Written by Ed Stoddard | From Reuters 

South African bullion producer Gold Fields said on Thursday its Damang mine in Ghana had swung back to profit and was now expected to make a significant contribution to the group’s bottom line.

“This mine has now been restored to sustainable profitability and is expected to make a meaningful contribution to the group’s strategy of generating cash flow for at least the next five years, and likely well beyond that,” Gold Fields said in its first quarter results.

Building on an increase in production in the previous quarter, output from the mine rose three percent to 46,700 ounces, while its costs fell 12 percent to $1,111 an ounce.

Spot gold is currently around $1,290 an ounce, down 12 percent since this time last year.

Looking at industry trends, Gold Fields chief executive Nick Holland forecast global output would fall 15 to 20 percent over the next five years from around 70 million ounces a year now, as projects were being ditched and exploration cut.

“Exploration budgets have been slashed, discoveries have become smaller and lower-quality and we think the production pipeline is going to be under pressure,” he said in an interview with Reuters.

Depressed prices have led to a pull back in investments in the industry.

Gold Fields’ rival Harmony Gold has significantly reduced the scale of its project in Papua New Guinea in response to this environment.

Gold Fields’ production for the quarter decreased by 7 percent to 557,000 ounces, in part because of lower output at its remaining South African operation, South Deep, stemming from an extended Christmas break and technical issues.

Read more at Reuters