Directors' Report

The directors have pleasure in submitting their report and the annual financial statements of Gold Fields Limited (Gold Fields or the Company) and its subsidiaries (together referred to as the Group) for the year ended 31 December 2016.


Business of the Company

Gold Fields is a globally diversified producer of gold with eight operating mines in Australia, Ghana, Peru and South Africa. Gold Fields has attributable gold-equivalent annual production of approximately 2.15Moz, attributable gold Mineral Reserves of approximately 48Moz and attributable gold Mineral Resources of approximately 101Moz. Attributable copper Mineral Reserves total 454 million pounds and attributable copper Mineral Resources 5,813 million pounds. Gold Fields has a primary listing on the JSE Limited, with secondary listings on the New York Stock Exchange (NYSE) and the Swiss Exchange (SWX).


The activities of the various Gold Fields operations are detailed in the Integrated Annual Report.


The information on the financial position of the Group for the year ended 31 December 2016 is set out in the financial statements on p99 – 179 of this report. The income statement for the Group shows a profit attributable to Gold Fields shareholders of US$163m for the year ended 31 December 2016 compared with a loss of US$242m for the year ended 31 December 2015.


The separate and consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, as well as the requirements of the South African Companies Act.


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); and the SIX Swiss Exchange (SWX).

At 31 December 2016, the Company had in issue, through The Bank of New York Mellon on the New York Stock Exchange (NYSE), 347,741,317 (31 December 2015: 330,101,258) American Depository Receipts (ADRs). Each ADR is equal to one ordinary share.


Composition of the Board

The Board consists of two executive directors and 11 non-executive directors.

Changes in directorship during the period under review were made as follows:

  • Mr Steven Reid was appointed to the Board on 1 February 2016
  • Mr David Murray resigned from the Board on 1 June 2016
  • Mr Terence Goodlace was appointed to the Board on 1 July 2016
  • Mr Alhassan Andani was appointed to the Board on 1 August 2016
  • Messrs Peter Bacchus and Yunus Suleman were appointed to the Board on 1 September 2016
  • Messrs Kofi Ansah and Alan Hill retired from the Board on 31 December 2016
  • Dr Carmen Letton was appointed to join the Board on 1 May 2017

Rotation of directors

Directors retiring in terms of the Company’s Memorandum of Incorporation, all of whom are eligible and offer themselves for re-election, are Mr TP Goodlace, Mr A Andani, Mr PJ Bacchus,
Mr YGH Suleman, Mr NJ Holland, Mr PA Schmidt as well as Dr C Letton, who was appointed to the Board effective from 1 May 2017.

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, as well as a non-executive director of Gold Fields.

Directors’ and officers’ disclosure of interests in contracts

During the period 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.

At 31 December 2016, the directors’ and prescribed officers’ beneficial interest in the issued and listed share capital of the Company was 0.21%. No one director’s or prescribed officer’s individual interest exceeds 1% of the issued share capital or voting control of the Company.

  Beneficial (Number of shares)  
  Direct   Indirect  
  31 December
31 December
31 December
31 December
Nick J Holland   610,877   610,877   507,4733 –  
Paul A Schmidt   122,549   122,549     –  
Alan Hill     –     –  
Kofi Ansah     –     –  
Cheryl Carolus   3,129   3,129     –  
Richard Menell   5,850   5,850     –  
Donald MJ Ncube     2,378     8,874  
David Murray     –     –  
Gayle Wilson   2,378   2,378     –  
Peter Bacchus     –     –  
Alhassan Andani     –     –  
Yunus Suleman     –     –  
Steven Reid     –     –  
Terence Goodlace     –     –  
Prescribed officer          
Richard Weston1   204,636   72,704     –  
Naseem Chohan1   82,023   74,023     –  
Brett Mattison   43,103   24,994     –  
Lee-Ann Samuel1   76,525   29,964     –  
Taryn Harmse   7,777   8,836     –  
Alfred Baku1   40,404   27,235     –  
Ernesto Balarezo1,2     26,696     –  
Nico Muller     –     –  
Avishkar Nagaser     –     –  
Luis Rivera    –    – 
Total   1,199,251   1,011,613   507,473   8,874  
1 Inclusive of shares vested and transferred between 1 January 2016 and 31 December 2016
2 Resigned from Gold Fields on 30 June 2016
3 This relates to Restricted Shares as per p98 of the Remuneration Report

Related-party and directors’ shareholding information are disclosed on p94 and p98.


