The 2021 financial year was another challenging period for the gold sector, with the prolonged Covid-19 pandemic requiring a dynamic operating approach and, consequently, exacerbating the cost and complexity of mining. All regions in which we operate diligently maintained strict operating procedures to comply with Covid-19 protocols and prioritise the health and wellbeing of our employees and other stakeholders.
We continued to conduct rigorous Covid-19 testing of site-based employees and visitors, and any person who tested positive was isolated and treated. We also maintained strict social distancing measures on site, with employees working remotely as much as possible. This included employees at the Group's head office, which reopened in January 2022. To protect our people and limit the impact on production, our operations shifted focus to providing vaccinations to employees and contractors during the second half of the year. By the middle of March 2022, 84% of our workforce was fully vaccinated, which has emerged as our primary defence against the pandemic.
Cerro Corona and South Deep were the most significantly impacted by Covid-19 during 2021. South Deep revised its production guidance down by 300kg (9.6koz) at the end of Q1 2021 due to the impact of Covid-19, but managed to recover the shortfall during the remainder of the year. In Peru, the combined effects of unseasonably high rainfall and Covid-19 caused Cerro Corona to also downgrade its gold production guidance at the end of the first quarter, with the mine taking 20koz off its full-year gold outlook.
Covid-19 also impacted construction activities at Salares Norte during 2021, with total project progress of 63% falling slightly short of the planned 65% at year-end. Encouragingly, critical path items of the plant construction remained on track and the project is still expected to pour first gold towards the end of Q1 2023. For more information in.
Despite the impact of the pandemic, the Group maintained and met production and AIC guidance for 2021 – a rare feat in the gold mining industry.
Despite the Covid-19 challenges, Gold Fields' attributable gold-equivalent production increased by 5% to 2.34Moz in 2021 (2020: 2.24Moz) and was at the upper end of guidance of 2.30Moz – 2.35Moz.
AIC for 2021 was US$1,297/oz, a 20% increase from US$1,079/oz in 2020 driven by increased project capex at Salares Norte and stronger exchange rates in Australia and South Africa. This was below the lower end of guidance, which ranged between US$1,310/oz – US$1,350/oz. Using 2020 exchange rates, AIC would have been US$1,236/oz – a 15% increase year-on-year. Excluding the increased capital costs at Salares Norte, and normalising the exchange rate differences by using the 2020 exchange rates for South Africa and Australia, AIC would have increased year-on-year by 5% to US$1,089/oz, up from US$1,038/oz in 2020.
AISC for the year amounted to US$1,063/oz (2020: US$977/oz), slightly higher than the guidance range of US$1,020/oz – US$1,060/oz. At 2020 exchange rates, AISC would have been US$1,006/oz in 2021.
2021 was a year of significant capex for Gold Fields, driven primarily by the increase in project capex to US$375m at Salares Norte. The Group maintained capex levels that, we believe, are important to ensure the longevity of the portfolio. Total capex (excluding Asanko) increased to US$1,089m from US$584m in 2020. This comprised sustaining capex of US$576m and project capital of US$513m. The increase in sustaining capex is mainly attributable to increased expenditure on capital waste mining and TSFs at Tarkwa, solar plant construction and TSF extension at South Deep, and increased development and waste stripping activities at our Australian operations.
Regional capex included:
|2022 guidance1||2021 actual||2021 guidance||2020 actual|
|Group||2.25 – 2.29||1,370 – 1,410||2.34||1,297||2.30 – 2.35||1,310 – 1,350||2.24||1,079|
In 2022, attributable gold equivalent production (excluding Asanko) is expected to range between 2.25Moz and 2.29Moz. AISC is expected to be between US$1,140/oz and US$1,180/oz, with AIC expected to be between US$1,370/oz and US$1,410/oz.
If we exclude project capex at Salares Norte, AIC is expected to range between US$1,230/oz and US$1,270/oz.
