Gold Fields Annual Financial Report including Governance Report 2016: Management's discussion and analysis of the financial statements

Management's discussion and analysis of the financial statements

The following management’s discussion and analysis of the financial statements should be read together with the Gold Fields consolidated financial statements, including the notes accompanying these financial statements.

Overview

Gold Fields is a significant producer of gold and a major holder of gold reserves and resources in South Africa, Ghana, Australia and Peru. In Peru, Gold Fields also produces copper. Gold Fields is primarily involved in underground and surface gold and surface copper mining and related activities, including exploration, extraction, processing and smelting.

In 2016, the South African, Ghanaian, Peruvian and Australian operations produced 13%, 32%, 12% and 43% of its total gold production, respectively.

Gold Fields’ South African operation is South Deep. Gold Fields also owns the St Ives, Agnew/Lawlers, Granny Smith and Darlot gold mining operations in Australia and has a 90.0% interest in each of Tarkwa and Damang in Ghana. Gold Fields also owns a 99.5% interest in the Cerro Corona mine in Peru. During February 2017, Gold Fields announced its intention to dispose of the Darlot operation.

On 13 December 2016, Gold Fields purchased 50% of the Gruyere Gold Project and entered into a 50:50 unincorporated joint venture with Gold Road Resources Limited (“Gold Road”) for the development and operation of the Gruyere Gold Project in Western Australia, which comprises the Gruyere gold deposit as well as additional resources including Central Bore and Attila/Alaric (Gruyere). Gold Fields acquired 50% interest in the Gruyere Gold Project for a total purchase consideration of A$350 million (US$259 million) payable in cash and a 1.5% royalty on Gold Fields’ share of production after total mine production exceeds two million ounces. The cash consideration was split with A$250 million (US$185 million) payable on the effective date and A$100 million
(US$74 million) payable according to an agreed construction cash call schedule. Transaction costs of A$19 million (US$13 million) were incurred.

As of 31 December 2016, Gold Fields reported attributable proven and probable gold and copper reserves of 48.0 million ounces of gold and 454 million pounds of copper, as compared to the
46.1 million ounces of gold and 532 million pounds of copper reported as of 31 December 2015.

Total gold production was 2.219 million ounces of gold equivalents in 2016, 2.146 million ounces of which were attributable to Gold Fields with the remainder attributable to non-controlling shareholders in Ghana and Peru. Total gold production was 2.236 million ounces of gold equivalents in 2015, 2.159 million ounces of which were attributable to Gold Fields with the remainder attributable to non-controlling shareholders in Ghana and Peru.

At South Deep in South Africa, production increased by 47% from 6,160 kilograms (198,000 ounces) in 2015 to 9,032 kilograms (290,400 ounces) in 2016 due to increased volumes and grades.

At the Ghanaian operations, gold production decreased by 5% from 753,900 ounces in 2015 to 715,800 ounces in 2016. At Tarkwa, gold production decreased by 3% from 586,100 ounces to 568,100 ounces mainly due to lower yield. At Damang, gold production decreased by 12% from 167,800 ounces to 147,700 ounces mainly due to lower yield.

Gold equivalent production at Cerro Corona decreased by 9% from 295,600 ounces in 2015 to 270,200 ounces in 2016 mainly due to the lower copper to gold price ratio as well as lower gold head grades treated and lower gold recovery.

At the Australian operations, gold production decreased by 5% from 988,000 ounces in 2015 to 942,400 ounces in 2016. At St Ives, gold production decreased by 2% from 371,900 ounces to 362,900 ounces due to lower grade of ore milled following the closure of the Cave Rocks and Athena underground mines and transition to a predominantly open pit operation. At Agnew/Lawlers, gold production decreased by 3% from 236,600 ounces to 229,300 ounces mainly due to a reduction in ore processed. At Darlot, gold production decreased by 15% from 78,400 ounces to
66,400 ounces due to lower grades mined. At Granny Smith, gold production decreased by 6% from 301,100 ounces to 283,800 ounces due to lower grades mined and an increase in stockpiled ore as a consequence of the timing of December milling campaign.

Revenues

Substantially all of Gold Fields’ revenues are derived from the sale of gold and copper production. As a result, Gold Fields’ revenues are directly related to the prices of gold and copper. Historically, the prices of gold and copper have fluctuated widely. The gold and copper prices are affected by numerous factors over which Gold Fields does not have control. The volatility of gold and copper prices is illustrated in the following tables, which show the annual high, low and average of the London afternoon fixing price of gold and the London Metal Exchange (“LME”) cash settlement price for copper in US Dollar for the past 12 calendar years (2005 to 2016):

2016	1,355	1,077	1,250
	Price per ounce¹
	High	Low	Average
	(US$/oz)
Gold
2005	537	411	445
2006	725	525	604
2007	834	607	687
2008	1,011	713	872
2009	1,213	810	972
2010	1,421	1,058	1,224
2011	1,895	1,319	1,571
2012	1,792	1,540	1,669
2013	1,694	1,192	1,409
2014	1,385	1,142	1,266
2015	1,296	1,060	1,167

Source: I-Net

¹ Rounded to the nearest US Dollar.

On 20 March 2017, the London afternoon fixing price of gold was US$1,232/oz.

2016	5,936	4,311	4,863
	Price per tonne¹
	High	Low	Average
	(US$/t)
Copper
2005	4,650	3,072	3,687
2006	8,788	4,537	6,728
2007	8,301	5,226	7,128
2008	8,985	2,770	6,952
2009	7,346	3,051	5,164
2010	9,740	6,091	7,539
2011	9,986	7,062	8,836
2012	8,658	7,252	7,951
2013	8,243	6,638	7,324
2014	7,440	6,306	6,861
2015	6,401	4,347	5,376

Source: I-Net

¹ Rounded to the nearest US Dollar.

On 20 March 2017, the LME cash settlement price for copper was US$5,891/t.

As a general rule, Gold Fields sells the gold it produces at market prices to obtain the maximum benefit from prevailing gold prices and does not enter into hedging arrangements such as forward sales or derivatives which establish a price in advance for the sale of its future gold production. Hedges can be undertaken in one or more of the following circumstances: to protect cash flows at times of significant capital expenditures, for specific debt servicing requirements and to safeguard the viability of higher cost operations. During 2016 and at 31 December 2016, Gold Fields had no commodity hedging arrangements in place. Significant changes in the prices of gold and copper over a sustained period of time may lead Gold Fields to increase or decrease its production in the near term, which could have a material impact on Gold Fields’ revenues.

Sales of copper concentrate are “provisionally priced” – that is, the selling price is subject to final adjustment at the end of a period normally ranging from 30 to 90 days after delivery to the customer, based on market prices at the relevant quotation points stipulated in the contract.

Revenue on provisionally priced copper concentrate sales is recorded on the date of shipment, net of refining and treatment charges, using the forward LME price to the estimated final pricing date, adjusted for the specific terms of the agreements. Variations between the price used to recognise revenue and the actual final price received can be caused by changes in prevailing copper prices and result in an embedded derivative. The host contract is the receivable from the sale of copper concentrate at the forward LME price at the time of sale. The embedded derivative, which does not qualify for hedge accounting, is marked-to-market each period until final settlement occurs, with changes in fair value classified as provisional price adjustments and included as a component of revenue while the contract itself is recorded in accounts receivable.

Gold Fields’ realised gold and copper prices

The following table sets out the average, the high and the low London afternoon fixing price per ounce of gold and Gold Fields’ average US Dollar realised gold price during the past three years. Gold Fields’ average realised gold price per equivalent ounce is calculated using the actual price per ounce of gold received on gold sold and the actual amount of revenue received on sales of copper, expressed in terms of the price per gold equivalent ounce.

	2016	2015	2014
Realised gold price¹
Average	1,250	1,167	1,266
High	1,355	1,296	1,385
Low	1,077	1,060	1,142
Gold Fields’ average realised gold price²	1,241	1,140	1,249

¹ Prices stated per ounce.
² Gold Fields’ average realised gold price may differ from the average gold price due to the timing of its sales of gold within each year.

	2016	2015	2014
Realised copper price¹
Average	4,863	5,376	6,861
High	5,936	6,401	7,440
Low	4,311	4,347	6,306
Gold Fields’ average realised copper price²	4,913	4,787	6,827

¹Prices stated per tonne.

²Gold Fields’ average realised copper price may differ from the average copper price due to the timing of its sales of copper within each year and is net of treatment and refining charges.

Production

Gold Fields’ revenues are primarily driven by its production levels and the price it realises on the sale of gold. Production levels are affected by a number of factors, some of which are described below. Total managed production decreased from 2.24 million ounces in 2015 to 2.22 million ounces in 2016.

Labour impact

In recent years, Gold Fields has experienced union activity in some of the countries in which it operates, including the entry of rival unions, which has resulted in more frequent industrial disputes, including violent protests, intra-union violence and clashes with police authorities, and has impacted labour relations. South Deep has a relatively well-educated labour force with a component of skilled and semi-skilled employees who receive remuneration packages that are competitive and highly incentivised. There is also no evidence to date that the Association of Mineworkers and Construction Union (“AMCU”), which has been responsible for extensive strike action at South Africa’s gold and platinum mines, has established a material presence at the mine. The National Union of Mineworkers (“NUM”) is the dominant union, providing relatively stable relations.

There were no work stoppages as a result of strikes during 2016, 2015 and 2014 at all the Gold Fields operations.

Health and safety impact

Gold Fields’ operations are also subject to various health and safety laws and regulations that impose various duties on Gold Fields’ mines while granting the authorities broad powers to, among other things, close or suspend operations at unsafe mines and order corrective action relating to health and safety matters. Additionally, it is Gold Fields’ policy to halt production at its operations when serious accidents occur in order to rectify dangerous situations and, if necessary, retrain workers. During 2016, Gold Fields’ operations suffered 16 work safety-related stoppages, two related to the fatality in September and 14 related to unsafe conditions. During 2015, Gold Fields’ operations suffered three work safety-related stoppages, two related to the fatalities in March and May and the third one related to a serious accident in April. In South Africa, Gold Fields has actively engaged with the Department of Mineral Resources (“DMR”) on the protocols applied to safety-related mine closures.

Gold Fields expects that each of these factors will continue to impact production levels in the future.

Costs

Over the last three years, Gold Fields’ production costs consisted primarily of labour and contractor costs, power, water and consumable stores, which include explosives, timber, diesel fuel, other petroleum products and other consumables. Gold Fields expects that its total costs, particularly the input costs noted above, are likely to continue to increase in the near future driven by general economic trends, market dynamics and other regulatory changes.

In order to counter the effect of increasing costs in the mining industry, the Group rationalised and prioritised capital expenditure without undermining the sustainability of its operations and continued prioritisation of cash generation over production volumes. The Group also undertook further reductions in labour costs. One of Gold Fields’ strategic priorities relates to the proactive management of costs with a view of achieving a 15% free cash flow margin at a US$1,300 per ounce gold price.

The Gold Fields’ South African operation is labour intensive due to the use of deep level underground mining methods. As a result, over the last three fiscal years labour has represented on average 34% of all-in costs (“AIC”) at the South African operation. In 2016, labour represented 36% of AIC at the South African operation.

At the latest wage talks with organised labour which commenced on 19 March 2015, Gold Fields offered an all-inclusive package which included a scarce skills allowance and a housing allowance. On 10 April 2015, the Group signed a three-year wage and other conditions of employment agreement with NUM and UASA, the registered trade unions at South Deep. The agreement resulted in average annual wage increases of 10% over the three-year period of the deal. The first increase took effect on 1 April 2015.

At the South African operation, power and water made up on average 9% of AIC over the last three years. In 2016, power and water costs made up 8% of AIC at the South African operation. Eskom applied to the National Energy Regulator of South Africa (“NERSA”) for a 16% average tariff increase on each of 1 April 2013, 2014, 2015, 2016 and 2017, and NERSA granted Eskom an average increase of 8% for each of the years, except for the actual legislated increase applicable to the mining industry on 1 April 2015 which was 12.69%, being 8% plus 4.69% due to the clawing back by Eskom of prudent costs through the “Regulatory Clearing Account” in respect of the three-year period from April 2010 to March 2013 and an increase of 9.4% effective 1 April 2016. Effective
1 April 2017, NERSA approved a 2.2% electricity increase. It is not clear what increases will be granted in the future.

Both Tarkwa and Damang concluded tariff negotiations for 2014 and 2015 with their respective power suppliers (the state electricity supplier, VRA, supplies power to Tarkwa and the ECG provides power to Damang). The ECG’s tariff for the period 1 January 2014 to 31 December 2014 was US$0.22/kWh, from 1 January 2015 to 31 December 2015 was US$0.23/kWh and 1 January 2016 to 31 December 2016 was US$0.23/kWh. Following negotiations with management, ECG agreed to decrease its tariffs to US$0.20/kWh from 1 August 2015 to 31 January 2016. Tarkwa has agreed tariffs with VRA with a base tariff of US$0.17/kWh with effect from 1 January 2015 using a tariff model which inputs actual variables (including the generation mix and input prices) of the previous quarter to determine the tariff for the current quarter. The average VRA tariff for 2016 was US$0.16/kWh.

In order to reduce their reliance on power supplied by VRA and ECG, Tarkwa and Damang entered into a 15 and eight-year Power Purchase Agreement (“PPA”) with independent power producer Genser Energy, or Genser. Under the PPA, Genser agreed to commission a gas power generation facility at Tarkwa and Damang. This power supply is expected to eventually replace all or a significant proportion of Tarkwa and Damang’s current supply from VRA and ECG. Genser has installed three 11MW turbines at Tarkwa and five 5.5MW turbines at Damang. These plants were commissioned in December 2016. An additional 11MW is planned to be installed at Tarkwa to meet full demand, with commissioning set for January 2018.

Contractor costs represented on average 6% of AIC at Tarkwa over the last fiscal years, and 6% of AIC during 2016. Over the last three years, contractor costs represented on average 17% of AIC at Damang with 21% in 2016. Following the restructuring concluded in the first half of 2016 in Damang, the direct labour cost has decreased as all mining and development will be performed by outside contractors. Direct labour costs represent on average a further 14% of AIC at Tarkwa over the last three years and 15% in 2016. Over the last three years, direct labour costs represented on average 15% at Damang and 12% in 2016.

Gold Fields’ operations in Ghana consume large quantities of diesel fuel for the running of their mining fleet. The cost of diesel fuel is directly related to the oil price and any movement in the oil price will have an impact on the cost of diesel fuel and therefore the cost of running the mining fleet. Over the last three years, fuel costs have represented 11% of AIC at the Ghana operations. In 2016, fuel costs represented 10% of AIC at the Ghana operations. Fuel use is proportionately higher at the Ghana operations than at other operations because open pit mining in general requires more fuel usage than underground mining and because of the configuration of the Ghana operations, including the scale of certain of the pits and the distances between the pits and the plants.

At Cerro Corona, contractor cost represented on average 25% of AIC over the last three years and 25% of AIC during 2016. Direct labour costs represent on average a further 17% of AIC over the last three years and 20% in 2016. Power and water made up on average a further 5% of AIC over the last three years and 6% in 2016.

