Gold Fields Sequential and Annual Gold Production Declines

Gold Fields Ltd. (NYSE: GFI) is so far managing to buck the news as its shares are up slightly. The problem is that the news around its forward guidance is absolutely atrocious, if you pay attention to sequential gold output and production. With the company being valued at just over $9 billion, this is one of the top gold companies out there.

The gold giant said that production for the September 2012 quarter is now projected to be 810,000 gold equivalent ounces. Here is where this gets bad. This 810,000 is down from 862,000 ounces in the June quarter (sequentially) and down from about 900,000 ounces in the September quarter back in 2011.

Gold Fields said its international regions unit was solid at 424,000 ounces, but this is still down from the 425,000 in the second quarter of this year. The company did note that there was a two-week closure of the heap leach facilities at the Tarkwa Gold Mine in Ghana. It is also talking up recovery at the Agnew Gold Mine in Australia as it added 48,000 ounces of gold versus the addition of 37,000 in the second quarter of this year.

The 386,000 ounces in the South African operations in the third quarter fell from 437,000 ounces in the second quarter of this year. The blame there was attributed to a loss of about 30,000 ounces due to a fire at the YaRona Shaft of the KDC Gold Mine. It also said that about 35,000 ounces was knocked off due to the unprotected strike action at KDC and the Beatrix Gold Mine during the quarter.

Gold Fields has said that the lower production will negatively impact its unit costs. The gold miner said:

The ongoing unlawful strike action in South Africa is of concern and will, even if resolved in the near term, increase the likelihood of major restructuring in the South African gold mining industry, including at Gold Fields.

Shares (ADRs actually) are still up 2 cents at $12.37 against a 52-week range of $11.71 to $18.39. The price of spot gold has fallen today by $4.60, or 0.26% down, to $1,762.60 per ounce. The move is still better than the overall group as the Market Vectors Gold Miners ETF (NYSEMKT: GDX) is down by 0.3% at $52.33 so far today.

JON C. OGG