- By Alberto Abaterusso
Gold Fields Ltd. (GFI) jumped 1.23% to $4.12 at market close following the release of the company's earnings for full fiscal 2017.
The South African miner reported headline earnings per share or HEPS, a non-GAAP measure of the financial statement's bottom line, of 24 cents or $194 million in 2017. This was a 7.7% decline on a year over year basis.
Based on the basic bottom line of the company's 2017 income statement, this was a net loss of 4 cents per share (down 120% from 2016) or a net loss of $35 million. Normalized earnings per share stood at 17 cents per share (down 7 cents per share from 2016), or $138 million.
The different financial measures in the income statement were backed by a revenue of $2.810 billion, a 2.23% growth from full fiscal 2016.
During the year that ended on Dec. 30, 2017, Gold Fields produced 2.16 million ounces of attributable gold versus a production of 2.146 million ounces in 2016. The South African gold mining company exceeded guidance on attributable production of gold for 2017. Gold Fields targeted an output ranging between 2.10 million and 2.15 million ounces.
The miner's higher volume in gold production in 2017 compared to 2016 can be attributed to increases at Cerro Corona in Peru and in Australia.
South Deep's gold production, which accounts for about 45% to 47% of the company's total output, was affected by a tough first quarter of fiscal 2017. Officials at Gold Fields said "two fatalities and three falls of ground in the high-grade corridors" occurred."
At South Deep, Gold Fields incurred a goodwill impairment of approximately $293.5 million due to a reduction in the determinants to the mine life model, which were used by the company last year for the preparation of a new rebase plan.
Concerning costs for full fiscal 2017, the all-in sustaining cost of $950 per ounce (-2.55% from 2016) and the all-in cost of $1,088 per ounce (+8.15% year over year) were both below the guidance range's lower end.
In addition, Golf Fields reported that projects at Damang (Ghana) and Gruyere (Australia) are on track and progressing to completion.
The company's financials of full fiscal 2017 led to a net debt to adjusted EBITDA ratio of 1.03 times. This is higher compared to a ratio of 0.95 times in 2016.
With $519 million in cash on hand and securities, a revolving credit facility of $374.45 million and a guaranteed revolving credit facility of $100 million, the balance sheet is strong enough to complete gold projects, refinance previous lines of credit and provide financial resources required by working capital and capex needs, the company says..
The South African gold mining company has also announced a 4 cents cash, six-months dividend that, if held constant over the entire year, will lead to an annual distribution of 8 cents. This amount of free cash flow that Gold Fields gave shareholders is determined based on a 25% to 35% rate of net earnings, Gold Fields reports.
Gold Fields has a market capitalization of $3.32 billion. The 52-week range is $2.86 to $4.70 per share. The recommendation rating is 3 out of 5. The average target price is $4.58 per share.
(Disclosure:I have no positions in any stock mentioned in this article.)
This article first appeared on GuruFocus.