At the Australian operations, mining operations were historically conducted by outside contractors. However, at Agnew/Lawlers, owner mining at the underground operations commenced in May 2010, while development is still conducted by outside contractors. At St Ives, owner mining commenced in July 2011 at the underground operations and in July 2012 at the surface operations, but development is still conducted by contractors. Over the last three years, total contractor costs represented on average 22% at St Ives and 35% at Agnew of AIC and direct labour costs represented on average a further 16% at St Ives and 16% at Agnew of AIC. In 2016, contractors and direct labour cost represented 24% and 16% at St Ives and 41% and 18% at Agnew/Lawlers, respectively. Power and water made up, on average, a further 9% and 7% of AIC over the last three years and 9% and 6% of AIC in 2016 at St Ives and Agnew, respectively. At the Granny Smith and Darlot operations, mining operations and development are conducted through owner mining. Over the last three years, contractors and direct labour cost represented, on average, 16% and 25% at Granny Smith and 16% and 35% at Darlot, respectively. In 2016, contractors and direct labour cost represented 16% and 26% at Granny Smith and 16% and 35% at Darlot, respectively. Power and water made up, on average, a further 9% and 8% of AIC over the last three years and 8% and 9% of AIC in 2016 at Granny Smith and Darlot, respectively.

The remainder of Gold Fields’ total costs consists primarily of amortisation and depreciation, exploration costs and selling, administration and general and corporate charges.

All-in sustaining and all-in cost

The World Gold Council has worked closely with its member companies to develop definitions for “all-in sustaining costs” (“AISC”) and “all-in costs” (“AIC”). The World Gold Council is not a regulatory industry organisation and does not have the authority to develop accounting standards or disclosure requirements. Gold Fields ceased being a member of the World Gold Council in 2014. AISC and AIC are non-IFRS measures. These non-IFRS measures are intended to provide further transparency into the costs associated with producing and selling an ounce of gold. The standard was released by the World Gold Council on 27 June 2013. It is expected that these metrics will be helpful to investors, governments, local communities and other stakeholders in understanding the economics of gold mining. AISC incorporates costs related to sustaining current production. AIC includes additional costs which relate to the growth of the Group. AISC, as defined by the World Gold Council, is operating costs plus all costs not already included therein relating to sustaining current production, including sustaining capital expenditure. The value of by-product revenues such as silver and copper is deducted from operating costs as it effectively reduces the cost of gold production. AIC starts with AISC and adds additional costs which relate to the growth of the Group, including non-sustaining capital expenditure and exploration, evaluation and feasibility costs not associated with current operations.

AISC and AIC are reported on a per ounce of gold basis, net of by-product revenues (as per the World Gold Council definition) as well as on a per ounce of gold equivalent basis, gross of by-product revenues.

An investor should not consider AISC or AIC in isolation or as alternatives to operating costs, cash flows from operating activities or any other measure of financial performance presented in accordance with International Financial Reporting Standards (“IFRS”). AISC and AIC as presented in this Annual Financial Report may not be comparable to other similarly titled measures of performance of other companies.

The following tables set out a reconciliation of Gold Fields’ operating costs, as calculated in accordance with IFRS (refer to the consolidated financial statements), to its AISC and AIC net of by-product revenues per ounce of gold sold for 2016, 2015 and 2014. The following tables also set out AISC and AIC gross of by-product revenue on a gold equivalent ounce basis for 2016, 2015 and 2014.

	AISC and AIC, net of by-product revenue per ounce of gold
	For the year ended 31 December 2016
	South Deep	Tarkwa	Damang	St Ives	Agnew/ Lawlers	Darlot	Granny Smith	Cerro Corona	Corporate and other	Group¹
	(in US$ million except as otherwise stated)
Operating costs	272.3	344.7	136.4	192.8	145.7	57.3	141.1	143.7	(1.1)	1,433.0
Gold inventory change	(0.7)	(17.5)	(0.4)	(11.0)	(5.1)	0.4	(7.4)	(3.8)	—	(45.5)
Royalties	1.8	35.4	9.2	11.5	7.1	2.0	8.8	4.6	—	80.4
Realised gains and losses on commodity cost hedges	—	—	—	0.6	0.2	0.1	0.7	—	—	1.6
Community/social responsibility costs	1.2	5.1	0.3	—	—	—	—	8.7	—	15.3
Non-cash remuneration (share-based payments)	2.3	2.5	0.3	1.5	0.8	0.4	0.9	2.0	3.6	14.4
Cash remuneration (long-term employee benefits)	2.4	3.0	0.8	0.9	0.9	0.6	1.0	1.8	(0.5)	11.0
Other	—	—	—	—	—	—	—	0.9	11.9	12.8
By-product revenue²	(0.5)	(1.5)	(0.1)	(0.8)	(0.2)	(0.3)	(0.1)	(130.6)	—	(134.1)
Rehabilitation, amortisation and interest	0.4	4.8	0.7	8.9	3.2	0.2	1.4	3.9	—	23.5
Sustaining capital expenditure³	70.1	168.4	37.9	140.0	70.0	21.4	90.3	42.8	—	640.8
AISC¹	349.3	545.0	185.2	344.3	222.5	82.3	236.7	74.4	13.9	2,053.6
Exploration, feasibility and evaluation costs⁴	—	—	—	—	—	—	—	—	47.1	47.1
Non-sustaining capital expenditure³	7.8	—	—	—	—	—	—	—	1.3	9.1
AIC1	357.1	545.0	185.2	344.3	222.5	82.3	236.7	74.4	62.0	2,109.4
Gold only ounces sold (’000oz)	289.4	568.1	147.7	362.9	229.3	66.4	283.8	149.1	—	2,096.8
AISC	349.3	545.0	185.2	344.3	222.5	82.3	236.7	74.0	13.9	2,053.6
AISC net of by-product revenue per ounce of gold sold (US$/oz)	1,207	959	1,254	949	971	1,238	834	499	—	980
AIC	357.1	545.0	185.2	344.3	222.5	82.3	236.7	74.0	62.0	2,109.4
AIC net of by-product revenue per ounce of gold sold (US$/oz)	1,234	959	1,254	949	971	1,238	834	499	—	1,006

¹	This total may not reflect the sum of the line items due to rounding.
²	By-product revenue at Cerro Corona relates to copper. For all the other operations, by-product revenue relates to silver.
³	Sustaining capital expenditure represents the majority of capital expenditures at existing operations, including underground mine development costs, ongoing replacement of mine equipment and other capital facilities and other capital expenditures at existing operations and is calculated as total capital expenditure per note 41 to the consolidated financial statements, less non-sustaining capital expenditures. Non-sustaining capital expenditures represent capital expenditures for major growth projects as well as enhancement capital for significant infrastructure improvements at existing operations.
⁴	Includes exploration, feasibility and evaluation and share of equity accounted losses of Far Southeast Gold Resources Incorporated (“FSE”).

	AISC and AIC, gross of by-product revenue per ounce of gold
	For the year ended 31 December 2016
	South Deep	Tarkwa	Damang	St Ives	Agnew/ Lawlers	Darlot	Granny Smith	Cerro Corona	Corporate and other	Group¹
	(in US$ million except as otherwise stated)
AISC (per table above)	349.3	545.0	185.2	344.3	222.5	82.3	236.7	74.4	13.9	2,053.6
Add back by-product revenue²	0.5	1.5	0.1	0.8	0.2	0.3	0.1	130.6	—	134.1
AISC gross of by-product revenue	349.8	546.5	185.2	345.1	222.8	82.5	236.8	205.0	13.9	2,187.7
AIC (per table above)	357.1	545.0	185.2	344.3	222.5	82.3	236.7	74.4	61.5	2,109.5
Add back by-product revenue²	0.5	1.5	0.1	0.8	0.2	0.3	0.1	130.6	—	134.1
AIC gross of by-product revenue	357.6	546.5	185.2	345.1	222.8	82.5	236.8	205.0	61.5	2,243.6
Gold equivalent ounces sold	289.4	568.1	147.7	362.9	229.3	66.4	283.8	268.9	—	2,216.4
AISC gross of by-product revenue (US$/equivalent oz)	1,209	962	1,254	951	972	1,243	834	762	—	987
AIC gross of by-product revenue (US$/equivalent oz)	1,236	962	1,254	951	972	1,243	834	762	—	1,012

¹	This total may not reflect the sum of the line items due to rounding.
²	By-product revenue at Cerro Corona relates to copper. For all the other operations, by-product revenue relates to silver.

AISC net of by-product revenues decreased by 3% from US$1,007 per ounce of gold in 2015 to US$980 per ounce of gold in 2016, mainly due to lower operating costs (including gold inventory change), lower losses on commodity cost hedges, higher by-product credits, partially offset by higher non-cash and cash remuneration and higher sustaining capital expenditure. AISC in 2015 included US$8 million of inventory written off at Damang. AIC net of by-product revenues decreased by 2% from US$1,026 per ounce of gold in 2015 to US$1,006 per ounce of gold in 2016, for the same reasons as AISC, as well as lower non-sustaining capital expenditure, partially offset by higher exploration, feasibility and evaluation costs.

AISC gross of by-product revenues decreased by 1% from US$1,000 per equivalent ounce of gold in 2015 to US$987 per equivalent ounce of gold in 2016 mainly due to lower operating costs (including gold inventory change) and lower losses on commodity cost hedges, partially offset by higher non-cash and cash remuneration and higher sustaining capital expenditure. AIC gross of by-product revenues decreased by 1% from US$1,018 per equivalent ounce of gold in 2015 to US$1,012 per equivalent ounce of gold in 2016, for the same reasons as AISC gross of by-product revenues, as well as lower non-sustaining capital expenditure, partially offset by higher exploration, feasibility and evaluation costs.

	AISC and AIC, net of by-product revenue per ounce of gold
	For the year ended 31 December 2015
	South Deep	Tarkwa	Damang	St Ives	Agnew/ Lawlers	Darlot	Granny Smith	Cerro Corona	Corporate and other	Group¹
	(in US$ million except as otherwise stated)
Operating costs	236.6	334.2	184.3	195.0	142.6	59.8	135.9	143.8	(0.8)	1,431.3
Gold inventory change	—	(7.3)	2.1	25.3	(1.1)	(0.6)	5.4	1.0	—	24.9
Inventory write-off	—	—	8.0	—	—	—	—	—	—	8.0
Royalties	1.2	34.0	9.7	10.7	6.6	2.1	8.7	3.1	—	76.0
Realised gains and losses on commodity cost hedges	—	—	—	5.0	1.5	0.5	5.2	—	—	12.1
Community/social responsibility costs	1.7	2.1	0.2	—	—	—	—	8.3	—	12.2
Non-cash remuneration (share-based payments)	1.0	1.5	0.3	1.2	0.7	0.2	0.4	1.2	4.4	10.9
Cash remuneration (long-term employee benefits)	1.0	1.4	0.4	0.2	0.5	0.2	0.3	0.8	0.6	5.3
Other	—	—	—	—	—	—	—	—	8.5	8.5
By-product revenue²	(0.4)	(5.5)	—	(0.5)	(0.3)	(0.2)	(0.1)	(113.8)	—	(120.7)
Rehabilitation, amortisation and interest	0.8	3.7	0.6	8.9	3.4	0.8	1.8	4.9	—	25.0
Sustaining capital expenditure³	53.2	204.2	16.9	114.5	73.0	20.0	72.4	64.8	—	619.9
AISC¹	295.1	568.2	222.5	360.2	226.8	82.9	230.0	114.0	12.7	2,113.3
Exploration, feasibility and evaluation costs⁴	—	—	—	—	—	—	—	—	26.0	26.0
Non-sustaining capital expenditure³	13.7	—	—	—	—	—	—	—	0.5	14.2
AIC¹	308.8	568.2	222.5	360.2	226.8	82.9	230.0	114.0	39.2	2,153.5
Gold only ounces sold (’000oz)	198.0	586.1	167.8	371.9	236.6	78.4	301.1	158.8	—	2,098.8
AISC	295.1	568.2	222.5	360.2	226.8	82.9	230.0	114.0	12.7	2,113.3
AISC net of by-product revenue per ounce of gold sold (US$/oz)	1,490	970	1,326	969	959	1,057	764	718	—	1,007
AIC	308.8	568.2	222.5	360.2	226.8	82.9	230.0	114.0	39.2	2,153.5
AIC net of by-product revenue per ounce of gold sold (US$/oz)	1,559	970	1,326	969	959	1,057	764	718	—	1,026

¹	This total may not reflect the sum of the line items due to rounding.
²	By-product revenue at Cerro Corona relates to copper. For all the other operations, by-product revenue relates to silver.
³	Sustaining capital expenditure represents the majority of capital expenditures at existing operations, including underground mine development costs, ongoing replacement of mine equipment and other capital facilities and other capital expenditures at existing operations and is calculated as total capital expenditure per note 41 to the consolidated financial statements, less non-sustaining capital expenditures. Non-sustaining capital expenditures represent capital expenditures for major growth projects as well as enhancement capital for significant infrastructure improvements at existing operations.
⁴	Includes exploration, feasibility and evaluation and share of equity accounted losses of Far Southeast Gold Resources Incorporated (“FSE”).

	AISC and AIC, net of by-product revenue per ounce of gold
	For the year ended 31 December 2015
	South Deep	Tarkwa	Damang	St Ives	Agnew/ Lawlers	Darlot	Granny Smith	Cerro Corona	Corporate and other	Group¹
	(in US$ million except as otherwise stated)
AISC (per table above)	295.1	568.2	222.5	360.2	226.8	82.9	230.0	114.0	12.7	2,113.3
Add back by-product revenue²	0.4	5.5	—	0.5	0.3	0.2	0.1	113.8	—	120.7
AISC gross of by-product revenue	295.5	573.7	222.5	360.7	227.1	83.1	230.1	227.8	12.7	2,234.0
AIC (per table above)	308.8	568.2	222.5	360.2	226.8	82.9	230.0	114.0	39.2	2,153.5
Add back by-product revenue²	0.4	5.5	—	0.5	0.3	0.2	0.1	113.8	—	120.7
AIC gross of by-product revenue	309.2	573.7	222.5	360.7	227.1	83.1	230.1	227.8	39.2	2,274.2
Gold equivalent ounces sold	198.0	586.1	167.8	371.9	236.6	78.4	301.1	293.3	—	2,233.3
AISC gross of by-product revenue (US$/equivalent oz)	1,492	979	1,326	970	960	1,059	764	777	—	1,000
AIC gross of by-product revenue (US$/equivalent oz)	1,561	979	1,326	970	960	1,059	764	777	—	1,018

¹	This total may not reflect the sum of the line items due to rounding.
²	By-product revenue at Cerro Corona relates to copper. For all the other operations, by-product revenue relates to silver.

