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Nick Holland - Chief Executive Officer “. . . if we cannot mine safely, we will not mine. . .”


I am pleased to report that we have had a year of strong progress against the goals and objectives articulated in our F2008 annual report, aimed at setting Gold Fields on a course for progressively improved performance during F2010, and the years beyond.

During F2009 we embraced a bold yet simple new vision, which is for Gold Fields to be the global leader in sustainable gold mining. Underpinning this vision, we have also adopted six values that guide us towards achieving this vision. These are:

1. Safety: If we cannot mine safely, we will not mine.
2. Responsibility: We act responsibly and care for the environment, each other, and all of our stakeholders – our employees, our communities, and our shareholders.
3. Honesty: We act with fairness, integrity, honesty and transparency.
4. Respect: We treat each other with trust, respect and dignity.
5. Innovation: We encourage innovation and entrepreneurship.
6. Delivery: We do what we say we will do.

As expected, F2009 was a year of two halves. The first half of the year was focused on improving the Gold Fields production machine. This included the completion of our international growth projects, as well as a number of planned, safety related production interruptions at our South African mines for the rehabilitation of critical infrastructure, which was the main contributor to a six per cent decline in attributable gold production to 3.41 million ounces for F2009.

However, as expected, in the second half of the year we experienced a return to greater stability, predictability and consistency in our performance as our international growth projects and the rehabilitation projects at our South Africa mines were completed. After reaching a production low point of 798,000 ounces in the first quarter of F2009, largely because of the production interruptions mentioned above, as well as a delay in the completion of certain growth projects, we had a steady improvement in quarterly production for the remainder of the year, ending the fourth quarter with attributable production of 906,000 ounces of gold. This represented an improvement of 108,000 ounces, or 14 per cent, over the low point recorded in the first quarter, and is a trend that we expect to see continuing throughout F2010 as Gold Fields moves closer to its short-to medium-term goal of again producing between 3.8 million and 4 million attributable ounces of gold per annum.

While F2009 was a year of unprecedented operational challenges, it was also a year of significant milestones on our course towards achieving this target on a sustained basis.

The first and most important of these milestones was the significant strengthening of the safety culture in Gold Fields. In our F2008 annual report, I said that we had crossed a watershed in our approach to safety and I made a commitment that “if we cannot mine safely, we will not mine”. During F2009 we bedded this down as our single most important value, and the bedrock of the Gold Fields culture.

Towards this end, we had to make a number of very difficult decisions during the past year, including several instances where we suspended production in the interest of safety. While these interventions came at a significant opportunity cost in lost production and revenue, it was a cost that we accepted without hesitation in the interest of the safety of our people and the long-term sustainability of our business. The net result is that we have seen a step change in our overall safety performance with all safety indicators showing a considerable improvement over the year. In particular, the number of fatalities on our mines declined by more than 55 per cent from 47 in F2008, to 21 in F2009.

While this represents a vast improvement, I deeply regret each one of these fatalities, and it remains my personal objective, and that of every person in Gold Fields, to eliminate all serious and fatal accidents on our mines. While this is a profound commitment to make in an industry that is characterised by high levels of risk, especially in the seismically active deep level mining environment in South Africa, it is a moral and commercial imperative for the future existence of our industry. I am confident that I have the unwavering support of the Board of Directors, the executive, all of the employees, and the vast majority of the shareholders of Gold Fields. I describe the specific safety interventions in more detail in the health and safety section of this message.

The second key milestone, which is closely related to the one of safety described above, was the successful completion of the critical safety related rehabilitation of infrastructure at our South African operations, as well as the completion of the secondary support backlog at these operations, which we described in some detail in the F2008 annual report.

The third key milestone was the completion of our international growth projects, as planned.

  • The Cerro Corona Mine in Peru was completed during December 2008. This is now a world-class mine and is operating sustainably at its design capacity of approximately 140,000 ounces of gold and 32,000 tons of copper per year, and will make a meaningful contribution to Gold Fields in the future. The well-known gold regions of South America feature prominently on Gold Fields’ radar screen for future expansion, and I believe that Cerro Corona gives Gold Fields an excellent foothold in this region.
  • At the Tarkwa Gold Mine in West Africa the expansion of the Carbon-in-Leach (CIL) plant was completed, as planned, by the end of December 2008. While production build-up of the expanded mill is slower than initially anticipated due to some commissioning delays, it is expected to produce at its design capacity of approximately one million tons of ore per month, on a sustainable basis, during F2010. Together with the significant volumes through the heap leach operation, Tarkwa should sustain approximately 750,000 ounces of production a year, for many years to come.
  • At St Ives in Australia, the Belleisle and Cave Rocks underground mines reached full production mid-way through F2009, providing a foundation for an improved operational performance.

