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Directors’ report

Directors’ report

The directors have pleasure in submitting their report and the annual financial statements of the company and the Group for the year ended
30 June 2010.

PROFILE

Business of the company

Gold Fields Limited is one of the world’s largest unhedged producers of gold with steady state production of approximately 3.6 million attributable ounces per annum from nine operating mines in South Africa, Peru, Ghana and Australia. The company has total attributable Mineral Reserves of approximately 78 million ounces and Mineral Resources of 281 million ounces. Gold Fields is listed on JSE Limited (primary listing), New York Stock Exchange (NYSE), NASDAQ Dubai Limited (NASDAQ Dubai), NYSE Euronext in Brussels (NYX) and the SIX Swiss Exchange (SWX).

REVIEW OF OPERATIONS

The activities of the various Gold Fields operations are detailed on pages 34 to 69 of this report.

FINANCIAL RESULTS

The information on the financial position of the Group for the year ended 30 June 2010 is set out in the financial statements on pages 194 to 243 of this annual report. The income statement shows profit attributable to Gold Fields Limited of R3,631 million (US$479 million) in financial 2010 compared to R1,536 million (US$170 million) in financial 2009.

COMPLIANCE WITH FINANCIAL REPORTING STANDARDS

The Gold Fields Group annual financial statements comply with International Financial Reporting Standards, the South African Companies Act and JSE Limited Listings Requirements (JSE Listings Requirements).

REPORTING IN UNITED STATES DOLLARS

To assist international investors, the income statement, statement of comprehensive income, statement of financial position and statement of cash flow of the Group have been translated into United States dollars.

SHARE CAPITAL

Authorised

The authorised share capital of the company is R500,000,010 divided into 1,000,000,000 ordinary par value shares of 50 cents each and 1,000 non-convertible redeemable preference par value shares of 1 cent each.

The following are the movements in the issued and listed ordinary share capital of the company for the year ended 30 June 2010:

    2010   2009  
    No of shares   Rand   No of shares   Rand  
  At the beginning of the year 704,749,849   352,374,924.50   653,200,682   326,600,341.00  
  Exercise of options by participants in the Gold Fields                
  incentive schemes 1,153,662   576,831.00   1,549,167   774,583.50  
  Shares issued to Mvelaphanda Gold (Pty) Limited     50,000,000   25,000,000.00  
  At 30 June 705,903,511   352,951,755.50   704,749, 849   352,374,924.50  

The following are the movements in the issued non-convertible redeemable preference share capital of the company for the year ended
30 June 2010:

    2010   2009  
    No of shares   Rand   No of shares   Rand  
  At the beginning of the year 50   50   100   1.00  
  Shares redeemed with FirstRand Bank Limited     (50)   (0.50)  
  At the end of the year 50   50   50   0.50  

In terms of the authority granted by shareholders at the annual general meeting held on 2 November 2007, 100 of the non-convertible redeemable preference shares were issued to FirstRand Bank on 20 December 2007. The reason for issuing the non-convertible redeemable preference shares was to provide the company with a mechanism to raise cost-effective capital equivalent to debt finance as part of a general capital management programme which, in the opinion of the directors, was deemed appropriate for the activities of the company. On 10 October 2008 the company elected to redeem 50 (fifty) preference shares from FirstRand Bank Limited for a consideration of R623,169,470.

In terms of the authority granted by shareholders at the annual general meeting held on 4 November 2009, all of the authorised but unissued ordinary and preference share capital at that date, after setting aside so many ordinary shares as may be required to be allotted and issued pursuant to the share incentive schemes, was placed under the control of the directors. This authority expires at the next annual general meeting where shareholders will be asked to place under the control of the directors the authorised but unissued ordinary share capital of the company representing not more than 20% of the issued share capital of the company from time to time.

In terms of JSE Listings Requirements, shareholders may, subject to certain conditions, authorise the directors to issue the shares held under their control for cash, other than by means of a rights offer, to shareholders. In order that the directors of the company may be placed in a position to take advantage of favourable circumstances which may arise for the issue of such shares for cash, without restriction, for the benefit of the company, shareholders will be asked to consider an ordinary resolution to this effect at the forthcoming annual general meeting.

Repurchase of shares

The company has not exercised the general authority granted to buy back shares from its issued ordinary share capital granted at the annual general meeting held on 4 November 2009. At the next annual general meeting, shareholders will be asked to renew the general authority for the acquisition by the company, or a subsidiary of the company, of its own shares.

Listings

The abbreviated name under which the company is listed on the JSE Limited (JSE) is “GFIELDS” and the short code is GFI. The company also has a secondary listing on the following stock exchanges:

New York Stock Exchange (NYSE); NASDAQ Dubai Limited (NASDAQ Dubai); NYSE Euronext in Brussels (NYX) and the SIX Swiss Exchange (SWX).

At 30 June 2010, the company had in issue, through The Bank of New York Mellon on the New York Stock Exchange (NYSE), 283,262,351 (2009: 298,196,921) American Depository Receipts (ADRs). Each ADR is equal to one ordinary share.

