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Gold Fields Releases 2016 Financial Results

- By Alberto Abaterusso

Gold Fields Ltd. (GFI) reported its financial and operating results for the fourth quarter and full-year 2016 on Feb. 17.

For the year, Gold Fields generated EPS of 24 cents, a 300% increase on a year-over-year basis, and revenue of $2.75 billion, an 8.3% increase from 2015.


The miner generated higher earnings in 2016 compared to 2015 due to a higher realized average gold price, lower costs sustained and the conversion to a stronger U.S. dollar versus local currencies.

The company said the average U.S. dollar gold price achieved increased 9%, from $1,140 per equivalent ounce in 2015 to $1,241 per equivalent ounce in 2016.

In 2016, the miner sustained net operating costs of $1.388 billion, a 5% decrease from 2015. Approximately 73.5% of these costs were due to the conversion between a stronger U.S. dollar and local currencies.

Gold Fields produced approximately 2.146 million ounces of gold equivalents in 2016, a 0.60% decrease on a year-over-year basis, at all-in sustianing costs of $980 per ounce and all-in costs of $1,006 per ounce. The AISC and AIC for 2016 were 2.7% and 2% lower than those of 2015.

The AISC and AIC were below the lower limit of the company's guidance, while gold production was in line with the guidance for the year.

For full-year 2016, Gold Fields expected to produce between 2.1 million and 2.15 million ounces of gold.

For the quarter, Gold Fields produced approximately 566,000 ounces of gold equivalent, a 5.4% increase from the third quarter of 2016, at an AISC of $911 per ounce and AIC of $941 per ounce. The AISC and AIC are 11.2% and 9.3% lower than the previous quarter.

Higher profits achieved by the miner during the year enabled the company to increase the cash flow generated from operations by 258.5% to $294 million from $82 million in 2015.

Gold Fields said the strong cash generation during the year enabled it to further improve its balance sheet, reducing its net debt by $214 million to $1,166 million at the end of 2016.

Part of the cash flow will be paid to shareholders through a dividend. On March 13, Gold Fields will pay a dividend of 60 cents to its shareholders, bringing the annual dividend distribution to 110 cents.

Gold Fields also aims to increase the quality of its asset base through organic growth by reinvesting into the business. The South African miner is currently advancing several projects.

At its Gruyere project, the company expects production to start between the end of 2018 and the beginning of 2019.

The company will release a prefeasibility study for the Salares Norte project in Chile during second-quarter 2017.

The company is also engaged in exploration activities on the St. Ives and Granny Smith properties in Australia, Cerro Corona in Peru and Tarkwa in Western Africa.

For 2017, Gold Fields expects to produce 2.10 million to 2.15 million ounces of gold at an AIC per ounce of $1,170 to $1,190.

In addition, the miner expects to spend a total of $869 million on maintenance and development.

Gold Fields is currently trading around $3.27 per share and has gained 8.64% year to date.

The stock is trading at 0.92 times the book value and at 3.45 times the Ebitda.

Disclosure: I do not have any position in Gold Fields Ltd.

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This article first appeared on GuruFocus.