The fourth key milestone achieved during F2009 was the implementation and roll-out of our new regionalisation strategy that I mentioned in my report last year. This strategy is aimed at transforming Gold Fields from its centralised structure to a more dynamic, networked structure, centred on the four regions of the world in which Gold Fields has an operational presence, and in which we aim to grow. Each of the regions, South Africa, West Africa, South America and Australasia, is moving through a process of building-up to greater accountability and responsibility for their operations and growth ambitions. I am confident that each of these regions will achieve the short-and medium-term cost and production challenges, as well as the medium-term growth targets that have been set. The four- to five-year target in South Africa is to produce between 2.2 and 2.5 million ounces of gold a year on a sustainable basis, while a target of one million ounces per annum of attributable production, either in development or in production, has been set for the management teams in each of West Africa, South America and Australasia.

In South Africa we have completed the separation of the corporate and the South African regional offices. The corporate office is now half the size that it was in the past, while the South African regional team is now housed together in its own separate regional office, closer to the nexus of the South African mines on the West Wits Line. This separation has resulted in a greater focus by the South African team on the main strategic initiatives that are being put in place at the various South African operations, while the more streamlined corporate office is better positioned to execute its mandate of Group related functions.

The fifth key milestone achieved during F2009 was the progress made with the South Deep Gold Mine in South Africa. Following a comprehensive, external review of this project between August 2008 and January 2009, we now have greater confidence in the overall integrity of this project, and its ability to deliver exceptional value to our shareholders for approximately the next fifty years. The purpose of the review was to answer three key questions: What is the full production capacity of South Deep? How long will it take to achieve? How much will it cost? At full production, South Deep should produce approximately 750,000 ounces to 800,000 ounces of gold per year; it should achieve this by December 2014; and it should cost approximately R8.5 billion in real terms to complete.

Regarding the near term, the re-commissioning of part of the South shaft has been completed, with single shift hoisting being planned for the next year to support the reef and waste tonnage build-up required for this mine to achieve 300,000 ounces of gold production during F2010, while simultaneously progressing development rates that should enable the mine to build to full production. The additional mining fleet required for the short-term build-up has been acquired and the first thirty years of the mining plan has been fully re-modelled and scheduled. Work is on schedule to complete the ventilation shaft of the Twin Shaft Complex by early 2012, which, along with development, is a very important milestone to achieve full production of 330,000 tons of ore per month at this operation.

On the operational front, production in South Africa declined, from 2.4 million ounces in F2008 to 2.0 million ounces in F2009, mainly as a result of the safety related production interruptions referred to above. Following the completion of the critical infrastructure rehabilitation during the first half of the year, the operational teams have been focused on bringing greater stability, predictability and consistency to the operations, and positioning the region to again build-up, over the next year, to a production range of approximately 550,000 to 575,000 ounces of gold per quarter on a sustainable basis. While progress towards this goal has continued during the second half of the year, the build-up was impeded by a lack of fl exibility caused by the focus on the backlog secondary support, which saw development crews redeployed from development into backlog secondary support. This situation is in the process of being remedied and ore reserve development has been designated as the second highest priority for F2010, second only to safety.

At the international operations total managed gold production increased from 1.5 million ounces in F2008 to 1.7 million ounces in F2009 as a result of the inclusion of 219,000 gold equivalent ounces from the newly completed Cerro Corona mine. This production increase was partially offset by a five per cent reduction in production at Tarkwa.

As indicated in the F2008 annual report, it remains a key strategic objective of Gold Fields to reduce notional cash expenditure (NCE) and increase free cash flow. NCE is defined as operating costs (including general and administration costs) plus capital expenditure, which includes brownfields exploration. The Group’s NCE for the year ended 30 June 2009 amounted to US$763 per ounce (R221,153 per kilogram), which compares with the US$796 per ounce (R186,088 per kilogram) for last year. These figures include all sustaining capital as well as capital expenditure for growth projects.

It remains a key strategic objective of Gold Fields to reduce notional cash expenditure and increase free cash flow.

At the South African operations the NCE increased from US$676 per ounce (R157,972 per kilogram) in the previous year to US$734 per ounce (R212,629 per kilogram) this year. The combined West African, South American and Australasian operations achieved NCE for F2009 of US$800 per ounce (R231,670 per kilogram), against last year’s US$757 per ounce (R176,909 per kilogram).