The GF Management Incentive Scheme

At the annual general meeting on 10 November 1999, shareholders approved the adoption of the GF Management Incentive Scheme (the Scheme) to substitute the scheme in place prior to the reverse takeover of Driefontein by Gold Fields in 1999. This scheme was introduced to provide an incentive for certain officers and employees to acquire shares in the company. No further allocations of options under this scheme are being made in view of the introduction of the Gold Fields 2005 Share Plan (see below) and the scheme will be closed once all options have been exercised or forfeited. Currently, the last date of expiry is 23 March 2013.

The salient features of the scheme are that:

  • It comprises only share options;
  • A third of the total share option grant vests upon the second, third and fourth anniversaries of the grant date; and
  • Share options expire no later than seven years from the grant date.

The directors are authorised to issue, allot and grant options to acquire up to a maximum of 22,791, 830 ordinary shares in the unissued share capital of the company in terms of the incentive scheme. At 30 June 2010, this represented 3.23% of shares in issue. The unexercised options under the scheme represented 0.19% of shares in issue as at 30 June 2010.

Further details of the scheme are disclosed in note 5 of the financial statements.

The GF Non-executive Director Share Plan

At the annual general meeting on 31 October 2001, shareholders approved a resolution to proceed with the allocation of options to non-executive directors. As a result, each non-executive director has been allocated the options detailed on note 5.

The salient features of the scheme are as follows:

  • Share options vest one year after allocation;
  • 10,000 share options will be issued annually to non-executive directors provided the directors in question have attended at least 75% of the Board meetings; and
  • A director will forfeit share options 30 days after a director leaves the Board.

No further allocations of options under this plan are being made in view of the introduction of the Gold Fields Limited 2005 Non-executive Share Plan (see below) and the plan will be closed once all options have been exercised or forfeited. Currently, the last date of expiry is 12 February 2011.

Further details of the scheme are disclosed in note 5 of the financial statements.

Gold Fields Limited 2005 Share Plan

At the annual general meeting on 17 November 2005 shareholders approved the adoption of the Gold Fields Limited 2005 Share Plan to replace the GF Management Incentive Scheme approved in 1999. The Plan provides for two methods of participation, namely the Performance Allocated Share Appreciation Rights Method (SARS) and the Performance Vesting Restricted Share Method (PVRS). This plan seeks to attract, retain, motivate and reward participating employees on a basis which seeks to align the interests of such employees with those of the company’s share owners.

The salient features of the Plan are:

  • PVRS and SARS are offered to participants annually during March. Quarterly allocations are also made in June, September and December on a pro rata basis to qualifying new employees. PVRS are performance-related shares, granted at zero cost;
  • All PVRS allocations made from 1 March 2006 to 1 March 2008 were conditionally awarded to participants. Based on the rules of the Plan, the actual number of PVRS which would be settled to a participant three years after the original award date is determined by the company’s performance measured against the performance of five other major gold mining companies (the peer group) based on the relative change in the Gold Fields share price compared to the basket of respective US dollar share prices of the peer group. From 1 June 2008 the rules were modified so that two performance measures apply. The target performance criterion has been set at 85% of the company’s expected gold production over the three-year measurement period as set out in the business plans of the company approved by the Board. In the event that the target performance criterion is met the full initial target award shall be settled on the settlement date. In addition the Remuneration Committee has determined that the number of PVRS to be settled may be increased by up to 300% of the number of the initial target PVRS conditionally awarded, depending on the performance of the company relative to the performance of the peer group based on the relative change in the Gold Fields share price compared to the basket of respective US dollar share prices of the peer group. The above amendments were effected under the ambit of the existing rules as previously approved by the shareholders at the annual general meeting;
  • The performance of the company that will result in the settlement of shares is to be measured by the company’s share price performance
    relative to the share price performance of the following peer gold mining companies, collectively referred to as “the peer group”, over the
    three year period:
    –– AngloGold Ashanti
    –– Barrick Gold Corp.
    –– Barrick Gold Corp.
    –– Barrick Gold Corp.
    –– Barrick Gold Corp.
    The performance of the company’s shares against the shares of the peer group will be measured for the three-year period running from the first business day of the month preceding the relevant allocation and award date;
  • SARS are share options, granted at the weighted average price over the previous 20 trading days; and
  • SARS will vest on the third anniversary of the grant date, but may be exercised between the third and sixth anniversary of the grant date by existing Gold Fields employees.

The details of the executive directors’ participation in the above scheme are listed on page 170.

Further details of the scheme are disclosed in note 5 of the financial statements.

Gold Fields Limited Non-executive Share Plan

At the annual general meeting on 17 November 2005, shareholders approved the adoption of the Gold Fields Limited 2005 Non-executive Share Plan to replace the GF Non-executive Director Share Plan approved in 2001. The 2005 Non-executive Plan provides for the award of restricted shares (shares that have been awarded but cannot be exercised during the restricted three-year period) to non-executive directors that ordinarily vest after a period of three years from the award thereof.

The salient features of the plan are as follows:

  • Restricted shares are to be granted annually; and
  • Shares will vest and be settled on the third anniversary of the award date.

Further details of the scheme are disclosed in note 5 of the financial statements.

Consistent with the King III Report on Corporate Governance and the JSE Listings Requirements, the Board has recommended to the shareholders that the practice of awarding of rights under the Gold Fields Limited 2005 Non-executive Share Plan Scheme be immediately discontinued.

