The world's fourth largest gold-miner, Gold Fields, on Thursday reported its highest quarterly production in more than two years, producing 908 000 oz of gold in the three months ended September.

This was compared with the 898 000 oz of gold produced in the June 2010 quarter.

Gold Fields boosted attributable output at its South African operations to 497 000 oz, from 488 000 oz in June, while gold output at its West African mines declined by 6% to 172 000 oz.

The South American operations increased output by 10% to 86 000 oz and the Australasian mines produced 3% more gold, from 1149 000 oz to 153 000 oz.

Gold Fields reported lower net earnings, falling from R900-million in the June quarter to R700-million in the first quarter of the 2011 financial year.

Headline earnings a share fell to 99c a share from 147c a share.

CEO Nick Hollland said that the group maintained its notional cash expenditure margin at 18%, despite seasonally higher electricity charges in South Africa, as well as the implementation of the second year of a two-year wage agreement with trade unions in the country.

He said that Gold Fields remained on track to achieve the production and cost guidance for the full year of between 3,5-million ounces and 3,9-million ounces of gold.

Holland pointed out that Gold Fields made considerable advances in its growth strategy through the purchase of an option on the undeveloped gold/copper Far Southeast (FSE) deposit in the Philippines. The agreement would allow the miner to conduct a major drilling programme and feasibility study on FSE deposit over the next 18 months.

"If successful, the FSE acquisition will significantly advance our target of achieving one-million ounces for the Australasia region, either in production or in development, by 2015," said Holland.

In addition to the FSE project for the Australasia region, the company has three other growth projects including, South Deep in South Africa, the Yanfolila project in Mali and the Chucapaca project in Peru.

The miner is also carrying out new metallurgical tests, using a new process on the 12-million- ounce APP project in Finland. The company reported that early indications were encouraging.

"All of these projects are progressing rapidly and put us on track towards achieving our target of five-million ounces, either in production or development, by 2015."

Holland added that the growth strategy was supported by the company's strong balance sheet, which had been further bolstered with the successful issue of a recent $1-billion, ten-year bond.

"The bond significantly improves our liquidity and maturity profiles without increasing debt levels. The funds raised will be used to restructure our existing debt and we are now well placed to pursue the growth opportunities mentioned above," he said.

Meanwhile, the company had embarked on a business process reengineering exercise at its Driefontein, Kloof and Beatrix, Tarkwa and St Ives operations, aimed at increasing the notional cash expenditure margin at each of these mines to at least 20%.

As a first step, Gold Fields had implemented a wide-ranging restructuring of the South Africa region, led by the merger of the Driefontein and Kloof operational and management structures. Holland said that significant progress was also made at its Tarkwa mine in Ghana and its St Ives operation in Australia.

Gold Fields was also on track to achieve its 2014 mining ownership target, through three empowerment deals, which it expected to conclude by the end of December.


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