).
Management Commentary: CEO Terence Goodlace welcomed the decision as "very positive" for development planning. The company pledged to use power strategically and sparingly to maximize benefit.
Risks and Contingencies:
- Power Constraints: Ongoing reliance on Eskom remains a critical risk factor, with no additional supply available for deeper mines like Beatrix and South Deep.
- Production Losses: Significant production shortfalls are expected for the current quarter despite the power increase.
Key Facts for Investor Verification
- Verify the specific impact of the 20%+ production loss forecast for Q3F08 on quarterly earnings guidance.
- Confirm the timeline for the restart of Nos. 6 and 7 Shafts at Driefontein and Nos. 3 and 8 Shafts at Kloof.
- Monitor the status of the Cerro Corona mine in Peru, expected to commence production by mid-2008 at 400,000 gold equivalent ounces per annum.
- Assess the long-term stability of power supply agreements with Eskom given the historical volatility.