INVESTORS AND MEDIA In the news
Good morning. Before we proceed with the formal business of this AGM please permit me a brief overview on the recent performance and developments at Gold Fields:
The safety, health and wellbeing of our employees and contractors has, and always will be, a priority for the Board and management. Tragically, one fatality occurred during 2016 when Vakele Thafeni, a learner miner, succumbed to his injuries after a seismic event caused an underground rock burst at the South Deep mine. Subsequent to year-end we had two further fatalities at the mine. On 1 January 2017, Thankslord Bekwayo, a dump truck operator, and on 16 February, Nceba Mehlwana, a loco driver, died in underground accidents. My heartfelt condolences go out once again to the family, friends and colleagues of Mr Thafeni, Mr Bekwayo and Mr Mehlwana
In honour of their memory, and those who have died at our mines in previous years, this Company will continue to prioritise safety and strive for Zero Harm at all operations. Despite the fatalities the company managed to show a 33% improvement in the Total Recordable Injury Frequency Rate in 2016. Similarly, further reducing the already low exposure of our employees to occupational and non-occupational diseases such as noise-induced hearing loss, silicosis, tuberculosis and HIV/Aids remains a priority.
Moving to operational and financial matters. The global economic environment faced by Gold Fields and the gold mining industry during 2016 showed a slight improvement with the higher gold price and weaker currencies helping our operations’ performances. However, the gold market remains volatile.
Gold Fields’ financial and operational performance for 2016 was strong. We generated US$294-million of net cash-flow – up from US$123 million in 2015 - which enabled us to deliver on our commitments to paying dividends and improving the balance sheet. Our debt has now been reduced by over US$700 million over the past two years. Production levels were maintained at just over 2.1 million ounces per year and our All-in Costs were further reduced to US$1,006 per ounce. Costs are now over a third lower than what they were four years ago.
Significantly, and for the first time, we managed to achieve cash breakeven at South Deep, enabling Gold Fields to announce the mine’s rebase plan from a solid platform. South Deep remains at the heart of our efforts to position Gold Fields as a long-term, sustainable value creator in the global gold sector. The successful implementation of the rebase plan that the Board approved for South Deep in February 2017 – to achieve a steady-state production level of around 500,000oz by 2022 at an AIC of around US$900/oz – is essential for realising this long-term value for the benefit of both our shareholders and other local stakeholders.
Management must also be congratulated for improving the performance and longerterm prospects of our international operations. The significant investment programme last year comprised the recapitalisation of our Damang mine in Ghana, entering into a joint venture with Gold Road Resources for the Gruyere project in Western Australia and commencing the pre-feasibility study at our Salares Norte project in Chile. These projects will improve the quality of our portfolio by reducing costs, improving margins and providing life extensions to our operations. Similarly, the successful brownfields exploration programme at our mines in Australia ensured that we improved the Reserve position of our operations there last year. Put together, these projects and programmes should ensure that our current production profile will be maintained over the next ten years.
Stakeholder engagement, beyond the regular interaction with our investors, is becoming an increasingly critical issue, and the Board devotes considerable time to ensure that Gold Fields’ management deals appropriately with the challenges, issues and concerns of the key stakeholders in our host countries, including governments, our workforce and host communities. We are intensifying our engagement with communities in particular and are strengthening the ability of our regions to distribute funds more effectively to host community projects.
Governments are a further critical stakeholder and we generally find ways of working with them. In Ghana we entered into a development agreement with the government, in 2016 which provides tax and other concessions in return for future investment at our operations. As a direct consequence, we were able to launch the Damang mine reinvestment project, which will extend the life of mine by eight years and create and preserve almost 1,850 jobs in the area.
The extensive and open negotiations with the Government of Ghana that led to the agreement can serve as a framework for dealing with governments in other jurisdictions. It would certainly assist in addressing the impasse that remains in South Africa, where industry and government are struggling to find solutions to a number of regulatory and legal issues.
Our stakeholder engagement strategies and policies, as well as other sustainable development areas, have been aided by our membership of the International Council on Mining & Metals. The ICMM is a CEO-led international organisation that advocates the values of a responsible and sustainable mining and metals sector. Gold Fields has benefited from the work undertaken by the ICMM in numerous areas, such as community engagement, environmental sustainability and tailings management, just to name a few.
As directors of this Company, one of our key responsibilities is to ensure that the global corporate governance programmes at Gold Fields are in line with the everchanging and more stringent standards expected from multi-national companies. During 2016, Gold Fields rolled out a revised Code of Conduct which is aimed at continuously enforcing ethical decision-making in the business and in all dealings with stakeholders.
I would like to welcome Dr Carmen Letton to the Board. She joined at the beginning of this month and brings with her 30 years of mining experience. Her appointment is part of an ongoing Board programme that seeks to ensure appropriate succession planning so that we can provide the appropriate oversight, strategic direction and governance to Gold Fields in years to come. This programme also saw us welcome Steven Reid, Yunus Suleman, Peter Bacchus, Terence Goodlace and Alhassan Andani to the Board last yea
In conclusion I would like to take this opportunity to thank Gayle Wilson for her service to the Gold Fields. Gayle retires after this AGM having spent nine years on the Board, most of those as Chair of the Audit Committee. Gayle has been passionate about Gold Fields throughout her tenure with the Company and her insights will be sorely missed. She has reviewed virtually every public report produced by Gold Fields over that period and her financial expertise and experiences have been of great value to the Company. Thank you Gayle. Yunus Suleman will take over as Chair of the Audit Committee
With this brief overview let us proceed to the business of the meeting