Total capex for 2022 is expected to be between US$1.050bn and US$1.150bn. The exchange rates used for our 2022 guidance are: R/US$15.55 and US$/A$0.76.
|2022 guidance||2021 actual||2021 guidance||2020 actual|
|St Ives||380koz||A$1,585/oz (US$1,205/oz)||393koz||A$1,385/oz (US$1,040/oz)||360koz||A$1,410/oz (US$1,060/oz)||385koz||A$1,266/oz (US$873/oz)|
|Agnew||251koz||A$1,765/oz (US$1,340/oz)||223koz||A$1,741/oz (US$1,308/oz)||240koz||A$1,625/oz (US$1,220/oz)||233koz||A$1,528/oz (US$1,053/oz)|
|Granny Smith||267koz||A$1,710/oz (US$1,300/oz)||279koz||A$1,545/oz (US$1,161/oz)||265koz||A$1,600/oz (US$1,200/oz)||270koz||A$1,465/oz (US$1,010/oz)|
|Gruyere (50%)||155koz||A$1,265/oz (US$960/oz)||123koz||A$1,541/oz (US$1,158/oz)||140koz||A$1,330/oz (US$1,000/oz)||129koz||A$1,350/oz (US$931/oz)|
|Region||1,053koz||A$1,612/oz (US$1,225/oz)||1,019koz||A$1,526/oz (US$1,146/oz)||1,005koz||A$1,500/oz (US$1,125/oz)||1,017koz||A$1,388/oz (US$957)|
The Australia region is the largest producer in Gold Fields' portfolio, with the four mines contributing 44% to Group attributable production in 2021. The mines delivered another strong operational performance during the year, maintaining annual production above the 1Moz level – a milestone achieved in 2020 for the first time since 2015. In 2021, gold production increased marginally to 1,019koz from 1,017koz in 2020. AIC increased by 10% to A$1,526/oz (US$1,146/oz) from A$1,388/oz (US$957/oz) in 2020 due to higher capex and higher cost of sales before amortisation and depreciation resulting from inflationary increases.
Western Australia experienced challenging labour market conditions during 2021, driven by Covid-19-related travel restrictions and buoyant commodity markets. Consequently, there was an increase in labour inflation due to a combination of higher wage increases driven by labour shortages, as well as several retention measures introduced to limit the turnover of critical skills. We expect 2022 to be another year of higher-than-normal labour inflation as these skills challenges persist for at least the first half of the year.
The Australia region reported adjusted FCF of A$621m (US$466m) in 2021 compared with A$723m (US$498m) in 2020.
At St Ives, production increased by 2% to 393koz in 2021 from 385koz in 2020, which is 9% above guidance of 360koz. AIC increased by 9% to A$1,385/oz (US$1,040/oz) in 2021 from A$1,266/oz (US$873/oz) in 2020 due to higher underground production costs and increased capex.
Capex was up by 29% to A$138m (US$103m) in 2021 from A$107m (US$73m) in 2020, reflecting increased development at the Invincible underground mine and pre-stripping of the Neptune stage 7 and Delta Island open pits, as well as the cost of constructing a paste plant at Invincible underground.
St Ives generated adjusted pre-tax free cash-flow of A$354m (US$266m) for the year.
A review of the mine's brownfields exploration activity in 2021 is detailed in.
At Agnew, gold production decreased by 4% to 223koz during the year from 233koz in 2020 – 7% lower than guidance of 240koz. Agnew was particularly hard hit by Covid-19-related challenges during 2021, which impacted the main mining contractor's ability to source labour. As a result, AIC increased by 14% to A$1,741/oz (US$1,308/oz) in 2021 from A$1,528/oz (US$1,053/oz) in 2020, which was also due to lower gold sold and increased capex, partially offset by lower production costs.
