Safe and OpeRational Delivery

Safe operational delivery

In order to deliver sustainable financial returns, we remain focused on running our operations safely and cost effectively. To deliver on our strategic promises, we need the right people with the right skills, ongoing investments in technology and an innovative approach to energy and carbon management

Key measurements - Safe operational delivery

  2017   Status   2016   2015   2014   2013  
Total Recordable Injury Frequency Rate (TRIFR)
(rate per million)		 2.42     2.27   3.40   4.04   4.14  
Fatalities 3     1   3   3   2  
Gold production - attributable (koz) 2,160     2,146   2,159   2,219   2,022  
Revenue (US$m) 2,811     2,750   2,545   2,869   2,906  
All-in sustaining cost (AISC) (US$/oz) 955     980   1,007   1,053   1,202  
All-in cost (AIC) (US$/oz) 1,088     1,006   1,026   1,087   1,312  
Average gold price received (US$/oz) 1,255     1,241   1,140   1,249   1,386  
Cost of sales before amortisation and depreciation (US$m) 1,404     1,388   1,456   1,678   1,667  
Headline earnings/(loss) (US$m) 210     204   (33)   27   (71)  
Normalised earnings (US$m) 154     186   39   85   58  
Net cash (outflow)/inflow (US$m) (2)     294   123   235   (235)  
Free cash-flow (FCF) margin (%) 16     17   8   13   n/a  

2017 performance improvement on 2016 or achievement in line with strategy

2017 performance drop against 2016

2017 performance on par with 2016

       Attributable gold production
2.16Moz		  
Results and impact
   
  • Deliver South Deep, Gruyere and Damang
  • Reduce energy and water costs and secure supply
  • Meet guidance by following mine plan which aligns with strategic plan
  • Leverage culture to drive delivery
  • Embed Zero Harm mindset
  • Ensure we have the right people in the right roles doing the right things
   
  • Production and cost/oz better than yearly guidance with spatial compliance to plan
  • No fatalities and a reduction in TRIFR by 10% in the long term
  • Reduce energy usage by 5% to 10% against a future baseline through energy saving initiatives and implement renewable energy initiative at South Deep
  • Implement ICMM critical controls guidelines on safety, health and environmental stewardship and stakeholder management
  • Project delivery: deliver Damang, South Deep and Gruyere in accordance with key metrics for 2018 year
  • Manage talent pipeline and succession cover for critical roles
  • Reinvigorate vision and values to a winning culture that rewards teamwork and delivery of Group strategy
  

Consecutive
five years
of exceeding or
meeting cost and
production guidance
   
  • South Deep – Partial achievement of the production targets as defined in the rebase plan and the associated loss of investor confidence
  • South Deep – Logistics and utilities infrastructure
  • Non-delivery of Damang reinvestment and Gruyere projects
  • Safety and health of our employees
  • Attraction and retention of skills
  
           
Key stakeholders
Employees Communities Governments Shareholders and investors
           

Introduction

Gold Fields has consolidated its position as a more focused, leaner business with a portfolio that is characterised by modern, fully mechanised underground and open-pit mines, as well as a number of projects that will ensure the long-term sustainability of the Company. The production base is geographically diversified with seven mines and two development projects in four regions.

Gold Fields' broader strategy is focused on cash generation and capital discipline rather than ounces for ounces' sake. This focus has enhanced the Group's ability to generate free cash-flow (FCF) and provide investors leverage to the gold price through dividends and share price performance. Our six operating mines in Ghana, Australia and Peru lived up to this mandate during 2017, with solid operational and cost performances which contributed to strong overall results for the Group.

While cash generation has remained a core attribute in all strategic decisions, management is cognisant that the sustainability of this cash generation is vital. As such, the longevity of our portfolio was addressed during 2017 through a number of investments:

  • A$184m (US$141m) was spent on the Gruyere project in Western Australia. A$106m (US$81m) of this was project capital, with the bulk of the remaining A$78m (US$60m) relating to cash calls on the deferred Gruyere purchase consideration. This is a 50:50 joint venture with Gold Road Resources. See here
  • US$115m in project capital was spent at our Damang mine in Ghana. See here
  • Near-mine exploration spending of A$99m (US$75m) in Australia (including Gruyere) and US$11m in Ghana. See here
  • US$53m investment on further exploration and drilling at Salares Norte in Chile. See here

In 2017, Gold Fields' attributable gold-equivalent production increased to 2.16Moz (2016: 2.15Moz), beating the upper end of guidance. This performance takes into account the loss of Darlot's contribution in Q4 2017 - when its sale took effect - and reflects an improved performance across the portfolio, with South Deep being the exception.

Group production overview

      2018 Guidance       2017 Actual   2017 Guidance     2016 Actual  
      Prod
(Moz)		   AIC
(US$/oz)		       Prod
(Moz)		   AIC
(US$/oz)		   Prod
(Moz)		   AIC
(US$/oz)		     Prod
(Moz)		   AIC
(US$/oz)		  
      2.08   1,190               2.10   1,170            
Group     - 2.10   - 1,210       2.16   1,088   - 2.15   - 1,190     2.15   1,006  

Central to Gold Fields' strategy of growing our margin and maximising FCF, is a relentless focus on managing costs on an all-in cost (AIC) basis. The Group recorded AIC of US$1,088/oz in 2017, which was lower than guidance (US$1,170/oz - US$1,190/oz), but higher than the US$1,006/oz recorded in 2016. The year-on-year increase in AIC was driven by the capital expenditure at Gruyere, Damang and South Deep as well as continued exploration spending at Salares Norte. Group AISC decreased to US$955/oz from US$980/oz in 2016, and was significantly lower than guidance of US$1,010/oz - US$1,030/oz.

During 2017, Gold Fields increased the capital expenditure levels deemed critical for the longevity of the portfolio. With the focus on extending the life of our ore bodies at all our international mines, Group capital expenditure increased to US$840m (2016: US$650m). This comprises sustaining capital of US$623m (including near-mine exploration of US$87m), equivalent to US$288/oz, and project capital of US$217m. Regional sustaining capital expenditure included:

  • Australia: Our Australian mines decreased capital expenditure to A$423m (US$324m) in 2017 from A$431m (US$322m) in 2016, with near-mine exploration spending coming in at A$99m (US$75m) in 2017 (2016: A$102m (US$76m))
  • South Africa: Sustaining capital expenditure at South Deep decreased to R874m (US$66m) in 2017 from R1,030m (US$70m) in 2016
  • South America: At Cerro Corona capital expenditure declined to US$34m in 2017 from US$43m in 2016. The decrease was mainly due to lower expenditure on the construction of the tailings dam and waste storage facilities
  • West Africa: Sustaining capital expenditure declined to US$198m (2016: US$206m)