Gold Fields Ltd (NYSE:GFI) (JSE:GFI) announced on Tuesday the restructuring of its money-losing South Deep mine in South Africa that range from high operating costs to the need for extensive support.
In a statement, Gold Fields said the mine has consistently failed to meet mining and production targets.
"The key challenge has been the difficulty in transitioning the mine from one run with a conventional mining mindset and practices to mining with a modern, bulk, mechanised mining approach," it said.
The company's shares at its primary listing in the Johannesburg exchange dropped 13.5% to trade at 4,199 rand. In the company's secondary listing in New York, Gold Field stock dropped 10.1% in premarket dealings to trade at US$3.01.
Operating and overhead costs are rising, the mine cannot go beyond 3,000 meters because of technical and ground conditions, and the need for infrastructure and support services to underpin mining operations, the company said.
Other problems plaguing the mine are poor equipment reliability because of poor maintenance practices and conditions and the fact overall labor productivity is below the industry average.
The company is due to release its first-half financial results on Thursday.
Gold Fields is a diversified gold producer with seven operating mines in Australia, Ghana, Peru and South Africa. It has a total attributable annual gold-equivalent production of approximately 2.2mln ounces.
Contact Rene Pastor at rene.pastor@proactiveinvestors.com