What happened
Shares of Gold Fields Limited (NYSE: GFI) plunged 10.3% on Thursday, according to data provided by S&P Global Market Intelligence, after the gold mining firm released in-line first-half 2023 earnings, modestly reduced its outlook for two mines and announced the retirement of its Chief Financial Officer.
So what
The South Africa-based mining company announced that its first-half net income declined 10.2% year over year to $457.8 million. Headline earnings fell to $0.51 per share from $0.58 per share in last year's first half, right at the midpoint of guidance for a per-share range of $0.49 to $0.53. Gold Fields also saw its adjusted free cash flow plunge significantly to $140 million for the period, down from $293 million in last year's first half.
Gold Fields' first-half attributable gold equivalent production declined to 1.15 million ounces (Moz), again in line with guidance but down from 1.2Moz a year earlier.
Management noted the "operating environment remained challenging during the period, with elevated mining cost inflation and strong competition for skills in our key mining jurisdictions presenting significant headwinds."
Gold Fields also announced that its CFO since 2008, Paul Schmidt, has informed the company of his intent to retire early and has agreed to continue serving his role until the Board is able to identify a suitable replacement.
Now what
On a more positive note, Gold Fields reiterated that it's on track to meet its consolidated guidance provided in February 2023, which calls for attributable gold equivalent production (excluding its Asanko joint venture) of between 2.25Moz and 2.30Moz, down from 2.32Moz in 2022.
Within that reiteration, however, there were a couple of modest negative adjustments for specific mines, indicating the company could arrive at the lower end of that guidance range.
First, at its Gruyere operation, production is now expected to be 320 thousand ounces (Koz) to 350Koz, down from 340Koz to 370Koz previously, with costs likely to be at the higher end of its guidance range of Australian $1,540/oz to AU$1,660/oz.
Second, at its South Deep location, Gold Fields says unstable ground conditions combined with skill shortages have negatively impacted production in the first half. As such, South Deep production is now expected to be 321.5Koz at the cost of $1,356/oz. The South Deep operation is now expected to achieve its steady-state production rate of 380Koz in the second half of 2025 rather than by the end of 2024 as previously anticipated.
In the end, these are all relatively minor issues that don't necessarily break Gold Fields' long-term story. But it's hardly surprising to see shares pulling back in response today.
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