Gold Fields Is Increasing Production, Decreasing Costs
Gold Fields (NYSE:GFI) is one of the more misunderstood gold mining companies. It has a reputation of being a South African miner with high production costs and no production growth. And to a large extent, this was true until very recently.
With the fall in gold prices last year and concerns over mining in South Africa, Gold Fields’ management radically revamped the company’s portfolio. It spun off all but one of its South African assets into a new company, Sibanye Gold (NYSE:SBGL). It also purchased additional assets in Australia from Barrick Gold (NYSE:ABX). In doing so, the company greatly reduced its geopolitical risk. Now, the company gets more than 40 percent of its production from Australia and just 16 percent from South Africa.
In addition to this shift toward low-risk mining jurisdictions, the company has been doing an excellent job lowering costs. Seven out of the company’s eight mines were operating so that they would be profitable at the current gold price. The company expects its all-in production costs to come in at $1,150 per ounce this year. This means that the mine will be comfortably profitable at the current gold price.