Gold Fields boss rejects cost argument

Gold Fields boss Nick Holland has rejected suggestions Australia is an impossibly high-cost mining destination, saying the company's local operations have become the lowest cost mines in its portfolio.

Speaking at Mining Indaba on Tuesday, Mr Holland said Gold Fields had turned around its St Ives and Agnew operations in WA, turning the latter from the highest cost operation in the group to its lowest. He said Gold Fields' strategy was to cut its high-cost mining and focus on improving the margin earned per ounce.

"Having more but smaller mines in our portfolio is not a bad thing. You don't have to go for the big thumpers with massive capital and long payback periods," Mr Holland said. A move to owner-mining from contractors would cut an estimated 20 per cent off its WA mine operating costs, and a restructure at Agnew had also paid dividends.

"In the first half of 2012 it was the worst performing asset in our portfolio," he said. "We decided to restructure it by stopping the low grade mining and the Waroonga underground operation and focus on the high-grade Kim deposit.

"As a consequence of that we have been able to turn it into the best operation in the group in the first quarter."

Agnew production would fall from about 200,000 ounces a year to 170,000oz, but production costs would fall to $US850/oz.

"We will drop overall costs by $US300/oz next year - this will be one of the lowest cost producers in the industry," he said.

The West Australian

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