We continue to be the only gold mining company to report NCE.

During the fourth quarter of F2009 we impaired our holding in associate, Rusoro Mining Limited, in terms of the applicable accounting standard. The impairment charge amounted to R1.1 billion (US$118 million). This impairment does not refl ect management’s view of the value inherent in Rusoro, which has reserves of 2.0 million ounces and resources of 14.1 million ounces.

There were some exciting developments on the growth front during F2009. At Gold Fields we see our growth coming primarily from exploration success, both near mine and greenfields. While we do not discount the possibility of acquisitions, it is difficult to make accretive purchases in the current environment.

We have therefore, during the year under review, increased our exploration activity around the globe and we now have over 30 exploration drill rigs operating in eleven countries: Australia, Ghana, Peru, Mali, Chile, Democratic Republic of Congo (DRC), Dominican Republic, China, USA, Indonesia and Kyrgyzstan, and we drilled 442,261 metres in F2009.

Interestingly, for the first time in Gold Fields’ history, we currently have three highly prospective advanced stage exploration projects underway at the same time, at least one of which we expect to progress to a prefeasibility study within the next 12 months.

  • In West Africa, we are, together with our joint venture partner, Glencar Mining Plc, moving ahead with an exciting new exploration project in the south of Mali, known as the Sankarani Project. After the reporting period covered in this report, Gold Fields made a successful offer to acquire the entire issued share capital of Glencar which, if successful, will give Gold Fields full ownership of this project as well as its advanced Komana project.
  • At the Chucapaca Project in southern Peru, recent drilling by our joint venture partner, Compania de Minas Buenaventura, has intersected significant gold with copper grades associated with a breccia-hosted deposit, and this resulted in approval being given to resume a resource delineation programme on this discovery.
  • In Kyrgyzstan, we are advancing the Talas joint venture with Orsu Metals Corporation, where we are obtaining a better understanding of the ore body following the recognition of at least three phases of mineralisation through various exploration activities. This project is in a new frontier for Gold Fields.

It is well endowed, yet under-explored and has significant mineralisation potential.

The uranium project, which we now refer to as our “fifth mine” in the South African portfolio, is also progressing rapidly and our feasibility study is expected to be completed early in 2010. This project is defining the economic potential of processing a select number of our historic surface tailings dams at the Driefontein, Kloof and South Deep mines in South Africa, as well as current arisings from underground mining at these mines, for the recovery of uranium and related by-products of gold and sulphuric acid.

In addition we have a number of very exciting near mine growth opportunities at several of our mines around the world. These are described in the growth section below.

Our share price performance over the last year largely refl ected our operational performance, and can be described as “a tale of two halves”. Together with the rest of the world’s markets, we experienced a significant decline in our share price in the first half of the financial year, reaching the year’s low of R54.00 (US$4.64) a share in September 2008. However, our share price increased strongly in the second half to end the year at R93.52 (US$12.05) a share, a gain of 73 per cent in rand terms from the low point during the year. The turbulent financial market resulted in the investment community being more circumspect on how they approach investment decisions, and they are now largely focusing on stability, predictability and consistency in companies, which we have also made our operational mantra. Taking a selection of major gold producing companies among Gold Fields’ peer grouping and comparing share price performance over our last financial year (see graph below), we delivered a very creditable performance, near the top-end of the spectrum, which, I believe, indicates that the market is regaining confidence in our ability to deliver.

In summary, F2009 has been a year focused on improving safety, fixing up our production machine, and returning a sense of stability, predictability and consistency to the performance of Gold Fields. This is the most important way in which we will continue to build our track record and, in doing so, differentiate our company from our peers.

One million fatality free shifts has been achieved at Kloof, South Deep and at Beatrix, and two million fatality free shifts at Driefontein.


Gold Fields’ health and safety philosophy is premised on our commitment that “if we cannot mine safely, we will not mine”, and on our objective of achieving a zero harm working environment for all of our people. This philosophy is informed, first and foremost, by the fact that there is no price to be placed on human health and safety, and by the economic reality that a stable, predictable and consistent operational performance is not possible in an environment constantly plagued by accident induced interruptions to operations.

We remain fully aware that the realisation of our safety objectives will materialise only as a result of a sustained and ongoing effort. This objective, which is the number one priority in the company, can only be achieved if we have a tripartite approach to change involving every employee in our organisation, the leadership of our unions and employee representative bodies, and the government. It is pleasing to report that over the year these key stakeholder groupings have realised that we are serious about placing safety ahead of production and that we are willing and able to make bold and courageous decisions when it comes to ensuring that no harm comes to any of our people. This, in my opinion, is one of the main reasons why we have seen a step change in safety over the past year.