	AISC and AIC, net of by-product revenue per ounce of gold
	For the year ended 31 December 2014
	South Deep	Tarkwa	Damang	St Ives	Agnew/ Lawlers	Darlot	Granny Smith	Cerro Corona	Corporate and other	Group¹
	(in US$ million except as otherwise stated)
Operating costs	245.5	373.9	177.6	292.3	173.0	81.9	182.6	158.2	—	1,684.9
Gold inventory change	—	(2.3)	2.1	(9.9)	(0.3)	1.7	—	1.5	—	(7.2)
Royalties	1.3	35.3	11.2	11.6	8.3	2.7	10.0	5.8	—	86.1
Realised gains and losses on commodity cost hedges	—	—	—	0.1	(0.1)	—	0.3	—	—	0.3
Community/social responsibility costs	3.9	1.2	0.2	—	—	—	—	7.0	—	12.3
Non-cash remuneration (share-based payments)	2.8	4.2	0.6	2.7	1.3	0.5	1.0	2.6	10.2	26.0
Cash remuneration (long-term employee benefits)	0.6	1.5	0.2	1.2	0.7	0.4	0.7	1.2	2.1	8.7
Other	—	—	—	—	—	—	—	—	10.6	10.6
By-product revenue²	(0.5)	(0.5)	(0.1)	(0.5)	(0.3)	(0.3)	(0.1)	(182.1)	—	(184.5)
Rehabilitation, amortisation and interest	1.8	9.0	1.1	6.1	2.0	0.5	1.7	3.3	—	25.5
Sustaining capital expenditure³	54.9	174.1	16.0	117.5	83.4	14.7	58.9	51.0	—	570.4
AISC1	310.3	596.5	208.9	421.0	267.9	102.2	255.1	48.5	22.9	2,232.9
Exploration, feasibility and evaluation costs⁴	—	—	—	—	—	—	—	—	34.6	34.6
Non-sustaining capital expenditure³	37.0	—	—	—	—	—	—	—	1.5	38.5
AIC1	347.2	596.5	208.9	421.0	267.9	102.2	255.1	48.5	59.0	2,306.0
Gold only ounces sold (’000oz)	200.5	558.3	177.8	361.7	270.7	83.6	315.2	153.6	—	2,121.4
AISC	310.3	596.5	208.9	421.0	267.9	102.2	255.1	48.5	22.9	2,232.9
AISC net of by-product revenue per ounce of gold sold (US$/oz)	1,548	1,068	1,175	1,164	990	1,222	809	316	—	1,053
AIC	347.2	596.5	208.9	421.0	267.9	102.2	255.1	48.5	59.0	2,306.0
AIC net of by-product revenue per ounce of gold sold (US$/oz)	1,732	1,068	1,175	1,164	990	1,222	809	316	—	1,087

¹	This total may not reflect the sum of the line items due to rounding.
²	By-product revenue at Cerro Corona relates to copper. For all the other operations, by-product revenue relates to silver.
³	Sustaining capital expenditure represents the majority of capital expenditures at existing operations, including underground mine development costs, ongoing replacement of mine equipment and other capital facilities and other capital expenditures at existing operations and is calculated as total capital expenditure per note 41 to the consolidated financial statements, less non-sustaining capital expenditures. Non-sustaining capital expenditures represent capital expenditures for major growth projects as well as enhancement capital for significant infrastructure improvements at existing operations.
⁴	Includes exploration, feasibility and evaluation and share of equity accounted losses of FSE.

	AISC and AIC, net of by-product revenue per ounce of gold
	For the year ended 31 December 2014
	South Deep	Tarkwa	Damang	St Ives	Agnew/ Lawlers	Darlot	Granny Smith	Cerro Corona	Corporate and other	Group¹
	(in US$ million except as otherwise stated)
AISC (per table above)	310.3	596.5	208.9	421.0	267.9	102.2	255.1	48.5	22.9	2,232.9
Add back by-product revenue²	0.5	0.5	0.1	0.5	0.3	0.3	0.1	182.1	—	184.5
AISC gross of by-product revenue	310.8	597.0	209.0	421.5	268.3	102.5	255.2	230.6	22.9	2,417.4
AIC (per table above)	347.2	596.5	208.9	421.0	267.9	102.2	255.1	48.5	59.0	2,306.0
Add back by-product revenue²	0.5	0.5	0.1	0.5	0.3	0.3	0.1	182.1	—	184.5
AIC gross of by-product revenue	347.7	597.0	209.0	421.5	268.3	102.5	255.2	230.6	59.0	2,490.5
Gold equivalent ounces sold	200.5	558.3	177.8	361.7	270.7	83.6	315.2	328.6	—	2,296.2
AISC gross of by-product revenue (US$/equivalent oz)	1,550	1,069	1,175	1,165	991	1,225	810	702	—	1,053
AIC gross of by-product revenue (US$/equivalent oz)	1,734	1,069	1,175	1,165	991	1,225	810	702	—	1,086

¹	This total may not reflect the sum of the line items due to rounding.
²	By-product revenue at Cerro Corona relates to copper. For all the other operations, by-product revenue relates to silver.

AISC net of by-product revenues decreased by 4% from US$1,053 per ounce of gold in 2014 to US$1,007 per ounce of gold in 2015, mainly due to lower operating costs, the weaker average R/US dollar and A$/US dollar gold price, partially offset by lower by-product credits and higher capital expenditure. AIC net of by-product revenues decreased by 6% from US$1,087 per ounce of gold in 2014 to US$1,026 per ounce of gold in 2015, due to the lower exploration, feasibility and evaluation costs and lower non-sustaining capital expenditure.

AISC gross of by-product revenues decreased by 5% from US$1,053 per equivalent ounce of gold in 2014 to US$1,000 per equivalent ounce of gold in 2015, mainly due to lower operating costs, the weaker average R/US dollar and A$/US dollar gold price, partially offset by higher capital expenditure. AIC gross of by-product revenues decreased by 6% from US$1,086 per equivalent ounce of gold in 2014 to US$1,018 per equivalent ounce of gold in 2015, due to lower exploration, feasibility and evaluation costs and lower non-sustaining capital expenditure.

Royalties

South Africa

The Royalty Act was promulgated on 24 November 2008 and came into operation on 1 March 2010. The Royalty Act imposes a royalty on refined and unrefined minerals payable to the South African government.

The royalty in respect of refined minerals (which include gold and platinum) is calculated by dividing EBIT by the product of 12.5times gross revenue calculated as a percentage, plus an additional 0.5%. EBIT refers to taxable mining income (with certain exceptions such as no deduction for interest payable and foreign exchange losses) before assessed losses but after capital expenditure. A maximum royalty of 5% is levied on refined minerals.

The royalty in respect of unrefined minerals (which include uranium) is calculated by dividing EBIT by the product of nine times gross revenue calculated as a percentage, plus an additional 0.5%. A maximum royalty of 7% is levied on unrefined minerals.

Where unrefined mineral resources (such as uranium) constitute less than 10% in value of the total composite mineral resources, the royalty rate in respect of refined mineral resources may be used for all gross sales and a separate calculation of EBIT for each class of mineral resources is not required. For Gold Fields, this means that currently it will pay a royalty based on the refined minerals royalty calculation as applied to its gross revenue. The rate of royalty tax payable for 2016, 2015 and 2014 was 0.5%, 0.5% and 0.5% of revenue, respectively.

Ghana

Minerals are owned by the Republic of Ghana and held in trust by the President. As such, in 2016 the Tarkwa and Damang operations were subject to a gold royalty of 5% of total revenue earned from minerals obtained. In 2017, under the terms of the Development Agreement (“DA”) entered into with the Government of Ghana, Tarkwa and Damang will be subject to a sliding scale for royalty rates, linked to the prevailing gold price. The royalty sliding scale is as follows:

Average gold price
Low value		High value	Royalty rate
US$0.00	–	US$1,299.99	3.0%
US$1,300.00	–	US$1,449.99	3.5%
US$1,450.00	–	US$2,299.99	4.1%
US$2,300.00	–	Unlimited	5.0%

Australia

Royalties are payable to the state based on the amount of gold produced from a mining tenement. Royalties are payable quarterly at a fixed rate of 2.5% of the royalty value of gold sold. The royalty value of gold is the amount of gold produced during the month multiplied by the average gold spot price for the month.

Peru

Royalties are calculated with reference to the operating margin and ranging from 1% (for operating margins less than 10%) to 12% (for operating margins of more than 80%). La Cima’s effective royalty rate for 2016, 2015 and 2014 was 6.4%, 4.0% and 3.3% of operating profit, respectively.

Income and mining taxes

South Africa

Generally, South Africa imposes tax on the worldwide income (including capital gains) of all of Gold Fields’ South African incorporated and tax resident entities. Certain classes of passive income such as interest and royalties, and certain capital gains, derived by Controlled Foreign Companies (“CFCs”) could be subject to South African tax on a notional imputation basis. CFCs generally constitute a foreign company in which Gold Fields owns or controls more than 50% of the shareholding.

Gold Fields pays taxes on its taxable income generated by its mining and non-mining tax entities. Under South African law, gold mining companies and non-gold mining companies are taxed at different rates. Companies in the Group not carrying on the direct gold mining operations are taxed at a statutory rate of 28%.

Gold Fields Operations Limited (“GFO”), and GFI Joint Venture Holdings Proprietary Limited (“GFIJVH”), jointly own the South Deep mine and constitute gold mining companies for South African taxation purposes. These companies are subject to the gold formula on their mining income.

The applicable formula takes the form Y = 34 — 170/x

Where:
Y = the tax rate to be determined
x = the ratio of taxable income to the total income (expressed as a percentage)

The effective mining tax rate for GFO and GFIJVH, owners of the South Deep mine, has been calculated at 30% (2015: 30% and 2014: 30%).

Ghana

Ghanaian resident entities are subject to tax on the basis of income derived from, accruing in, received in, or brought into Ghana. The standard corporate income tax rate applicable to mining companies was 35%. Gold Fields signed a development agreement (“DA”) with the Government of Ghana for both the Tarkwa and Damang mines during 2016. This agreement resulted in a reduction in the corporate tax rate from 35% to 32.5%, effective 17 March 2016.

Under the previous Project Development Agreement (entered into between the Ghanaian government and Gold Fields Ghana Limited) and the deed of warranty (entered into between the Ghanaian government and Abosso Goldfields Limited), the government agreed that no withholding tax shall be deducted from the payment of any dividend or capital repayment declared by Gold Fields Ghana or Abosso which was due and payable to any shareholder not normally resident in Ghana. The new DA which became effective 17 March 2016, did not cover any withholding tax on dividends and accordingly, future dividends out of Ghana will be subject to 8% withholding tax.

Implementation of Ghana’s Income Tax Act 2015, Act 896 continues, while awaiting issuance of supporting practice and guidance notes by the tax authorities. In August 2016, the Income Tax Regulations (LI 2244) were entered into force. While LI 2244 has clarified a number of uncertainties with regards to the implementation of Act 896 (such as unutilised capital allowances and ring-fencing), the industry continues to dialogue with the government and with the tax authorities for even further clarity as gaps still persist.

The Revenue Administration Act 2016, Act 915 was gazetted in August 2016 and enters into force from 1 January 2017. Act 915 consolidates tax administration provisions from the various tax laws (income tax, value added tax, customs) into a single act and introduces a more stringent tax compliance framework. Act 915 now enables taxpayers to offset surpluses and liabilities arising from different tax types. It should be noted that the tax authorities are again expected to release guidance notes to allow taxpayers to fully utilise the offset mechanism.

Australia

Generally, Australia imposes tax on the worldwide income (including capital gains) of all of Gold Fields’ Australian incorporated and tax resident entities. The current income tax rate for companies is 30%. Exploration expenditure is deductible in full as incurred and other capital expenditure is generally deductible over the effective lives of the assets acquired. The Australian Uniform Capital Allowance system allows tax deductions for the decline in value of depreciable assets and certain other capital expenditures.

Gold Fields Australia and its eligible related Australian sister companies, together with all wholly owned Australian subsidiaries, have elected to be treated as a tax consolidated group for taxation purposes. As a tax consolidated group, a single tax return is lodged for the Group based on the consolidated results of all companies within the Group.

Withholding tax is payable on dividends, interest and royalties paid by Australian residents to non-residents. In the case of dividend payments to non-residents, withholding tax at a rate of 30% will apply. However, where the recipient of the dividend is a resident of a country with which Australia has concluded a double taxation agreement, the rate of withholding tax is generally limited to between 5% and 15%, depending on the applicable agreement and percentage shareholding. Where dividends are paid out of profits that have been subject to Australian corporate tax there is no withholding tax, regardless of whether a double taxation agreement is in place.

Peru

Peruvian taxes for resident individuals and domiciled corporations are based on their worldwide income, and for non-resident individuals and non-domiciled corporations are based on their Peruvian income source. The general income tax rate applicable to domiciled corporations is 29.5% on taxable income and to non-resident corporations is 30%. The income tax applied to interest paid to non-residents is 4.99%. The dividends tax rate (to residents and non-residents) is 5%. Capital gains are also taxed as ordinary income for domiciled corporations.

Exchange rates

Gold Fields’ Australian and South African revenues and costs are very sensitive to the Australian Dollar/US Dollar exchange rate and the Rand/US Dollar exchange rate, because revenues are generated using a gold price denominated in US Dollar, while the costs of the Australian and South African operations are incurred principally in Australian Dollar and Rand, respectively. Depreciation of the Australian Dollar and Rand against the US Dollar reduces Gold Fields’ average costs when they are translated into US Dollar, thereby increasing the operating margin of the Australian and South African operations. Conversely, appreciation of the Australian Dollar and Rand results in Australian and South African operating costs being translated into US Dollars at a lower Australian Dollar/US Dollar exchange rate and Rand/US Dollar exchange rate, resulting in lower operating margins. The impact on profitability of any change in the value of the Australian Dollar and Rand against the US Dollar can be substantial. Furthermore, the exchange rates obtained when converting US Dollar to Australian Dollar and Rand are set by foreign exchange markets, over which Gold Fields has no control. In 2016, movements in the US Dollar/Rand exchange rate had a significant impact on Gold Fields’ results of operations as the Rand weakened 16% against the US Dollar, from an average of R12.68 per US$1.00 in 2015 to R14.70 per US$1.00 in 2016. The Australian Dollar was similar at an average of A$1.00 per US$0.75.

With respect to its operations in Ghana and Peru, a substantial portion of Gold Fields’ operating costs (including wages) are either directly incurred in US Dollar or are translated to US Dollar. Accordingly, fluctuations in the Ghanaian Cedi and Peruvian Nuevos Soles do not materially impact operating results for the Ghana and Peru operations.

During 2016, Gold Fields had the following currency forward contract:

On 1 October 2014, South Deep entered into a US$/Rand zero-cost collar for US$7.5 million per month for a period of six months starting October 2014. A floor of R11.2 and an average cap over the period of R12.0567 was achieved.

Inflation

A period of significant inflation could adversely affect Gold Fields’ results and financial condition. For example, in 2016, inflation in South Africa was 6.8% (2015: 4.6% and 2014: 6.2%). Further, over the past several years, production costs, especially wages and electricity costs, have increased considerably. The effect of these increases has adversely affected, and may continue to adversely affect, the profitability of Gold Fields’ South Deep operations.

In 2016, the Group continued rationalising and prioritising capital expenditure without undermining the sustainability of its operations and continued prioritisation of cash generation over production volumes. The Ghanaian operations concluded a DA with the Government of Ghana for both the Tarkwa and Damang mines. The highlights of the agreement included reductions in the tax and royalty rates. The Group undertook reductions in labour costs through a retrenchment process in Damang in preparation for rightsizing for the Damang reinvestment plan. In addition, the Australian operations implemented a margin improvement project.

In 2015, the Group undertook reductions in labour costs through completing the retrenchment process in Ghana following the closure of the heap leach facilities at Tarkwa and rightsizing at the Australian operations following the closure of the Cave Rocks underground mine at St Ives. In addition, the Group implemented various business improvement initiatives to reduce costs across all regions.

Further, the majority of Gold Fields’ costs at the South African operations are in Rand and revenues from gold sales are in US Dollar. Generally, when inflation is high, the Rand potentially devalues thereby increasing Rand revenues and potentially offsetting the increase in costs. However, there can be no guarantee that any cost-saving measures or the effects of any potential devaluation will offset the effects of increased inflation and production costs.

