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01/10 20:10
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals several negative indicators: downgraded production guidance, increased costs, and operational challenges. Safety and supply chain risks, along with significant capital expenditure and debt levels, further contribute to the negative sentiment. Despite a dividend announcement, the lack of a share buyback program and weak financial performance overshadow positive aspects like renewable energy projects. The absence of unclear management responses in the Q&A does not improve the outlook. Overall, these factors suggest a potential stock price decline of -2% to -8% over the next two weeks.
Normalized Earnings $355 million, down 22% year-over-year due to a 20% decrease in production.
Adjusted Free Cash Flow Outflow of $58 million, significantly impacted by lower production.
All-in Cost $2,060 per ounce, up significantly due to lower production, increased gold inventory charge, and higher capital expenditures.
Dividend ZAR0.300, representing a payout ratio of 40% of normalized earnings.
Net Debt $1.2 billion, with a healthy ratio of 0.53 times net debt to EBITDA.
Gross Debt $1.2 billion with available facilities of $1.2 billion.
Capital Expenditure (CapEx) at Gruyere AUD55 million, up 106% due to increased capital waste mined.
All-in Cost at Gruyere AUD2,676 per ounce, increased by 62% due to lower gold sold and higher capital expenditure.
Adjusted Free Cash Flow at Granny Smith AUD200 million, doubled during H1.
Gold Production at St Ives 139,000 ounces, down 25% due to lower grades of ore mined.
All-in Cost at St Ives AUD2,900, excluding renewable microgrid project, guided at AUD2,330 per ounce.
Production at South Deep 117,000 ounces, down 25% due to increased off-reef development.
All-in Cost at South Deep 41% higher due to lower gold sold and higher capital expenditure.
CapEx at South Deep ZAR824 million, up 25% due to upgrades and refurbishments.
Gold Production at Tarkwa 248,000 ounces, down 14% due to lower yield.
All-in Cost at Tarkwa $1,822, up 54% due to low gold sold and high cost of sales.
Gold Production at Cerro Corona 37,000 ounces, down 48% due to weather-related challenges.
All-in Cost at Cerro Corona $911 per ounce, up 197% due to lower gold sold and lower byproduct credits.
Production Guidance for Salares Norte 40,000 to 50,000 ounces for 2024, impacted by severe winter weather.
Acquisition of Osisko Mining: On the 12th of August, Gold Fields announced the acquisition of Osisko Mining, consolidating 100% ownership of the Windfall project.
Renewable Energy Projects: Construction of renewable energy plants at St Ives and Granny Smith has commenced.
Salares Norte Production: Production from Salares Norte is expected to ramp up, albeit below initial guidance.
Tarkwa/Iduapriem Joint Venture: Gold Fields is continuing to engage with the Government of Ghana for the approval of the Tarkwa/Iduapriem joint venture.
Production Decline: Gold Fields reported a 20% decline in production in H1 2024, impacting unit costs.
Cost Increase: All-in costs increased significantly due to lower production and higher capital expenditure.
Safety Improvement Roadmap: A multi-year safety improvement roadmap has been developed following an independent safety review.
Strategic Priorities Alignment: Gold Fields is aligning its strategic priorities to focus on becoming a safe, reliable, and cost-effective producer.
Capital Allocation Framework: Gold Fields has refined its capital allocation framework to prioritize safe production, maintaining credit ratings, and dividends.
Safety Risks: The company reported two fatalities in the first half of 2024, highlighting significant safety risks in operations. An independent review of safety culture and practices was commissioned to identify areas for improvement.
Operational Risks: A 20% decline in production was reported, significantly impacting unit costs. The company anticipates a recovery in the second half of 2024, but the downgrade in production guidance indicates ongoing operational challenges.
Supply Chain Challenges: Heavy rains in March and April damaged access roads to the Gruyere mine, forcing a temporary closure and impacting the supply of diesel and consumables.
Regulatory Risks: The company is awaiting government approval for the Tarkwa/Iduapriem joint venture, which could impact future operations.
Economic Factors: The company downgraded its 2024 production guidance due to lower expected production from South Deep and Cerro Corona, influenced by copper price fluctuations and operational delays.
Weather-Related Risks: Severe winter weather conditions impacted the ramp-up of the Salares Norte project, causing temporary shutdowns and delays in production.
Capital Expenditure Risks: Increased capital expenditure was noted across several operations, which could strain financial resources if not managed effectively.
Debt Management Risks: The company reported a net debt of $1.2 billion, which could pose risks if cash flows do not improve as anticipated.
Acquisition of Osisko Mining: Gold Fields announced the acquisition of Osisko Mining, consolidating 100% ownership of the Windfall project, which is expected to significantly contribute to cash flows in the coming years.
Tarkwa/Iduapriem Joint Venture: Gold Fields is awaiting final approval from the Government of Ghana for the Tarkwa/Iduapriem joint venture, with significant progress made in discussions.
Safety Improvement Roadmap: Implementation of a multi-year safety improvement roadmap based on an independent review of safety culture and practices.
Renewable Energy Projects: Construction of renewable energy plants at St Ives and Granny Smith is underway as part of the decarbonization journey.
2030 ESG Targets: Gold Fields is conducting a midterm review of its 2030 ESG targets, with progress made towards achieving these objectives.
2024 Production Guidance: Gold Fields has downgraded its 2024 production guidance to between 2.05 million ounces and 2.15 million ounces, primarily due to lower expected production from South Deep and delayed ramp-up at Salares Norte.
H2 2024 Production Expectations: Attributable gold production for H2 2024 is expected to be between 1.13 million ounces and 1.23 million ounces.
Cost Projections for H2 2024: All-in sustaining costs for H2 2024 are forecasted to be between $1,440 to $1,560 per ounce, while all-in costs are guided to be between $1,600 to $1,720 per ounce.
2024 Capital Expenditure: Approximately $30 per ounce of the all-in cost is attributed to the 2024 capital expenditure at the St Ives renewable energy project.
Dividend Payment: Gold Fields announced a dividend of ZAR0.300, representing a payout ratio of 40% of normalized earnings for the half.
Share Buyback Program: None
The earnings call highlights significant production improvements across multiple sites, a positive indicator for future revenue. While the Q&A section reveals some uncertainties, such as delayed guidance and feasibility study updates, the overall sentiment is positive due to strategic investments in leadership, sustainability, and production capacity. The company's proactive approach to addressing operational challenges and maintaining a strong production outlook suggests a likely stock price increase in the short term.
The earnings call reveals several negative indicators: downgraded production guidance, increased costs, and operational challenges. Safety and supply chain risks, along with significant capital expenditure and debt levels, further contribute to the negative sentiment. Despite a dividend announcement, the lack of a share buyback program and weak financial performance overshadow positive aspects like renewable energy projects. The absence of unclear management responses in the Q&A does not improve the outlook. Overall, these factors suggest a potential stock price decline of -2% to -8% over the next two weeks.
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