REVIEW OF OPERATIONS: SOUTH AFRICA REGION

South Deep Project Mine positioned to increase production to 300,000 ounces during F2010. South shaft recommissioned, fleet in place, ore body remodelled for next 30 years. On track for build-up to full production by end of 2014.

OVERVIEW

Location: South Deep is situated in the districts of Westonaria and Vanderbijlpark (Gauteng Province), some 45 km southwest of Johannesburg at latitude 26º 25’S and longitude 27º 40’E. It is accessed via the R28 provincial road between Westonaria and Vereeniging, and is located in the major gold mining region of South Africa, being the Witwatersrand Basin. Infrastructure: South Deep operates one gold plant and is accessed from surface through two shaft systems, the new Twin shaft complex of which the main shaft comprises a single-drop to a depth of 2,995 metres, and the original mine’s South shaft complex. The mine has been subdivided into two main areas, namely “above current infrastructure” to 110 level (2,888 metres below surface), and below current infrastructure to 135 level (3,250 metres below surface). Geology: Exploiting auriferous palaeoplacers (reefs), i.e. the Ventersdorp Contact Reef (VCR) of the Venterspost Formation and conglomerates that comprise the Upper Elsburg Reefs of the Mondeor Formation. Mine type and depth: A large developing deep level gold mine (>2,000 metres below surface). Employees in service: The mine has 2,273 permanent employees and 2,382 contractors.

SAFETY AND ENVIRONMENT

There has been a steady improvement in the safety performance year on year. The standout safety statistic was a fatality free year for F2009. The serious injury frequency rate decreased from 5.25 to 2.08, an improvement of 60 per cent, the lost day injury frequency rate decreased from 16.81 to 5.26, an improvement of 69 per cent, and the injury free days for the year of 218 is a new record for the mine. South Deep is now 100 per cent on trackless mechanised mining methods and this has significantly contributed to the improved safety performance. The mine has adopted a ‘one pass system’ for support, which covers all development headings across the mine. No Section 54s were issued to South Deep by the Department of Mineral Resources during the year. Various internal and external audits were conducted during the year.

South Deep has received ISO14001:2004 (Environmental Management System) accreditation, and became the first of Gold Fields’ operations to be fully compliant and accredited with the requirements of the ICMI Cyanide Code. In F2010, OHSAS18001 certification is planned.

PROJECT REVIEW

South Deep is a capital project and remains a developing mine. Excellent progress has been made on the infrastructure to support the F2010 target of producing 300,000 ounces of gold and the F2014 target of achieving full production of between 750,000 and 800,000 ounces of gold. The ore body has been remodelled and scheduled for the next 30-years, the fleet is in place and South shaft has been refurbished.

Re-investment in the South shaft complex during the year has seen rock winding facilities recommissioned, which is in line with the strategy for F2010 with approximately 60,000 tons per month to be hoisted at the South shaft complex. At the Twin shaft complex the Ventilation shaft brattice wall was safely installed during F2009 and the first of four surface fans has been commissioned. The fans will be utilised in the build-up to full production when the mine design requires the additional ventilation. Everything is on track for the completion of the Ventilation shaft early in 2012 and the subsequent full commissioning of the entire Twin shaft complex to its design capacity of 330,000 tons of ore hoisted per month. This is a critical path milestone required for the mine to achieve full production, as planned by the end of F2014.

The surface exploration drilling programme has progressed in F2009 and the currently planned 12 boreholes will be completed by the end of F2011. In addition, long incline boreholes (LIB) have been drilled underground and this has resulted in a better understanding of the area below 95 level and has reduced the development required on 110 level to access and open up the ore body.

The mining rights conversion application was submitted in December 2008 and the mine is advancing the commitments as set out in the Social and Labour Plan.

Mechanised de-stress mining commenced in the three targeted project areas in the current mining horizons during F2009. Innovative mine design has resulted in the application of a horizontal de-stress mining cut and the same low profile mechanised equipment is applied for the regular mining and the de-stress cut mining. The horizontal method has the benefit of enhancing the de-stress mining grade and will facilitate access to the long hole stoping mining layouts for the new ground below 95 level.

Construction of the new South Deep tailings storage facility has commenced and is scheduled for first tailings deposition in February 2010. Construction is expected to be completed by July 2010.

OPERATIONAL REVIEW

Gold produced decreased by 25 per cent from 7,220 kilograms in F2008 to 5,434 kilograms in F2009. This was due to the cessation of VCR mining in January 2007 because of a major geological fault causing the depletion of ore availability.

Tons milled decreased from 1.37 million tons in F2008 to 1.24 million tons in F2009. This was mainly due to lower surface tons milled and the cessation of the VCR mining. Surface tons decreased from 0.30 million tons to 0.20 million tons due to the depletion of surface dump material. The majority of the surface material processed in F2009 was from surface clean-up.

Main development increased from 5,850 metres to 7,152 metres in F2009. Development below 95 level gained momentum in January 2009, after the interruptions caused by the shaft accident in May 2008.

Revenue increased from R1,342 million in F2008 to R1,398 million in F2009. The higher gold price received was partially offset by the lower production.

Operating costs decreased by six per cent from R1,264 million in F2008 to R1,188 million in F2009. This decrease was mainly due to labour restructuring early in the year which was necessary because of the depletion of ore at the labour intensive VCR mining area.

Total cash cost increased from R169,889 per kilogram (US$727/oz) in F2008 to R207,803 per kilogram (US$717/oz) in F2009 as a result of the lower production.

Operating profit, before amortisation, increased from R78 million in F2008 to R210 million in F2009. Operating margin increased from six per cent in F2008 to 15 per cent in F2009.

Capital expenditure increased from R785 million in F2008 to R1,021 million in F2009. The majority of this increase was due to expenditure on development and infrastructure below 95 level.

Notional cash expenditure increased from R283,712 per kilogram (US$1,214/oz) in F2008 to R406,423 per kilogram (US$1,403/oz) in F2009, due to the significant capital investment needed to bring this mine to full production.