The same applies to the Australian operations with regard to the link between the Australian Dollar and US Dollar. The Peruvian and Ghanaian operations, on the other hand, are affected by inflation without a potential similar effect on revenue proceeds, thereby increasing the impact of inflation on the operating margins.

Capital expenditures

Gold Fields will continue to be required to make capital investments in both new and existing infrastructure and opportunities and, therefore, management will be required to continue to balance the demands for capital expenditure in the business and allocate Gold Fields’ resources in a focused manner to achieve its sustainable growth objectives. Gold Fields expects that its use of available capital resources and allocation of its capital expenditures may shift in future periods as it increases investment in certain of its exploration projects.

Capital expenditure increased by US$16 million, or 3%, from US$634 million in 2015 to US$650 million in 2016. Set out below are the capital expenditures made by Gold Fields during 2016. Also, refer to “Cash flows from investing activities” section.

South African operation

Gold Fields spent R1,145 million (US$78 million) on capital expenditures at South Deep in 2016 and has budgeted R1,309 million (US$92 million) for capital expenditures at South Deep in 2017.

Ghanaian operations

Gold Fields spent US$168 million on capital expenditures at Tarkwa in 2016 and has budgeted US$180 million for capital expenditures at Tarkwa for 2017.

Gold Fields spent US$38 million on capital expenditures at Damang in 2016 and has budgeted US$140 million of capital expenditures at Damang for 2017.

Peruvian operation

Gold Fields spent US$43 million on capital expenditures at Cerro Corona in 2016 and has budgeted US$53 million for capital expenditures at Cerro Corona for 2017.

Australian operations

Gold Fields spent A$188 million (US$140 million) on capital expenditures at St Ives in 2016 and has budgeted A$185 million (US$135 million) for capital expenditures at St Ives in 2017.

Gold Fields spent A$94 million (US$70 million) on capital expenditures at Agnew/Lawlers in 2016 and has budgeted A$87 million (US$64 million) for capital expenditures at Agnew/Lawlers for 2017.

Gold Fields spent A$29 million (US$21 million) on capital expenditures at Darlot in 2016 and has budgeted A$12 million (US$8 million) for capital expenditures at Darlot for 2017.

Gold Fields spent A$121 million (US$90 million) on capital expenditures at Granny Smith in 2016 and has budgeted A$115 million (US$84 million) for capital expenditures at Granny Smith for 2017.

Gold Fields has budgeted A$153 million (US$112 million) for capital expenditure at the Gruyere Gold project for 2017.

The actual expenditures for the future periods noted above may be different from the amounts set out above and the amount of actual capital expenditure will depend on a number of factors, such as production volumes, the price of gold, copper and other minerals mined by Gold Fields and general economic conditions. Some of the factors are outside of the control of Gold Fields.

Significant accounting judgements and estimates

Gold Fields’ significant accounting policies are more fully described in the accounting policies to its consolidated financial statements included in this Annual Financial Report. Some of Gold Fields’ accounting policies require the application of significant judgements and estimates by management that can affect the amounts reported in the consolidated financial statements. By their nature, these judgements are subject to a degree of uncertainty and are based on Gold Fields’ historical experience, terms of existing contracts, management’s view on trends in the gold mining industry, information from outside sources and other assumptions that Gold Fields considers to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions. Refer to the accounting policies, pages 99 to 115, to the consolidated financial statements included elsewhere in this Annual Financial Report for the more significant areas requiring the use of management judgements and estimates.

Results for the period – years ended 31 December 2016 and 31 December 2015

Profit/(loss) attributable to owners of the parent was a profit of US$163 million (or US$0.20 per share) for 2016 compared to a loss of US$242 million (or US$0.31 per share) for 2015. The reasons for this increase are discussed below.

Revenue

Revenue increased by 8% from US$2,545 million in 2015 to US$2,750 million in 2016. The increase in revenue of US$205 million was mainly due to an increase of 9% in the average US Dollar gold price for the year from US$1,140 per equivalent ounce in 2015 to US$1,241 per equivalent ounce in 2016. The Rand weakened by 16% to the US Dollar from an average of R12.68 in 2015 to R14.70 in 2016 and the average Australian/US Dollar exchange rate was similar at A$1 = US$0.75.

Gold sales decreased by 1% from 2,233,300 equivalent ounces in 2015 to 2,216,400 equivalent ounces in 2016. Gold sales at the South African operation increased by 46% from 6,160 kilograms (198,000 ounces) to 9,001 kilograms (289,400 ounces). Gold sales at the Ghanaian operations decreased by 5% from 753,900 ounces to 715,800 ounces. Gold equivalent sales at the Peruvian operation (Cerro Corona) decreased by 8% from 293,300 equivalent ounces to 268,900 equivalent ounces. At the Australian operations, gold sales decreased by 5% from 988,000 ounces to 942,400 ounces. As a general rule, Gold Fields sells all the gold it produces in the year of production.

	2016			2015
	Revenue US$ million	Gold sold ’000oz	Gold produced ’000oz	Revenue US$ million	Gold sold ’000oz	Gold produced ’000oz
South Deep	358.2	289.4	290.4	232.3	198.0	198.0
Tarkwa	708.9	568.1	568.1	680.7	586.1	586.1
Damang	183.4	147.7	147.7	194.8	167.8	167.8
Cerro Corona	322.3	268.9	270.2	292.2	293.3	295.6
St Ives	452.3	362.9	362.9	431.8	371.9	371.9
Agnew/Lawlers	285.4	229.3	229.3	273.9	236.6	236.6
Darlot	83.1	66.4	66.4	91.3	78.4	78.4
Granny Smith	355.8	283.8	283.8	348.4	301.1	301.1
Total	2,749.5	2,216.4	2,218.7	2,545.4	2,233.3	2,235.6

At South Deep in South Africa, gold sales increased by 46% from 6,160 kilograms (198,000 ounces) to 9,001 kilograms (289,400 ounces) mainly due to increased volumes and grades.

At the Ghanaian operations, gold sales at Tarkwa decreased by 3% from 586,100 ounces to 568,100 ounces due to the lower yield. Damang’s gold sales decreased by 12% from 167,800 ounces to 147,700 ounces mainly due to lower yield.

At Cerro Corona in Peru, copper production increased by 7% from 28,702 tonnes to 30,667 tonnes and gold production decreased by 5% from 158,900 ounces to 150,200 ounces. As a result gold equivalent sales decreased by 8% from 293,300 ounces to 268,900 ounces due to lower copper to gold price ratio as well as lower gold head grades treated and lower gold recovery.

At the Australian operations, production at St Ives decreased by 2% from 371,900 ounces to 362,900 ounces due to lower grade or ore milled following the closure of the Cave Rocks and Athena underground mines and transition to a predominantly open pit operation. At Agnew/Lawlers, gold sales decreased by 3% from 236,600 ounces to 229,300 ounces mainly due to a reduction in ore processed. Gold production at Darlot decreased by 15% from 78,400 ounces to 66,400 ounces due to lower grades mined. At Granny Smith, gold production decreased by 6% from 301,100 ounces to 283,800 ounces due to lower grades mined and an increase in stockpiled ore as a consequence of the timing of the December milling campaign.

Cost of sales

Cost of sales, which comprise operating costs, gold inventory change and amortisation and depreciation, increased marginally from US$2,066 million in 2015 to US$2,067 million in 2016.

Operating costs

Operating costs increased marginally from US$1,431 million in 2015 to US$1,433 million in 2016.

At South Deep in South Africa, operating costs increased by 33% from R3,000 million (US$237 million) to R4,003 million (US$272 million). This increase of R1,003 million was mainly due to the 47% increase in production, annual salary increases, the electricity increase and an increase in employees and contractors in line with the strategy to sustainably improve all aspects of the operation and to position the mine to achieve the targets set out in the rebase plan.

At the Ghanaian operations, operating costs decreased by 7% from US$519 million in 2015 to US$481 million in 2016. This decrease of US$38 million was mainly at Damang due to lower mining and consumable costs in line with the lower production. It was partially offset by increased costs at Tarkwa. At Tarkwa, operating costs increased by 3% from US$334 million to US$345 million and at Damang, operating costs decreased by 26% from US$184 million to US$136 million.

At Cerro Corona in Peru, operating costs of US$144 million in 2016 were similar to 2015.

At the Australian operations, operating costs increased by 2% from A$709 million (US$533 million) in 2015 to A$720 million (US$537 million) in 2016. At St Ives, operating costs remained similar at A$259 million (US$195 million). At Agnew/Lawlers, operating costs increased by 3% from A$190 million (US$143 million) to A$195 million (US$146 million). Operating costs at Darlot decreased by 4% from A$80 million (US$60 million) to A$77 million (US$57 million) due to cost reduction measures applied to mining activities. At Granny Smith, operating costs increased by 4% from
A$181 million (US$136 million) to A$189 million (US$141 million) due to additional volumes.

Gold inventory change

The gold inventory credit to costs of US$46 million in 2016 compared with a charge to costs of US$25 million in 2015.

At South Deep, the gold inventory credit of Rnil (US$nil) in 2015 compared with R11 million (US$1 million) in 2016, due to gold produced not sold at year-end.

At Tarkwa, the gold inventory credit of US$7 million in 2015 compared with US$18 million in 2016, both due to a buildup of stockpiles.

At Damang, the gold inventory charge of US$2 million in 2015 compared with a credit to costs of US$nil in 2016, due to a drawdown of stockpiles and gold in circuit in 2015 compared to a buildup of gold in circuit in 2016.

At Cerro Corona, the gold inventory charge of US$1 million in 2015 compared with a credit to costs of US$4 million in 2016, due to a buildup of concentrate inventory in 2016 compared with a US$1 million drawdown in 2015.

At St Ives, the charge to costs of A$34 million (US$25 million) in 2015 compared with a credit to costs of A$15 million (US$11 million) in 2016, due to a buildup on stockpiles in 2016 compared with a drawdown of stockpiles in 2015.

At Agnew, the credit to costs of A$2 million (US$1 million) in 2015 increased to A$7 million (US$5 million) in 2016, both due to a buildup of stockpiles.

At Darlot, the credit to costs of A$1 million (US$1 million) in 2015 compared with a charge to costs of A$1 million (US$nil) in 2016, due to a drawdown of gold in circuit in 2016 compared to a buildup of gold in circuit in 2015.

At Granny Smith, the charge of A$7 million (US$5 million) in 2015 compared to a credit to costs of A$10 million (US$7 million) in 2016, due to a buildup of stockpiles in 2016 compared to a drawdown of stockpiles in 2015.

Amortisation and depreciation

Amortisation and depreciation is calculated on the units-of-production method and is based on current gold production as a percentage of total expected gold production over the lives of the different mines.

The table below depicts the changes from 31 December 2015 to 31 December 2016 for proven and probable managed gold and equivalent reserves and for the life-of-mine for each operation and the resulting impact on the amortisation charge in 2016. The amortisation in 2016 was based on the reserves as at 31 December 2015. The life-of-mine information is based on the operations’ strategic plans, adjusted for proven and probable reserve balances. In basic terms, amortisation is calculated using the life-of-mine for each operation, which is based on: (1) the proven and probable reserves for the operation at the start of the relevant year (which are taken to be the same as at the end of the prior fiscal year); and (2) the amount of gold produced by the operation during the year. The ore reserve statement as at 31 December 2016 became effective on 1 January 2017.

	Proved and probable mineral reserves as of			Life-of-mine		Amortisation and depreciation for the year ended
	31 December 2016 (’000oz)	31 December 2015 (’000oz)	31 December 2014 (’000oz)	31 December 2016 (years)	31 December 2015 (years)	31 December 2016 (US$ million)	31 December 2015 (US$ million)
South African operation
South Deep	37,300	37,300	38,000	79	81	71.5	67.9
Ghanaian operations
Tarkwa¹	6,100	6,700	7,500	15	16	184.4	162.3
Damang²	1,700	1,000	1,200	8	5	17.8	26.4
Peruvian operation
Cerro Corona³	2,400	2,800	3,000	7	8	115.6	100.1
Australian operations
St Ives	1,700	1,500	1,800	5	5	144.8	109.9
Agnew/Lawlers	500	700	900	3	4	77.1	62.0
Darlot	100	30	100	1	0.5	14.4	25.8
Granny Smith	1,700	1,300	900	9	9	45.0	54.1
Corporate and other	—	—	—	—	—	8.6	1.4
Total reserves⁴	51,500	51,330	53,400			679.2	609.9

¹	As of 31 December 2014, 31 December 2015 and 31 December 2016 mineral reserves of 6.742 million ounces, 6.071 million ounces and 5.473 million ounces of gold, respectively, were attributable to Gold Fields, with the remainder attributable to non-controlling shareholders in the Tarkwa operation.
²	As of 31 December 2014, 31 December 2015 and 31 December 2016 mineral reserves of 1.111 million ounces, 0.876 million ounces and 1.506 million ounces of gold, respectively, were attributable to Gold Fields, with the remainder attributable to non-controlling shareholders in the Damang operation.
³	As of 31 December 2014, 31 December 2015 and 31 December 2016 mineral reserves of 2.988 million ounces, 2.763 million ounces and 2.356 million ounces of equivalent gold were attributable to Gold Fields, with the remainder attributable to non-controlling shareholders in the Cerro Corona operation.
⁴	As of 31 December 2014, 31 December 2015 and 31 December 2016 reserves of 48.123 million ounces, 47.292 million ounces and 49.172 million ounces of equivalent gold, respectively, were attributable to Gold Fields, with the remainder attributable to non-controlling shareholders in the Ghanaian and Peruvian operations.

Amortisation and depreciation increased by 11% from US$610 million in 2015 to US$679 million in 2016.

At South Deep in South Africa, amortisation and depreciation increased by 22% from R861 million (US$68 million) in 2015 to R1,051 million (US$72 million) mainly due to an increase in production.

At the Ghanaian operations, amortisation and depreciation increased by 7% from US$189 million in 2015 to US$202 million in 2016. Tarkwa increased by 14% from US$162 million to US$184 million mainly due to a reduction in reserves. Damang decreased by 31% from US$26 million to US$18 million mainly due to the asset-specific impairment at Damang at the end of 2015 and a decrease in production in 2016.

At Cerro Corona in Peru, amortisation and depreciation increased by 16% from US$100 million in 2015 to US$116 million in 2016. This increase is due to reduction in gold and copper reserves.

At the Australian operations, amortisation and depreciation increased by 13%, from A$335 million (US$252 million) in 2015 to A$377 million (US$281 million) in 2016. At St Ives, amortisation and depreciation increased by 33% from A$146 million (US$110 million) in 2015 to A$194 million (US$145 million) due to a decrease in reserves. Agnew/Lawlers increased by 26% from A$82 million (US$62 million) in 2015 to A$103 million (US$77 million) mainly due to a decrease in reserves. Amortisation and depreciation at Darlot decreased by 44% from A$34 million (US$26 million) to A$19 million (US$14 million) mainly due to the cash-generating unit impairment at Darlot at the end of 2015 and lower production in 2016. At Granny Smith, amortisation and depreciation decreased by 15% from A$72 million (US$54 million) to A$61 million (US$45 million) due to lower production.

