Integrated Annual Review 2012 Annual Financial Report 2012 Mineral Resources and Mineral Reserves Regional overview  

6.1.1 Q&A with Tommy McKeith

Executive Vice-President: Growth and International Projects

Q. How would you characterise Gold Fields approach to growth?

A. Our growth focus is largely organic – and is based on proactive portfolio management. This includes the maintenance and development of our sector-leading, in-house exploration and development expertise. This is with the aim of maintaining an aggressive, geographically diversified and well sequenced exploration portfolio.

In particular, we aim to maintain a ‘steady-state’ growth pipeline, by managing the seamless transition between relevant Growth and International Project teams as opportunities advance through the development lifecycle – and by leveraging reliable and repeatable development models. This is with the aim of maintaining – at any one time – at least:

  • Three advanced drilling projects (scoping)
  • Two resource development projects (prefeasibility)
  • One feasibility

This approach aims to ensure we are always in the process of constructing a new mine – in the current case, South Deep.

Finally, sustainability plays a core role in all our exploration and development activities – something that is particularly important in potentially challenging new exploration locations. This includes – through structured stakeholder engagement as well as holistic operational and strategic management – the careful consideration of local social, economic and political issues in all our decisionmaking. By doing so, we are able to operate effectively, predictably and profitably 'where others fear to tread'.

Q. What do you consider to be the growth ‘highlights’ in 2012

A. Key highlights in 2012 include:

  • Discovery of the Suhanko North deposit at the Arctic Platinum Project
  • Doubling of the Mineral Resource at Yanfolila, completion of the project scoping study and acceleration of the de-risking programme to fast-track development
  • Declaration of a maiden Mineral Resource at the Far Southeast project
  • Promoting sustainable development among local communities based on shared value

Q. What are the implications of the proposed restructuring of Gold Fields?

A. The Growth and International Projects function remains part of Gold Fields following the listing of Sibanye Gold on the JSE1 Limited (JSE). The smaller size and turnover of the post-restructured Gold Fields has meant that we have reprioritised our exploration and project activity. The annual greenfields exploration budget has been reduced to US$80 million and we will only advance projects that we believe will deliver optimal returns and cash-flow generation (p17).

Although the restructuring will mean Gold Fields South African operations make up a smaller proportion of its Mineral Resources, Mineral Reserves and production, it will also reduce the total number of mines in its portfolio. As a result, Gold Fields will look to reduce its risk profile through further production diversification. This includes particular emphasis on supplementing our current project pipeline with new opportunities in lower-risk geographies – and reducing the risk profile of the Group as a whole.

Nonetheless, we will continue to “go where the gold is” and remain open to exploring growth opportunities in potentially higher risk geographies. This will be underpinned by our ongoing commitment to implement an ‘integrated’ approach to risk management and sustainability (p103).

Q. What are the implications of Gold Fields shift from its 2015 goal of 5 million ounces in production or development, towards the more disciplined and focused pursuit of cash-generating growth?

A. Our focus has always been on cash-generating growth. The difference is that in light of the recent restructuring and our refocusing away from our previous 2015 goal, we now have more freedom to pursue only the highest-quality projects that will – over time – raise the profile of Gold Fields and enhance its status as a desirable investment target.

We will do so by imposing conservative economic hurdles to ensure only the best projects proceed – and to maintain a highly selective and disciplined growth portfolio. Inevitably, this will also result in the sale of some of our more marginal projects – but will also ensure that we live up to our philosophy that “all new projects will be better than what we have”.

Q. Will you continue to eschew M&A-led growth?

A. We continue to believe that the discovery and development of greenfields projects by our own Growth and International Projects function remains the best means of adding value to the Company. Nonetheless, taking projects from discovery to production takes time – and can require the costly navigation of a range of operational, social and environmental risks.

Because of this – as well as the need to continue diversifying Gold Fields from a smaller base to lower our overall risk profile – we are open to balancing our exploration activity with additional M&A activity, including in well-established, lower-risk jurisdictions, but only on an opportunistic basis where the path to value is clear. Nonetheless, ‘organic’ exploration growth will remain our main focus.