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| REVIEW OF OPERATIONS: SOUTH AMERICA REGION
OVERVIEW Location: The Cerro Corona Mine is situated in the highest part of the Western Cordillera of the Andes in northern Peru, 1.5 km west-northwest of the village of Hualgayoc in the Department of Cajamarca, centred at longitude 78° 37’ 8” W and latitude 6° 45’ 36” S. The mine is located approximately 600 km north-northeast of Lima and approximately 80 km by road north of the city of Cajamarca. Access is by road from Cajamarca. Infrastructure: The project involves the production of gold and copper by conventional open pit mining methods, and the copper-gold flotation concentrate is trucked to the Port of Salaverry for shipment to smelters in Japan, Korea and Europe. Geology: The Cerro Corona Cu-Au deposit is a Porphyrystyle mineralisation hosted by a 600-700 metre diameter sub-vertical cylindrical-shaped diorite porphyry emplaced in mid-Cretaceous limestone, marls and siliclastic rocks. Mine type and depth: Large open pit mine. Employees in service: The mine has 310 permanent employees and 560 contractors active on the operations and currently there are 40 employees and approximately 900 contractors on various capital projects. SAFETY AND ENVIRONMENT Cerro Corona experienced a significant improvement in safety performance in F2009 compared to the previous year, with the Lost Day Injuries down from 12 to 2, Medically Treated Injuries down from 21 to 11, and zero fatalities. The lost day injury frequency rate improved from 0.96 in F2008 to 0.25 in F2009. Management has focused on promoting a culture of safety awareness among all employees and contractors to further continue improvements in the mine´s safety performance. A new hazard reporting system was successfully implemented during the March quarter. Implementation also began on the OHSAS 18001 Health and Safety Management System with the objective of further reducing injuries, occupational illness and property damage as well as process losses. The certification of the programme is expected to be obtained by the end of F2010. The ISO14001:2004 (Environmental Management System) certification process was initiated in F2009 and final certification is planned for early 2010. The sustainable development programmes, together with infrastructure development projects for the local communities, and the employment of local people and contractors, have been the three pillars of the social strategy, which has created strong goodwill for Gold Fields in the region. Commitments to the surrounding communities have been met and have allowed Cerro Corona to enhance its relationships with local groups inside its area of influence. During F2009, we received two important awards for our safety and environmental performance. We were placed second in the National Pit Safety Awards presented by the Peruvian National Institute of Mine Engineers and we achieved second position at the Expomina national contest for environmental practices and projects. OPERATIONAL REVIEW The year marked the transition of Cerro Corona from a project phase to a fully functional mining operation. Construction of the project was completed in July 2008 for a total construction cost of US$545 million. Commissioning and production build-up of the operation followed and was completed by the end of the first quarter, with the first shipment of a parcel of 4,026 wet metric tons of concentrate. Cerro Corona reached design capacity by the end of December 2008 and steady state operations were reached during the third quarter of F2009. Construction of the second phase of the tailings dam started in late August 2008, while planned levels should be achieved in December 2009. Gold produced for the nine months to year end, since the mine became operational, amounted to 105,000 ounces. Copper production amounted to 23,947 tons. Converting the copper production to equivalent gold ounces was based on an average copper price of US$4,115 per ton and an average gold price of US$875 per ounce and resulted in production for F2009 of 219,000 equivalent ounces, of which 218,000 equivalent ounces were sold. Tons milled amounted to 4.55 million, producing 119,000 tons of concentrate. Total tons mined amounted to 9.9 million which included 5.0 million tons of ore. Revenue amounted to US$184 million. Costs, including gold-in-process movements, amounted to US$82 million. The operating profit of US$102 million resulted in an operating margin of 55 per cent for F2009. Total cash cost for F2009 averaged US$369 per ounce based on equivalent ounces. Capital expenditure decreased from US$348 million in F2008 to US$117 million in F2009 due to achieving commercial levels of production at the end of the December quarter. The majority of the expenditure during F2009, other than on the project phase, was incurred on the Tailing Management Facility (TMF). Notional cash expenditure for F2009 was US$926 per ounce.
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