Gold Fields’ Salares Norte runs into more delays as Covid, “severe weather” hit project

GOLD Fields reported further delays in the construction of its 450,000 ounce a year Salares Norte project in Chile owing to the lingering effects of Covid-19 and more “severe weather which flowed over” from the second quarter.

“Construction progressed 7% during the September quarter, impacted by various snow and white wind events in July and high winds for the remainder of the quarter,” Gold Fields said in its third quarter production report today. Salares Norte is now 82% complete compared to the 77% completion reported at the group’s half year.

In August, Gold Fields said capital expenditure on the project would increase to as much as $940m from the previously scoped $860m were it to be commissioned in June 2023 – about three months late. In such an event, the ramp up in Salares Norte’s production would fall to 102,000 of gold equivalent ounces in Gold Fields’ 2023 financial year from the 200,000 oz that is currently scoped.

Current guidance on capital expenditure is a range of between $903m to $920m. This adjustment was taken last year as a result of inflation.

Gold Fields is expected to hear from shareholders shortly on the group’s proposed $6.8bn all-share offer for Yamana Gold as CEO Chris Griffith has been marketing the deal since Monday. A general meeting at which the vote will be taken is scheduled for November 22.

Commenting briefly on the transaction, Gold Fields said in its third quarter report that: “We continue to make good progress on the transaction”.

For the quarter, Gold Fields produced 597,000 oz, a 1% year-on-year decline. All in sustaining costs were 4% to $1,061/oz, partly influenced by “significant project capex” at Salares Norte.

Gold Fields revised gold production for its South African mine South Deep upwards to 321,500 ounces for the financial year ended December after it had “tracked well” against its targets. The mine was previously expected to produce 308,600 oz.

The group said it expected to meet annual guidance of between 2.25 to 2.29 million oz produced at an all in sustaining cost of between $1,140 to $1,180/oz. Mining cost inflation had been higher than expected but it had been partially offset by weaker exchange rates.

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