Production and cost performance
After the impact of Covid-19 and associated government restrictions on our business in 2020 and 2021, during 2022 we experienced a somewhat normalised operating environment. Apart from restrictions im posed by the Chilean government in H1 2022, our operations reported no Covid-19-related output constraints during the year.
However, the gold industry was not without challenges, and faced significant inflationary headwinds in 2022. At a Group level, we recorded effective mining inflation of 10.7% during the year, with all regions except Chile and South Africa recording double-digit cost inflation. While all cost inputs faced upward pressure in 2022, oil and wage increases were the main drivers of the double-digit mining inflation in the sector. The inflationary pressures carried into 2023, with initial indications of the trend continuing for the first half of the year before some relief expected during H2 2023.
The political backdrop also became significantly more challenging in some of Gold Fields' operating countries. The political reform and proposed constitutional amendment in Chile, while ultimately rejected in a popular referendum, provided an uncertain background in a country where we are investing just over US$1bn in developing Salares Norte. Similarly, the social and political unrest in Peru – which did not affect production at Cerro Corona – is equally concerning, and has impacted our mining peers in the southern part of the country.
More recently, developments in Ghana have been particularly troubling. In response to the worsening economic and fiscal situation, with high public debt and surging inflation, the government is seeking to aggressively increase revenues through higher tax revenues. The mining industry is one of the sectors targeted by this campaign.
Despite these developments, 2022 was a year in which Gold Fields' regionalised operating model proved its worth, with all our regions achieving their 2022 plans.
Gold Fields was one of the few producers in our global peer group to maintain and meet our production and cost guidance issued at the beginning of 2022. While this is a testament to the good work and strict cost control undertaken at each operation, currency movements did provide a tailwind in Australia and South Africa during the year. The Australian Dollar weakened by 8% against the US Dollar to average A$1/US$0.69, while the South African Rand weakened by 11% to average R16.37/US$1.
South Deep continued its strong momentum into 2022 and maintained its pace throughout the year. With the release of our Q3 2022 operating update in November, the mine's guidance was increased by 4% – which it managed to achieve. Production is expected to increase by 6% in 2023, and the mine is on track to reach the 380koz run rate by the end of 2024.
While construction teams at Salares Norte continued making good progress, the effects of Covid-19 and severe weather conditions experienced in 2021 continued to affect activities on-site during 2022. In addition, ongoing skills sourcing challenges faced by the operation's main contractor in the latter part of 2022 and the start of 2023 further impacted construction activities.
Indications are that first production will probably only be achieved during Q4 2023. Still, at the end of December 2022, total project progress was at 87% completion.
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For more information on Salares Norte's progress. |
Group operational performance
| 2023 guidance1 | 2022 actual | 2022 guidance (revised) | 2021 actual | |||||
| Prod (Moz) |
AIC (US$/oz) |
Prod (Moz) |
AIC (US$/oz) |
Prod (Moz) |
AIC (US$/oz) |
Prod (Moz) |
AIC (US$/oz) |
|
| Group | 2.25 – 2.30 | 1,480 – 1,520 | 2.40 | 1,320 | 2.31 – 2.36 | 1,370 – 1,410 | 2.34 | 1,297 |
|---|---|---|---|---|---|---|---|---|
| 1 | Excluding Asanko |
Gold Fields' attributable gold-equivalent production increased by 3% to 2.40Moz in 2022 (2021: 2.34Moz). Excluding Asanko, attributable production was 2.32Moz, above the guidance for the year of 2.25Moz – 2.29Moz.
