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

5.1 Ensuring our mines deliver

In July 2012, Gold Fields CEO Nick Holland made a key note speech to the prestigious Melbourne Mining Club, titled “What do Investors want from a Gold Mining Stock?” In light of the rise of gold Exchange Traded Funds, as well as the underperformance of gold mining equities versus the gold price, he concluded that “the challenge for gold stocks is how to provide investors with leverage over the gold price and to attract some of the incremental investment into gold equity.”

Amongst his conclusions, Mr Holland noted that a key requirement was to “focus on cash flow”, meaning that all of the industry’s efforts needed to:

  • Focus on cash-based Key Performance Indicators (KPIs) over ounces produced and Mineral Reserves
  • Measure total costs using Notional Cash Expenditure (NCE) instead of cash costs
  • Avoid chasing marginal ounces to extend the lives of mines, instead of optimising cash returns – and base project feasibility on the optimisation of returns

It is these principles that will primarily inform Gold Fields approach to production and development – and that helped drive the decision in late 2012 to restructure the Group (p1415).

This does not mean that production growth no longer matters – but growth will not be pursued for growth’s sake and will always be focused on cashflow generation. As a result, while we will pursue quality, cash-generating growth where we can – our production goal of 5 million ounces no longer remains our primary point of strategic reference.

www.bullioninternational.com/ images/uploads/images/ powerpoints/Melbourne.pdf

Figure 5.2: Attributable gold
production (pre-unbundling)
  Figure 5.3: Total cash cost
(pre-unbundling)
  Figure 5.4: NCE margin
(pre-unbundling)
Figure 5.2: Attributable gold production (pre-unbundling)   Figure 5.3: Total cash cost (pre-unbundling)   Figure 5.4: NCE margin (pre-unbundling)