Dividend Policy

The Company’s dividend policy is to declare an interim and final dividend of between 25% and 35% of its normalised earnings. On 16 February 2017, the Company declared a final cash dividend number 85 of 60 SA cents per ordinary share (2016: 21 SA cents) to shareholders reflected in the register of the Company on 8 March 2017. The dividend was declared in the currency of the Republic of South Africa. This dividend was paid on 13 March 2017. The dividend resulted in a total dividend of 110 SA cents per share for the year ended 31 December 2016 (2015: 25 SA cents), with the final dividend being accounted for in 2017.

Borrowing Powers

In terms of the provisions of section 19(1) of the Companies Act, No 71 of 2008, read together with Clause 4 of the Company’s Memorandum of Incorporation, the borrowing powers of the Company are unlimited. As at 31 December 2016, the Company’s borrowings totalled US$1.69bn, compared to total borrowings of US$1.82bn at 31 December 2015. Cash resources at
31 December 2016 amounted to US$527m (2015: US$440m) resulting in net debt of US$1.17bn (2015: US$1.38bn).

Capital Expenditure

Capital expenditure for the year ended 31 December 2016 amounted to US$650m compared with US$634m for 2015. Estimated capital expenditure for 2017 is US$869m and is intended to be funded from internal sources and, to the extent necessary, borrowings.


Appointment of Director

15 January 2016

Gold Fields announces the appointment of Steven Reid as an independent non-executive director to the Board of Directors of Gold Fields with effect from 1 February 2016.

Gold Fields Strengthens Balance Sheet

18 March 2016

Gold Fields successfully completes a R2.3bn (US$152m) accelerated equity raising by way of a private placement to institutional investors. The offer was significantly oversubscribed and a total number of 38,857,913 new Gold Fields shares were placed at a price of R59.50 per share which represents a discount of 6.0% to the 30-day volume weighted average traded price (VWAP), for the period ended 17 March 2016 and a 0.7% discount to the 50-day moving average.

Development Agreement Concluded in Ghana

29 March 2016

Gold Fields announces the conclusion of a development agreement with the Government of Ghana for both the Tarkwa and Damang mines. The terms of the agreement, effective from 17 March 2016, will be for a period of 11 years for Tarkwa and nine years for Damang, each renewable for an additional five years. The agreement provides tax concessions as well as royalty payments linked to the prevailing gold price.

Gold Fields Australia Wins Appeal in Native Title Proceedings

29 March 2016

Gold Fields announces that the Full Court of the Federal Court of Australia overturned a July 2014 Federal Court decision that the re-grant of certain tenements to Gold Fields Australia’s St Ives mine in 2004 by the State was not compliant with the correct processes in the Native Title Act 1993.

Resignation of Director

1 June 2016

David Murray resigns as a non-executive director of the Gold Fields Board of Directors, with effect from 1 June 2016.

Credit Facilities Successfully Refinanced

7 June 2016

Gold Fields successfully refinances its US$1,510m term loan and revolving credit facilities due in November 2017. The new facilities amount to US$1,290m and comprise three tranches:

  1. US$380m – three-year term loan – margin 250 basis points (bps) over Libor
  2. US$360m – three-year revolving credit facility (RCF) (with an option to extend to up to five years) – margin 220 bps over Libor
  3. US$550m – five-year RCF – margin 245 bps over Libor

Appointment of Terence Goodlace to the Gold Fields Board of Directors

14 June 2016

Gold Fields announces the appointment of Terence Philip Goodlace as an independent non-executive director to the Board of Directors of Gold Fields with effect from 1 July 2016.

Appointment of Yunus Suleman to the Gold Fields Board of Directors

14 July 2016

Gold Fields announces the appointment of Yunus Suleman as independent non-executive director to the Board of Gold Fields. The appointment of Mr Suleman takes effect on 1 September 2016.

Two New Appointments to the Gold Fields Board of Directors

22 July 2016

Gold Fields announces the appointments of Alhassan Andani and Peter Bacchus as independent non-executive directors to the Board of Gold Fields. The appointment of Mr Andani takes effect on 1 August 2016 and that of Mr Bacchus on 1 September 2016.

Fatal Accident at South Deep

12 September 2016

Gold Fields announces that an employee at the South Deep mine in South Africa lost his life in a fall-of-ground accident on Saturday following a 1.5 magnitude seismic event. South Deep management immediately suspended all destress mining activities and notified the Department of Mineral Resources.

Gold Fields Rated Top SA Mining Company on the DJSI

21 September 2016

Gold Fields is ranked the top South African mining company on the prestigious Dow Jones Sustainability Index (DJSI) benchmarking database. The 2016 DJSI benchmarking database indicates that Gold Fields’ sustainability practices rank with the best of resources companies worldwide. Gold Fields is ranked 5th in terms of all 44 mining companies on the DJSI and the 3rd best global gold company.