The increased focus on safety across all levels of injury prevention has led to significant improvements across the board: Fatal Injury Frequency Rate; Serious Injury Frequency Rate and Lost Day Injury Frequency Rate. The Group’s all important Fatal Injury Frequency Rate continues to trend downwards with the year’s rate being 0.13 versus last year’s 0.29 per million man hours worked. This represents a 55 per cent improvement year on year. The Serious Injury Frequency Rate has decreased from 4.03 per million man hours worked to 2.82 per million man hours worked, which represents a 30 per cent improvement. The Lost Day Injury Frequency Rate decreased to 4.35 per million man hours worked, which represents a 43 per cent improvement.


Share price performance (1 July 2008 to 30 June 2009)

Share price performance (1 July 2008 to 30 June 2009)

At the South African operations, one million fatality free shifts were achieved at Kloof, South Deep and at Beatrix, and two million fatality free shifts were achieved at Driefontein, while the operations in West Africa, South America and Australasia operated for the full year without any fatalities. South Deep has to date mined for 15 months without a fatality, while Driefontein operated for eight months without a fatality, which proves that it can be done.

Although we have made significant strides in our quest to ensure a culture where the safety of everyone at Gold Fields is of the utmost importance, we know that simply doing more of the same is not going to move us forward.

With this in mind, during the year we have completed a Group-wide safety review by industry leaders DuPont, which I mentioned in last year’s report. The purpose of this review was twofold and included:

  • To understand our operations’ safety management system and culture better; and
  • To identify and recommend a path forward to achieve safety improvement objectives.

Systems, rules and procedures, as well as personal beliefs and values, largely direct behaviours. This is precisely why we included a safety perception survey in the DuPont review that was used to uncover the internal beliefs and perceptions of our people regarding safety. In South Africa, the outcomes of the DuPont review have resulted in a focused project termed Safe Production Management. This is now well underway, with dedicated resources, to ensure that the South Africa Region has an optimal health and safety culture and performance in the years ahead.

At the West Africa, South America and Australasia operations, the assessment of each mine has culminated in the drafting of action plans to address opportunities for improvement. Many of these action plans have already been implemented while the remainder will be fully developed and implemented in the early stages of the 2010 financial year.

Gold Fields officially opened its new Employee Housing Programme in the communities of Glenharvie and Blybank on the West Rand in South Africa.

The Safe Production Rules, which have been introduced to employees globally, were developed through a comprehensive analysis of all historical safety incidents, and seek to reinforce the Gold Fields Health and Safety Policy, and to pursue our ultimate objective of zero harm. These rules also serve as an integral part of the training and orientation processes on all of our mines. All new employees, contractors and employees returning from annual leave are exposed to the Safe Production Rules during their induction, or re-induction sessions. The rules work hand-in-hand with other initiatives like the ‘Stop, Think, Fix, Verify and then Continue’ campaign, which has had a tremendous impact on employees’ safety behaviour and awareness.

Good safety management remains essential to Gold Fields’ business. It is now the cornerstone of everything we do and the people of Gold Fields, as well as all our stakeholders in the form of contractors, suppliers and unions, must be congratulated for the manner in which they have embraced our new safety philosophy. Without the cooperation and commitment of every member of our team globally, we would not have achieved the improvements that we have seen so far.

However, while we have made significant progress in the past year, we are acutely aware of the fact that much remains to be done.

We have introduced a new programme in South Africa, called “24 Hours in the Life of a Gold Fields Employee”. This programme, which is based on the total well-being philosophy and is aimed at improving every facet of the lives of our people, includes interventions in the fields of living conditions, nutrition, health care, safety, sport and recreation, and learning. During F2010 this programme will also be rolled out to all of our international operations.

In June 2009, Gold Fields officially opened its new Employee Housing Programme in the communities of Glenharvie and Blybank on the West Rand in South Africa. This programme consists of 192 family homes which will be occupied by employees of the Driefontein and Kloof gold mines.


To achieve the Gold Fields objective of operating in a manner that represents a platform for responsible investment, we have integrated sustainable development considerations into the corporate and operational decision-making processes of the organisation. The result that we are striving towards is an appropriate balance between the Group’s requirements to perform financially, achieve world-class standards in environmental management, and the desire and need to ensure broad social benefit. This approach of viewing sustainable development as an integral part of our business also informs the structure of this annual report to our stakeholders – incorporating financial, social and environmental reporting into a single report.

