The core focus of Gold Fields’ strategy is to grow its FCF margin and sustain this in the long term. Therefore, when looking at growth within Gold Fields, we focus not on increasing our levels of production, but rather on reducing Group AIC, increasing the FCF margin per ounce of gold produced and sustainably extending the average reserve life per operation. The Group targets an FCF margin of at least 15% at a notional long-term planning gold price of US$1,300/oz. This provides a degree of downside resilience should the price decline below that level in the short term. At the same time, it means we can improve our margins should the gold price exceed that level – which has been the case for the last two years.

Our progress towards our target is supported by the gradual decline of Group AIC to below US$1,100/ oz over the past few years. In Q4 2012 – the last quarter before the Sibanye Gold unbundling – Group AIC amounted to US$1,621/oz. All the while, our production levels held steady at around 2.20Moz.

The improved cost performance at stable production levels and the higher gold price received, as well as the gradual easing of our capex programme, ensured that net cash-flow from operating activities improved steadily over the past few years, culminating in inflows of US$631m in 2020. This translated into an FCF margin of 28% at a gold price of US$1,771/oz, meaning that we successfully exceeded our 15% target for four consecutive years. During 2021, our US$508m capex programme at Salares Norte will push up AIC temporarily.

GROUP AIC AND CASH-FLOW TRENDS FROM 2012 TO 2020

¹ Net cash-flow from operating activities after taking account of net capital expenditure and environmental payments