Gold Fields unsurprised by doubling in Windfall capex

GOLD Fields CEO Mike Fraser said on Thursday his company had not been surprised by a doubling in the capital cost of its Windfall project in Quebec.“We went into this investment fully with our eyes open,” he said in a conference call with media. “We were absolutely aware that the capital estimate was not the amount of money that you would need to go and build a project of this nature.”Fraser was commenting after a presentation to analysts on Wednesday about Gold Fields’s capital allocation plans. The group said it would return $500m to shareholders over the next two years either in special dividends or by buying back its shares, or a combination.As part of the presentation, Gold Fields said Windfall – a 300,000 ounce a year project – was forecast to cost between $1.7bn to $1.9bn. This compared to a 2022 estimate of $790m and compares, more favourably, to a recent Scotia Bank estimate of $1.75bn for the project.“That [2022] capital estimate was only for surface infrastructure,” said Fraser. “So it excluded all of the mining activity that is required to develop the mine up to full production and the ramp-up of the mine. So that was capital that was excluded.”The original estimate also factored in outsourcing fleet maintenance while inflation has been a major bugbear for the mining industry, as gold prices have also climbed. “Clearly, there’s some inflation that’s happened over four years, and in fact it’ll be six or seven years by the time we get through to completion,” said Fraser.In Wednesday’s presentation, Fraser said Windfall would also be commissioned about six months later than planned, during the first half of 2029, owing to permitting delays.Acquiring permits for mining is complex. Fraser outlined a series of discussions with the community near the Windfall project as well as a parallel process to get secondary permits. An important development was public consultation due to start in January.“When we come out with our full-year results in February, we’ll have a very good idea whether there’s any additional potential risk on that schedule based on the work that’s been done over the next three months,” he said.“So it’s a really crucial time for us, and we’re pushing very hard to meet that schedule.”Gold Fields took control of Windfall in February after buying out its partner, the Canada’s Osisko Mining, for $1.39bn having bought an initial 50% in May 2023 for the much lower sum of C$600m (then $440m).“On a fundamnetal value basis, given the [Windfall] asset, where it was, and the expansion potential, it will still be a good deal,” said Fraser at the time.“Some parts of the team were asking why pay at the top of the cycle,” he said. “But who knows where gold will go, and we need to continue to develop the portfolio. Two years from now, Windfall will be a lot more expensive (to buy).”Gold was trading at about $2,880/oz at the time compared to $4,168/oz today.The post Gold Fields unsurprised by doubling in Windfall capex appeared first on Miningmx.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com