In last year’s report we mentioned the progress being made towards a Sustainable Development Framework for Gold Fields. It is pleasing to report that this Framework has now been fully developed and implemented. Many of the best practices enshrined within the various sustainable development principles are not new to us at Gold Fields. For many years we have implemented policies and protocols in support of the various components of sustainable development. As a result, the consolidation of our existing approaches with new knowledge and best practices gleaned from the work of, inter alia, the International Council on Mining and Metals (ICMM), of which Gold Fields is a member, presented a unique opportunity for all operations to share their knowledge and facilitate the process of cross pollination.


The availability of appropriate skills, across the spectrum of disciplines, remains one of the most significant challenges we face in all of the countries in which we operate. While the pullback that we have seen in the commodities sector globally has brought some reprieve, the medium- to long-term outlook remains one of grave concern.

To address this matter we have had to embark on a number of innovative new approaches to the attraction and retention of skilled employees. At Gold Fields we believe in “hiring for attitude and training for skills”. Our efforts are focused on attracting the right people, training for the right skills, ensuring job satisfaction, providing career path progression opportunities and, in the final instance, offering competitive remuneration.

During the year we have restructured and refocused the Gold Fields Leadership Academy to ensure that it is better positioned to meet the skills demand of, in particular, our South African operations over the next decade. I am pleased with the renewed vigour that we are seeing in the ongoing education and training efforts throughout the Group and we continue to look at and implement innovative new interventions in this field. We place a high premium on education and training because it is a fundamental building block for continuous improvement, not only in the production arena, but also in our safety performance. A key focus of all of our education and training interventions is the development of the leadership skills of our people.

Fundamental to our approach to the management of our people is a strategic shift away from the historic focus on improved productivity through rationalisation, to an approach of mobilising our existing employees to work more productively. We believe, in the current environment that greater job security and stability for our people will, in the longer term, benefit our employees, our company and the various countries in which we operate.

It is pleasing to report that Gold Fields’ balance sheet remains strong, which provides greater financial stability and, potentially, enables us to pursue new opportunities.


Group attributable gold production decreased by six per cent from 3.64 million ounces for the year ended June 2008 to 3.41 million ounces for the year ended June 2009.

At the South African operations gold production decreased from 2.42 million ounces to 2.04 million ounces. Driefontein’s gold production decreased by 11 per cent from 0.93 million ounces to 0.83 million ounces due to a decrease in volumes mined, associated with safety stoppages and the infrastructure rehabilitation projects referred to in the introduction of this report. At Kloof, gold production decreased by 22 per cent from 0.82 million ounces to 0.64 million ounces due to the Main shaft refurbishment project and safety related mine stoppages. Beatrix’s gold production decreased by 11 per cent from 0.44 million ounces to 0.39 million ounces due to lower mining volumes, limited flexibility and lower than planned quality mining factors. South Deep’s gold production decreased by 25 per cent from 0.23 million ounces to 0.17 million ounces due to the termination of conventional Ventersdorp Contact Reef (VCR) mining because of the geological structure and the stoppages related to the rehabilitation of the two main access ramps during the first quarter of the year under review.

At the international operations total managed gold production increased from 1.46 million ounces for the year ended June 2008 to 1.65 million ounces for the year ended June 2009. The main reason for this increase was the inclusion of 0.22 million gold equivalent ounces from the newly completed Cerro Corona mine, which was not included in the previous year. Damang’s gold production increased by three per cent to 0.20 million ounces. Tarkwa was five per cent down at 0.61 million ounces, mainly due to commissioning issues at the new CIL plant, which affected the whole plant. St Ives increased by three per cent from 0.42 million ounces to 0.43 million ounces. This was mainly due to increased production at Argo and Cave Rocks. Production at Agnew decreased by six per cent to 0.19 million ounces, mainly due to the depletion of the Songvang stockpiles.

Revenue increased by 26 per cent in rand terms (increased two per cent in US dollar terms) from R23,010 million (US$3,165 million) to R29,087 million (US$3,228 million). The 33 per cent higher average gold price at R253,459 per kilogram (US$875 per ounce) compares with R190,623 per kilogram (US$816 per ounce) achieved for the year ended June 2008. The rand weakened from an average rate of US$1 = R7.27 to US$1 = R9.01, or 24 per cent, while the rand/Australian dollar weakened by two per cent from an average rate of A$1 = R6.52 to A$1 = R6.67.