The directors are authorised to issue and allot all or any of such shares required for the plan, but in aggregate with the other schemes, may not exceed 5% of the total issued ordinary shares in the capital of the company. An individual participant may not be awarded an aggregate of shares from all or any such schemes, exceeding 0.5% of the company’s total issued ordinary share capital. The unexercised options and shares under the schemes and plans represented 2.22% of shares in issue at 30 June 2010.


Consolidated table of all equity-settled instruments under all the schemes

      Number of equity securities  
  Outstanding at 1 July 2009 13,927,911*  
  Movement during the year    
  Granted during the year 4,789,069  
  Exercised and released (1,124,081)  
  Forfeited (1,314,002)  
  Conditions for vesting not met (609,751)  
  Outstanding at 30 June 2010 15,669,146**  

  * Included in this number are 81,700 options and 101,100 restricted shares available to non-executive directors under the GF Non-executive Share Plan and the Gold Fields Limited 2005 Non-executive Share Plan, respectively.
  ** Included in this number are 81,700 options and 132,578 restricted shares available to non-executive directors under the GF Non-executive Share Plan and the Gold Fields Limited 2005 Non-executive Share Plan, respectively.

Due to the number of prohibited periods which the company has been subjected to as a result of various transactions, the expiry dates
of options under the GF Management Incentive Scheme and the GF Non-executive Director Share Plan have been extended so as to not
prejudice the individuals affected.

DIRECTORATE

Composition of the Board

The Board currently consists of two executive directors and twelve non-executive directors.

The following changes in directorate occurred during the year under review:

  Director Nature of change   Date of change  
  Paul Schmidt1 Appointed   6 November 2009  
  At 30 JuneJohn Hopwood Passed away   19 March 2010  

1 Appointed Financial Director

Gayle Wilson was appointed Chair of the Audit Committee on 25 March 2010 to replace John Hopwood.

Mamphela Ramphele joined the Board on 1 July 2010 as an independent non-executive director and Deputy Chair of the Board. She will take over as Chair of the Board from Alan Wright who will retire at the end of the company’s annual general meeting to be held on 2 November 2010.

Rotation of directors

Directors retiring in terms of the company’s articles of association are Dr MA Ramphele, Mr PA Schmidt, Mr RL Pennant-Rea, Mr DMJ Ncube and Mr AJ Wright. Mr Wright has indicated that he will not be available for re-election. The remaining directors are eligible and offer themselves for re-election.

The Board of Directors of various subsidiaries of Gold Fields comprise some of the executive officers and one or both of the executive directors, where appropriate.

Interest of directors

As at 30 June 2010, the directors’ beneficial and associate interest in the issued and listed share capital of the company was 0.026% (2009: 0.026%) in aggregate. No one director individually exceeds 1% of the issued share capital or voting control of the company.

    Beneficial           Associates Interest  
    Direct   Indirect   Direct  
  Director 2010   2009   2010   2009   2010   2009  
  Alan Wright 71,582   71,582   87,635   87,635   5,360   5,360  
  Mamphela Ramphele            
  Nicholas Holland            
  Paul Schmidt            
  Kofi Ansah            
  Cheryl Carolus            
  Roberto Danino            
  John Hopwood1 15,000   15,000          
  Richard Menell            
  David Murray            
  Donald Ncube            
  Rupert Pennant-Rea 2,030   2,030          
  Chris von Christierson 3,000            
  Gayle Wilson            
  Total 91,612   88,612   87,635   87,635   5,360   5,360  

1 Deceased 19 March 2010, shares held through his estate.

At the date that this directors’ report was prepared, the following directors disposed, on market, some or all of the shares, which settled after
30 June 2010 and before 10 September 2010:

  • Paul Schmidt – 452 shares
  • Rupert Pennant-Rea – 728 shares

The following directors acquired, off market, additional shares, which settled after 30 June 2010 and before 10 September 2010:

  • Nicholas Holland – 2,788 shares
  • Rupert Pennant-Rea – 1,172 shares
  • Alan Wright – 2,800 shares.

The company has not entered into any contracts of service, other than the service contract with the executive directors of the company.

Directors’ equity-settled instruments

The directors held the following equity-settled instruments at 30 June 2010.

    Equity-settled
instruments at
30 June 2009
  Equity-settled
instruments granted
during the year
  Equity-settled
instruments forfeited
during the year
 
  Director Number   Average
strike
price
(cents)
  Number   Average
strike
price
(cents)
  Number   Average
strike
price
(cents)
 
  Alan Wright 44,500   89.00   6,300        
  Nicholas Holland 463,290   89.92          
  Paul Schmidt1 100,309   101.36          
  Kofi Ansah 16,300   68.59   4,100        
  Cheryl Carolus     4,100        
  Roberto Danino     4,100        
  John Hopwood2 8,500     4,100     7,022    
  Richard Menell     4,100        
  David Murray 5,000     4,100        
  Donald Ncube 8,500     4,100        
  Rupert Pennant-Rea 34,600   84.79   4,100        
  Chris von Christierson 29,600   99.21   4,100        
  Gayle Wilson     4,100        
  Alan Hill3            
  Vishnu Pillay4, 5 108,207   109.82          
  Michael Fleischer4, 6 131,130   110.26          
  Tommy McKeith4 190,530   115.40          

