South African mining company Gold Fields Ltd. (GFI.JO) said Thursday that profit tumbled during the first half of 2017, due to a stronger rand, an increase in amortization and reinvestment in its mines.
The world's eighth-largest gold producer said profit for the half fell 54% from a year earlier to $53 million. The higher amortization was due in large part to lower reserve ounces at the company's Tarkwa mine, while a stronger South African rand against the U.S. dollar, which gold is priced in, also hurt profit. In addition, earnings were impacted by nonrecurring items, including a $30.2 million provision for an ongoing silicosis lawsuit brought against many of South Africa's largest mining companies.
Continue Reading Below
The company's headline earnings per share, which strips out certain exceptional and one-off items, fell to 9 cents from 15 cents a year earlier.
Gold Fields, which mines in South Africa, Ghana, Peru and Australia, said it would pay a first-half dividend of 40 South African rand cents a share, down from a dividend of ZAR0.50 a share a year earlier.
Shares of the company on the Johannesburg Stock Exchange are up 19% year-to-date, but down 38% over the past 12 months. Gold futures, on the other hand, have risen 12% in 2017 but are down 4.7% over the past year at about $1,294 an ounce.
Gold Fields restructured in 2012 and 2013 to cope with lower metal prices by spinning off three aging, higher-cost South African mines to create Sibanye Gold Ltd. (SGL.JO) in 2013. Though a higher gold price has recently provided Gold Fields and other gold-mining companies some respite, the metal is still down more than 30% from its 2011 highs.
The price Gold Fields received per ounce of gold rose 1.2% during the year through June to $1,232 an ounce from the previous year, while gold production ticked 0.3% higher to 1,047,000 ounces. Revenue rose 2.3% to $1.33 billion.
The company's fully mechanized South Deep mine, its only remaining South African asset, reported a 15% decrease in output from the first half of 2016, due to fatalities and multiple falls of ground at the mine.
Write to Alexandra Wexler at email@example.com
(END) Dow Jones Newswires
August 17, 2017 02:24 ET (06:24 GMT)