Reporting Code and Code of Practice
The Group's December 2017 Mineral Resource and Mineral Reserve estimate is in accordance with the requirements of the South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves (the SAMREC Code, 2016 edition), the South African Code for the Reporting of Mineral Asset Valuation (2016 SAMVAL Code) and Industry Guide 7 for reporting on the United States Securities and Exchange Commission (SEC). The SAMREC Code covers public reporting and information that is prepared for investors or potential investors and their advisers, as well as other interested parties.
Reporting is also in accordance with Section 12 of the JSE Listings Requirements and takes cognisance of other relevant international codes where geographically applicable. The definitions contained in the SAMREC Code are either identical to, or not materially different from, International Codes.
The relationships between Mineral Resources and Mineral Reserves are depicted in the SAMREC classification diagram. Technical and operating procedures are designed to be compliant with the Sarbanes-Oxley Act framework as adopted by Gold Fields for Mineral Resource and Mineral Reserve estimation, auditing and reporting.
The SEC permits mining companies, in their filings with the commission, to disclose only those Mineral Reserves that a company can economically and legally extract or produce. In accordance with the SEC guidelines, companies are not permitted to report Mineral Resources in their Form 20-F submissions. However, certain terms referring to Mineral Resources are used in this report, such as 'Measured, Indicated and Inferred Mineral Resources'. Consequently, US investors are urged to consider closely the disclosure in our Form 20-F.
The Competent Persons (CPs) designated in terms of SAMREC, who take responsibility for the reporting of Gold Fields' Mineral Resources and Mineral Reserves are the respective operation-based Geologists, Resource Estimators, Mine Planning Engineers, Technical Managers and relevant Project Managers, as listed in the 'Supplementary information' section. The CPs have sufficient experience relative to the type and style of mineral deposit under consideration and, unless otherwise stated, are full-time employees of Gold Fields. Corporate governance on the overall regulatory compliance of these figures has been overseen and consolidated by the Gold Fields CP, Tim Rowland, who is a member of the Corporate Technical Services team. CP consent is hereby given to the disclosure of this Mineral Resource and Mineral Reserve estimate. The Corporate Technical Services team covering the full Resource and Reserve value chain are listed in the Competent Person table.
Corporate Governance on the overall compliance of these figures and responsibility for the generation of a consolidated statement has been overseen by the respective corporate CPs and discipline experts listed below:
|Tim Rowland1, 4
|Vice-President: Group Geology, Resource Estimation and Mine Planning||BSc (Hons) Geology; MSc Mineral Exploration; GDE Mining Engineering; Pr Sci Nat; FSAIMM (702861); FGSSA||31|
CEng reg. number – 438305
|Executive Vice-President and Head of Group Technical Services||MSc Mining Engineering; CEng, FAusIMM (CP); MIMMM; MSAIMM||37|
|Group Manager: Survey and Planning||NHD (Mine Survey); GDE (Mining Engineering); MSCC; MIMSSA||41|
|Winfred Assibey-Bonsu1, 4
|Group Geostatistician and Evaluator||BSc (Mining); PhD (Eng); EDP Wits Business School; FSAIMM (700632)||31|
|Group Geologist||BSc (Hons) Geology; MSc Geology; BComm (Hons); MAusIMM; MAIG||30|
AusIMM (CP) 302255
|Vice-President: Group Head of Geotechnical||BSc (Honours) Geology and Geophysics; MEngSci (Geomechanics); MAusIMM||21|
|Vice-President: Mining||BEng (Geological); GradDip (Mining); MBA; FAusIMM (CP); GAICD||25|
AusIMM No. 227106
|Vice-President and Group Head of Metallurgy||BEng (Chemical)FAusIMM CP (Metallurgy)||27|
|Matthew Hochen||Vice-President: Capital Projects||BEng (Elec)||20|
|Pieter Coetzee||Vice-President and Head of Finance: Operations||BCom Internal Auditing Mining Taxation||23|
Assessment and reporting criteria
The assessment and reporting criteria as outlined in the SAMREC Code have been used in the preparation of an internal Competent Person Report (CPR) or PFS document for each operating asset and major growth project, from which the numbers stated in this report were drawn. The CPR principally comprises a technical review of the Mineral Resources and Mineral Reserves, together with a techno-economic appraisal of the relevant mining, processing assets and LoM plan. Each item under Table 1 of the code has been considered using the 'if not, why not' principle and any material year-on-year variance is explained in this document. This report is in effect a summary of all the individual CPRs as submitted and kept on record.
Metal prices and exchange rates
The table below summarises the metal price deck approved by Gold Fields for the December 2017 Mineral Resource and Reserve estimate and which is in accordance with the SEC's three-year trailing average gold price to December 2017. The copper price is flexed over the first two years (US$2.5lb 2018-2019 and US$2.8lb from 2020 onward). The strategic positioning of the operations to be cash-generative at gold prices periodically trading lower, is central to the phasing of the LoM plans. The December Mineral Resource prices have a premium of approximately 15% over the Mineral Reserve prices.
|December 2017||December 2016|
|Copper||US$/tonne||5,510 to 6,170||7,050||5,070 to 6,170||7,050|
|US$/lb||2.5 to 2.8||3.2||2.3 to 2.8||3.2|
The following exchange rates were used for planning purposes, with the comparative historic rates.