    Conditions
for vesting
not met
  Equity-settled
instruments exercised
during the year
  Equity-settled
instruments at
30 June 2010
 
  Director Number   Average
strike
price
(cents)
  Number   Average
strike
price
(cents)
  Benefit
arising
(R million)
  Number   Average
strike
price
(cents)
 
  Alan Wright           50,800   89.00  
  Nicholas Holland           463,290   89.92  
  Paul Schmidt1           100,309   101.36  
  Kofi Ansah     1,900     0.2   20,400   68.59  
  Cheryl Carolus           4,100    
  Roberto Danino           4,100    
  John Hopwood2           5,578    
  Richard Menell           4,100    
  David Murray           9,100    
  Donald Ncube     800     0.1   11,800    
  Rupert Pennant-Rea           38,700   84.79  
  Chris von Christierson     1,900     0.2   31,800   99.21  
  Gayle Wilson           4,100    
  Alan Hill3              
  Vishnu Pillay4, 5           108,207   109.82  
  Michael Fleischer4, 6           131,130   110.26  
  Tommy McKeith4           190,530   115.40  

1 Appointed 6 November 2009.
2 Deceased 19 March 2010.
3 Appointed 21 August 2009.
4 Three most highly paid employees who are not directors.
6 Acquired, off market, 1,946 additional shares which settled after 30 June 2010 and before 10 September 2010.
7 Sold, on market, 2,986 additional shares which settled after 30 June 2010 and before 10 September 2010.

After 30 June 2010, the following directors forfeited all of the share options which vested to them in terms of Gold Fields 2005 Share Plan:

  • Rupert Pennant-Rea – 5,000 options
  • Chris von Christierson – 10,000 options
  • Alan Wright – 10,000 options.

A register of detailed equity-settled instruments outstanding by tranche is available for inspection at the company’s registered office.
The equity-settled instrument terms are detailed on pages 167 and 200.

Directors’ fees

In terms of the articles of association the fees for services as non-executive directors are determined by the company at a general meeting.

    Board fees              
  Director Directors’
fees
  Committee
fees
  Travel
allowance3
  Salary   Total bonus1  
  Executive                    
  Nicholas Holland       6,271,760.18   5,949,425.51  
  Paul Schmidt4       1,967,012.04    
  Three most highly paid                    
  employees who are not                    
  directors                    
  Michael Fleischer8       3,816,348.37   2,466,758.26  
  Vishnu Pillay8       3,580,213.60   2,141,937.00  
  Tommy McKeith8       3,808,420.59   1,966,770.06  
  Non-executive                    
  Kofi Ansah 245,000.00   168,200.00   238,600.00      
  Cheryl Carolus 255,000.00   84,100.00   40,500.00      
  Roberto Danino 255,000.00   84,100.00   159,800.00      
  John Hopwood5 175,994.48   197,085.08        
  Gill Marcus6 10,010.87          
  Richard Menell 245,000.00   338,700.00   40,500.00      
  David Murray 255,000.00   220,250.00   198,100.00      
  Donald Ncube 255,000.00   202,550.00   40,500.00      
  Rupert Pennant-Rea 235,000.00   202,550.00   279,100.00      
  Chris von Christierson 245,000.00   310,350.00   238,600.00      
  Gayle Wilson 255,000.00   312,953.87   40,500.00      
  Alan Wright 1,256,000.00     40,500.00      
  Alan Hill7 216,290.76   71,281.52   200,300.00      
    3,903,296.11   2,192,120.47   1,517,000.00   19,443,754.78   12,524,890.83  

  Director Pension
scheme total
contributions
  Expense
allowances
  20102   2009  
  Executive                
  Nicholas Holland 1,038,499.98   1,183,112.28   14,442,797.95   11,735,340.00  
  Paul Schmidt4 235,311.96   211,458.33   2,413,782.33    
  Three most highly paid                
  employees who are not                
  directors                
  Michael Fleischer8 615,520.02     6,898,626.65    
  Vishnu Pillay8 806,958.48   95,506.67   6,624,615.75    
  Tommy McKeith8 210,075.97     5,985,266.62    
  Non-executive                
  Kofi Ansah     651,800.00   625,096.00  
  Cheryl Carolus     379,600.00   132,631.49  
  Roberto Danino   184,019.86   682,919.86   118,340.88  
  John Hopwood5     373,079.56   537,508.00  
  Gill Marcus6     10,010.87   282,950.00  
  Richard Menell     624,200.00   303,181.79  
  David Murray     673,350.00   596,446.00  
  Donald Ncube     498,050.00   371,172.00  
  Rupert Pennant-Rea     716,650.00   607,596.00  
  Chris von Christierson     793,950.00   778,682.00  
  Gayle Wilson   86,820.00   695,273.87   460,476.32  
  Alan Wright   79,515.00   1,376,015.00   1,475,949.00  
  Alan Hill7   205,769.75   693,642.03    
    2,906,366.41   2,046,201.89   44,533,630.49   18,025,369.48  

  1 Bonuses are for financial 2009 performance, paid in financial 2010.
  2 These amounts reflect the full directors’ emoluments in rand for comparative purposes.
    The portion of executive directors’ emoluments payable in US dollars is paid in terms of agreements with the offshore subsidiaries for work
    done by directors offshore for offshore companies.
    The total US dollar amounts paid for financial 2010 were as follows:
    Nicholas Holland US$501,164.96 and Paul Schmidt US$45,098.86.
  3 A travel allowance for the non-executive directors was approved at the AGM held on 4 November 2009.
  4 Appointed 6 November 2009.
  5 Deceased 19 March 2010.
  6 Resigned 20 July 2009.
  7 Appointed 21 August 2009.
  8 Three most highly paid employees who are not directors.

