Diversified gold producer Gold Fields has downgraded its 2023 and 2024 production expectations for its new Salares Norte mine in Chile due to a delay in the first gold from the project.
In a project update on Friday, the JSE- and NYSE-listed mining firm explained that certain components required commissioning by the original equipment manufacturer (OEM) vendor to maintain the validity of their warranties.
“Challenges in securing the OEM vendor representatives, due to previously announced delays by the main contractor, have resulted in an approximate two-month delay in the commissioning of the mills and filter presses,” Gold Fields said.
If the first gold is produced on December 1, production for 2023 would be 1,000 gold-equivalent ounces (GEOs), compared with the previously forecasted 15,000 to 20,000 GEOs.
Gold Fields cautioned that the production outlook for next year had also been impacted and would fall in the range of 400,000 to 430,000 GEOs, down from the previously forecasted 500,000 GEOs.
However, if the delay is longer, and the first gold is only produced by the end of December, 2024’s output will be only 350,000 GEOs at an all-in cost (AIC) of $1,050/GEO.
Despite the downgrade in production for 2023 and 2024, steady-state production will be reached by the beginning of 2025. Production volumes for 2025 and 2026 remain unchanged at 600,000 GEOs.
The average output for the first six years of the mine life (2024 to 2029) will be 500,000 GEOs, and over the total mine life (2024 to 2033), it averages at 355,000 GEOs.
The project’s AIC will average at $700/GEO for the first six years and $780/oz for the total mine life.
Gold Fields, led by CEO Martin Preece, stressed that Salares Norte remained a world-class project with a payback of less than three years at spot prices.
The company has increased the capital estimate by $20 million to $1.04 billion due to the capitalization of costs following the later start date for the first gold.