Risks to the metal price assumptions used include, but are not limited to adverse legislation or poor policies implemented by governments in operating regions, slow global growth, exchange rate volatility and international policies – e.g. USA, Russia, China, Middle East and North Korea.
Mineral Resource tonnages and grades are estimated in situ over a minimum mining width, and may include mineralisation below the selected cut-off grade to ensure that the Mineral Resources comprise practical mining blocks of adequate size and continuity. Measured and Indicated Mineral Resources are reported inclusive of those Mineral Resources modified to produce Mineral Reserves. Mineral Resources are estimates, being dependent on interpretation of limited information about the location, shape, and continuity of the occurrence and available sampling results. As the understanding of the ore body improves and the methods and modifying factors that determine its extraction criteria gain increased resolution, the estimates may also change and the Mineral Resource and Mineral Reserve data modified accordingly.
The Mineral Reserve is that portion of the Mineral Resource, which technical and economic studies have demonstrated, can justify extraction at the time of disclosure (to a minimum of a pre-feasibility study level). Estimates of tonnages and grades quoted as Mineral Reserves include allowances for all mining dilution, all other mining factors (modifying factors) and are consequently reported as net tonnes and grades delivered to the mill.
Additional key criteria are as follows:
- The LoM plan is underpinned by a full mine design and production schedule using appropriate proprietary software. Of importance is the utilisation of historically achieved data to inform productivity and processing rates, modifying factors and operating costs. The resultant LoM plans are NPV positive with free cash-flow margins broadly aligned to the Company strategy
- The Group's underground Mineral Reserves are classified as being above existing infrastructure. This is in line with international practice, where Reserves are continually accessed via ramps for which the planned expenditure has been provided for in the LoM
- Although all permitting may not be finalised, there is no reason to expect that these will not be granted based on existing processes and protocols. However, the duration taken for final approval may impact the production schedules
- Open pit Mineral Resources are confined to pit shells that are defined by the price, costs and relevant modifying factors used for their estimates. These pit shells are used to constrain the mineralisation to that which is economically and practically extractable under assumed economic conditions
- Underground Mineral Resources are typically confined using Mineable Shape Optimiser (MSO), which assists with generating optimised stope designs to maximise the volume of recovered ore within the given ore body and design constraints, including minimum mining widths and mining cut-off grades
- All regions and operations have documented the assumptions, inputs and modifying factors that underpin the LoM plans, which are supported by mine designs and schedules
- Caution should be exercised when interpreting the grade-tonnage curves provided within this report. The ability to high-grade (selectively mine) the deposits may be precluded by the deposit geometry, mining method and the need for practical development of the ore body
- Operations are entitled to mine all declared material located within their respective mineral rights and/or mining rights, and all necessary statutory mining authorisations and permits are in place or have reasonable expectation of being granted
- Power and utility cost escalation and fuel prices have been factored into all financial models
- Estimated closure plan and rehabilitation costs have been included in all financial models
- All financial models are based on existing tax laws as at 31 December 2017
- This supplement (this report) contains information as at 31 December 2017 (the effective date of this report). The statements and information set out in this report pertain only to the effective date of this report. Shareholders and affected parties are therefore urged to review all public disclosures made by Gold Fields after the effective date of this report, as some of the information contained in the report may have changed or been updated
Quality assurance and quality control
In accordance with the SAMREC Code, a comprehensive quality assurance and quality control (QA/QC) protocol is in place at all the Gold Fields operations and projects. It draws on industry leading practice for data acquisition and utilises national standards authority accredited laboratories (e.g. South African National Accreditation System (SANAS) in South Africa), which are regularly reviewed both internally and externally. Analytical QA/QC is maintained and monitored through the submission of blanks, certified reference material and duplicates, plus umpire laboratory checks.
Auditing and risk
This December 2017 declaration aims to report on information that is rated as important for disclosure on Mineral Resources and Mineral Reserves and it reflects a level of detail required for completeness, transparency and materiality in reporting. Gold Fields' Mineral Resource and Mineral Reserve estimates are reviewed on an ongoing basis by an internal Competent Person team administered by Corporate Technical Services and cyclically by external and independent experts.
Gold Fields follows an embedded process of third-party reviews to provide expert independent assurance regarding the Mineral Resource and Mineral Reserve estimates and compliance to the appropriate reporting codes.
In 2017, the following operations were subject to external review in line with the Gold Fields policy that each operation or material project will be reviewed by an independent third party on average once every three years:
- St Ives Mineral Resource reviewed by AMC and the Mineral Reserve by Optiro
- Agnew Mineral Resource and Mineral Reserve reviewed by AMC
- Granny Smith Mineral Resource and Mineral Reserve reviewed by SRK
- Gruyere Joint Venture Mineral Resource reviewed by SRK and the Mineral Reserve by Optiro
- Salares Norte Geology model reviewed by Santiago Gigola (consultant), the Mineral Resource by Optiro and the database by GeoSpark
Certificates of compliance have been received from all companies that conducted the external reviews, which state that the Mineral Resource and/or Mineral Reserve have been stated in accordance with the SAMREC Code and there are no material issues identified in the estimation processes and LoM plans. Importantly, third-party audits are also configured to assist with continuous improvement regarding Resource and Reserve estimation and reporting.