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.
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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.
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(END) Dow Jones Newswires
August 17, 2017 02:24 ET (06:24 GMT)