All-in sustaining and total all-in cost

The following table sets out for each operation and the Group, total gold sales in ounces, all-in sustaining costs (“AISC”) and all-in cost (“AIC”), net of by-product revenue, in US$/oz for 2016 and 2015:

		2016			2015
	Gold only ounces sold	AISC² – US$/oz	AIC² – US$/oz	Gold only ounces sold	AISC² – US$/oz	AIC2 – US$/oz
South Deep	289.4	1,207	1,234	198.0	1,490	1,559
South African operation	289.4	1,207	1,234	198.0	1,490	1,559
Tarkwa	568.1	959	959	586.1	970	970
Damang	147.7	1,254	1,254	167.8	1,326	1,326
Ghanaian operations	715.8	1,020	1,020	753.9	1,049	1,049
Cerro Corona¹	149.1	499	499	158.8	718	718
Peruvian operation	149.1	499	499	158.8	718	718
St Ives	362.9	949	949	371.9	969	969
Agnew/Lawlers	229.3	971	971	236.6	959	959
Darlot	66.4	1,238	1,238	78.4	1,057	1,057
Granny Smith	283.8	834	834	301.1	764	764
Australian operations	942.4	940	940	988.0	912	912
GIP and corporate	–	7	30	–	6	19
Total operations	2,096.8	980	1,006	2,098.8	1,007	1,026

¹	Gold sold at Cerro Corona excludes copper equivalents of 119,800 ounces in 2016 and 134,500 ounces in 2015.
²	Net of by-product revenue.
³	AIC and AISC are calculated in accordance with the World Gold Council Industry standard. Refer to pages 32 to 38 for detailed calculations and discussion of non-IFRS measures
⁴	Figures above may not add as they are rounded independently.

The Group AISC decreased by 3% from US$1,007 per ounce in 2015 to US$980 per ounce in 2016 mainly due to lower net operating costs, lower losses on commodity cost hedges, higher by-product credits, partially offset by higher non-cash and cash remuneration and higher sustaining capital expenditure. AISC in 2015 included US$8 million of inventory written off at Damang. AIC decreased by 2% from US$1,026 per ounce in 2015 to US$1,006 per ounce in 2016 for the same reasons as AISC, as well as lower non-sustaining capital expenditure, partially offset by higher exploration, feasibility and evaluation costs.

At South Deep in South Africa, AISC decreased by 6% from R607,429 per kilogram (US$1,490 per ounce) in 2015 to R570,303 per kilogram (US$1,207 per ounce) in 2016 mainly due to increased gold sold, partially offset by higher operating costs and higher sustaining capital expenditure. The AIC decreased by 8% from R635,622 per kilogram (US$1,559 per ounce) to R583,059 per kilogram (US$1,234 per ounce) due to the same reasons as for AISC as well as lower non-sustaining capital expenditure.

At the Ghanaian operations, AISC and total AIC decreased by 3% from US$1,049 per ounce in 2015 to US$1,020 per ounce in 2016 mainly due to lower net operating costs and lower capital expenditure, partially offset by lower gold sold. At Tarkwa, AISC and AIC decreased by 1% from US$970 per ounce in 2015 to US$959 per ounce in 2016 due to lower capital expenditure, partially offset by lower gold sold. At Damang, AISC and AIC decreased by 5% from US$1,326 per ounce in 2015 to US$1,254 per ounce in 2016 due to lower net operating costs, partially offset by lower gold sold and higher capital expenditure.

At Cerro Corona in Peru, AISC and AIC decreased by 31% from US$718 per ounce in 2015 to US$499 per ounce in 2016 mainly due to lower net operating costs, lower sustaining capital expenditure and higher by-product credits, partially offset by lower gold sold. AISC and total AIC per equivalent ounce decreased by 2% from US$777 per equivalent ounce to US$762 per equivalent ounce mainly due to the same reasons as above.

At the Australian operations, AISC and AIC increased by 4% from A$1,211 per ounce (US$912 per ounce) in 2015 to A$1,261 per ounce (US$941 per ounce) in 2016 mainly due to higher capital expenditure and lower gold sold, partially offset by lower net operating costs. At St Ives, AISC and AIC decreased by 1% from A$1,287 per ounce (US$969 per ounce) in 2015 to A$1,273 per ounce (US$949 per ounce) in 2016 due to the significant reduction in net operating costs, partially offset by lower gold sold and higher capital expenditure. At Agnew, AISC and AIC increased by 2% from A$1,276 per ounce (US$959 per ounce) in 2015 to A$1,301 per ounce (US$971 per ounce) in 2016 due to lower gold sold, partially offset by lower capital expenditure. At Darlot, AISC and AIC increased by 18% from A$1,403 per ounce (US$1,057 per ounce) in 2015 to A$1,662 per ounce (US$1,238 per ounce) in 2016 due to lower gold sold and higher capital expenditure, partially offset by lower net operating costs. At Granny Smith, AISC and AIC increased by 10% from A$1,017 per ounce (US$764 per ounce) in 2015 to A$1,119 per ounce (US$834 per ounce) in 2016 mainly due to lower gold sold and higher capital expenditure, partially offset by the lower net operating costs.

Net operating profit

Net operating profit increased by 43% from US$479 million in 2015 to US$683 million in 2016.

This is due to reasons discussed earlier.

Investment income

Income from investments increased by 33% from US$6 million in 2015 to US$8 million in 2016. The increase was mainly due to higher cash balances at the international operations in 2016.

The investment income in 2016 of US$8 million comprised US$1 million interest on monies invested in the South African rehabilitation trust fund and US$7 million interest on other cash and cash equivalent balances.

The investment income in 2015 of US$6 million comprised US$nil interest on monies invested in the South African rehabilitation trust fund and US$6 million interest on other cash and cash equivalent balances.

Interest received on the South African rehabilitation trust fund increased marginally from US$nil in 2015 to US$1 million in 2016.

Interest on other cash balances increased by 17% from US$6 million in 2015 to US$7 million in 2016 mainly due to higher cash balances at the international operations in 2016.

Finance expense

Finance expense decreased by 6% from US$83 million in 2015 to US$78 million in 2016.

The finance expense of US$78 million in 2016 comprised US$11 million relating to the accretion of the environmental rehabilitation liability and US$82 million on various Group borrowings, partially offset by borrowing costs capitalised of US$15 million.

The finance expense of US$83 million in 2015 comprised US$12 million relating to the accretion of the environmental rehabilitation liability and US$88 million on various Group borrowings, partially offset by borrowing costs capitalised of US$17 million.

The environmental rehabilitation liability accretion expense decreased from US$12 million in 2015 to US$11 million in 2016 mainly due to lower present values of the rehabilitation liabilities which resulted from the lower discount rates used in the 2015 rehabilitation liabilities calculation.

Below is an analysis of the components making up the interest on the various Group borrowings, stated on a comparative basis:

	2016 US$ million	2015 US$ million
Interest on borrowings to fund capital expenditure and operating costs at the South African operation	6	3
Interest on US$1 billion notes issue	44	50
Sibanye Gold guarantee fee	–	1
Interest on US$70 million senior secured revolving credit facility	2	2
Interest on US$150 million revolving senior secured credit facility	3	3
Interest on US$1,510 million term loan and revolving credit facilities	12	28
Interest on US$1,290 million term loan and revolving credit facilities	14	–
Other interest charges	1	1
	82	88

Interest on borrowings to fund capital expenditure and operating costs at the South African operation increased from US$3 million in 2015 to US$6 million in 2016 due to drawdowns of South African borrowings in 2016.

Interest on the US$1 billion notes issue decreased from US$50 million in 2015 to US$44 million in 2016. The decrease is due to the buy-back of notes amounting to US$148 million during 2016.

The yearly guarantee fee of US$5 million became payable to Sibanye Gold in 2013 after the unbundling of Sibanye Gold. On 24 April 2015, Sibanye Gold was released as guarantor, resulting in a pro-rata guarantee fee of US$1 million in 2015.

Interest on the US$70 million senior secured revolving credit facility remained flat at US$2 million.

Interest on the US$150 million revolving senior secured credit facility remained flat at US$3 million.

Interest on the US$1,510 million term loan and revolving credit facilities decreased from US$28 million in 2015 to US$12 million in 2016. The decrease is due to the US$1,510 million term loan and revolving credit facilities being cancelled and refinanced through the US$1,290 million term loan and revolving credit facilities on 6 June 2016. Interest on the US$1,290 million term loan and revolving credit facilities from the date of refinancing was US$14 million.

During 2016, US$15 million (2015: US$17 million) of borrowing costs were capitalised in terms of IAS 23 Borrowing cost. IAS 23 requires capitalisation of borrowing costs whenever general borrowings are used to finance qualifying projects. The only qualifying project was South Deep’s mine development. An average interest capitalisation rate of 4.7% (2015: 4.8%) was applied.

Gain/(loss) on financial instruments

The gain/(loss) on financial instruments was a gain of US$14 million in 2016 compared to a loss of US$5 million in 2015.

The gain on financial instruments of US$14 million in 2016 comprised the profit on the South Deep currency hedge.

On 25 February 2016, South Deep entered into US$/Rand forward exchange contracts for a total delivery of US$69.8 million starting at July 2016 to December 2016. The average forward rate achieved over the six-month period was R16.8273. The hedge was delivered in July and August and the balance closed out in September 2016. The average rate achieved on delivery and close out was R13.8010, resulting in a positive cash flow and profit of US$14 million.

The loss on financial instruments of US$5 million in 2015 comprised the loss on the Australian diesel hedges.

On 10 September 2014, Gold Fields Australia Proprietary Limited (“GFA”) entered into a Singapore Gasoil 10ppm cash-settled swap transaction contract for a total of 136,500 barrels, effective
15 September 2014 until 31 March 2015 at a fixed price of US$115.00 per barrel. The 136,500 barrels are based on 50% of usage for the seven-month period September 2014 to March 2015. Brent Crude at the time of the transaction was US$99.10 per barrel. On 26 November 2014, GFA entered into further contracts. A contract for 63,000 barrels for the period January to March 2015 was committed at a fixed price of US$94.00 per barrel and a further 283,500 barrels were committed at a price of US$96.00 per barrel for the period April to December 2015. Brent Crude at the time of the transaction was US$78.50 per barrel. By entering into the above contracts, the Australian region hedged its full diesel requirements for 2015.

At 31 December 2015, the fair value of these oil derivative contracts was negative US$2 million. At 31 December 2016, there were no derivative contracts outstanding.

Foreign exchange (loss)/gain

The foreign exchange (loss)/gain was a loss of US$6 million in 2016 compared to a gain of US$10 million in 2015.

These gains and losses on foreign exchange related to the conversion of offshore cash holdings into their functional currencies. The exchange loss of US$6 million was mainly due to the weakening of the Ghanaian Cedi, while the gains of US$10 million in 2015 were mainly due to the weakening of the Australian Dollar.

Other costs, net

Other costs, net decreased by 19% from US$21 million in 2015 to US$17 million in 2016.

The costs in 2016 are mainly made up of:

Social contributions and sponsorships of US$19 million; »» Facility charges of US$8 million on borrowings;
Offshore structure costs of US$9 million;
Corporate related costs of US$4 million;
GFA margin improvement project of US$5 million;
Profit of US$18 million on the buy-back of notes; and
Rehabilitation income of US$10 million as a result of changes in estimates relating to the provision for environmental rehabilitation costs recognised in profit or loss.

The costs in 2015 are mainly made up of:

Social contributions and sponsorships of US$12 million;
Facility charges of US$2 million on borrowings;
Offshore structure costs of US$13 million;
Global compliance costs of US$4 million; and
Rehabilitation income of US$15 million as a result of changes in estimates relating to the provision for environmental rehabilitation costs recognised in profit or loss.

Share-based payments

Gold Fields recognises the cost of share options granted (share-based payments) in terms of IFRS 2 Share-based payment.

Gold Fields has adopted appropriate valuation models (Black-Scholes and Monte Carlo simulation) to fair value share-based payments. The value of the share options is determined at the grant date of the options and depending on the rules of the plan expensed on a straight-line basis over a three-year vesting period, adjusted for forfeitures as appropriate.

Share-based payments increased by 27% from US$11 million in 2015 to US$14 million in 2016. The corresponding entry for the above adjustments was share-based payment reserve within shareholders’ equity.

The increase in share-based payments was due to the adoption of the revised Gold Fields Limited 2012 Share Plan during 2016 to replace the Gold Fields Limited long-term incentive plan (“LTIP”).

Long-term incentive plan expense

Gold Fields recognises the LTIP expense in terms of IAS 19 Employee benefits.

On 1 March 2014, the Remuneration Committee approved the Gold Fields Limited LTIP. The plan provides for executive directors, certain officers and employees to receive a cash award conditional on the achievement of specified performance conditions relating to total shareholder return and free cash flow margin. The conditions are assessed over the performance cycle which runs over three calendar years. The expected timing of the cash outflows in respect of each grant is at the end of three years after the original award was made.

These awards are measured on the date the award is made and re-measured at each reporting period. The total shareholder return portion of the award is measured using the Monte Carlo simulation valuation model, which requires assumptions regarding the share price volatility and expected dividend yield. The fair value of the free cash flow portion of the award is valued based on the actual and expected achievement of the cash flow targets set out in the plan. The assumptions used in the Monte Carlo model and the expected cash flow targets are reviewed at each reporting date.

No allocations were made under the LTIP in 2016 following the approval of the revised Gold Fields Limited 2012 Share Plan.

The LTIP expense increased by 120% from US$5 million in 2015 to US$11 million in 2016. The increase was due to marked- to-market adjustments, as well as additional vestings under the plan.

Exploration expense

For 2016, US$124 million was spent on exploration, comprising brownfields exploration of US$79 million (Australia US$76 million and Ghana US$3 million) and greenfields exploration comprising Salares Norte in Chile (US$39 million), APP in Finland (US$1 million) and US$5 million was spent on exploration office costs. Of the US$124 million exploration costs incurred, US$92 million was recognised in the consolidated income statement of which US$48 million related to Australia.

For 2015, US$95 million was spent on exploration, comprising brownfields exploration of US$72 million (Australia US$68 million, Ghana US$3 million and South Africa US$1 million) and greenfields exploration comprising Salares Norte in Chile (US$16 million), APP in Finland (US$1 million) and US$6 million was spent on exploration office costs. Of the US$95 million exploration costs incurred, US$54 million was recognised in the consolidated income statement of which US$31 million related to Australia.

Subject to continued exploration success, US$134 million will be spent on exploration in 2017, comprising brownfields exploration of US$65 million (Australia US$65 million) and greenfields exploration of US$69 million, primarily at Salares Norte.

Share of results of equity-accounted investees after taxation

Share of results of equity-accounted investees after taxation decreased by 67% from a loss of US$6 million in 2015 to a loss of US$2 million in 2016.

The decrease relates mainly to the reclassification of Hummingbird and Bezant to available-for-sale investments during 2015 and 2016, respectively, when they no longer qualified as equity-accounted investees. During 2016, Gold Fields only equity accounted for Far South East Resources Incorporated (“FSE”).

Restructuring costs

Restructuring costs increased by 33% from US$9 million in 2015 to US$12 million in 2016. The cost in 2016 relates mainly to separation packages in Damang and Granny Smith and the cost in 2015 relates mainly to separation packages in Tarkwa and St Ives.

Impairment of investments and assets

Impairment of investments and assets decreased by 65% from US$221 million in 2015 to US$77 million in 2016.

The impairment charge of US$77 million in 2016 comprises:

US$2 million asset-specific impairment at Damang, relating to inoperable mining fleet that is no longer used under the current life-of-mine plan;
US$8 million write down of assets held for sale. Following the Damang re-investment plan, a decision was taken to sell certain mining fleet assets and related spares. The sale of the assets is expected to be concluded during 2017. As a result, the assets were classified as held for sale and valued at the lower of FVLCOD or carrying value which resulted in an impairment; and
US$66 million cash-generating unit impairment at Cerro Corona. The impairment is due to reduction in gold and copper reserves due to depletion, a decrease in the gold and copper price assumptions for 2017 and 2018, a lower resource price and an increase in the Peru tax rate from 2017 onwards.