Remuneration policy

The company’s remuneration policy is determined by the Remuneration Committee of the Board. Over the past financial year the policy has been aligned to and now complies with the guidelines of the King III Report on Corporate Governance. The remuneration policies and practices are reviewed regularly to align them with Gold Fields’ strategic objectives. The aim is to ensure that executives create long-term value for the company in a sustainable manner.

Gold Fields’ remuneration philosophy is aimed at attracting and retaining motivated, high-calibre executives aligned with the interests of shareholders. Such alignment is achieved through an appropriate mix of guaranteed and performance-based remuneration (variable pay), which provides for differentiation between high, average and low performers.

Gold Fields endeavours to reward its people fairly and consistently according to their role and individual contribution to the company. To achieve external equity and achieve a competitive total remuneration position, Gold Fields surveys the relevant markets continuously. The benchmark for guaranteed remuneration is the market median. The company’s intent is to position remuneration, including short-term incentives, at the 75th percentile of the market for exceptional performance.

The pay mix of guaranteed and variable remuneration differs according to the level of the individual in the company. Generally, more senior employees’ remuneration will consist of a higher portion of variable pay as a percentage of their total package. Executives are paid guaranteed remuneration packages (GRP), which include all fixed elements of remuneration and 24 working days’ leave per annum, with the company having no contingent retirement or medical liabilities. A portion of the fixed remuneration of executives with international responsibilities is paid in US dollars. Increases are determined, usually effective January each year, by the Remuneration Committee informed by remuneration surveys, to which the company subscribes, and, where necessary, independent advice.

The Short Term incentive is an annual incentive bonus in terms of which the executive directors are able to earn bonuses of 50% of their GRPs for on-target performance. This incentive bonus could increase above 50% due to stretch target achievement. Incentive bonuses are based on targets approved in advance by the Remuneration Committee, comprising of a combination of safety, corporate, operational and personal objectives. In the case of the Chief Executive Officer 70% of the incentive is based on corporate objectives and the remaining 30% on personal performance. For the other executive positions, corporate and operational objectives (where applicable) comprise 35% to 70% of the incentive with personal objectives making up the balance. Based on the bonus accrued for the financial 2009 financial year, in financial 2010 the weighted average incentive bonus and retention bonus paid to members of the executive team (excluding executive directors, details of which are shown on the previous page) was 49.7% of GRP.

The corporate objectives for the year under review comprise four elements with an equal weighting of 25% each:

  • Safety achievements;
  • Relative performance of the Gold Fields share price against its peers;
  • Notional cash expenditure per ounce produced; and
  • Total gold production.

Operational objectives are measured against the operational plans approved by the Board and cover safety, production, costs and progress in developing long-term ore reserves. Personal objectives are developed every year for each executive based on key performance areas and are approved at the beginning of the year by the Remuneration Committee. Performance against these objectives is reviewed by the Remuneration Committee at the end of the year.

The Long Term Incentive share plan consists of a number of share mechanisms that have been established as share incentive arrangements for employees of Gold Fields. Long Term Incentive awards are made annually to senior and key staff to incentivise their continued commitment to the future of Gold Fields. These awards, a form of variable pay, have been designed to:

  • Encourage senior and key employees to identify closely with the objectives of Gold Fields;
  • Align their interests with the continuing growth of the company and delivery of value to its shareholders; and
  • Allow participants of the schemes to participate in the future financial success of Gold Fields.

The fees for non-executive directors are dealt with by a special non-executive Remuneration Committee comprising the CEO and independent external parties. Proposed changes to the fees payable to non-executive directors, are set out in the notice of the annual general meeting, which accompanies this report.

Directors’ and officers’ disclosure of interests in contracts

During the year under review, no contracts were entered into in which directors and officers of the company had an interest and which significantly affected the business of the Group.

Related party information is disclosed on note 34 and note 35.

FINANCIAL AFFAIRS

Dividend policy

The company’s dividend policy is to declare an interim and final dividend in respect of each financial year, based on 50% of the earnings for the year before taking account of investment opportunities and after excluding impairments.

Interim dividend

On Wednesday, 3 February 2010, the company declared an interim cash dividend of 50 SA cents (2009: 30 SA cents) per ordinary share to
shareholders reflected in the register of the company on Friday, 19 February 2010. The dividend was declared in the currency of the Republic of South Africa. This dividend was paid on Monday, 1 March 2010.