AIC for 2022 was US$1,320/oz, a 2% increase from US$1,297/oz in 2021. This was short of the lower end of guidance, which ranged between US$1,370/oz – US$1,410/oz, driven by currency tailwinds in Australia and South Africa, together with deferred capital spend on Salares Norte. AISC for the year amounted to US$1,105/oz (2021: US$1,063/oz), slightly lower than the guidance range of US$1,140/oz – US$1,180/oz. The 2022 reporting period was another year of significant capex for Gold Fields, driven primarily by the project capex of US$286m at Salares Norte. The Group maintained capex levels that, we believe, are important to ensure the longevity of the portfolio. Total capex (excluding Asanko) decreased to US$1,069m from US$1,089m in 2021. This comprised sustaining capex of US$657m and project capital of US$412m. The increase in sustaining capex is mainly attributable to increased expenditure on capital waste mining and tailings storage facilities (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:
- Australia: Our Australian mines increased capex to A$457m (US$317m) in 2022 from A$447m (US$336m) in 2021, mainly due to increased pre-strip activities at the Neptune pit at our St Ives mine, the mill crushing circuit upgrade at Agnew and development of the Z135 area at Granny Smith
- South Africa: Total capex at South Deep increased by 47% year-on-year to R1,943m (US$119m) in 2022, up from R1,320m (US$89m) in 2021. The increase in capex was mainly driven by increased spending on the 50MW solar plant and the TSF extension
- Ghana: Total capex (excluding Asanko) increased by 24% to US$289m in 2022 from US$232m in 2021, driven by higher capital waste stripping and the construction of a new TSF at Tarkwa
- Americas: At Cerro Corona, capex decreased by 17% to US$46m in 2022 from US$56m in 2021, mainly due to decreased construction activities at the waste storage facilities. We spent capex of US$296m on Salares Norte during 2022 (2021:US$375m) as the project progressed to 87% completion as at end-2022
We expect Group attributable goldequivalent production (excluding Asanko) to range between 2.25Moz – 2.30Moz in 2023. AISC is expected to be between US$1,300/oz and US$1,340/oz, with AIC expected to be between US$1,480/oz and US$1,520/oz. Total capex for the Group is expected to range between US$1.11bn and US$1.17bn in 2023, with sustaining capital ranging between US$820m and US$850m. The increase in sustaining capital is largely driven by capital stripping at Salares Norte, as well as capital related to the pre-stripping of additional stages of the Gruyere pit, together with an upgrade of the mine's pebble crusher.
REGIONAL PERFORMANCES
South Africa
| 2023 guidance | 2022 actual | 2022 guidance | 2021 actual | |||||
| Prod | AIC | Prod | AIC | Prod1 | AIC | Prod | AIC | |
| South Deep | 10,800kg (347koz) |
R730,000/kg (US$1,330/oz) |
10,200kg (328koz) |
R713,624/kg (US$1,356/oz) |
10,000kg (322koz) |
R755,000/kg (US$1,510/oz) |
9,102kg (293koz) |
R655,826/kg (US$1,379/oz) |
|---|---|---|---|---|---|---|---|---|
South Deep continued to improve across most key performance measures during 2022. Production was in line with the ramp-up plan towards an annual gold output of 12t from 2024. Productivity improvement programmes introduced in 2019 are delivering sustainable results, and further enhancements will ensure continued delivery.
Gold production increased by 12% to 10,200kg (328koz) in 2022 from 9,102kg (293koz) in 2021. This increase was due to improved efficiencies resulting in increased volumes mined and processed, as well as improved mine call factor and plant recovery factors.
The deliberate transition from the current mine to the area North of Wrench – the so-called new mine – continued during 2022. The contribution of mining from North of Wrench increased to 81% in 2022 from 71% in 2021, with the contribution from the current mine decreasing in equal measure (down to 19% in 2022 from 29% in 2021).
Total development at South Deep increased by 13% to 11,594m in 2022 from 10,282m in 2021 as a result of improved operational efficiencies and additional drill rig availability, in line with the ramp-up plan. Secondary support decreased by 16% during the year due to less backlog and rehabilitation support requirements, while backfill increased by 12% as more stopes were available for backfilling.
AISC decreased by 1% to R680,931/kg (US$1,294/oz) in 2022 from R622,726/ kg (US$1,310/oz) in 2021, while AIC declined by 2% to R713,624/kg (US$1,356/oz) from R655,826/kg (US$1,379/oz) in 2021. Currency movements during the year had a positive 11% impact on AIC in US Dollar terms. Total capex increased by 47% to R1.9bn (US$119m) in 2022 from R1.3bn (US$89m) in 2021, driven by a 58% increase in sustaining capex to R1.6bn (US$98m). This increase was underpinned by the increased spend on the solar plant (R547m (US$35m)) and the Doornpoort TSF extension (R123m (US$8m)) in 2022.
Encouragingly, South Deep generated adjusted FCF of R2.1bn (US$129m) in 2022, a 47% increase from the R1.4bn (US$97m) recorded in 2021. This is the fourth consecutive year of positive cash-flow.