The impairment charge of US$221 million in 2015 comprises:

US$8 million net realisable write-downs of stockpiles at Damang;
US$7 million impairment of redundant assets at Cerro Corona;
US$14 million cash-generating unit impairment at Darlot;
US$36 million asset-specific impairment at Damang, relating to immovable mining assets that would no longer be used under the current life-of-mine;
US$39 million at the Arctic Platinum Project (“APP”). This project is valued at the lower of fair value less cost of disposal or carrying value after a decision was made to dispose of APP and it was reclassified as held for sale in 2013. The carrying value at 31 December 2014 was US$40 million based on an offer made as part of the ongoing sale process during 2014. This offer was not realised and during 2015, APP was further impaired by US$39 million to its fair value less cost of disposal;
US$101 million impairment of the Group’s investment in FSE to its recoverable amount;
US$8 million impairment of Hummingbird was recognised to adjust the carrying value of the investment to its fair value upon derecognition of the investment as an equity-accounted investee; and
US$8 million related to impairment of listed investments (Hummingbird, Bezant and various junior exploration companies) to their fair values.

Profit on disposal of investments

The profit on the disposal of investments was US$2 million in 2016 compared with US$nil in 2015.

The profit on disposal of investments of US$2 million in 2016 related mainly the profit on disposal of shares in Sibanye Gold Limited.

Profit/(loss) on disposal of assets

Profit on disposal of assets was US$48 million in 2016 compared to US$nil in 2015.

Profit on disposal of assets of US$48 million in 2016 related to the sale of royalties as part of the Maverix transaction.

Royalties

Royalties increased by 5% from US$76 million in 2015 to US$80 million in 2016 and are made up as follows:

	2016 US$ million	2015 US$ million
South Africa	2	1
Ghana	44	44
Peru	5	3
Australia	29	28
	80	76

The royalty in South Africa and Australia increased in line with the increase in gold revenues. The royalty in Peru increased due to the higher operating margin of Cerro Corona.

Mining and income tax

Mining and income tax charge decreased by 22% from US$247 million in 2015 to US$192 million in 2016.

The table below indicates Gold Fields’ effective tax rate in 2016 and 2015:

	2016	2015
Income and mining tax charge – US$ million	(192)	(247)
Effective tax rate – %	(52.5)	(5,491.1)

In 2016, the effective tax rate of 52.5% was higher than the maximum South African mining statutory tax rate of 34% mainly due to the tax effect of the following:

US$23 million adjustment to reflect the actual realised company tax rates in South Africa and offshore;
US$9 million deferred tax release on the reduction of corporate tax rate at the Ghanaian operations, partially offset by the increase in tax rate at Cerro Corona;
US$6 million non-taxable profit on the buy-back of notes; and
US$1 million non-taxable profit on disposal of investments.

The above were offset by the following tax-effected charges:

US$20 million non-deductible charges comprising share-based payments (US$5 million) and exploration expense (US$15 million);
US$24 million non-deductible interest paid;
US$1 million deferred tax charge on Peruvian Nuevo Sol devaluation against US Dollar;
US$35 million deferred tax assets not recognised at Cerro Corona and Damang;
US$10 million of net non-deductible expenditure and non-taxable income;
US$1 million of non-deductible share of results of associates after taxation; and
US$8 million of various Peruvian non-deductible expenses.

In 2015, the effective tax rate of 5,491% was higher than the maximum South African mining statutory tax rate of 34% mainly due to the tax effect of the following:

US$22 million adjustment to reflect the actual realised company tax rates in South Africa and offshore; and
US$5 million deferred tax release on the change of tax rate at the Peruvian operation.

The above were offset by the following tax-effected charges:

US$12 million non-deductible charges comprising share-based payments (US$4 million) and exploration expense (US$8 million);
US$53 million non-deductible impairment charges of assets relating mainly to listed investment, Hummingbird, APP and FSE;
US$27 million non-deductible interest paid;
US$41 million deferred tax charge on Peruvian Nuevo Sol devaluation against US Dollar;
US$113 million derecognition of deferred tax assets at Cerro Corona and Damang;
US$9 million of net non-deductible expenditure and non-taxable income;
US$2 million of non-deductible share of results of associates after taxation; and
US$8 million of various Peruvian non-deductible expenses.

Profit/(loss) for the year

As a result of the factors discussed above, Gold Fields posted a profit of US$174 million in 2016 compared with a loss of US$243 million in 2015.

Profit/(loss) attributable to owners of the parent

Gold Fields posted a profit attributable to owners of the parent of US$163 million in 2016 compared to a loss of US$242 million in 2015.

Profit/(loss) attributable to non-controlling interest holders

Profit/(loss) attributable to non-controlling interest was a profit of US$11 million in 2016 compared to a loss of US$1 million in 2015.

The non-controlling interest consists of Gold Fields Ghana (Tarkwa) and Abosso Goldfields (Damang) at 10% each at the end of 2016 and 2015 and Gold Fields La Cima (Cerro Corona) at 0.47% at the end of 2016 and 2015.

The amount making up the non-controlling interest is shown below:

	2016 Non- controlling interest Effective*	2015 Non- controlling interest Effective*	2016 US$ million	2015 US$ million
Gold Fields Ghana Limited – Tarkwa	10.0%	10.0%	12	9
Abosso Goldfields – Damang	10.0%	10.0%	(1)	(9)
Gold Fields La Cima – Cerro Corona	0.47%	0.47%	–	(1)
			11	(1)

*Average for the year.

Earnings/(loss) per share

As a result of the above, Gold Fields earnings of US$0.20 per share in 2016 compared with a loss of US$0.31 per share in 2015.

Results for the year – years ended 31 December 2015 and 31 December 2014

(Loss)/profit attributable to owners of the parent was a loss of US$242 million (or US$0.31 per share) for 2015 compared to a profit of US$13 million (or US$0.02 per share) for 2014. The reasons for this decrease are discussed below.

Revenue

Revenue decreased by 11% from US$2,869 million in 2014 to US$2,545 million in 2015. The decrease in revenue of US$324 million was mainly due to a decrease of 9% in the average US Dollar gold price for the year from US$1,249 per ounce in 2014 to US$1,140 per ounce in 2015, a 30% decrease in the average US Dollar copper price from US$6,827 per tonne in 2014 to US$4,787 per tonne in 2015 and a decrease in gold sales of 3% from 2,296,200 equivalent ounces to 2,233,300 equivalent ounces in 2015. The Rand weakened by 17% to the US dollar from an average of R10.82 in 2014 to R12.68 in 2015 and the average Australian/US Dollar exchange rate weakened by 17% from an average of A$1 = US$0.90 in 2014 to A$1 = US$0.75 in 2015.

Gold sales decreased by 3% from 2,296,200 equivalent ounces in 2014 to 2,233,300 equivalent ounces in 2015. Gold sales at the South African operation decreased by 1% from 6,237 kilograms (200,500 ounces) to 6,160 kilograms (198,000 ounces). Gold sales at the Ghanaian operations increased by 2% from 736,000 ounces to 753,900 ounces. Gold equivalent sales at the Peruvian operation decreased by 11% from 328,600 equivalent ounces to 293,300 equivalent ounces. At the Australian operations, gold sales decreased by 4% from 1,031,100 ounces to 988,000 ounces. As a general rule, Gold Fields sells all the gold it produces in the year of production.

	2015			2014
	Revenue US$ million	Gold sold ’000oz	Gold produced ’000oz	Revenue US$ million	Gold sold ’000oz	Gold produced ’000oz
South Deep	232.3	198.0	198.0	254.8	200.5	200.5
Tarkwa	680.7	586.1	586.1	706.7	558.3	558.3
Damang	194.8	167.8	167.8	224.6	177.8	177.8
Cerro Corona	292.2	293.3	295.6	375.5	328.6	326.6
St Ives	431.8	371.9	371.9	458.8	361.7	361.7
Agnew/Lawlers	273.9	236.6	236.6	342.5	270.7	270.7
Darlot	91.3	78.4	78.4	106.2	83.6	83.6
Granny Smith	348.4	301.1	301.1	399.8	315.2	315.2
Total	2,545.4	2,233.3	2,235.6	2,868.8	2,296.2	2,294.2

At South Deep in South Africa, gold sales were lower, decreasing by 1% from 6,237 kilograms (200,500 ounces) to 6,160 kilograms (198,000 ounces) mainly due to lower grades, partially offset by increased volumes.

At the Ghanaian operations, gold sales at Tarkwa increased by 5% from 558,300 ounces to 586,100 ounces mainly due to higher grade. Damang’s gold sales decreased by 6% from 177,800 ounces to 167,800 ounces mainly due to lower grades, partially offset by increased volumes.

At Cerro Corona in Peru, copper production decreased by 11% from 32,300 tonnes to 28,700 tonnes and gold production increased by 5% from 150,800 ounces to 158,800 ounces. As a result gold equivalent sales decreased by 11% from 328,600 ounces to 293,300 ounces due to a decrease in gold and copper grades as well as a lower gold equivalent price ratio.

At the Australian operations, production at St Ives increased by 3% from 361,700 ounces to 371,900 ounces mainly due to higher grades mined and processed. At Agnew/Lawlers, gold sales decreased by 13% from 270,700 ounces to 236,600 ounces mainly due to lower tonnes mined and processed as well as lower grade. Gold production at Darlot decreased by 6% from 83,600 ounces to 78,400 ounces mainly due to lower tonnes mined and processed, partially offset by higher grade. At Granny Smith gold production decreased by 4% from 315,200 ounces to 301,100 ounces mainly due to lower grades and volumes processed.

Cost of sales

Cost of sales, which comprise operating costs, gold inventory change and amortisation and depreciation, decreased by 11% from US$2,334 million in 2014 to US$2,066 million in 2015.

Operating costs

Operating costs decreased by 15% from US$1,685 million in 2014 to US$1,431 million in 2015.

At South Deep in South Africa, operating costs increased by 13% from R2,657 million (US$246 million) to R3,000 million (US$237 million). This increase of R343 million was mainly due to annual wage increases and normal inflationary increases.

At the Ghanaian operations, operating costs decreased by 6% from US$551 million in 2014 to US$519 million in 2015. This decrease of US$32 million was mainly at Tarkwa due to ongoing business improvement initiatives and the lower oil price. It was partially offset by increased costs at Damang mainly due to the increased tonnes mined. At Tarkwa, operating costs decreased by 11% from US$374 million to US$334 million and at Damang, operating costs increased by 3% from US$178 million to US$184 million.

At Cerro Corona in Peru, operating costs decreased by 9% from US$158 million in 2014 to US$144 million in 2015, mainly due to lower ore tonnes mined.

At the Australian operations, operating costs decreased by 12% from A$808 million (US$730 million) in 2014 to A$709 million (US$533 million) in 2015 mainly due to lower production. At St Ives, operating costs decreased by 20% from A$324 million (US$292 million) to A$259 million (US$195 million). This decrease of A$65 million was mainly due to restructuring after Cave Rocks mine moved into care and maintenance at the beginning of May 2015, reduced tonnage from Athena underground, lower costs at the Lefroy mill since the introduction of campaign milling in March 2015 as well as lower surface cartage costs resulting from shorter tramming distances after the Cave Rocks closure. At Agnew/Lawlers, operating costs decreased by 1% from A$192 million (US$173 million) to A$190 million (US$143 million), this was mainly due to cost-saving initiatives. Operating costs at Darlot decreased by 12% from A$91 million (US$82 million) to A$80 million (US$60 million) due to lower mining and processing costs and continued rationalisation of costs. At Granny Smith, operating costs decreased by 10% from A$202 million (US$183 million) to A$181 million (US$136 million) due to lower mining and processing costs.

Gold inventory change

The gold inventory charge to costs of US$25 million in 2015 compared with a credit to costs of US$7 million in 2014.

At Tarkwa, the gold inventory credit of US$2 million in 2014 compared with US$7 million in 2015, both due to an increase in inventory.

At Damang, the gold inventory charge of US$2 million in 2015 was similar to 2014, both due to a drawdown of stockpiles.

At Cerro Corona, the gold inventory charge of US$2 million in 2014 compared with US$1 million in 2015, both due to a drawdown of sulphide stockpiles.

At St Ives, the credit to costs of A$11 million (US$10 million) in 2014 compared with a charge to costs of A$34 million (US$25 million) in 2015. This was mainly due to a drawdown of Neptune stockpiles of A$34 million (US$25 million) in 2015 compared with a buildup of A$11 million (US$10 million) in 2014.

At Agnew, the gold inventory charge of A$nil (US$nil) in 2014 compared with a credit to costs of A$2 million (US$1 million) in 2015. The credit in 2015 was due to a buildup of inventory.

At Darlot, the charge to costs of A$2 million (US$2 million) in 2014 compared with a credit to costs of A$1 million (US$1 million) in 2015 as a result of a buildup of inventory in 2015 compared with a drawdown in 2014.

At Granny Smith, the charge of A$7 million (US$5 million) in 2015 was due to a drawdown of inventory. This compared with a charge of A$nil (US$nil) in 2014.

Amortisation and depreciation

The table on the following page depicts the changes from 31 December 2014 to 31 December 2015 for proven and probable managed gold and equivalent reserves and for the life-of-mine for each operation and the resulting impact on the amortisation charge in 2015. The amortisation in 2015 was based on the reserves as at 31 December 2014. The life-of-mine information is based on the operations’ strategic plans, adjusted for proven and probable reserve balances. In basic terms, amortisation is calculated using the life-of-mine for each operation, which is based on: (1) the proven and probable reserves for the operation at the start of the relevant year (which are taken to be the same as at the end of the prior fiscal year); and (2) the amount of gold produced by the operation during the year. The ore reserve statement as at 31 December 2015 became effective on 1 January 2016.

	Proved and probable mineral reserves as of			Life-of-mine		Amortisation and depreciation for the year ended
	31 December 2015 (’000oz)	31 December 2014 (’000oz)	31 December 2013 (’000oz)	31 December 2015 (years)	31 December 2014 (years)	31 December 2015 (US$ million)	31 December 2014 (US$ million)
South African operation
South Deep	37,300	38,000	38,200	81	73	67.9	74.5
Ghanaian operations
Tarkwa¹	6,700	7,500	7,300	16	17	162.3	141.6
Damang²	1,000	1,200	1,100	5	6	26.4	20.9
Peruvian operation
Cerro Corona³	2,800	3,000	3,700	8	9	100.1	79.6
Australian operations
St Ives	1,500	1,800	2,000	5	6	109.9	140.5
Agnew/Lawlers	700	900	1,000	4	5	62.0	96.4
Darlot	30	100	200	0.5	2	25.8	16.6
Granny Smith	1,300	900	800	9	5	54.1	84.6
Corporate and other	—	—	—	—	—	1.4	2.0
Total reserves⁴	51,330	53,400	54,300			609.9	656.7

¹	As of 31 December 2013, 31 December 2014 and 31 December 2015 mineral reserves of 6.546 million ounces, 6.742 million ounces and 6.071 million ounces of gold, respectively, were attributable to Gold Fields, with the remainder attributable to non-controlling shareholders in Tarkwa.
²	As of 31 December 2013, 31 December 2014 and 31 December 2015 mineral reserves of 0.966 million ounces, 1.111 million ounces and 0.876 million ounces of gold, respectively, were attributable to Gold Fields, with the remainder attributable to non-controlling shareholders in Damang.
³	As of 31 December 2013, 31 December 2014 and 31 December 2015 mineral reserves of 3.683 million ounces, 2.988 million ounces and 2.763 million ounces of equivalent gold were attributable to Gold Fields, with the remainder attributable to non-controlling shareholders in Cerro Corona.
⁴	As of 31 December 2013, 31 December 2014 and 31 December 2015 reserves of 49.363 million ounces, 48.123 million ounces and 47.292 million ounces of gold, respectively, were attributable to Gold Fields, with the remainder attributable to non-controlling shareholders in Tarkwa, Damang and Cerro Corona.

