Gold Fields

Operational performance

Regional performance

Americas region

						2017 Guidance
Production overview			AIC (US$/oz)			Prod (Moz)		AIC (US$/oz)			AIC (US$/oz)
Gold-only production	koz		145			159		152			150
Copper production	kt		30			30		28			31
Gold-equivalent production	koz		280			307		290			270
AIC/AISC1	US$/oz		585			203		620			499
AIC/AISC eq-oz	US$/oz		810			673		780			762

1	Significant variances due to movements in the copper price. Copper revenue is viewed as a buy-product revenue for purposes of AIC/AISC calculations, in line with the World Gold Council definition

Cerro Corona in Peru had a solid year, with total managed gold-equivalent production increasing 14% year-on-year to 307koz in 2017 (2016: 270koz), mainly as a result of the improved copper to gold price ratio, higher gold head grades treated and better gold recoveries. This was 6% higher than the gold-equivalent production guidance for the year of 290koz.

Cost of sales (before amortisation and depreciation, including gold-in-process movements) increased by 10% to US$154m in 2017 from US$140m in 2016. The higher costs were mainly due to a US$3m draw-down of concentrate inventory compared to a US$4m build-up in 2016, higher expenses associated with the increase in tonnes mined and higher power costs. Capital expenditure decreased by 21% to US$34m in 2017 from US$43m in 2016, mainly due to lower expenditure on the tailings dam and waste storage facilities during 2017 compared to 2016.

AISC and AIC were US$203/oz in 2017 compared to US$499/oz in 2016 and, on a gold equivalent basis, US$673/oz in 2017 (2016: US$762/oz). The decrease in AISC and AIC was primarily due to higher by-product credits, lower sustaining capital expenditure and higher gold sold, partially offset by higher costs of sales.

Critically, we announced a successful extension of Cerro Corona's life to 2030. The life extension is to be achieved by a combination of a higher density factor and an increase in the dam walls of the current tailings dam to 3,803m above sea level (which adds two years to the existing tailings storage facility) and in-pit tailings (which adds five years).

The region reported net cash inflow of US$117m during 2017.

Tailings storage facility at Cerro Corona

Australia region

		2018 Guidance				2017 Actual		2017 Guidance				2016 Actual
Production overview		Prod (koz)	AISC/AIC (A$/oz)			Prod (koz)	AISC/AIC (A$/oz)	Prod (koz)	AISC/AIC (A$/oz)			Prod (koz)		AISC/AIC (A$/oz)
St Ives		360	1,250 (US$1,000)			364	1,198 (US$916)	360	1,325 (US$970)			363		1,273 (US$949)
Agnew		230	1,310 (US$1,050)			241	1,276 (US$977)	220	1390 (US$1,020)			229		1,301 (US$971)
Granny Smith		275	1,240 (US$990)			290	1,171 (US$896)	278	1,215 (US$890)			284		1,119 (US$834)
Darlot1		Sold	Sold			39	1,874 (US$1,432)	52	1,755 (US$1,285)			66		1,662 (US$1,238)
Region		865	1,26 3 (US$1,010)			935	1,239 (US$948)	910	1,332 (US$977)			942		1,261 (US$941)

1	Darlot Q1 - Q3 2017

Gold Fields' Australian operations delivered another strong operational performance in 2017. Gold production of 935koz at AIC of A$1,239/oz (US$948/oz) was better than full year guidance of 910koz at an AIC of A$1,332/oz (US$977/oz), despite the sale of Darlot, which was completed on 2 October 2017. Granny Smith, St Ives and Agnew all outperformed both production and cost guidance, while Darlot was on track to achieve guidance before being sold. Production was only 1% lower than in 2016 (942koz), despite the loss of fourth quarter output from Darlot.

Costs of sales decreased by 2% to A$675m (US$517m) in 2017 from A$689m (US$514m) in 2016 as a consequence of more material mined than processed, partially offset by increased mining volumes. Capital expenditure decreased to A$423m (US$324m) from A$431m (US$322m).

The Australia region reported a net cash inflow of US$187m in 2017 compared to US$256m in 2016. The lower cash-flow was mainly due to an increase in tax payments to A$171m in 2017 (2016: A$92m).

Mine performances

At St Ives the Invincible complex continued to be the main source of production during 2017. The Drake and Fenton underground portals at Invincible were blasted in July and first ore at Invincible Underground was intersected in December. The Invincible open pit will continue to operate in 2018 but will be phased out by end-2019, at which point Invincible underground and the Neptune open pit will be the main sources of ore at St Ives.

Production increased marginally to 364koz in 2017 from 363koz in 2016, and came in slightly ahead of guidance of 360koz. Cost of sales decreased by 15% to A$207m (US$159m) in 2017 from A$244m (US$182m) in 2016, mainly due to a gold inventory credit of A$38m (US$29m) in 2017 compared to a credit of A$15m (US$11m) in 2016. In addition, mining costs decreased by A$19m (US$14m) in 2017 on the back of reduced operational tonnes mined from the open pits together with cost improvements at the open pits and Hamlet underground.

