Gold Fields Ltd.’s troubled South Deep mine in South Africa generated positive cash flow for the first time since the company bought the operation for about $3 billion in 2006. The stock rose for the first time in five days.
Boosted by a higher gold price and efficiency gains, South Deep made 63 million rand ($5 million) of cash in the second quarter, compared to a loss of 330 million rand a year ago, the Johannesburg-based producer said in a presentation on its website.
The mine is a kingpin asset for Gold Fields, comprising about 75 percent of reserves, according to the company’s website, even after a decade of delays, accidents and losing money.
“We’ve stopped the blood at this stage,” Chief Executive Officer Nick Holland said in a phone interview. “But I wouldn’t claim victory yet. It’s still multi years of work still to get South Deep where we want it to be.”
South Deep is South Africa’s only mechanized gold mine and comprises the world’s largest gold-ore body behind Grasberg in Indonesia. Gold Fields has invested about $1 billion in it over the last 10 years in an attempt to produce 700,000 ounces annually until at least 2075. Yet the complex ore body, mistakes, and changes to the mining method means it’s on course for 289,000 ounces of output this year.
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