* South Deep mine shows improvement
* Damang mine under review
* Shares jump more than 20 pct (Recasts with South Deep mine, adds CEO quote, detail)
By Zandi Shabalala
JOHANNESBURG, Nov 19 (Reuters) - Gold Fields Ltd GFIJ.J on Thursday reported improved production and lower cash outflows at its troubled South African South Deep mine, sending shares soaring more than 20 percent.
Gold Fields shares traded at 37.54 rand and were headed for the highest daily jump since November 2008.
The mechanised South Deep mine, which holds a huge 40-million ounces in bullion reserves, is Gold Fields' last remaining South African asset.
The mine has been plagued by a number of technical difficulties but a turnaround strategy is beginning to show signs of success.
Gold Fields said production at South Deep jumped 42 percent to 60,283 ounces while cash outflows fell to $20 million from $27 million in the previous quarter.
"Gold production at South Deep is up quite nicely in quarter and guidance for the year is decent," said Noah Capital Markets analyst Rene Hochreiter.
Gold Fields, which also operates mines in Australia, Ghana and Peru, said normalised earnings for July-September reached $22 million, the same as the previous quarter. It also said it cut net debt by 3.4 percent to $1.42 billion.
The company said it was deciding whether to place its Damang mine in Ghana under "care and maintenance" - pulling back on certain mining activities - until gold prices recover or injecting cash to access deeper higher quality ore.
"If the results of the study indicate that we are going to need higher gold prices to make it work we may decide to pull back," chief executive Nick Holland told Reuters.
Around 2,000 jobs are at risk if the mine is be placed under care and maintenance, he said. A decision on the operation, which contributes seven percent of the company's output, will be announced early next year.
"The costs at Damang are way too high - they are higher than the gold price. If you get rid of loss-making operations you are better off," Hochreiter said.
Damang did not benefit from weaker currencies like its mines in other regions, leaving it exposed to sinking gold prices.
The spot price of gold XAU= fell about 5 percent over the three months through September on bets that the U.S. central bank would raise interest rates, denting its safe-haven appeal. (Editing by Joe Brock)