Creating enduring value beyond mining
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GOLD FIELDS LIMITED INTEGRATED ANNUAL REPORT 2021

Chairperson's report

"In addition to its employees, Gold Fields seeks to ensure all stakeholders accrue real value from our mining activities."
Cheryl Carolus

DEAR STAKEHOLDERS

This will be my last report as Gold Fields' Chairperson before I step down at the Company's Annual General Meeting on 1 June 2022. Therefore, I think it is appropriate to use this opportunity to reflect on my 13 years with the Group, the last eight of which I had the privilege of chairing the Board.

It certainly has been an eventful journey, one that mirrored the changing fortunes of the gold and wider mining industry. It was also a journey whose direction was shaped by our many stakeholders, along with the broader societal expectations of sound corporate citizenship.

But, above all, it was a journey of a company that has set its own course to embrace long-term value creation and sustainability.

The Gold Fields of today is almost unrecognisable from the company I joined in 2009. Most notably, it has expanded into a more global and modern business after fundamentally restructuring the composition and geographic distribution of its portfolio in 2013. During that year we saw two significant changes – the unbundling of our non-mechanised South African gold mines into Sibanye Gold (now Sibanye-Stillwater) in February, and the acquisition of the Yilgarn South assets (Darlot, Granny Smith and Lawlers) from Barrick Gold in Western Australia in October.

Before this, our South African assets accounted for well over 50% of our total production. Now, our Australian mines comprise just under half of our portfolio, with the South Deep mine – our remaining asset in South Africa – contributing around 12%. However, with a life-of-mine lasting until the end of this century, our investment in South Deep will ensure Gold Fields, now a truly global company with operations on three continents, looks set to retain its presence in South Africa. This has been given significant impetus with the marked operational and financial improvement shown by South Deep over the past three years.

Our shareholders witnessed long-term value accretion from the Sibanye Gold unbundling, as well as management's subsequent focus on continuous optimisation and growth of our portfolio. The core focus of this strategy is increasing the free cash-flow (FCF) margin per ounce of gold produced and sustainably extending the average reserve life of our mines.

We have largely succeeded on both fronts. Over the past seven years, Gold Fields has consistently achieved its production and cost guidance to the market – bar some Covid-19-required adjustments – and, in doing so, managed to generate significant FCF even after capital expenditure of US$2.28bn over the past three years alone.

This has enabled Gold Fields to:

  • Fund growth: Over the past four years, we invested A$350m to buy 50% of the Gruyere project in Western Australia and A$329m to build the mine, spent US$340m to rebuild the Damang mine in Ghana, and are about a year out from commissioning the US$860m Salares Norte mine in Chile
  • Strengthen the balance sheet: At the height of the growth capital cycle at the end of 2018, the Group's net debt:EBITDA peaked at 1.45x. But despite the continued capex at Salares Norte, we managed to reduce the ratio to 0.40x, its lowest in 10 years
  • Return dividends to shareholders: Gold Fields has a long and well-established policy of paying out 25% - 35% of normalised earnings to shareholders. During 2021, Gold Fields declared a total dividend of R4.70/share (2020: R4.80/ share), which translates to 30% of normalised earnings

The solid operational and financial performance is reflected in Gold Fields' share price, which has been one of the top performing gold stocks in recent years. Our share price has increased by over 300% since January 2019, and while the gold index was down 8% last year our shares showed an 18% gain.

The corporate transformation also had a noticeable impact on other aspects of Gold Fields' performance, most notably safety, which has always been the Company's number one value and the Board's overriding priority when evaluating management's performance. In 2008, Gold Fields reported a now unfathomable 47 deaths, and the number of fatalities remained in double digits until the unbundling of the labour-intensive South African gold mines.

However, I want to echo the words of our former CEO, Nick Holland, who wrote in his outgoing report last year that he was leaving Gold Fields with one major regret – that we are still recording fatalities and serious injuries at our operations. During 2021, again, we reported one death, that of Vumile Mgcine at South Deep, as well as nine serious injuries. I know that my fellow directors and Gold Fields' management team are absolutely committed to the safety and health of our people above all other operational considerations.

This approach has also come to the fore in the way Gold Fields managed the impact of Covid-19 over the past two years. From the outset of the pandemic in March 2020, the mining industry in general – and Gold Fields in particular – has been at the forefront of measures to assist its employees, communities and host governments, while also mitigating the impact on our operations.

To date, we have tragically lost 20 colleagues to the virus, and our heartfelt condolences once again go out to the families and friends of those who passed away. But, I believe, we also saved many more lives through our interventions. Most recently, this comprised an extensive vaccination campaign that ensured that 84% of our workforce has received two doses of vaccines by mid-March 2022.

