Gold Fields shares fall most in 7 years as results swing to losses

By Zandi Shabalala and Peroshni Govender

JOHANNESBURG, May 7 (Reuters) – Shares in Gold Fields booked their biggest daily fall in seven years on Thursday after the South African bullion producer swung to a quarterly loss.

Gold Fields
Gold Fields’ performance thus far on 8 May 2015.

 

Hit by seasonal weakness and safety stoppages, Africa’s second-biggest gold miner lost $13 million in the three months to March 31, compared with normalised earnings of $17 million in the previous quarter.

Its shares plunged by as much as 15 percent before recouping some of the losses to close 13 percent down at 44.28 rand.

Michael Treherne, a fund manager at Vestact, said the rout appeared to have been overdone.

“To some extent people got a bit hyped up and excited, particularly with regard to the company’s cost management; and when they don’t see that coming through in earnings, it can cause a bit of sell-off in the stock,” he said.

Gold Fields has spun off two of its three labour-intensive domestic mines to focus on cheaper, mechanised mining in several other countries such Peru and Australia. However, its mechanised domestic South Deep operation has suffered continued technical problems, with production down 25 percent in the quarter.

Chief Executive Nick Holland said the company aims to make the mine break even by the end of 2016.

Holland told reporters that the South African mining industry is set to collaborate to produce their own power to reduce reliance on the strained national grid.

“We have certainly spoken about it and we have agreed in principle that it is something we should explore,” Holland said.

Africa’s most advanced economy is experiencing its worst electricity crisis since 2008, with state-owned Eskom implementing rolling blackouts as its creaking grid struggles to meet growing demand.

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