Capital expenditure increased 9% to A$204m (US$156m) during 2017 from A$188m (US$140m) in 2016, with A$21m (US$16m) incurred at the new Invincible underground mine.

AISC and AIC decreased 6% to A$1,198/oz (US$916/oz) in 2017 from A$1,273/oz (US$949/oz) in 2016 and were 10% below full year guidance of A$1,325/oz (US$970/oz).

St Ives generated net cash-flow of US$125m for the year.

A review of the mine's brownfields exploration activity in 2017 is here.

At Agnew, gold production increased 5% to 241koz in 2017 from 229koz in 2016, and was 10% higher than guidance of 220koz. The higher production was mainly due to higher tonnes mined and processed.

Costs of sales increased 4% to A$197m (US$150m) in 2017 from A$189m (US$141m) in 2016 due to higher mining costs, which resulted from a 16% increase in ore development metres. AISC and AIC decreased to A$1,276/oz (US$977/oz) in 2017 from A$1,301/oz (US$971/oz) in 2016, due to higher gold sold, partially offset by higher net operating costs and capital expenditure. Capital expenditure increased by 2% to A$96m (US$74m) in 2017 from A$94m (US$70m) in 2016, driven by the purchase of a crushing facility for A$5m (US$4m) in 2017.

Agnew generated net cash-flow of US$76m in 2017.

A review of the mine's brownfields exploration activity in 2017 is here.

At Granny Smith, production increased by 2% to 290koz in 2017 from 284koz in 2016, and was 4% ahead of guidance for the year. Costs of sales increased 17% to A$210m (US$160m) in 2017 from A$179m (US$134m) in 2016 due to higher volumes mined and a gold-in-process charge in 2017 compared with a credit in 2016. AISC and AIC of A$1,171/oz (US$896/oz) in 2017 compared with A$1,119/oz (US$834/oz) in 2016, with the increase driven by higher cost of sales, partially offset by higher gold sold and lower capital expenditure.

Capital expenditure was 6% lower in 2017 at A$114m (US$87m), with the majority of the expenditure related to capital development and infrastructure at the Wallaby mine, exploration and the purchase of mobile equipment. The mine development programme saw around 10km of horizontal capital development advanced, providing access to lower ore horizons at Zone 110/120. Following a positive feasibility study of Zone 110/120 an extension at depth to the Wallaby mine was approved.

Granny Smith generated net cash-flow of US$125m in 2017.

A review of the mine's brownfields exploration activity in 2017 is here.

Darlot produced 39koz in the nine months to end-September before being sold to Australian mining group Red 5. As part of the sale agreement Gold Fields has taken a 19.9% stake in Red 5, thereby maintaining exposure in Darlot.

The Neptune pit at the St Ives mine in Western Australia

South Africa region

		2018 Guidance					2017 Actual		2017 Guidance				2016 Actual
Production overview		Prod  (kg)		AIC  (R/kg)			Prod  (kg)	AIC  (R/kg)	Prod  (kg)	AIC  (R/kg)			Prod  (kg)	AIC  (R/kg)
South Deep		10,000  (321koz)		540,000  (US$1,400/oz)			8,748  (281koz)	600,109  (US$1,400/oz)	9,800  (315koz)	585,000  (US$1,290/oz)			9,032  (290koz)	583,059  (US$1,234/oz)

The implementation of the South Deep rebase plan got off to a slow start, with five safety incidents impacting production during Q1 2017. As a result production was 600kg (19koz) lower than planned. The mine was unable to make up the shortfall in production and consequently fell short of guidance for the year.

Despite a strong recovery in the second half, production for the full year decreased by 3% to 8,748kg (281koz) in 2017 from 9,032kg (290koz) in 2016 and was 11% short of the guided 9,800kg (315koz). Costs of sales were 2% higher at R4,062m (US$305m). AISC increased by 1% to R574,406/kg (US$1,340/oz) from R570,303/kg (US$1,207/oz) in 2016, while AIC increased by 3% to R600,109/kg (US$1,400/oz) compared with R583,059/kg (US$1,234/oz) in 2016. The increase in AISC was driven by lower gold sold and higher costs of sales, partially offset by lower sustaining capital expenditure. AIC increased for the same reasons in addition to higher non-sustaining capital incurred during 2017. The rebase plan had guided an AIC of R585,000/kg (US$1,280/oz) for year one. South Deep also reported a goodwill impairment of R3.5bn (US$278m) (gross and after tax) during 2017, related to the slow start of the rebase plan and a reduction in the gold price and resource price assumptions used in the life-of-mine model.