Total capex increased by 56% to A$117m (US$88m) in 2021 from A$75m (US$52m) in 2020. Sustaining capex increased by 19% to A$75m (US$56m) in 2021 from A$63m (US$44m) in 2020 due to increased underground development, as well as upgrades to the underground ventilation infrastructure. Non-sustaining capex increased by 246% to A$43m (US$32m) in 2021 from A$12m (US$9m) in 2020 due to the development of new ore bodies at the Waroonga and New Holland underground mines, the crusher circuit upgrade and increased exploration drilling.
Agnew generated adjusted pre-tax free cash-flow of A$149m (US$112m) in 2020 compared with A$192m (US$132m) in 2020.
A review of the mine's brownfields exploration activity in 2021 is in.
At Granny Smith, production increased by 4% to 279koz in 2021 from 270koz in 2020, which was 5% ahead of the 265koz guided for the year. AIC increased by 5% to A$1,545/oz (US$1,161/oz) in 2021 from A$1,465/oz (US$1,010/oz) in 2020 due to increased capex and cost of sales before amortisation and depreciation, partially offset by higher gold sold.
Total capex increased by 39% to A$134m (US$100m) in 2021 from A$96m (US$66m) in 2020. Sustaining capex increased by 25% to A$86m (US$64m) in 2021 from A$69m (US$47m) in 2020 due to increased mine development in the Zone 110/120 areas. Non-sustaining capex increased by 73% to A$48m (US$36m) in 2021 from A$28m (US$19m) in 2020 due to increased development in the Z135 area and the second decline of the Wallaby underground mine. When completed, the second decline will reduce congestion in the main decline and support short interval control measures to maintain the production profile.
The mine generated adjusted pre-tax free cash-flow of A$214m (US$161m) in 2021 compared with A$224m (US$155m) in 2020.
A review of the mine's brownfields exploration activity in 2021 is in.
At Gruyere, a 50/50 JV with Gold Road Resources, gold production decreased by 5% to 247koz (on a 100% basis) in 2021 from 258koz in 2020 due to a decrease in grade of ore mined and processed, as well as processing plant issues early in the year.
AIC increased by 14% to A$1,541/oz (US$1,158/oz) in 2021 from A$1,350/oz (US$931/oz) in 2020 due to lower gold sold and a A$15m (US$11m) increase in processing costs associated with plant reliability projects as well as increased capex.
Capex (on a 50% basis) increased by 43% to A$58m (US$44m) in 2021 from A$41m (US$28m) in 2020, driven by pre-stripping of stages 2 and 3 of the pit.
Gruyere generated adjusted pre-tax free cash-flow (on a 50% basis) of A$79m (US$60m) in 2021 compared with cash-flow of A$110m (US$76m) in 2020.
2021 was another challenging year for Cerro Corona as Covid-19 continued to affect operations. The impacts hit hardest during the first quarter, with an estimated 20koz-eq production lost compared with 46koz-eq in 2020. In addition, H1 2021 was impacted by slope instability in the high-grade area of the pit due to abnormally high rainfall. This triggered resequencing of the mining plan, impacting ore mined from the eastern part of the mine.
Gold-equivalent production increased by 20% to 248koz in 2021 from 207koz in 2020, driven primarily by the higher copper-gold price factor. Consequently, AIC on a gold-equivalent basis decreased by 7% to US$1,040/oz from US$1,119/oz in 2020.
Despite higher equivalent ounces sold, adjusted FCF decreased by 32% to US$57m in 2021 compared with US$84m in 2020. This is mainly explained by a hedge over the copper price, which resulted in a hedge loss of US$46m for 2021.
|2022 guidance||2021 actual||2021 guidance||2020 actual|
|1||Original guidance revised to take account of the Covid-19 lockdown|
South Deep improved significantly across most key performance measures during 2021 compared with 2020, despite the impact of Covid-19-related interruptions in both years. Productivity improvement programmes that we first introduced in 2019 continue to deliver sustainable results. The Covid-19-related production impact, primarily confined to Q1 2021, was 300kg (9.6koz) compared with 1,000kg (32koz) in 2020.