Damang Reinvestment Plan

24 October 2016

Gold Fields announces the reinvestment plan for the Damang Gold mine in Ghana which will extend the life of mine (LOM) by eight years from 2017 to 2024. The reinvestment plan, entails Gold Fields investing US$1.4bn (operating and capital expenditure) over the LOM. It will enhance the Group’s presence in one of its key operating regions and will result in significant social benefits for Ghana, including the creation and preservation of 1,850 direct jobs.

Acquisition of 50% of Gold Road’s Gruyere Gold Project

7 November 2016

Gold Fields announces that it has agreed to acquire a 50% interest in ASX listed Gold Road Resources’ Gruyere Gold Project in Western Australia and to form a 50:50 unincorporated joint venture to develop, construct and operate Gruyere. The acquired interest include the Gruyere, Central Bore, Attila/Alaric and other associated deposits.

Gold Fields Ghana and Germany’s GIZ Launch Youth Farming Project

23 November 2016

Gold Fields Ghana (GFG), in partnership with the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, launch the Youth in Organic Horticulture Production (YouHop) Programme. The initiative is aimed at creating employment and improving incomes for about 1,000 community youth. GFG and GIZ are investing €800,000 in the programme, over a three-year period.

Sale of Royalty Portfolio to Maverix

5 December 2016

Maverix agrees to acquire a portfolio of 11 existing producing and non-producing royalties from Gold Fields in return for 42.85 million common shares and 10 million common share purchase warrants of Maverix. Upon completion of the transaction and a concurrent Maverix financing transaction, Gold Fields will own approximately 32% of the issued and outstanding common shares of Maverix.

Resignation of Nico Muller

7 December 2016

Gold Fields announces the resignation of Nico Muller, EVP: South Africa, effective 3 March 2017. Nico will be leaving Gold Fields to take up the position of chief executive officer (CEO) of Impala Platinum.

Retirement of Directors

14 December 2016

Gold Fields announces the retirement of Messrs Kofi Ansah and Alan Hill as non-executive directors of the Gold Fields Board of Directors with effect from 31 December 2016.


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.


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.


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 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 such as the ruling by the Constitutional Court in February 2011 against AngloGold Ashanti in favour of a claimant, who suffered from silicosis. Increased costs, should they transpire, are currently indeterminate. The Company continues to monitor developments in this regard. See Silicosis, p24.


The Company’s total gross closure liability for environmental rehabilitation costs amounted to US$381m at 31 December 2016 compared with US$353m at 31 December 2015. The regional gross closure liabilities are as follows:

  • Australia: US$182m
  • South Africa: US$37m
  • Peru: US$57m
  • Ghana: US$105m

The funding methods used by each region to make provision for the mine closure cost estimates are:

  • Australia – self-funding, using existing cash resources
  • South Africa – contributions into environmental trust funds and guarantees
  • Peru – bank guarantees
  • Ghana – reclamation bonds underwritten by banks and restricted cash


Randgold & Exploration Summons

On 21 August 2008, Gold Fields Operations Limited, formerly known as Western Areas Limited (WAL), a subsidiary of Gold Fields Limited, received a summons from Randgold and Exploration Company Limited (R&E) and African Strategic Investment (Holdings) Limited. The summons claims that during the period that WAL was under the control of Brett Kebble, Roger Kebble and others, WAL assisted in unlawfully disposing of shares owned by R&E in Randgold Resources Limited, or Resources, and Afrikander Lease Limited, now Uranium One.

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 shares between the dates of the alleged thefts and March 2008 (between R11bn and R12bn). The alternative claims have been computed on the basis of the actual amounts allegedly received by Gold Fields Operations Limited to fund its operations (approximately R519m).

Simultaneously with delivering its plea, Gold Fields Operations Limited joined certain third parties to the action (namely JCI Limited, JC Lamprecht, RAR Kebble and the deceased and insolvent estate of BK Kebble), in order to enable it to claim compensation against such third parties in the event that the plaintiffs are successful in one or more of their claims. In addition, notices in terms of section 2(2) (b) of the Apportionment of Damages Act, 1956 were served on various parties by Gold Fields Operations Limited, in order to enable it to make a claim for a contribution against such parties in terms of the Apportionment of Damages Act, should the plaintiffs be successful in one or more of their claims.

A case manager has been appointed to manage the process to ensure that it progresses and that a trial date is allocated in due course.