Final dividend

On Wednesday, 4 August 2010, the company declared a final cash dividend of 70 SA cents per ordinary share (2009: 80 SA cents) to shareholders reflected in the register of the company on Friday, 20 August 2010. The dividend was declared in the currency of the Republic of South Africa. This dividend was paid on Monday, 30 August 2010.

The dividend resulted in a total dividend of 120 SA cents per share for the year, with the final dividend being accounted for in financial 2011.

Borrowing powers

In terms of the provisions of article 12.1 of the articles of association, the borrowing powers of the company are unlimited. As at 30 June 2010, the company’s borrowing totalled R8,487 million (US$1,121 million) (2009: R8,895.5 million (US$1,104 million)).

Fixed assets

Capital expenditure

Capital expenditure for the year amounted to R7,742 million compared to R7,649 million in financial 2009. Estimated capital expenditure for the year ending 30 June 2011 is R8,600 million and is intended to be funded from internal sources and, to the extent necessary, borrowings.

Investments

Acquisitions

Investment purchases decreased marginally from R99 million in financial 2009 to R97 million in financial 2010.

The major investment in financial 2010 were loans of R91 million advanced to GBF Underground Mining Company.

Disposals

Proceeds from the disposal of investments increased from R482 million in financial 2009 to R2,831 million in financial 2010.

The major investment disposal in financial 2010 was the sale of shares in Eldorado Gold Corporation.

During financial 2010, 58 million Sino Gold shares were exchanged for 28 million shares in Eldorado Gold Corporation resulting in a profit of R447 million. Subsequently a further four million top-up shares were received from Eldorado Gold. All the Eldorado shares were liquidated during the year resulting in a profit of R752 million of which R402 million relating to the top-up shares was recognised as gains on financial instruments. The total cash proceeds on disposal of Eldorado shares was R2,731 million.

SIGNIFICANT ANNOUNCEMENTS

21 October 2009

Gold Fields Limited announced that it has become the first mining group, registered as a signatory with the International Cyanide Management Institute (ICMI1), to obtain accreditation for all its eligible operations with the International Cyanide Management Code (Cyanide Code). This follows full accreditation being achieved at Kloof Mine and Driefontein Mine, both located in South Africa.

1 The ICMI is established under the auspices of the United Nations’ Environment Programme and International Council on Metals and the Environment. The ICMI administers the International Cyanide Management Code of Practice to which signatories adhere, to manage cyanide responsibly.

18 November 2009

Gold Fields Limited announced the appointment of Paul Schmidt CA(SA) as Financial Director of the Company with effect from Friday, 6 November 2009.

24 March 2010

Gold Fields Limited announced the appointment of Richard Weston as Executive Vice-President of its Australasian Region with effect from May 1. Mr Weston will be part of the company’s Executive Committee reporting to CEO Nick Holland.

26 March 2010

Gold Fields Limited announced that attributable Group gold production for Q3 financial 2010 is expected to be approximately 800 000 ounces, in line with the revised guidance issued on 23 February 2010.

9 April 2010

Gold Fields Limited announced that it has been ranked first in the open-pit mining category of the 13th National Mining Safety Contest of Peru. The yearly contest is organised by the Mining Safety Institute of Peru to instill safe mining practices and ensure that the best occupational health and safety standards are maintained in the industry.

19 April 2010

Gold Fields Limited announced that it is investing R26 million in an effort to address skills shortages in the South African mining industry. The three-year sponsorship deal comprises investments in the mining engineering faculties at the University of Witwatersrand and the University of Johannesburg. The official handover ceremony held at Wits University was attended by the Department of Minerals and Resources Minister Susan Shabangu.

21 April 2010

Gold Fields Limited announced that it has started the depth extension of the South Deep Ventilation Shaft, a crucial milestone in the development of South Deep, the newest mine in Gold Fields’ South African portfolio. The Ventilation Shaft is the second of the two shafts which together form the Twin Shaft Complex of South Deep. The first shaft of the Twin Shaft Complex, the Main Shaft, was completed in 2004.

30 April 2010

Gold Fields Limited announced that its Damang Gold Mine in Ghana is set to increase production significantly, following the successful construction and commissioning of a new Secondary Crushing Plant.

10 May 2010

Gold Fields Limited announced that the South African Department of Mineral Resources has approved – in terms of the requirements of the Mineral and Petroleum Resources Development Act 2002 (Act 28 of 2002) (the Act) – the conversion of the South Deep old order mining right into a new-order mining right.

11 May 2010

Chucapaca’s joint venture partners, Gold Fields Limited (51%) and Compañía de Minas Buenaventura S.A.A. (49%) announced the discovery of a major gold-copper-silver deposit in their Chucapaca project area in southern Peru.

20 May 2010

Gold Fields Limited announced a substantial increase in the Mineral Resource at Hamlet, an emerging gold deposit in the Argo-Athena camp at its St Ives Gold Mine in Western Australia.

24 May 2010

Gold Fields Limited announced that it has secured a US$450 million revolving credit loan maturing 30 September 2013 to refinance a US$311 million one-year facility that expired in May 2010. Gold Fields was seeking a minimum of US$300 million from the banks approached to support the revolving credit loan.