2023 guidance:
- Gold production: 10,800kg (347koz)
- Capex: R1,855m (US$109m)
- AISC, AIC: R730,000/kg (US$1,330/oz)
Australia
| 2023 guidance | 2022 actual | 2022 guidance | 2021 actual | |||||
| Prod | AIC | Prod | AIC | Prod | AIC | Prod | AIC | |
| St Ives | 380koz | A$1,770/oz (US$1,240/oz) |
377koz | A$1,594/oz (US$1,104/oz) |
380koz | A$1,585/oz (US$1,205/oz) |
393koz | A$1,385/oz (US$1,040/oz) |
|---|---|---|---|---|---|---|---|---|
| Agnew | 240koz | A$1,910/oz (US$1,335/oz) |
239koz | A$1,875/oz (US$1,298/oz) |
251koz | A$1,765/oz (US$1,340/oz) |
223koz | A$1,741/oz (US$1,308/oz) |
| Granny Smith | 272koz | A$1,760/oz (US$1,235/oz) |
288koz | A$1,691/oz (US$1,171/oz) |
267koz | A$1,710/oz (US$1,300/oz) |
279koz | A$1,545/oz (US$1,161/oz) |
| Gruyere (50%) | 177koz | A$1,685/oz (US$1,180/oz) |
157koz | A$1,431/oz (US$991/oz) |
155koz | A$1,265/oz (US$960/oz) |
123koz | A$1,541/oz (US$1,158/oz) |
| Region | 1,069koz | A$1,790/oz (US$1,250/oz) |
1,061koz | A$1,659/oz (US$1,150/oz) |
1,053koz | A$1,612/oz (US$1,225/oz) |
1,019koz | A$1,526/oz (US$1,146/oz) |
The Australian region is the largest producer in Gold Fields' portfolio, with the four mines contributing 44% to Group attributable production and approximately half of FCF in 2022.
The mines delivered another solid operational performance in 2022, maintaining annual production above the 1Moz level – a milestone achieved in 2020 for the first time since 2015. In 2022, gold production increased by 4% to 1,061koz, up from 1,019koz in 2021. AIC increased by 9% to A$1,659/oz (US$1,150/oz) in 2022 from A$1,526/oz (US$1,146/oz) in 2021. This was due to higher capex and higher cost of sales before amortisation and depreciation as a result of inflationary increases and structural cost increases, particularly at the Granny Smith underground mine.
Western Australia experienced an extremely competitive labour market during 2022, driven by buoyant commodity prices and travel restrictions imposed by Covid-19-related measures. Consequently, wage inflation at our Australian operations remained high in 2022 due to escalating wage increases driven by labour shortages and several retention measures introduced to limit the turnover of critical skills. We expect 2023 to be another year of higher-thannormal labour inflation as these skills challenges persist for at least the first half of the year.
The Australia region reported adjusted FCF of A$623m (US$431m) in 2022 compared with A$621m (US$466m) in 2021.
Mine performance
At St Ives, production decreased by 4% to 377koz in 2022 from 393koz in 2021, which is slightly below guidance of 380koz. AIC increased by 15% to A$1,594/oz (US$1,104/oz) in 2022 from A$1,385/oz (US$1,040/oz) in 2021 due to lower ounces sold, higher cost of sales before amortisation and depreciation and rising capex. Capex was up 6% to A$145m (US$101m) in 2022 from A$138m (US$103m) in 2021, reflecting increased pre-stripping of the Neptune stage seven open pit.
St Ives generated adjusted pre-tax FCF of A$379m (US$262m) for the year.
A review of the mine’s brownfields activity in 2022 is detailed here.
2023 guidance:
- Gold production: 380koz
- Capex: A$191m (US$134m), of which A$154m (US$108m) is sustaining capex and A$37m (US$26m) nonsustaining capex
- AISC: A$1,620/oz (US$1,135/oz)
- AIC: A$1,770/oz (US$1,240/oz)
At Agnew, gold production rose by 7% to 239koz during the year from 223koz in 2021 – 5% lower than guidance of 251koz. AIC increased by 8% to A$1,875/oz (US$1,298/oz) in 2022 from A$1,741/oz (US$1,308/oz) in 2021 due to increased capex and inflationary pressures on commodity inputs and employee and contractor costs. The production and capital cost increases were partially offset by the improved volumes of gold sold.