It should be noted that the claims lie only against Gold Fields Operations Limited, whose only interest is a 50% stake in the South Deep mine. This alleged liability is historic and relates to a period of time prior to the Group purchasing the Company.

Gold Fields Operations Limited’s assessment remains that it has sustainable defences to these claims and, accordingly, Gold Fields Operation Limited’s attorneys were instructed to vigorously defend the claims.


As previously indicated, the Respondents in the Certification Application, including Gold Fields, all opposed the certification application, which was heard by the Gauteng Local Division of the High Court from 12 to 23 October 2015.

On 13 May 2016, the High Court ordered, amongst other things: (i) the certification of two classes: (a) a silicosis class comprising current and former mine workers who have contracted silicosis and the dependants of mine workers who have died of silicosis; and (b) a tuberculosis class comprising current and former mine workers who have worked on the mines for a period of not less than two years and who have contracted pulmonary tuberculosis and the dependants of deceased mine workers who died of pulmonary tuberculosis; and (ii) that the common law be developed to provide that, where a claimant commences suing for general damages and subsequently dies whether arising from harm caused by a wrongful act or omission of a person or otherwise, before close of pleadings, and who would but for his or her death have been entitled to continue with such action, the claim for general damages will transmit to the estate of the deceased claimant.

The progression of the classes certified will be done in two phases: (i) a determination of common issues, on an opt-out basis, and (ii) the hearing and determination of individualised issues, on an-opt in basis. In addition, costs were awarded in favour of the Claimants. The High Court ruling did not represent a ruling on the merits of the cases brought by the Claimants. The amount of damages has not yet been quantified for any of the claimants in the Consolidated Class Application or for any other members of the classes.

Gold Fields and the other respondents believe that the judgment addressed a number of highly complex and important issues, including a far-reaching amendment of the common law, that have not previously been considered by other courts in South Africa. The High Court itself found that the scope and magnitude of the proposed claims is unprecedented in South Africa and that the class action would address novel and complex issues of fact and law. The companies applied for leave to appeal against the judgment because they believed that the court’s ruling on some of these issues is incorrect and that another court may come to a different decision.

On 24 June 2016, the High Court granted the mining companies leave to appeal against the finding amending the common law in respect of the transmissibility of general damages claims. It refused leave to appeal on the certification of silicosis and tuberculosis classes.

On 15 July 2016, Gold Fields and the other respondents each filed petitions to the Supreme Court of Appeal for leave to appeal against the certification of the two separate classes for silicosis and tuberculosis. On 21 September 2016, the Supreme Court of Appeal granted the respondents leave to appeal against all aspects of the class certification judgment of the South Gauteng High Court delivered in May 2016. The appeal record has been filed. It is anticipated that an appeal hearing date may be allocated in the third quarter of 2017.

In addition to the consolidated class action application, an individual action has been instituted against Gold Fields and other mining companies in terms of which the plaintiff claims some R25m (US$2m) in damages plus interest and costs, arising from his alleged contraction of silicosis which he claims was caused by the defendants. The matter is being defended. Gold Fields is proceeding with trial preparation in the normal course. No trial date has yet been allocated.

Gold Working Group

The Occupational Lung Disease Working Group, comprising of African Rainbow Minerals, Anglo American SA, AngloGold Ashanti, Gold Fields, Harmony and Sibanye Gold, remains of the view that achieving a comprehensive settlement which is both fair to past, present and future employees, and sustainable for the sector, is preferable to protracted litigation.

The members of the Working Group are among respondent companies in a number of lawsuits related to occupational lung disease. These companies do not believe that they are liable in respect of the claims brought, and they are defending these.

The companies do, however, believe that they should work together to seek a solution to this South African mining industry legacy issue. The Working Group will continue with its efforts – which have been ongoing for more than two years – to find common ground with all stakeholders, including government, labour and the claimants’ legal representatives.

South Deep Tax Dispute

The South Deep mine (South Deep) is jointly owned and operated by GFIJVH (50%) and GFO (50%).

As at 31 December 2016, South Deep’s gross deductible temporary differences amounted to US$1,585.3m (R22,242.2m), resulting in a deferred tax asset balance of US$475.6m (R6,672.7m). This amount is included in the consolidated deferred tax asset of US$48.7m on Gold Fields’ statement of financial position. South Deep’s gross deductible temporary differences comprises unredeemed capital expenditure balances of US$633.2m (R8,884.0m) (tax effect: US$190.0m (R2,665.2m)) at GFIJVH and US$606.4m (R8,508.0m) (tax effect: US$181.9m (R2,552.4m)) at GFO, a capital allowance balance (Additional Capital Allowance) of US$163.4m (R2,292.0m) (tax effect: US$49.0m (R687.6m)) at GFIJVH and an assessed loss balance of US$182.3m (R2,558.2m) (tax effect: US$54.7m (R767.5m)) at GFO.