Gold production increased by 29% to 9,102kg (293koz) in 2021 from 7,056kg (227koz) in 2020. This increase was due to improved volumes mined and processed, as well as lower Covid-19-related production losses during the year.
In Rand terms, AISC decreased by 4% to R622,726/kg (US$1,310/oz) in 2021 from R651,514/kg (US$1,237/oz) in 2020, while AIC decreased by 1% to R655,826/kg (US$1,379/oz) from R663,635/kg (US$1,260/oz) in 2020; the inflationary effect and higher capital cost was fully offset by improved gold production and sales.
Encouragingly, South Deep generated adjusted FCF of R1.4bn (US$97m) in 2021, almost three times the R558m (US$34m) recorded in 2020 and the third consecutive year of positive cash-flow.
For a detailed analysis see.
|2022 guidance||2021 actual||2021 guidance
|1||45% stake, equity-accounted|
The Ghanaian region is the second-biggest producer in the Gold Fields portfolio, contributing 34% to Group attributable production in 2021. Gold Fields has a shareholding of 90% in Tarkwa and Damang, while the Ghanaian government holds the remaining 10% on a free carry basis. At Asanko, Gold Fields and Galiano Gold, which manages the mine, hold 45% each and the Ghanaian government the remaining 10%.
Total managed gold production for the region (including our 45% share of Asanko) increased by 1% to 871koz in 2021 but was 2% lower than guidance of 891koz. The increase in output was driven by increased production at Damang as mining progressed into the main ore body at the Damang Pit Cutback (DPCB), partially offset by reduced production at Asanko. AIC for the region increased by 5% to US$1,112/oz in 2021 from US$1,060/oz in 2020, mainly due to cost inflation and higher AIC at Asanko.
The region reported adjusted free cash-flow of US$292m (excluding Asanko) in 2021 compared with US$252m in 2020. Gold Fields received US$5m on the redemption of preference shares from Asanko in 2021, which increased the region's total cash-flow to US$297m.
Tarkwa's production decreased by 1% to 522koz in 2021 (2020: 526koz) but was 2% ahead of guidance of 510koz.
AIC increased by 14% to US$1,155/oz in 2021 from US$1,017/oz in 2020 and was slightly higher than guidance of US$1,075/oz. The increase was driven by higher capex, lower gold sold and higher cost of sales before amortisation and depreciation. Capex and operating expenditure include a contractor mining rate adjustment in 2021.
Tarkwa generated adjusted free cash-flow of US$194m during 2021.
A review of the mine's 2021 brownfields exploration activity is in.
Damang produced 254koz in 2021, which is 14% higher than the 223koz produced in 2020 but 8% below guidance of 275koz. 2020 was a year of two halves for Damang, with the first half focused on higher waste stripping and mining the lower grade Huni Sandstone section. In the second half of the year, the mine transitioned into the main ore body of the Damang pit complex. In 2021, mining only occurred in the base of the DPCB, which was the main reason for the improvement in production during the year.
AIC decreased by 18% to US$852/oz in 2021 from US$1,035/oz in 2020 due to higher gold sold and lower cost of sales before amortisation and depreciation, partially offset by higher capex.
Damang recorded adjusted free cash-flow of US$98m in 2021 compared with US$66m in 2020.
As guided in February, 2022 will be the last full production year at DPCB, with production expected to reach approximately 230koz for the year. Thereafter, production is expected to decline to approximately 150koz in 2023 with production for the last two years of life (2024 and 2025) derived from stockpile treatment. In the meantime, project studies are underway to determine whether life extension projects are financially viable. We will provide an update on these studies later when appropriate.
Asanko produced 210koz in 2021 of which 95koz was attributable to Gold Fields – a 16% decrease from 2020 due to lower grade ore mined at the main pit. AIC increased by 18% to US$1,559/oz in 2021 from US$1,316/oz in 2020 due to an increase in cost of sales before amortisation and depreciation and lower gold sold, partially offset by lower capex. At this point in time, Gold Fields is not in a position to provide 2022 production guidance for Asanko.