SA miner Gold Fields expects its headline earnings to have tripled in the first half of this year as geopolitical uncertainty kept its safe-haven metal at record prices.
Shares in the company jumped 5% on the release of a recent trading update, as investors welcomed an increase in sales volumes. Gold Fields has more than doubled in value since the start of this year, taking its market capitalisation well above R400bn.
On Monday, the miner said it expected interim headline earnings per share of $1.09-$1.21, up 203%-236% from the previous first half.
The price of gold climbed nearly 30% during the period under review, with US President Donald Trump’s aggressive and unpredictable trade policy and conflict in the Middle East fuelling its momentum.
A recent forecast by Bank of America estimated that bullion could reach $4,000/oz by year-end as central banks continue to favour the safe-haven asset over dollars.
Gold Fields said its jump in earnings was somewhat offset by “general mining inflation”, with the latest Minerals Council SA data showing that double digit electricity tariff hikes continue to constrain SA's deep-level gold mines. Inefficient rail and port logistics and high financing costs have also emerged as key drivers of input cost inflation this year.
Still, the company maintained its full-year production and cost guidance, with attributable gold equivalent production expected to grow by nearly a quarter year on year in the six months to end-June.
Gold Fields hailed a strong operational performance at its Salares Norte mine in particular, adding that group sales are projected to increase further in the second half as the Chilean mine continues its ramp up.
The company plans to release its interim results on August 22.
Gold Fields’ share price leapt 8.71% to R499.69 by market close on Monday.
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