Amortisation and depreciation decreased by 7% from US$657 million to US$610 million in 2015.

At South Deep in South Africa, amortisation and depreciation at South Deep increased by 7% from R806 million (US$75 million) in 2014 to R861 million (US$68 million) in 2015 mainly due to additions to property, plant and equipment and reassessment of useful lives of certain assets.

At the Ghanaian operations, amortisation and depreciation increased by 16% from US$163 million in 2014 to US$189 million in 2015. Tarkwa increased by 14% from US$142 million to US$162 million due to additions to property, plant and equipment. Damang increased by 24% from US$21 million to US$26 million mainly due to an increase in volume mined.

At Cerro Corona in Peru, amortisation and depreciation at Cerro Corona increased by 25%, from US$80 million in 2014 to US$100 million in 2015. This significant increase from 2014 to 2015 was due to additions to property, plant and equipment and reassessment of useful lives of certain assets.

At the Australian operations, amortisation and depreciation decreased by 10%, from A$374 million (US$338 million) in 2014 to A$335 million (US$252 million) in 2015 mainly due to lower production. At St Ives, amortisation and depreciation decreased by 6% from A$156 million (US$141 million) in 2014 to A$146 million (US$110 million) due to the decrease in production. Agnew/Lawlers decreased by 23% from A$107 million (US$96 million) in 2014 to A$82 million (US$62 million) mainly due to lower production. Amortisation and depreciation at Darlot increased by 89% from A$18 million (US$17 million) to A$34 million (US$26 million) as a result of the change in life of mine reserves. At Granny Smith, amortisation and depreciation decreased by 23% from A$94 million (US$85 million) to A$72 million (US$54 million) due to lower production.

All-in sustaining and total all-in cost

		2015			2014
	Gold only ounces sold	AISC² – US$/oz	AIC2 – US$/oz	Gold only ounces sold	AISC² – US$/oz	AIC² – US$/oz
South Deep	198.0	1,490	1,559	200.5	1,548	1,732
South African operation	198.0	1,490	1,559	200.5	1,548	1,732
Tarkwa	586.1	970	970	558.3	1,068	1,068
Damang	167.8	1,326	1,326	177.8	1,175	1,175
Ghanaian operations	753.9	1,049	1,049	736.0	1,094	1,094
Cerro Corona¹	158.8	718	718	153.6	316	316
Peruvian operation	158.8	718	718	153.6	316	316
St Ives	371.9	969	969	361.7	1,164	1,164
Agnew/Lawlers	236.6	959	959	270.7	990	990
Darlot	78.4	1,057	1,057	83.6	1,222	1,222
Granny Smith	301.1	764	764	315.2	809	809
Australian operations	988.0	912	912	1,031.1	1,015	1,015
GIP and corporate	–	6	19	–	11	28
Total operations	2,098.8	1,007	1,026	2,121.4	1,053	1,087

¹	Gold sold at Cerro Corona excludes copper equivalents of 134,500 ounces in 2015 and 175,000 ounces in 2014.
²	Net of by-product revenue.
³	3 AIC and AISC are calculated in accordance with the World Gold Council Industry standard. Refer to pages 32 to 38 for detailed calculations and discussion of non-IFRS measures.
⁴	Figures above may not add as they are rounded independently.

AISC decreased by 4% from US$1,053 per ounce in 2014 to US$1,007 per ounce in 2015. AIC decreased by 6% from US$1,087 per ounce in 2014 to US$1,026 per ounce in 2015. The decrease in AISC and AIC was due to lower net operating costs, the weaker R/US Dollar and A$/US$, partially offset by lower by-product credits and higher capital expenditure.

At South Deep in South Africa, AISC of R607,429 per kilogram (US$1,490 per ounce) and AIC of R635,622 per kilogram (US$1,559 per ounce) in 2015 compared with AISC of R538,254 per kilogram (US$1,548 per ounce) and AIC of R602,363 per kilogram (US$1,732 per ounce) in 2014 due to lower gold sold and higher operating costs, partially offset by lower capital expenditure.

At the Ghanaian operations, AISC and total AIC for the region of US$1,049 per ounce in 2015 compared with US$1,094 per ounce in 2014. At Tarkwa, AISC and AIC of US$970 per ounce in 2015 compared with US$1,068 per ounce in 2014 due to increased gold sold and lower operating costs, partially offset by higher capital expenditure. At Damang, AISC and AIC of US$1,326 per ounce in 2015 compared with US$1,175 per ounce in 2014 due to higher net operating costs, lower gold sold and the US$8 million inventory write-off.

At Cerro Corona in Peru, AISC and AIC amounted to US$718 per ounce in 2015 compared with US$316 per ounce in 2014 due to lower gold sold, lower by-product credits and higher capital expenditure, partially offset by lower net operating costs. AISC and AIC, on a gold equivalent basis amounted to US$777 per ounce in 2015 compared with US$702 per ounce in 2014 mainly due to the same reasons as above as well as lower equivalent ounces sold.

At the Australian operations, AISC and AIC for the region of A$1,211 per ounce (US$912 per ounce) in 2015 compared with A$1,124 per ounce (US$1,015 per ounce) in 2014 due to lower gold sold and higher capital expenditure, partially offset by lower net operating costs. At St Ives, AISC and AIC for St Ives of A$1,287 per ounce (US$969 per ounce) in 2015 compared with A$1,289 per ounce (US$1,164 per ounce) in 2014 due to higher gold sold and lower net operating costs, partially offset by higher capital expenditure. At Agnew/Lawlers, AISC and AIC for Agnew/Lawlers of A$1,276 per ounce (US$959 per ounce) in 2015 compared with A$1,096 per ounce (US$990 per ounce) in 2014 due to lower gold sold and higher capital expenditure, partially offset by lower net operating costs. At Darlot, AISC and AIC of A$1,403 per ounce (US$1,057 per ounce) in 2015 compared with A$1,353 per ounce (US$1,222 per ounce) in 2014 due to lower gold sold and higher capital expenditure, partially offset by lower operating costs. At Granny Smith, AISC and AIC of A$1,017 per ounce (US$764 per ounce) in 2015 compared with A$896 per ounce (US$809 per ounce) in 2014 due to lower gold sold and higher capital expenditure, partially offset by lower net operating costs.

Net operating profit

Net operating profit decreased by 10% from US$534 million in 2014 to US$479 million in 2015 due to reasons discussed earlier.

Investment income

Income from investments increased by 50% from US$4 million in 2014 to US$6 million in 2015. The increase was mainly due to higher cash balances at the international operations in 2015.

The investment income in 2014 of US$4 million comprised US$1 million interest on monies invested in the South African and Ghanaian environmental rehabilitation trust funds and US$3 million interest on other cash and cash equivalent balances.

Interest received on the funds decreased from US$1 million in 2014 to US$nil in 2015 mainly due to the weakening of the South African Rand resulting in South Deep’s Rand contribution being a nil United States Dollar figure.

Interest on other cash balances increased from US$3 million in 2014 to US$6 million in 2015 mainly due to higher cash balances at the international operations in 2015.

Finance expense

Finance expense decreased by 16% from US$99 million in 2014 to US$83 million in 2015.

The finance expense of US$99 million in 2014 comprised US$18 million relating to the accretion of the environmental rehabilitation liability and US$105 million on various Group borrowings, partially offset by interest capitalised of US$24 million.

The environmental rehabilitation liability accretion expense decreased from US$18 million in 2014 to US$12 million in 2015 mainly due to lower present values of the rehabilitation liabilities which resulted from an increase in discount rates.

Below is an analysis of the components making up the interest on the various Group borrowings, stated on a comparative basis:

	2015 US$ million	2014 US$ million
Interest on borrowings to fund capital expenditure and operating costs at the South African operation	3	18
Interest on US$1 billion notes issue	50	50
Sibanye Gold guarantee fee	1	5
Interest on US$70 million senior secured revolving credit facility	2	3
Interest on US$200 million non-revolving senior secured term loan	–	2
Interest on US$150 million revolving senior secured credit facility	3	–
Interest of US$1,510 million term loan and revolving credit facility	28	25
Other interest charges	1	2
	88	105

Interest on borrowings to fund capital expenditure and operating costs at the South African operation decreased from US$18 million in 2014 to US$3 million in 2015 due to repayments of South African borrowings in the March 2015 quarter.

Interest on the US$1 billion notes issue remained flat at US$50 million in 2015.

Interest on the US$70 million senior secured revolving credit facility decreased marginally from US$3 million in 2014 to US$2 million in 2015.

On 19 December 2014, the outstanding balance under the US$200 million non-revolving senior secured term loan was refinanced by drawing down under the US$150 million revolving senior secured credit facility. Interest on these facilities increased marginally from US$2 million in 2014 to US$3 million in 2015.

Interest on the US$1,510 million term loan and revolving credit facilities increased from US$25 million in 2014 to US$28 million in 2015. The increase is due to additional borrowings during 2015.

During 2015, US$17 million (2014: US$24 million) of interest was capitalised in terms of IAS 23 Borrowing cost. IAS 23 requires capitalisation of borrowing costs whenever general borrowings are used to finance qualifying projects. The only qualifying project was South Deep’s mine development. An average interest capitalisation rate of 4.8% (2014: 5.3%) was applied.

Loss on financial instruments

The loss on financial instruments decreased by 58% from US$12 million in 2014 to US$5 million in 2015.

The loss on financial instruments of US$5 million in 2015 and US$12 million in 2014 comprised the loss on the Australian diesel hedges.

On 10 September 2014, Gold Fields Australia Proprietary Limited entered into a Singapore Gasoil 10ppm cash-settled swap transaction contract for a total of 136,500 barrels, effective 15 September 2014 until 31 March 2015 at a fixed price of US$115.00 per barrel. The 136,500 barrels are based on 50% of usage for the seven-month period September 2014 to March 2015. Brent Crude at the time of the transaction was US$99.10 per barrel. On 26 November 2014, Gold Fields Australia Proprietary Limited entered into further contracts. A contract for 63,000 barrels for the period January to March 2015 was committed at a fixed price of US$94.00 per barrel and a further 283,500 barrels were committed at a price of US$96.00 per barrel for the period April to December 2015. Brent Crude at the time of the transaction was US$78.50 per barrel. By entering into the above contracts, the Australian region hedged its full diesel requirements for 2015.

As at 31 December 2015, the fair value of these oil derivative contracts was negative US$2 million (2014: negative US$10 million).

Foreign exchange gains

The foreign exchange gains increased by 25% from US$8 million in 2014 to US$10 million in 2015.

The foreign exchange gains comprised exchange gains on cash and working capital balances. The exchange gains of US$10 million in 2015 were mainly due to the weakening of the Australian Dollar, while the US$8 million in 2014 were due to the weakening of the Ghanaian Cedi.

Other costs

Other costs decreased by 67% from US$63 million in 2014 to US$21 million in 2015.

The costs in 2015 are mainly made up of:

Social contributions and sponsorships of US$12 million;
Global compliance costs of US$4 million;
Facility charges of US$2 million on the South African Rand borrowings; and
Rehabilitation income of US$15 million as a result of changes in estimates relating to the provision for environmental rehabilitation costs recognised in profit or loss.

The costs in 2014 are mainly made up of:

Social contributions and sponsorships of US$12 million;
Facility charges of US$1 million on the South African Rand borrowings;
Legal fees amounting to US$7 million as a result of the Gold Fields Board examination and regulatory investigation relating to the South Deep Black Economic Empowerment transaction;
Rehabilitation costs of US$18 million as a result of changes in estimates relating to the provision for environmental rehabilitation costs recognised in profit or loss; and
Information technology conversion costs at the Yilgarn South assets of US$5 million.

Share-based payments

Gold Fields recognises the cost of share options granted (share-based payments) in terms of IFRS 2 Share-based payment.

Share-based payments decreased by 58% from US$26 million in 2014 to US$11 million in 2015. The corresponding entry for the above adjustments was share-based payment reserve within shareholders’ equity.

The decrease in share-based payments was due to the fact that no allocations of options under existing plans were made during 2014 and 2015 following the introduction of the long-term incentive plan (“LTIP”) during 2014.

Long-term incentive plan expense

Gold Fields recognises the LTIP expense in terms of IAS 19 Employee benefits.

The LTIP expense decreased by 44% from US$9 million in 2014 to US$5 million in 2015. The decrease was due to marked-to-market adjustments, partially offset by two years of grants being valued in 2015 compared to one year of grants in 2014.

Exploration expense

For 2014, US$98 million was spent on exploration, comprising brownfields exploration of US$62 million (Australia US$58 million and Ghana US$4 million) and greenfields exploration comprising Yanfolila in Mali (US$4 million) up to the date of disposal, Salares Norte in Chile (US$11 million), APP in Finland (US$3 million) and Chucapaca in Peru (US$3 million) and US$15 million was spent on exploration office costs. Of the US$98 million exploration costs incurred, US$47 million was recognised in the consolidated income statement of which US$15 million related to Australia.

Subject to continued exploration success, US$118 million will be spent on exploration, comprising brownfields exploration of US$63 million (Australia US$63 million) and greenfields exploration of US$55 million.

Share of results of equity-accounted investees after taxation

Share of results of equity-accounted investees after taxation increased by 200% from a loss of US$2 million in 2014 to a loss of US$6 million in 2015.

The increase relate mainly to ongoing study and evaluation costs at the FSE project in the Philippines and the Group’s share of losses of US$2 million at Hummingbird (up to 30 June 2015, the date Hummingbird was reclassified to available-for-sale financial investments).

Restructuring costs

Restructuring costs decreased by 79% from US$42 million in 2014 to US$9 million in 2015. The cost in 2015 relates mainly to separation packages in Tarkwa and St Ives and the cost in 2014 related mainly to separation packages in Tarkwa, South Deep, Damang and St Ives.

Impairment of investments and assets

Impairment of investments and assets increased from US$27 million in 2014 to US$221 million in 2015.

The impairment charge of US$221 million in 2015 comprises:

US$8 million net realisable write-downs of stockpiles at Damang;
US$7 million impairment of redundant assets at Cerro Corona;
US$14 million cash-generating unit impairment at Darlot;
US$36 million asset-specific impairment at Damang, relating to immovable assets that would no longer be used under the current life-of-mine;
US$39 million at the Arctic Platinum Project (“APP”). This project is valued at the lower of fair value less cost of disposal or carrying value after a decision was made to dispose of APP and it was reclassified as held for sale in 2013. The carrying value at 31 December 2014 was US$40 million based on an offer made as part of the ongoing sale process during 2014. This offer was not realised and during 2015, APP was further impaired by US$39 million to its fair value less cost of disposal;
US$101 million impairment of the Group’s investment in FSE to its recoverable amount;
US$8 million impairment of Hummingbird was recognised to adjust the carrying value of the investment to its fair value upon derecognition of the investment as an equity-accounted investee; and
US$8 million related to impairment of listed investments (Hummingbird, Bezant and various junior exploration companies) to their fair values.