Capital expenditure decreased by 4% to R1,099m (US$82m) in 2017 from R1,145m (US$78m) in 2016. Sustaining capital expenditure decreased to R874m (US$66m) in 2017 from R1,030m (US$70m) in 2016, underpinned by lower spend on the mine's fleet. Non-sustaining capital expenditure increased to R225m (US$17m) in 2017 (2016: R115m (US$8m)) due to higher expenditure on new mine development infrastructure and refrigeration infrastructure.

During 2017, development decreased marginally to 6,897 metres from 6,933 metres in 2016, with development in the new mine areas increasing by 20% to 976 metres from 811 metres in 2016. Destress mining increased by 3% to 33,419m² in 2017 from 32,333m² in 2016. Long-hole stoping volumes mined increased by 3% to 767kt in 2017 from 745kt in 2016.

South Deep recorded a net cash outflow of US$60m, in line with the rebase plan.

For a details the progress of the South Deep rebase plan, please refer to here.

Drilling and installing support at South Deep

West Africa region

		2018 Guidance				2017 Actual		2017 Guidance				2016 Actual
Production overview		Prod  (koz)	AISC/AIC  (A$/oz)			Prod  (koz)	AIC  (US$/oz)	Prod  (koz)	AIC  (US$/oz)			Prod  (koz)	AIC  (US$/oz)
Tarkwa		520	970			566	940	565	985			568	959
Damang		160	1,520			144	1,827	120	2,250			148	1,254
Region		680	1,100			710	1,119	685	1,193			716	1,020

The West Africa region is the second biggest producer in the Gold Fields portfolio, contributing 32% to Group managed production in 2017. Gold Fields has a shareholding of 90% in both mines with the Ghana government holding the remaining 10%.

The Damang reinvestment project, which commenced on 23 December 2016, got off to a strong start, with both contractors performing ahead of plan. During 2017, total tonnes mined were 40Mt compared to the original project schedule of 33Mt, while gold produced was 144koz against guidance of 120koz. Encouragingly, AISC of US$1,027/oz and AIC of US$1,827/oz both came in below guidance of US$1,175/oz and US$2,250/oz, respectively. For an update on the Damang reinvestment plan, see here.

Despite total managed gold production for the region falling 1% to 710koz in 2017, it came in 4% ahead of guidance of 685koz, driven by the better than expected performance at Damang costs of sales for the region decreased by 8% to US$428m in 2017 from US$463m in 2016, underpinned by lower production, continued business process re-engineering and a build-up of inventory of US$41m (2016: US$18m). The mine also realised benefits from incorporating the Development Agreement, which was signed with the Ghana government in 2016 and was fully embedded during 2017.

Capital expenditure increased to US$313m in 2017 from US$206m in 2016, with the bulk of the increase coming from the US$115m in project capital incurred at Damang. AIC for the region was US$1,119/oz, 6% lower than guidance of US$1,193/oz and 10% higher than the US$1,020/oz reported in 2016.

Despite the significant amount of project capital incurred at Damang, the region as a whole reported a net cash inflow of US$64m during 2017, with Tarkwa generating net cash of US$109m and Damang recording a US$45m outflow.

Through an agreement with US-based Genser Energy, an independent power producer, Tarkwa and Damang are now being supplied with gas-fired, on-site energy. This has improved reliability, the mills' operational efficiencies and contributed to significant cost savings as a result of lower tariffs and using less diesel-driven generators. Savings during 2017 were around US$15m, when taking into account improved efficiencies and higher utility tariffs the mines would otherwise have had to pay. For more details see here.

Mine performances

At Tarkwa, the largest and one of the most consistent producers in the Gold Fields Group, production decreased marginally to 565koz in 2017 (2016: 568koz), but was in-line with guidance of 565koz. The mine's carbon-in-leach plant throughput decreased slightly to 13.5Mt (2016: 13.6Mt), while its yield remained steady at 1.30g/t.

Cost of sales decreased by 6% to US$306m in 2017 from US$327m in 2016. Capital expenditure increased 8% to US$181m in 2017 from US$168m in 2016 mainly due to higher expenditure on the mining fleet. AISC and AIC decreased by 2% to US$940/oz in 2017 from US$959/oz in 2016, and were comfortably below guidance of US$985/oz.

Tarkwa generated a net cash inflow of US$109m during 2017.

Damang produced 144koz in 2017, which is 3% lower than the 148koz produced in 2016, but 20% higher than guidance of 120koz. While the reinvestment plan entailed an increase in both operating costs and capital expenditure, both AISC (US$1,027/oz) and AIC (US$1,827/oz) came in below guidance. This is a result of the strict cost controls and better than expected efficiencies from the contractors used to implement the plan.

Cost of sales decreased 10% to US$122m in 2017 from US$136m in 2016, due to the benefits of the Development Agreement being realised, the move to contractor mining and lower operating tonnes mined.

Damang recorded a net cash outflow of US$45m in 2017, underpinned by the US$115m in project capital spent during the year.