As Gold Fields has evolved over the past 10 years, so has our workforce profile. The most noticeable manifestation of the Sibanye Gold unbundling was the dramatic decrease in our workforce by about 30,000 people. Another feature of the past decade is increased mechanisation at our mines, requiring changes to our employees' skill sets. Finally, our workforce has become more diverse and transformed, though we recognise that we still have a long way to go before it fully reflects the demographics of the countries in which we operate. This is particularly relevant in terms of gender diversity, with the percentage of women in the workforce at 22% at the end of 2021, though off a low base of 15% in 2016.

Amid the rise in the number of women in the workforce, Gold Fields is also committed to providing a safe and inclusive work environment for all our employees and contractors, free from any form of discrimination, harassment or harm. The Board takes a zero-tolerance approach to any form of sexual harassment or violence in our workplaces. Any allegation of this type of behaviour is treated with the highest level of seriousness.

In addition to its employees, Gold Fields seeks to ensure that all stakeholders accrue real value from our mining activities. Mining operations have a material impact on their host countries and communities. It is therefore critical that these stakeholders receive material, real benefits from the mining activities taking place in their midst. We believe that Gold Fields does just that: since 2013, annual value creation has been between US$2.4bn and US$4bn, taking the form of payments to suppliers, salaries and wages to employees, taxes and royalties to governments, as well as dividend and interest payments to capital providers.

Host communities, in particular, are critical stakeholders for our mines. Their consent, while not legally binding, provides our mines with their social licences to operate. We seek to create economic value in our host communities by creating jobs among our workforce, procuring goods and services from host community enterprises and investing in community projects. In 2021, these programmes ensured that US$872m – or 28% – of our total value creation of US$3.6bn remained with our host communities. Over the past six years, we have created almost US$4.4bn in host community value, a significant investment in the economic wellbeing of the estimated 485,000 people residing near our mines.

Gold Fields is committed to responsible environmental stewardship. The conservative use of water and energy resources by our mines is not only critical for them to remain competitive, but also to limit the impact of our operations on neighbouring communities and the environment.

A strong focus of our environmental, social and governance (ESG) work has been on understanding and mitigating the impact of climate change on our operations, while also continuing to limit our contribution to the warming climate. We have done so through energy efficiency programmes and by investing in renewable energy at our mines in Western Australia and South Africa.

Gold Fields is widely considered as one of the sector leaders in the use of renewable energy, and we are set to invest hundreds of millions of US dollars to reduce our scope 1 and 2 emissions by 30% by 2030 against our 2016 baseline, while continuing to grow the business. There is an element of self-interest in this, as supply security and the cost of energy are critical operational elements, and our investment in dedicated energy micro-grids at our mines ensures that we have a secure supply of affordable electricity.

To entrench the Company's commitment to long-term sustainable growth, last year the Board adopted an enhanced commitment to ESG as one of the Group's three strategic pillars, and endorsed a comprehensive range of ESG targets for 2030. This, I believe, will underpin Gold Fields' long-term, sustainable value creation for years to come.

In conclusion, I would like to express my sincere gratitude to the many colleagues who supported me during my tenure at Gold Fields. Firstly, my thanks go to my fellow directors, many of whom have been with me for several years and provided countless hours of advice and experience. As I hand over to Yunus Suleman as Chairperson and Steve Reid as Lead Independent Director, I know they will continue to provide Gold Fields with valuable strategic and governance oversight. They will be well supported by a Board that, over the last year, was strengthened by the appointment of two new NEDs, Philisiwe Sibiya and Jacqueline McGill. I want to thank them for the contributions they have already made and would like to express my gratitude to the three NEDs who left the Board last year: Rick Menell, Carmen Letton and Phuti Mahanyele-Dabengwa.

Secondly, I want to thank the Gold Fields management team which, for most of my tenure, was under the leadership of Nick Holland, with Chris Griffith being in charge since 1 April 2021. We entrusted them with managing the Company in a way that will create enduring value beyond mining for all stakeholders, and they have succeeded admirably.

Finally, and most importantly, I want to thank the people of Gold Fields. From the cleaning and security teams, to the geologists out in the field and the operators working 3,000m underground or at heights of over 4,000m, the successes of Gold Fields over the past decade have been built on the hard work by these 20,000-plus men and women. As I look back over my tenure, it is each and every one of you I want to thank for your significant contribution to the growth and sustainability of our Company.

Cheryl Carolus
Chairperson