Total capex increased by 5% to A$123m (US$85m) in 2022 from A$117m (US$88m) in 2021. Sustaining capex was up by 5% to A$79m (US$54m) in 2022 from A$75m (US$56m) in 2021 following a 100-room expansion of the accommodation village. Non-sustaining capex increased by 4% to A$44m (US$31m) in 2022 from A$43m (US$32m) in 2021, mainly due to the replacement of a crushing circuit.
Agnew generated adjusted pre-tax FCF of A$162m (US$112m) in 2022, compared with A$149m (US$112m) in 2021.
A review of the mine’s brownfields activity in 2022 is detailed here.
2023 guidance
- Gold production: 380koz
- Capex: A$191m (US$134m), of which A$154m (US$108m) is sustaining capex and A$37m (US$26m) nonsustaining capex
- AISC: A$1,620/oz (US$1,135/oz)
- AIC: A$1,770/oz (US$1,240/oz)
At Granny Smith, production increased by 3% to 288koz in 2022 from 279koz in 2021, which was 8% ahead of the 267koz guided for the year. AIC rose by 9% to A$1,691/oz (US$1,171/oz) in 2022 from A$1,545/oz (US$1,161/oz) in 2021, due to increased capex and inflationary pressures on commodity inputs, as well as escalating employee and contractor costs.
Total capex increased by 6% to A$141m (US$98m) in 2022 from A$134m (US$100m) in 2021. Sustaining capex rose by 2% to A$88m (US$61m) in 2022 from A$86m (US$64m) in 2021 due to increased expenditure on a new TSF. Non-sustaining capex increased by 11% to A$53m (US$37m) in 2022 from A$48m (US$36m) in 2021, mainly due to increased expenditure on developing the Z135 underground area of the Wallaby mine.
The mine generated adjusted pre-tax FCF of A$280m (US$194m) in 2022, compared with A$214m (US$161m) in 2021. A review of the mine’s brownfields activity in 2022 is detailed here.
2023 guidance:
- Gold production: 272koz
- Capex: A$117m (US$82m), of which A$88m (US$62m) is sustaining capex and A$29m (US$20m) non-sustaining capex
- AISC: A$1,630/oz (US$1,145/oz)
- AIC: A$1,760/oz (US$1,235/oz)
At Gruyere, a 50/50 JV with Gold Road Resources, gold production (on a 100% basis) increased by 28% to 315koz in 2022, up from 247koz in 2021 due to increased ore processed at higher grade.
AIC decreased by 7% to A$1,431/oz (US$991/oz) in 2022 from A$1,541/oz (US$1,158/oz) in 2021, mainly due to higher gold sold and lower capex, partially offset by higher cost of sales before amortisation and depreciation. Capex (on a 50% basis) decreased by 18% to A$48m (US$33m) in 2022 from A$58m (US$44m) in 2021, reflecting completion of pre-stripping of stages two and three of the pit. Gruyere generated adjusted pre-tax FCF (on a 50% basis) of A$152m (US$106m) in 2022, compared with a cash-flow of $79m (US$60m) in 2021.
2023 guidance
- Gold production: 170koz – 185koz (50% basis)
- Capex: A$98m (US$69m) (50% basis), all of which is sustaining capex
- AISC: A$1,665/oz (US$1,170/oz)
- AIC: A$1,685/oz (US$1,180/oz)
Peru
| Production overview | 2023 guidance |
2022 actual | 2022 guidance |
2021 actual |
| Gold-only production | 126koz | 129koz | 120koz | 113koz |
|---|---|---|---|---|
| Copper production | 27.0kt | 27.0kt | 27.0kt | 26.0kt |
| Gold-equivalent production | 255koz | 261koz | 255koz | 248koz |
| AIC | US$570/oz | US$444/oz | US$500/oz | US$230/oz |
| AIC eq-oz | US$1,070/oz | US$998/oz | US$990/oz | US$1,040/oz |
Gold-equivalent production at Cerro Corona increased by 5% to 261koz in 2022 from 248koz in 2021, driven by the selective processing of higher-grade ore together with higher gold and copper recoveries. AIC on a gold-equivalent basis decreased by 4% to US$998/oz from US$1,040/oz in 2021, mainly due to higher equivalent ounces sold and lower capex, partially offset by higher operating costs driven by inflation. In line with the higher equivalent ounces sold, adjusted FCF increased by 33% to US$76m in 2022, compared with US$57m in 2021. This includes a US$13m income tax refund from the Peruvian tax authority related to a deduction associated with the 2021 copper hedge collar.