Net operating costs, including gold-in-process movements, increased by 26 per cent from R13,969 million to R17,624 million, or two per cent in dollar terms from US$1,922 million to US$1,956 million. The increase was largely as a result of the exchange rate movements of R1,260 million, mainly due to the weaker rand; the inclusion of Cerro Corona (R742 million or US$82 million), which was not included in the previous year; and increases in electricity costs at the South African and Ghanaian operations. Total cash cost for the Group increased from R111,315 per kilogram (US$476 per ounce) to R149,398 per kilogram (US$516 per ounce) due to the above factors, combined with the lower production.

At the South African operations operating costs increased by 14 per cent from R8,611 million (US$1,184 million) for the year ended June 2008 to R9,840 million (US$1,092 million) for the year ended June 2009. This was due to the annual wage increases, the 25 per cent increase in electricity costs and the increase in commodity prices, partially offset by the cost saving initiatives implemented during the year. Whereas power supply was an operational issue last year, I believe that the national electricity supplier is now better equipped to ensure a reliable supply of electricity. However, it remains critically important that a national electricity conservation programme be implemented, spanning industry as well as other sectors. Such a programme will contribute significantly to the equitable distribution of tariff increases and the sustainability of supply. Total cash costs at the South African operations increased from R109,117 per kilogram to R147,657 per kilogram as a result of the above factors.

At the international operations, operating costs, including gold-in-process movements, increased by 45 per cent from R5,358 million (US$737 million) for the year ended June 2008 to R7,784 million (US$864 million) for the year ended June 2009. Of this increase, R742 million (US$82 million) was as a result of the inclusion of Cerro Corona (not included in the previous year), while R1,260 million was as a result of exchange rate movements. Added to this were the annual increases in salaries and consumables at all the international operations driven by the resource boom and, at St Ives, the increase in the gold price and volume linked third party royalty due to the higher Australian dollar gold price.

Operating profit i.e. profit before amortisation, increased from R9,041 million (US$1,244 million) to R11,463 million (US$1,272 million). After accounting for taxation, sundry costs and exceptional items, net earnings amounted to R1,536 million (US$170 million), compared with R4,458 million (US$613 million) for the year ended June 2008. The main reason for this variance was a R2.6 billion negative movement on exceptional items, being mainly a profit on the sale of Essakane of R1.4 billion in F2008 and the impairment of Rusoro of R1.1 billion in F2009.

Our goal is to grow Gold Fields from a four million ounce to a five million ounce producer over a four to five year time horizon.

Earnings excluding exceptional items, gains and losses on foreign exchange, financial instruments, losses of associates after taxation and discontinued operations amounted to R2,981 million (US$331 million) for the year ended June 2009 compared with R2,939 million (US$404 million) for the year ended June 2008.


It is pleasing to report that Gold Fields’ balance sheet remains strong, which provides greater financial stability and, potentially, enables us to pursue new opportunities. This is also particularly important given the ongoing and deepening liquidity crisis around the world. Today, most companies’ balance sheets are under severe strain and I believe that the strength in our financial position will stand us in good stead should this financially constrained period continue for any length of time.

During the year, Standard and Poor’s Ratings Service assigned Gold Fields with an investment grade rating that is an independent endorsement of Gold Fields as an investment grade company with a stable outlook. The rating confirms aspects such as Gold Fields’ sound corporate governance and risk management, while aligning the Group with global best practice. An official credit rating will allow flexibility for the Group to efficiently structure long-term debt as well as new debt, should the need arise.

As at 30 June 2009, Gold Fields had net debt of R6,092 million (US$756 million), comprising R2,561 million (US$318 million) short- and R6,335 million (US$786 million) long-term debt with cash of R2,804 million (US$348 million) and a liquid investment portfolio, consisting primarily of investments in joint venture partners associated with our exploration portfolio, which was valued at R2,971 million (US$369 million).

We announced recently that agreement had been reached in terms of which we have sold our 19.9 per cent stake in Sino Gold Mining Limited to Eldorado Gold Corporation for a total consideration of approximately US$282 million, paid in Eldorado shares. On closing we received 48 Eldorado shares for every 100 Sino Gold shares, resulting in Gold Fields holding approximately seven per cent of the outstanding shares of Eldorado on a fully diluted basis. On 3 September 2009, Gold Fields disposed of its holding in Eldorado for a total consideration of CAD323 million, approximately US$293 million. In the event of Eldorado concluding a take-over of Sino Gold within 18 months of the original transaction, Gold Fields will still receive a ‘topup’ should a higher price be paid than the original consideration.