26 May 2010

Gold Fields Limited is set to become the world’s first gold mining company to sell Certified Emissions Reductions (CERs), the financial securities used to trade carbon emissions. Gold Fields will derive the CERs from the capture of methane gas at its Beatrix Gold Mine in South Africa’s Free State province. The company will sell 1,700,000 CERs to European energy trading company Mercuria Energy Trading SA under forward contracts which will run until 2016.

31 May 2010

Gold Fields Limited announced that Alan Wright will retire as Chair and director of Gold Fields with effect from the next annual general meeting (AGM) on 2 November 2010. Mr Wright will be replaced as Chair by prominent businesswoman and political and social activist, Mamphela Ramphele. Dr Ramphele will join the Board as Non-Executive Director and Deputy Chair on 1 July 2010 and take over as Chair at the AGM.

5 August 2010

Following on its 10 May 2010 media release, Gold Fields Limited announced that the Department of Mineral Resources (DMR) of South Africa has executed the new-order mining right for its South Deep gold mine. The cumulative effect of this execution, together with the previous conversions for Driefontein, Kloof and Beatrix granted in 2006, is that all of Gold Fields’ South African operations have now been granted their new-order mining right.

GOING CONCERN

The financial statements have been prepared using appropriate accounting policies, supported by reasonable judgements and estimates. The directors have reasonable belief that the company and the Group have adequate resources to continue as a going concern for the foreseeable future.

DEMATERIALISATION OF SHARES (STRATE)

Shareholders are reminded that as a result of the clearing and settlement of trades through STRATE, the company’s share certificates are no longer good for delivery for trading. Dematerialisation of the company’s share certificates is a prerequisite when dealing in the company’s shares.

PROPERTY

The register of property and mineral rights is available for inspection at the registered office of the company during normal business hours.

OCCUPATIONAL HEALTHCARE SERVICES

Occupational healthcare services are made available by Gold Fields to employees in South Africa from its existing facilities. There is a risk that the cost of providing such services could increase in the future depending upon changes in the nature of underlying legislation and the profile of employees. This increased cost, should it transpire, is currently indeterminate. The company is monitoring developments in this regard.

ENVIRONMENTAL OBLIGATIONS

The company has made provision in the financial statements for environmental rehabilitation costs amounting to R2,296 million (2009: R2,268 million). Cash contributions of R60 million (2009: R58 million) have been paid during the year to a dedicated trust fund created to fund these provisions. The total amount invested at year-end amounted to R1,013 million (2009: R887 million).

SPECIAL RESOLUTIONS ADOPTED BY SUBSIDIARY COMPANIES

There were no special resolutions passed by subsidiary companies during the year under review that related to capital structures, borrowing powers, the objects clause contained in the memorandum of association or any other material matter that affects the understanding of the company and its subsidiaries.

LITIGATION

The shareholders were informed about the summons received on 21 August 2008 from Randgold and Exploration Company Limited (R&E) and African Strategic Investment (Holdings) Limited issued to Gold Fields Operations Limited, formerly known as Western Areas Limited (WAL), a subsidiary of Gold Fields.

It is asserted in the summons that during the period that WAL was under the control of Brett Kebble, Roger Kebble and others, WAL assisted in the unlawful disposal of shares owned by R&E in Randgold Resources Limited (Resources) and Afrikander Lease Limited, now known as Uranium One. WAL’s assessment remains that it has sustainable defences to these claims and it has instructed its attorneys to vigorously defend these claims. The claims have been computed in various ways. The highest claims have been computed on the basis of the highest prices of Resources and Uranium One between the dates of the alleged unlawful acts and March 2008 (approximately R11 billion). The alternative claims have been computed on the basis of the actual amounts allegedly received by WAL to fund its operations (approximately R519 million). The claims lie only against WAL, which holds a 50% stake in the South Deep Mine. This alleged liability is historic and relates to a period of time prior to Gold Fields purchasing the company.

The update on the matter is that the plaintiffs have failed, to date, to prosecute their claims and the action remains in abeyance.

On 1 May 2008, an accident occurred at the twin shaft complex of the South Deep Mine. The accident occurred at the mine’s ventilation raise hole and nine people were fatally injured. The Mine Health and Safety Inspectorate (MHSI) of the DMR has completed an investigation into the accident pursuant to the Mine Health and Safety Act. The investigation report of the MHSI and an expert report obtained by the DMR, have been forwarded to the Director of Public Prosecution for attention. The Director of Public Prosecution has requested the Chief Magistrate and Senior Public Prosecutor of the Westonaria magisterial district, in which district the accident occurred, to make arrangements for the holding of a joint inquest and inquiry. The South Deep Mine has taken steps to obtain a copy of the investigation and expert reports.

BLACK ECONOMIC EMPOWERMENT

On 5 August 2010 Gold Fields announced a series of empowerment transactions to meet its 2014 Black Economic Empowerment equity ownership requirements. It is the aim of the company to complete the following three transactions before the end of 2010:

Transaction 1

Gold Fields will facilitate the establishment of an Employee Share Option Scheme (ESOP) in respect of an effective 10.75% stake in GFIMSA (the holding company which controls Gold Fields’ South African assets). The ESOP will be housed and administered through the Thusano Share Trust. The holding in GFIMSA is equivalent to about 13.5 million unencumbered Gold Fields Limited shares with full voting rights, which will be issued to and held by the trust at par value of R0.50 which represents a 99.5% discount to the 30 days VWAP price at 30 July 2010. This represents approximately 1.91% of the current Gold Fields shares in issue.