During the September 2014 quarter, the South African Revenue Services (SARS) issued a Finalisation of Audit Letter (the Audit Letter) stating that SARS has restated GFIJVH’s Additional Capital Allowance balance rejected on its 2011 tax return from US$163.4m (R2,292.0m) to nil. The tax effect of this amount is US$49.0m (R687.6m) that being the amount referred to above as Additional Capital Allowance.

The Additional Capital Allowance was claimed by GFIJVH in terms of section 36(11)(c) of the South African Income Tax Act, 1962 (the Act). The Additional Capital Allowance provides an incentive for new mining development and only applies to unredeemed capital expenditure. The Additional Capital Allowance allows a 12% capital allowance over and above actual capital expenditure incurred on developing a deep level gold mine, as well as a further annual 12% allowance on the mine’s unredeemed capital expenditure balance brought forward, until the year that the mine starts earning mining taxable income (i.e. when all tax losses and unredeemed capital expenditure have been fully utilised).

In order to qualify for the Additional Capital Allowance, South Deep must qualify as a “post-1990 gold mine” as defined in the Act. A “post-1990 gold mine”, according to the Act, is defined as “a gold mine which, in the opinion of the Director-General: Mineral and Energy Affairs, is an independent workable proposition and in respect of which a mining authorisation for gold mining was issued for the first time after 14 March 1990”.

During 1999, the Director-General: Minerals and Energy Affairs (DME) and SARS confirmed, in writing, that GFIJVH is a “post-1990 gold mine” as defined, and therefore qualified for the Additional Capital Allowance. Relying on these representations, GFIJVH subsequently filed its tax returns on this basis, as was confirmed by the DME and SARS.

In the Audit Letter, SARS stated that both the DME and SARS erred in issuing the confirmations as mentioned above and that GFIJVH does not qualify as a “post-1990 gold mine” and therefore does not qualify for the Additional Capital Allowance.

The Group has taken legal advice on the matter and was advised by external Senior Counsel that SARS should not be allowed to disallow the claiming of the Additional Capital Allowance. GFIJVH has in the meantime not only formally appealed against the position taken by SARS, but also filed an application in the High Court and will vigorously defend its position. A trial date in the Tax Court has been set for October 2017.

Accordingly, no adjustment for any effects on the Company that may result from the proceedings, if any, has been made in the consolidated financial statements.

Native Title Claim

Following the decision of the Full Federal Court in favour of St Ives, the Ngadju group applied for permission to appeal that decision to the High Court of Australia. On 14 October 2016, that request was declined by the High Court, leaving no other opportunity for review or appeal. St Ives continues to engage with the Ngadju group in relation to routine heritage surveys and other matters.

Regulatory Investigations

On 22 June 2015, Gold Fields Limited notified shareholders that it had been informed by the Foreign Corrupt Practices Act Unit of the United States Securities Exchange Commission (the Commission) that it had concluded its investigation in connection with the Black Economic Empowerment (BEE) transaction related to South Deep and, based on the information available to them, would not recommend to the Commission that enforcement action be taken against Gold Fields.

The notice was provided under the guidelines set out in the final paragraph of the Securities Act Release No 5310, which states in part that the notice “must in no way be construed as indicating that the party has been exonerated or that no action may ultimately result from the staff’s investigation.”

In South Africa, in 2013 the Directorate for Priority Crime Investigation (the Hawks) informed the Company that it has started a preliminary investigation into the BEE transaction to determine whether or not to proceed with a formal investigation, following a complaint by the Democratic Alliance. The investigation is still in progress and it is not possible to determine what effect the ultimate outcome of this investigation, any regulatory findings and any related developments on the Company or the timing thereof.

Accordingly, no adjustment for any effects on the Company that may result from the investigation, if any, has been made in the consolidated financial statements.


The office of Company Secretary of Gold Fields Limited was held by Lucy Mokoka for the period under review. Computershare Investor Services (Pty) Limited are the Company’s South African transfer secretaries and Capita Registrars are the United Kingdom registrars of the Company.


The Audit Committee has recommended to the Board that KPMG Inc. continues in office in accordance with section 90(1) of the Companies Act No 71 of 2008 (as amended).


Details of major subsidiary companies in which the Company has a direct or indirect interest are set out on p166 and 167.