During the past year most of the senior and intermediate gold producers around the world have capitalised on the positive sentiment towards the gold sector by accessing the equity and equity-linked markets for funding. In the absence of any significant downturn in the gold market, Gold Fields believes that the equity or equity-linked markets should only be accessed for projects that are demonstrably accretive on a per share basis.


As previously indicated, F2009 has been one of the most challenging years in the history of Gold Fields. In essence the first half of the year was dedicated to fixing up the production machine, while the second half was focused on again increasing production closer to the historical run-rate of approximately one million ounces of production per quarter, at an NCE of approximately US$725 per ounce (calculated at an exchange rate of US$1:R8.00). While we did not achieve the targeted run rate of one million ounces of production per quarter as set out in our annual report for F2008, we did show significantly improved stability, predictability and consistency, with production increasing for the last three consecutive quarters of the year, to end the year at 906,000 ounces of attributable production in quarter four. This is 108,000 ounces or 14 per cent higher than the production low-point of 798,000 ounces reported in quarter one of F2009.

During F2010 the strategic focus for Gold Fields will be to consolidate the operational gains made during F2009 and to further ‘sweat’ our existing assets. In particular we aim to achieve the following strategic objectives:

1. Further enhance our efforts on health and safety. Our goal remains the total elimination of all serious and fatal accidents on all of our operations.
2. Open up our ore bodies by stepping up development. This has become particularly urgent in South Africa where the focus on catching-up the backlog in secondary support over the past year has seen resources diverted away from development. As a result, flexibility has been affected, as we suspected it would. The target is to have at least 24 months of opened up reserves at each of our long-life shafts. Improved flexibility will also help us to get closer to our targeted production run-rate, on a sustainable basis.
3. Build momentum at the South Deep Project by increasing production to approximately 300,000 ounces for the year, while advancing the Twin Shaft infrastructure for completion in F2012 and focusing on the development of the ore body below 95-level, which will facilitate the ultimate build-up to full production of approximately 750,000 to 800,000 ounces per annum by December 2014.
4. Achieve greater stability, predictability and consistency in our quarterly production. We are working towards our goal of producing at a run-rate of between 925,000 and 950,000 ounces of gold per quarter during F2010. I believe that, beyond F2010, achieving one million ounces per quarter is realistic.
5. Increase the skills level across the organisation by improving our ability to attract and retain key personnel through a more aggressive programme of recruitment, and a review of remuneration models, as well as by further enhancing our education and training initiatives.
6. Further improve our performance in the field of sustainable development and, in particular, improve our environmental record wherever we operate.
7. Further entrench the regionalisation strategy by bolstering the executive teams in each of the regions, in order to drive the operational performance of the regions and to advance our growth strategy.

The Gold Fields senior executive team is now firmly in place and well positioned to lead the company into the exciting new phase of growth.


Our strategy is focused on growth in ounces per share and returns on a per share basis. This comes down to ‘sweating’ our assets and leveraging our large resource and reserve base.

With this discipline in mind, our goal is to grow Gold Fields to five million ounces over a four to five year time horizon, with South Africa producing approximately 2.2 to 2.5 million ounces and each of our international regions (South America, West Africa and Australasia) producing approximately one million attributable ounces per year.

We aim to work towards this goal by advancing our regionalisation strategy and growing organically by leveraging off our existing production footprints in West Africa, South America, Australasia and South Africa.

Exploration remains the most cost effective way in which to grow a gold mining company. Through our various exploration programmes we are discovering new gold ounces for less than US$20 per ounce and, in the past year, Gold Fields has laid the foundation for what will hopefully turn out to be significant success in the future.

Exploration expenditure in F2009 was US$90.2 million. This expenditure reflects the high quality of projects in our pipeline and, of course, stepping-up evaluation work on the more significant project areas. Turning now to our near mine exploration activities, there is significant opportunities for creating value as our exploration teams are working in and around existing operations and infrastructure, and costs are therefore lower than they would be in a totally greenfield environment.

  • At St Ives in Western Australia, drilling of the Athena project continues to deliver exceptional gold grades, and at the Hamlet target, diamond drilling has returned intercepts at sufficiently high grade to define a reserve. Together these two projects have the potential to add more than two million ounces to the resource base of St Ives and possibly double the life of this mine. Resources and reserves for both of these projects are included in the Mineral Resource and Reserve statement that is part of this report.
  • At Agnew, also in Western Australia, surface drilling in the Redeemer – Waroonga gap has intersected a stratigraphic package including narrow zones of mineralisation. This exciting new development, together with additional potential at the Waroonga underground complex, has the potential to increase the life of this mine to as much as 10 years or more.
  • At Damang in Ghana, extensional drilling below the Juno pit and southwards for 700 metres on the Tamang prospect intersected veining within 150 metres of surface and outside any resource shells. Similarly, favourable indications continue to come out of the Amoanda – Tomento East gap and veining has been located within 30 metres of surface 200 metres south of Tomento East.
  • In Peru, the Consolidada de Hualgayoc 50:50 joint venture between Gold Fields La Cima and Buenaventura (NYSE: “BVN”) is in the final stage of the approval process with the communities for drilling access to the Titan- Arabe copper-gold target.

