Gold Fields reserves fall on troubled mines

Reuters

JOHANNESBURG -- Gold Fields , the world's No. 4 gold producer, said that attributable precious metal reserves fell by 12 per cent by June because of declines from mines struggling with safety issues.

Gold Fields' reserves, the economically mineable part of a mineral, fell to 83 million ounces in June from 94 million ounces in December. Total attributable precious metal resources were about flat at 251 million ounces from 252 million ounces.

"Gold Fields' 83 million ounces reserve base remains one of the strongest in the industry and provides it with a robust base from which to pursue its aggressive growth strategy," Gold Fields chief executive officer, Nick Holland said.

The reserves and resources were net of the 5.7 million ounces of depletion over the last 18 months, the sales of the Choco 10 Gold Mine in Venezuela and the Essakane Project in Burkina Faso, and inclusive of copper and platinum as gold equivalent ounces, the group said.

The reserves were calculated using three-year average commodity prices of 150,000 rand per kg in South Africa, and a copper price of $US1.75 a pound.

Under a safety campaign, Gold Fields launched a pillar and remnant mining review in April, which was now completed.

The review slashed 600,000 ounces of reserves at key mine Driefontein or three per cent of the total reserves at the mine now forecast to produce 6,400 kg (225,920 ounces) in the September quarter and 6,800 kg in the December quarter and beyond.

At the Kloof mine, the review cut five per cent of the total reserves or 500,000 ounces, and the mine is forecast to produce 3,900 kg during the September and December quarter, stabilising at about 6,000 kg in the March quarter and beyond.

On August 1, Gold Fields shares plunged to their lowest in about three years, after saying output would fall because of plans to shut shafts at Driefontein and Kloof for months for safety-related repairs.

By the end of June, Gold Fields had suffered about a quarter of South Africa's 85 mine fatalities recorded at the time, and Holland decided to take short term pain by halting mining in a bid to improve safety in the long term, saying the group would not mine if it could not do so safely.