2023 guidance
- Gold-only production: 126koz
- Copper production: 27kt
- Gold-equivalent production: 255koz
- Capex: US$45m
- AISC (Au-eq): US$1,010/oz
- AIC (Au-eq): US$1,070/oz
- AISC: US$450/oz
- AIC: US$570/oz
Ghana
| 2023 guidance | 2022 actual | 2022 guidance | 2021 actual | |||||
| Prod | AIC | Prod | AIC | Prod | AIC | Prod | AIC | |
| Tarkwa | 545koz | US$1,390/oz | 532koz | US$1,248/oz | 515koz | US$1,230/oz | 522koz | US$1,155/oz |
|---|---|---|---|---|---|---|---|---|
| Damang | 136koz | US$1,830/oz | 230koz | US$1,083/oz | 229koz | US$1,030/oz | 254koz | US$852/oz |
| Asanko1 | NA | NA | 77koz | US$1,435/oz | NA | NA | 95koz | US$1,559/oz |
| Region | NA | NA | 838koz | US$1,220/oz | NA | NA | 871koz | US$1,112/oz |
| 1 | 45% stake, equity-accounted |
The Ghanaian region is the secondbiggest producer in Gold Fields' portfolio, contributing 32% to Group attributable production in 2022. 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 decreased by 4% to 838koz in 2022 from 871koz in 2021, mainly due to decreased production at Damang because of the completion of the Damang pit cutback. Asanko's production was also lower as the mine treated the lower grade stockpiles due to the temporary cessation of mining activities in July 2022. AIC for the region increased by 10% to US$1,220/oz in 2022 from US$1,112/oz in 2021, amid cost inflation and higher AIC at Damang.
The region reported adjusted FCF (excluding Asanko) of US$219m in 2022, compared with US$292m in 2021.
Mine performances
Tarkwa's production increased by 2% to 532koz in 2022 (2021: 522koz) and was 3% ahead of guidance of 515koz. AIC increased by 8% to US$1,248/oz in 2022 from US$1,155/oz in 2021 due to increased capex and higher cost of sales before amortisation and depreciation, partially offset by improved ounces sold.
Tarkwa generated adjusted FCF of US$161m in 2022, compared with US$194m in 2021.
Subsequent to year-end, Gold Fields announced a proposed JV between Tarkwa and AngloGold Ashanti's neighbouring Iduapriem mine. The proposal is being negotiated with the Ghana government.
2023 guidance
- Gold production: 545koz
- Capex: US$243m (all sustaining)
- AISC/AIC: US$1,390/oz
Damang produced 230koz in 2022, which is 10% lower than the 254koz produced in 2021 but in line with guidance. AIC increased by 27% to US$1,083/oz in 2022 from US$852/oz in 2021, due to lower production, higher capex and increased cost of sales before amortisation and depreciation. Damang recorded adjusted FCF of US$58m in 2022.
As previously guided, 2022 was the last full production year at the mine under the Damang Pit Cutback project. In 2023, production will be a combination of mining the Huni pit and processing ore stockpiles. As a result, the level of production will be significantly lower than in 2022, as indicated in the guidance below.
2023 guidance
- Gold production: 136koz
- Capex: US$7m, all of which is sustaining capex
- AISC/AIC: US$1,830/oz
Asanko produced 170koz in 2022 – of which 77koz was attributable to Gold Fields – a 19% decrease from 2021 due to the lower yield, which declined by 17% to 0.91g/t in 2022 from 1.10g/t in 2021. AIC decreased by 8% to US$1,435/oz in 2022 from US$1,559/oz in 2021, due to lower cost of sales before amortisation and depreciation and lower capex, partially offset by lower gold ounces sold.
Asanko produced adjusted FCF of US$42m in 2022.
Gold Fields is current reviewing its 45% stake in Asanko.
2023 guidance
By end-March 2023, Gold Fields was not in a position to verify Asanko's 2023 production and cost guidance provided by Galiano Gold.