We are very fortunate that we now have a portfolio of exploration assets which is complementary to our existing asset base, and will allow Gold Fields to achieve its stated growth ambitions.

During F2010 our strategic growth objectives are:

1. To proceed at least one of our advanced stage exploration projects to conceptual study stage;
2. To complete the uranium feasibility study in South Africa by early 2010;
3. To advance the phase 2 expansion of the Cerro Corona mine in Peru;
4. To complete the feasibility study and commence construction of the Athena discovery at St Ives; and
5. To continue drilling and development at South Deep.


In January 2009, Paul Schmidt was appointed Chief Financial Officer, and during the latter part of the financial year, we announced a reorganisation and further strengthening of our executive team.

The South Africa Region will continue to be led by Vishnu Pillay and, in line with our new regionalisation strategy, the international portfolio has been split into three separate portfolios. Each of these regions is now the responsibility of a dedicated regional executive vice president, all of whom are also members of the Group Executive Committee.

  • The Australasia Region is headed up by Glenn Baldwin;
  • The West Africa Region is headed up by Peter Turner; and
  • The South America Region is headed up by Juan Luis Kruger.

Each of the regional Executive Vice Presidents is responsible for all operational matters in their respective regions and will also work with the business development and exploration executives to achieve our medium-term objective of growing production in each of the international regions to a million ounces per annum. This change to the structure will allow greater executive focus on the very specific demands of each of our international regions. Ben Zikmundovsky has been appointed as Executive Vice President and Head of International Capital Projects and International Technical Services. This is a new position created to take responsibility for project development in our international portfolio, as well as the international technical group. Ben joined Gold Fields on 1 August 2009 and is a member of the Group Executive Committee.

The Gold Fields senior executive team is now firmly in place and well positioned to lead the company into the exciting new phase of growth that lies ahead over the next few years.


Considering the economic challenges over the past year, it has been a stimulating time in the industry. Gold has showed its resilience by being a refuge for a financial community that has been constrained in almost every other investing sector.

Gold is now emerging, once again, as an asset class in many investment portfolios, which is the single most important underpin of the current gold price. It continues to be a ‘safe haven’ investment and there is every reason to believe that gold will continue to be supported as the world struggles to recover from the financial turmoil of the past 18 months. Leading indicators point to global gold production that continues to decline, central banks (mainly China and Russia) being net buyers of gold, and investment demand continuing to grow exponentially, especially through the various exchange traded funds. Europe’s Central Banks have also jointly announced lowering the gold sales quota by 20 per cent to 400 tons of gold a year.

As I mentioned last year, one of the most significant underpins to the price of gold is the real all-in cost of producing an ounce of gold which we estimate to be in the order of approximately US$700 to US$800 per ounce globally. This should provide a natural longterm fl oor for the price of gold. While one can be almost certain that gold would from time to time test this level on the downside, it has real potential to move above that level over the longer term.


Gold Fields is continuing its dividend paying policy and in so doing is maintaining its position as the highest dividend payer in the industry. Notwithstanding the difficulties in financial markets, and a commitment to various growth initiatives, an interim dividend of R0.30 per share was declared on 29 January 2009 and paid on 23 February 2009. A final dividend of R0.80 per share was declared on 6 August 2009 and paid on 31 August 2009.


This past year has seen many thousands of people, which include employees, members of governments, and representative labour organisations as well as our business partners, contributing to re-building our great company. I hope I have provided some insight into the activities we are implementing and challenges we face, to achieve our objective of continuing to deliver value for all our stakeholders into the future.

The progress that we have made over the last year is very much an indication of the spirit and commitment of all of our people across the world. I would like to take this opportunity to thank the entire Gold Fields team for their diligence, support, enthusiasm and unstinting commitment that has enabled us to achieve our milestones during F2009.

Finally, I extend my appreciation to our Chairman and the Board of Directors for entrusting our executive team and the operational management teams on each of our mines with the opportunity to build a company that is determined to become “the global leader in sustainable gold mining”.

Nick Holland
Chief Executive Officer