Gold Fields shared "disappointing" performance results for the first six months of 2024, as the company cut its guidance for the second time this year.

The South Africa-headquartered miner reported an attributable production of 918,000oz, compared to 1.15Moz in the same period in 2023. The operational performance was mainly affected by weather-related events and operational challenges at some of its assets.

"Our operational performance was disappointing with attributable production declining by 20% due to unplanned events, the delayed ramp-up at Salares Norte, and the backfill issues at South Deep", chief executive Mike Fraser said.

The lower output volumes significantly affected costs, with all-in sustaining costs of US$1,745/oz, an increase of 44% year-on-year from $1,215/oz.

Normalised earnings decreased by 22% YoY to $355 million, or $0.40 per share, mainly driven by higher gold price received offset by lower gold sold.

Total profits totalled $389 million, or $0.43 per share, compared to $458 million, or $0.51 per share, for the first half of 2023.

Gold Fields said that while its balance sheet remains robust with a net debt to EBITDA ratio of 0.53x, net debt increased by $129 million to $1.153 billion, driven by $42 million in Windfall pre-construction capital and a $199 million final dividend payment.

The miner experienced operational headwinds at mines across its portfolio, including operations in South Africa, Australia, and Peru.

At the South Deep mine in South Africa, increased backfill rehandling and challenging ground conditions affected stope access, stope turnaround, planned volumes and grade profile.

In Australia, the Gruyere gold mine suspended mining and processing operations for around six weeks after significant rainfall damaged the main access roads to the site. The St Ives mine's planned lower production was further impacted by the delay in the development of two new open pits.

At Cerro Corona in Peru, severe weather affected the stability of the pit's north wall, leading to the resequencing of mining to lower-grade areas. Gold Fields said the stability of the wall has since been addressed. 

Next year will be the last year of mining at Cerro Corona before it will only process stockpiles from 2026.

"Whilst Cerro Corona will continue to produce gold and generate cash flow until 2031, we've begun to consider options for Cerro Corona's future," Mike Fraser said.

Salares Norte struggles with winter chill

The ramp-up at the Salares Norte project in Chile has progressed slower than planned due to the early onset of winter and severe winter weather in the last few months.

Gold Fields already announced in June that the early onset of severe winter weather had delayed the ramp-up of Salares Norte due to the freezing of material on the process plant pipes, causing a shutdown of the plant. 

While the gold miner has been working on the plant restart in the last few months, it said that the low temperatures have continued to slow down work.

"As recently as two days ago, the area had heavy snowfall with temperatures of -30 degrees on site," Fraser shared.

Gold Fields has now cut its guidance for Salares Norte for the second time this year to 90,000-180,000oz (depending on when the plant restarts) from a previous estimate of 2.33-2.43Moz at the beginning of this year.

The company is currently focused on setting up the plant for a safe restart and ramp-up. The restart is now scheduled for 30 September 2024 instead of 1 September.  It expects to finish all weather mitigation activities by the first quarter of next year.

If the ramp-up goes to plan from here on, Fraser expects to reach normalised production levels in the second half of 2025. Production guidance for 2025 at Salares will be provided after the plant is successfully started.

"We deliberately haven't put out any guidance for 2025 at this stage because we want to confidently get into ramp-up in the fourth quarter, and then we'll come out with the guidance number into 2025," Fraser explained.

As the winter conditions weren't wholly unexpected, Fraser said the ramp-up during winter was a mistake.

"The real lesson [here] was attempting the ramp-up during winter. I think that was always going to be the wrong thing to do," Fraser told Mining Journal. "We should have been clear upfront when we had that first freeze event in early April. We knew it was going to be a bad winter, we should have just said: we will continue to do some incremental work, but let's not get ahead of ourselves. Let's plan for a safe restart and acknowledge that the right time to restart was in the spring."

Better prospects for H2 and 2025

Due to the operational headwinds in the first half of the year, Gold Fields is revising the group production guidance for 2024 down to 2.20-2.30Moz from 2.33-2.43Moz. It is also revising its all-in sustaining costs to US$1,470-1,520/oz, compared to the previously guided $1,410-1,460/oz.

The miner expects a better performance in the year's second half, following the enhancements of safety processes and systems, progress in the Salares Norte ramp-up, and operational recovery plans at South Deep, Gruyere, St Ives, and Cerro Corona.

"Even when we started this year, we'd always planned for a slightly second-half weighted production profile," Fraser told Mining Journal. 

Production for the second half of the year is expected to be nearly 1.2Moz, compared to the 918,000oz in the first half. With the higher volumes in H2, Gold Fields also forecasted improved costs.

"We expect 2025 to be a much better year than 2024," Fraser said. "It has been a disappointing first six months, obviously, with a lot of externalities, but I think we should see a second half and 2025 in a much better place."