Currently viewing: PROFITABLE PRODUCTION | Profitable production and sustainable cash-flow key – highlights | Next: Profitable production and sustainable cash

Profitable production and sustainable cash-flow – key highlights

NEW TECHNOLOGIES, NEW WAYS OF WORKING

Technology and innovation are helping to strengthen our business and make work safer and easier

HORIZON 1

The foundational phase of our Modernisation journey focuses on visualising our operations through real time data

ASSOCIATED GROUP RISKS

1

Covid-19

The impact of Covid-19 on our employees, communities and business plan

2

Gold/foreign exchange

Gold price and currency exchange rate volatility

3

South Deep

Loss of investor confidence due to non-achievement of the mine’s business plan

6

Mining costs

Rising mining costs, including those relating to ESG

7

Safety

Safety and health of our employees, including occupational illnesses

8

Energy

Security of power supply and cost of energy



13

Water

Water pollution, security and reduction in freshwater consumption

14

Geotechnical

Increased geotechnical risk underground and in open pits

15

Ghana contractors

Challenges with local mining contractors in Ghana

16

Chile

Delays and cost overrun relating to the Salares Norte project

18

Infrastructure

Ageing infrastructure

19

I&T

Failure to modernise operations


RELATED SDG

Decent work and
economic growth

Industrial innovation
and infrastructure

GROUP OPERATIONAL PERFORMANCE

2021 Guidance 2020 Actual 2020 Guidance (revised) 2019 Actual
Prod AIC Prod AIC Prod AIC Prod AIC
Group 2.30Moz – US$1,310/oz –     2.20Moz – US$1,070/oz –    
  2.35Moz US$1,350/oz 2.24Moz US$1,079/oz 2.25Moz US$1,090/oz 2.20Moz US$1,064/oz

REGIONAL PERFORMANCES

SOUTH AFRICA REGION

2021 Guidance 2020 Actual 2020 Guidance (revised) 2019 Actual
Prod AIC Prod AIC Prod1 AIC Prod AIC
South Deep 9,000kg R660,000/kg 7,056kg R663,635/kg 7,000 R610,000/kg 6,907kg R585,482/kg
  (289koz) (US$1,320/oz) (227koz) (US$1,260/oz) (225koz) (US$1,394/oz) (222koz) (US$1,259/oz)
1 Original guidance revised to take account of Covid-19 lockdown
 
 
 

AMERICAS REGION

  Prod 2021
Guidance
2020 Actual 2020
Guidance
2019 Actual
Gold-only production 130koz 119koz 158koz 156koz
Copper production 24.7kt 24.9kt 27.5kt 31kt
Gold-equivalent production 220koz 207koz 275koz 293koz
AIC US$1,060/oz US$715/oz US$575/oz US$472/oz
AIC eq-oz US$1,190/oz US$1,119/oz US$830/oz US$810/oz
 

Australia region

2021 Guidance 2020 Actual 2020 Guidance 2019 Actual
Prod AIC Prod AIC Prod AIC Prod AIC
St Ives 360koz A$1,410/oz 385koz A$1,266/oz 360koz A$1,320/oz 371koz A$1,385/oz
    (US$1,060/oz)   (US$873/oz)   (US$910/oz)   (US$963/oz)
Agnew 240koz A$1,625/oz 233koz A$1,528/oz 225koz A$1,440/oz 219koz A$1,656/oz
    (US$1,220/oz)   (US$1,053/oz)   (US$995/oz)   (US$1,152/oz)
Granny Smith 265koz A$1,600/oz 270koz A$1,465/oz 265koz A$1,415/oz 275koz A$1,325/oz
    (US$1,200/oz)   (US$1,010/oz)   (US$975/oz)   (US$922)
Gruyere 140koz A$1,330/oz 129koz A$1,350/oz 135koz A$1,150/oz 50koz A$4,170/oz
(50%)   (US$1,000/oz)   (US$931/oz)   (US$795/oz)   (US$2,900/oz)
Region 1,005koz A$1,500/oz 1,017koz A$1,388/oz 985koz A$1,350/oz 914koz A$1,418/oz
    (US$1,125/oz)   (US$957)   (US$932/oz)   (US$986/oz)

WEST AFRICA REGION

2021 Guidance 2020 Actual 2020 Guidance 2019 Actual
Prod AIC Prod AIC Prod AIC Prod AIC
Tarkwa 510koz US$1,075/oz 526koz US$1,017/oz 510koz US$970/oz 519koz US$958/oz
Damang 275koz US$790/oz 223koz US$1,035/oz 215koz US$1,030/oz 208koz US$1,147/oz
Asanko¹ 106koz US$1,400/oz 112koz US$1,316/oz 115koz US$1,130/oz 113koz US$1,214/oz
Region 891koz US$1,025/oz 862koz US$1,060/oz 840koz US$1,006/oz 840koz US$1,039/oz
1 45% stake, equity-accounted

 OVERVIEW AND HISTORY

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

Previous