UPDATE 2-South Africa's Gold Fields reports drop in Q3 output
* Gold Fields Q3 production falls
* Cuts South Deep production guidance
* Shares fall more than 5 percent
(Adds CEO comment, shares, analyst quote)
By Tanisha Heiberg
JOHANNESBURG, Nov 9 (Reuters) - Shares in Gold Fields fell on Friday after the company reported a 3 percentdrop in third-quarter production, dragged down by a decline inoutput from its last South African asset, South Deep.
The mine has faced numerous operational obstacles in a toughgeological setting 3 kilometres (2 miles) below the surface,including strike action in response to restructuring plans thatwill cut around about 1,100 jobs .
Gold Fields' production from continuing operations for thethree months to Sept. 30 fell to 533,000 ounces from 552,000 inthe same period last year, with South Deep producing just 50,000ounces in that period, against 81,000 ounces a year earlier.
"(The quarter) was characterised by the international assetsposting another strong operating performance and South Deepnegatively impacted by the restructuring announced in August2018," Chief Executive Nick Holland said in a statement.
The bullion producer's shares were down 5.6 percent at 37.63rand by 1048 GMT, their lowest in a month, outpacing the broadergold sector which was down 1.68 percent.
"It's obviously not great news (if) you put it into contextwith the rest of the market. If you come out with a tradingupdate with numbers that are less than stellar it will be alittle bit more magnified," said Ryan Woods, trader atIndependent Securities.
The firm cut its annual gold production guidance for SouthDeep to around 154,600 ounces, assuming strike action therecontinues to year-end. The firm had already cut its guidance forthe mine to 244,000 ounces from 321,000 ounce in April.
Group production was also revised down to 2 million ouncesfrom a previous estimate of 2.08 million ounces.
"All of the international operations in the group areexpected to be on or slightly above guidance, with costsexpected to be on or below guidance. We are doing pretty good onthe international side," Holland said.
The bullion producer, which also has operations in Ghana,Peru, Chile and Australia, said in August South Deep had lost 4billion rand ($284 million) over the past five years.
The majority union at South Deep, the National Union ofMineworkers (NUM), downed tools last week over the planned jobcuts, with the firm warning it could threaten output and lead toeven more layoffs. Holland said two buildings had been burnt during theprotests. The firm, which sought a court order last week toprevent violence during the protest, could not yet estimate thecost of damages due to the strike.
(Reporting by Tanisha Heiberg; Editing by Amrutha Gayathri)
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