Transaction 2

The issue to a broad-based BEE consortium as described below (BEECO) of about 600,000 Gold Fields Limited shares at par value of R0.50 which represents a 99.5% discount to the 30 days VWAP price at 30 July 2010. This represents about 0.08% of the current Gold Fields shares in issue. These shares will carry no restrictions.

Transaction 3

BEECO will also subscribe for a 10% holding with full voting rights directly in South Deep with a phased in participation over 20 years. Transaction 3 is below the JSE transaction threshold of 5% and is not with related parties as defined as per the JSE Limited Listings Requirements and is therefore included for information purposes only.

These deals are central to the company’s objective to make every current employee at the company an owner, while at the same time expanding opportunities for historically disadvantaged persons to benefit from the exploitation of the country’s mineral resources by promoting broad-based ownership, employment, and the advancement of social and economic welfare generally.

In terms of JSE Listing Requirements a circular giving full details of the transaction will be distributed to shareholders in due course. The transactions are subject to certain suspensive conditions, including shareholder approval for Transactions 1 and 2. The detailed pro-forma effect of Transactions 1 and 2 were outlined in a Stock Exchange News Services statement on 5 August 2010.

Details of the ESOP scheme

  • About 47,100 GFIMSA employees in the Paterson Grade A to C categories will be granted approximately 13.5 million unencumbered new Gold Fields Limited shares through the Thusano Trust.
  • About 12.6 million of the shares will be allocated to HDSA employees, an effective 10% stake in GFIMSA.
  • The approximate 13.5 million Gold Fields Limited shares in the ESOP scheme will be held by the Gold Fields Thusano Share Trust for 15 years.
  • The Thusano Trust will have 14 trustees comprising ten trade union representatives, two Gold Fields trustees and two independent trustees, of whom one will be the chairperson.
  • The Thusano Trust will exercise full voting rights on behalf of the employees.
  • The share allocation to employees will be based on an employee’s length of service with Gold Fields, ranging from 100 shares for one year service to 480 shares for 20 years service.
  • The shares are allocated free of charge but have to be held for 15 years. The employees will receive dividend payments during those 15 years. Based on historical dividend yields the dividend payments will total about R20 million a year.

Details of the BEE Consortium (BEECO)

  • The newly formed BEECO will comprise:
    i. a Broad-Based Education Trust, to facilitate and promote education, youth and skills development for the mining industry. The majority
    of the Trustees will be independent and the Trust will hold a 54% beneficial interest in BEECO;
    ii. a selected number of black business and community leaders, who will not be related parties as defined by the JSE Listings Requirements and will hold a combined 36% beneficial interest in BEECO; and iii. a Broad-Based Community Trust. The majority of the Trustees will be independent and the Trust will hold a 10% beneficial interest in BEECO;
  • The acquisition of the BEECO’s 10% stake in South Deep will be facilitated through a unique vendor financed phased participation scheme
    that will see the shareholding acquired at no cost to the BEECO.
  • The BEECO will hold 10% of South Deep in the form of B-class Shares with full ownership and voting rights. As holders of the B-class
    Shares the BEECO will be entitled to a cumulative preferential dividend of R20 million per annum for the first 10 years, R13.3 million per
    annum for the next five years and R6.7 million for the next five years (R2.00 per B-class Share) payable out of profits of South Deep. After 20 years the preferential dividend ceases.
  • The B-class Shares’ right to participate in other distributions over and above the preferred dividend will initially be suspended. The
    suspension will be lifted on a phased-in basis, resulting in the B-class Shares having the same rights as the A-class Shares, as follows:
    –– After 10 years, in respect of one-third of the B-class Shares;
    –– After 15 years, in respect of another one-third of the B-class Shares; and
    –– After 20 years, in respect of the remaining one-third of the B-class Shares.
  • The BEECO must retain ownership of South Deep for 30 years which is the term of the new-order mining right granted to South Deep.

FINANCIAL YEAR-END

At a meeting held on Wednesday, 4 August 2010 the Board resolved to change the financial year-end of the company and its subsidiaries from June to December to align the financial reporting period to its peers in the mining industry. In December 2010 the company will report for the six-month financial period ending 31 December 2010. Subsequently, the financial accounting period will run for a full 12-month cycle from January to December.

ADMINISTRATION

The office of Company Secretary of Gold Fields Limited was held by Cain Farrel for the year under review.

Computershare Investor Services (Pty) Limited is the company’s South African transfer secretaries and Capita Registrars is the United Kingdom registrars of the company.

AUDITORS

At the recommendation of the Audit Committee, the Board at a meeting held on 24 June 2010 resolved, subject to the approval by shareholders, to appoint KPMG as the new auditors of the company in place of PricewaterhouseCoopers Inc, the current auditors. KPMG’s appointment is with effect from the new financial period commencing 1 July 2010.

SUBSIDIARY COMPANIES

Details of major subsidiary companies in which the company has a direct or indirect interest are set out on pages 255 and 256.