The impairment charge of US$27 million in 2014 comprises:

US$1 million net realisable write-downs of consumables at Lawlers;
US$13 million impairment of redundant assets at South Deep, St Ives and Agnew;
US$3 million at the APP. This project is valued at the lower of fair value less cost of disposal or carrying value after a decision was made to dispose of APP and it was reclassified as held for sale in 2013. The carrying value at 31 December 2013 was US$43.2 million based on an offer made as part of the ongoing sale process during 2013. This offer was not realised but a second, lower offer was received closer to the end of 2014 which resulted in the further impairment in 2014;
US$8 million related to impairment of listed investments (Bezant, Orsu Metals Corporation and various junior exploration companies); and
US$6 million related to impairment of unlisted investments (Rand Refinery and Aurigin Resources Incorporated).

The above impairments were partially offset by the reversal of US$4 million impairment of Yanfolila. Following the Group’s decision during 2013 to dispose of non-core projects, Yanfolila was classified as held for sale and, accordingly, valued at the lower of fair value less cost to sell or carrying value which resulted in an impairment of US$30 million during 2013. During 2014, Gold Fields sold its 85% interest in the Yanfolila project in Mali to London-listed Hummingbird Resources PLC (“Hummingbird”) for US$21 million, which was settled in the form of 21,258,503 Hummingbird shares. The fair value of Hummingbird shares exceeded the carrying value of Yanfolila, which resulted in a partial reversal of the 2013 impairment in 2014.

Profit on disposal of investments

The profit on the disposal of investments was US$nil in 2015 compared to US$1 million in 2014.

The profit on disposal of investments of US$1 million in 2014 comprises:

	US$ million
Profit on disposal of shares in Robust Resources Limited	2
Additional loss on disposal of the Group’s interest in Talas (exploration project in Kyrgyzstan)	(1)
	1

Profit on disposal of Chucapaca

During 2014, Gold Fields sold its 51% interest in Canteras del Hallazgo (entity that houses the Chucapaca project in Peru) for US$81 million to Compañía de Minas Buenaventura S.A.A. realising a profit of US$5 million.

Loss on disposal of assets

Loss on disposal of assets was US$nil in 2015 compared to US$1 million in 2014.

The major disposals in 2014 related to the sale of redundant assets at St Ives, Darlot, Granny Smith, Tarkwa, Cerro Corona and South Deep.

Royalties

Royalties decreased by 12% from US$86 million in 2014 to US$76 million in 2015 and are made up as follows:

	2015 US$ million	2014 US$ million
South Africa	1	1
Ghana	44	47
Peru	3	6
Australia	28	32
	76	86

The royalty in Ghana decreased in line with the decrease in gold revenue. The royalty in Peru reduced due to the lower operating margin of Cerro Corona. The royalty in Australia remained stable in Australian Dollar terms from 2014 to 2015, however, decreased in United States Dollar terms due to the weakening of the Australian Dollar against the United States Dollar in 2015.

Mining and income tax

Mining and income tax was a charge of US$247 million in 2015 compared to US$118 million in 2014.

The table below indicates Gold Fields’ effective tax rate in 2015 and 2014:

	2015	2014
Income and mining tax charge – US$ million	(247)	(118)
Effective tax rate – %	(5,491.1)	(85.3)

In 2015, the effective tax rate of 5,491% was higher than the maximum South African mining statutory tax rate of 34% mainly due to the tax effect of the following:

US$22 million adjustment to reflect the actual realised company tax rates in South Africa and offshore; and
US$5 million deferred tax release on the change of tax rate at the Peruvian operations.

The above were offset by the following tax-effected charges:

US$12 million non-deductible charges comprising share-based payments (US$4 million) and exploration expense (US$8 million);
US$53 million non-deductible impairment charges of assets relating mainly to listed investment, Hummingbird, APP and FSE;
US$27 million non-deductible interest paid;
US$41 million deferred tax charge on Peruvian Nuevo Sol devaluation against United States Dollar;
US$113 million derecognition of deferred tax assets at Cerro Corona and Damang;
US$9 million of net non-deductible expenditure and non-taxable income;
US$2 million of non-deductible share of results of associates after taxation; and
US$8 million of various Peruvian non-deductible expenses.

In 2014, the effective tax rate of 85% was higher than the maximum South African mining statutory tax rate of 34% mainly due to the tax effect of the following:

US$8 million adjustment to reflect the actual realised company tax rates in South Africa and offshore; and
US$2 million non-taxable profit on disposal of investments and subsidiaries.
The above were offset by the following tax-effected charges:
US$18 million non-deductible charges comprising share-based payments (US$7 million) and exploration expense (US$11 million);
US$4 million non-deductible impairment charges of assets relating mainly to APP, Yanfolila, Bezant and Rand Refinery;
US$28 million non-deductible interest paid;
US$2 million non-deductible legal and consulting fees;
US$3 million deferred tax charge on Peruvian Nuevo Sol devaluation against United States Dollar;
US$8 million of net non-deductible expenditure and non-taxable income;
US$1 million of non-deductible share of results of associates after taxation; and
US$8 million of various Peruvian non-deductible expenses.

(Loss)/profit for the year

As a result of the factors discussed above, Gold Fields posted a loss of US$243 in 2015 compared with a profit of US$20 million in 2014.

(Loss)/profit attributable to owners of the parent from continuing operations

Gold Fields posted a loss attributable to ordinary shareholders of the company of US$242 million in 2015 compared to a profit of US$13 million in 2014.

(Loss)/profit attributable to non-controlling interest holders

(Loss)/profit attributable to non-controlling interest was a loss of US$1 million in 2015 compared to a profit of US$8 million in 2014.

The non-controlling interest consists of Gold Fields Ghana (Tarkwa) and Abosso Goldfields (Damang) at 10% each at the end of 2015 and 2014, Gold Fields La Cima (Cerro Corona) at 0.47% at the end of 2015 and 2014 and Canteras del Hallazgo (entity that houses the Chucapaca project in Peru) at nil% at the end of 2015 and 2014.

Gold Fields sold its interest in Canteras del Hallazgo for US$81 million during 2014.

The amount making up the non-controlling interest is shown below:

	2015 Non- controlling interest Effective*	2014 Non- controlling interest Effective*	2015 US$ million	2014 US$ million
Gold Fields Ghana Limited – Tarkwa	10.0%	10.0%	9	9
Abosso Goldfields – Damang	10.0%	10.0%	(9)	–
Gold Fields La Cima – Cerro Corona	0.47%	0.47%	(1)	–
Canteras del Hallazgo	–	49.0%	–	(1)
			(1)	8

*Average for the year.

(Loss)/earnings per share

As a result of the above, Gold Fields realised a loss of US$0.31 per share in 2015 compared with earnings of US$0.02 per share in 2014.

Liquidity and capital resources – years ended 31 December 2016 and 31 December 2015

Cash resources

Cash flows from operating activities

Cash inflows from operating activities increased by 23% from US$744 million in 2015 to US$918 million in 2016. The increase of US$174 million was due to:

	US$ million
Increase in cash generated from operations due to higher operating profit	265
Increase in interest received due to higher cash balances	1
Increase in investment in working capital	(46)
Decrease in interest paid due to lower borrowings	5
Increase in royalties paid due to higher revenue	(2)
Increase in taxes paid	(37)
Increase in dividends paid due to higher normalised earnings	(12)
	174

Dividends paid increased from US$29 million in 2015 to US$41 million in 2016. The dividends paid of US$41 million in 2016 comprised dividends paid to ordinary shareholders of US$39 million, non-controlling interests in Peru of US$1 million and South Deep BEE dividend of US$1 million.

The dividends paid of US$29 million in 2015 comprised dividends paid to ordinary shareholders of US$15 million, non-controlling interests in Ghana and Peru of US$12 million and South Deep
BEE dividend of US$2 million.

Cash flows from investing activities

Cash outflows from investing activities increased by 33% from US$652 million in 2015 to US$868 million in 2016. The items comprising these numbers are discussed below.

Additions to property, plant and equipment

Capital expenditure increased by 3% from US$634 million in 2015 to US$650 million in 2016.

Capital expenditure at South Deep in South Africa increased by 35% from R848 million (US$67 million) in 2015 to R1,145 million (US$78 million) in 2016:

This increase was due to higher spending on fleet, the refurbishment of the man winder at Twin shaft and higher spend on mining employee accommodation.

Capital expenditure at the Ghanaian operations decreased by 7% from US$221 million in 2015 to US$206 million in 2016:

Tarkwa decreased by 18% from US$204 million to US$168 million mainly due to the purchase of mining fleet for replacement in 2015; and
Damang increased by 124% from US$17 million to US$38 million with the majority spent on waste stripping at the Amoanda pit.

Capital expenditure at Cerro Corona in Peru decreased by 34% from US$65 million in 2015 to US$43 million in 2016:

The decrease is due to higher expenditure on construction of the tailings dam, waste storage facilities and once-off capital projects in 2015.

Capital expenditure at the Australian operations increased by 16% from A$373 million (US$281 million) in 2015 to A$431 million (US$322 million) in 2016:

St Ives increased by 24% from A$152 million (US$115 million) to A$188 million (US$140 million) due to increased expenditure on pre-stripping at the Invincible and Neptune open pits;
Agnew/Lawlers decreased by 3% from A$97 million (US$73 million) to A$94 million (US$70 million) due to increased development of Fitzroy Bengal Hastings at Waroonga in 2015, partially offset by increased exploration expenditure in 2016;
Darlot increased by 7% from A$27 million (US$20 million) to A$29 million (US$21 million) due to increased exploration and capital development at the Oval ore body; and
Granny Smith increased by 26% from A$96 million (US$72 million) to A$121 million (US$90 million). The majority of expenditure related to capital development, exploration and the establishment of new fresh air intake ventilation raises.

Proceeds on disposal of property, plant and equipment

Proceeds on the disposal of property, plant and equipment decreased by 33% from US$3 million in 2015 to US$2 million in 2016. In both 2016 and 2015, this related to the sale of various redundant assets.

Purchase of Gruyere Gold Project assets

Gold Fields acquired 50% interest in the Gruyere Gold Project for a total purchase consideration of A$350.0 million payable in cash and a 1.5% royalty on Gold Fields’ share of production after total mine production exceeds two million ounces. The cash consideration is split with A$250.0 million payable on effective date and A$100.0 million payable according to an agreed construction cash call schedule. Transaction costs of A$19 million were incurred.

At 31 December 2016, Gruyere mining assets of US$276 million (A$372 million) were capitalised of which US$197 million (A$266 million) were cash additions and US$79 million (A$106 million) were non-cash additions.

The US$197 million (A$266 million) cash additions comprise the initial cash consideration of A$250 million payable, as well as additional development costs. The US$79 million (A$106 million) non-cash additions comprise of the initial A$100 million payable, as well as stamp duties payable.

Purchase of investments

Investment purchases increased by 333% from US$3 million in 2015 to US$13 million in 2016.

The purchase of investments of US$13 million in 2016 comprised:

	US$ million
Cardinal Resource Limited¹	13
	13

The purchase of investments of US$3 million in 2015 comprised:

	US$ million
Mine Vision Systems	3
	3

Proceeds on disposal of investments

Proceeds on the disposal of investments increased from US$nil in 2015 to US$4 million in 2016.

The proceeds on disposal of investments of US$4 million in 2016 comprised:

	US$ million
Sale of shares in Sibanye Gold Limited	2
Sale of shares in Tocqueville Bullion Reserve Limited	2
	4

Environmental trust funds and rehabilitation payments

The environmental trust fund and rehabilitation payments decreased by 17% from US$18 million in 2015 to US$15 million in 2016.

During 2016, Gold Fields paid US$2 million into its South Deep mine environmental trust fund and US$6 million into its Tarkwa mine environmental trust fund and spent US$7 million on ongoing rehabilitation at the international operations, resulting in a total cash outflow of US$15 million for the year.

During 2015, Gold Fields paid US$1 million into its South Deep mine environmental trust fund and US$7 million into its Tarkwa mine environmental trust fund and spent US$10 million on ongoing rehabilitation at the international operations, resulting in a total cash outflow of US$18 million for the year.

Cash flows from financing activities

Cash outflows from financing activities was an inflow of US$37 million in 2016 compared to an outflow of US$88 million in 2015.

Share issue

During 2016, Gold Fields completed a US$152 million (R2.3 billion) accelerated equity raising by way of a private placement to institutional investors. A total number of 38,857,913 new Gold Fields shares were placed at a price of R59.50 per share which represented a 6% discount to the 30-day volume weighted average traded price, for the period 17 March 2016 and a 0.7% discount to the 50-day moving average.

The net proceeds from the placement were used to finance the buy-back of the notes.

Loans raised

Loans raised increased by 157% from US$506 million in 2015 to US$1,299 million in 2016.

The US$1,299 million loans raised in 2016 comprised:

	US$ million
US$150 million revolving senior secured credit facility	40
US$1,510 million term loan and revolving credit facilities	174
US$1,290 million term loan and revolving credit facilities¹	708
R1,500 million Nedbank revolving credit facility	21
Short-term Rand uncommitted credit facilities	356
	1,299

Credit facilities refinancing

Gold Fields successfully refinanced its US$1,440 million credit facilities due in November 2017. The new facilities amount to US$1,290 million and comprise three tranches:

US$380 million: three-year term loan maturing in June 2019 – margin 250 basis points (bps) over Libor;
US$360 million: three-year revolving credit facility (“RCF”) also maturing in June 2019 (with an option to extend to up to five years) – margin 220bps over Libor; and
US$550 million: five-year RCF maturing in June 2021 – margin 245bps over Libor.

The new facilities were concluded with a syndicate of 15 banks. On average, the interest rate on the new facilities is similar to the interest rate on the existing facilities. A total of US$645 million was drawn down from the new facilities on 13 June 2016 to repay the Group’s existing US$ facilities, with US$645 million remaining unutilised. The refinancing is a key milestone in Gold Fields’ balance sheet management and increases the maturity of its core debt, with the first maturity now only in June 2019 (previously November 2017).

The US$506 million loans raised in 2015 comprised:

	US$ million
US$70 million senior secured revolving credit facility	10
US$1,510 million term loan and revolving credit facilities	400
Short-term Rand uncommitted credit facilities	96
	506

Loans repaid

Loans repaid increased by 138% from US$594 million in 2015 to US$1,413 million in 2016.

The US$1,413 million loans repaid in 2016 comprised:

	US$ million
US$1 billion notes issue¹	130
US$1,510 million term loan and revolving credit facility	898
US$1,290 million term loan and revolving credit facility	49
R1,500 million Nedbank revolving credit facility	21
Short-term Rand uncommitted credit facilities	315
	1,413

Bond buy-back

On 19 February 2016, Gold Fields announced an offer to purchase US$200 million of the US$1 billion notes outstanding. Gold Fields accepted the purchase of an aggregate principal amount of notes equal to US$148 million at the purchase price of US$880 per US$1,000 in principal amount of notes. A profit of US$18 million was recognised on the buy-back of the notes, resulting in a cash outflow of US$130 million.

The US$1,299 million loans raised in 2016 comprised:

	US$ million
US$1,510 million term loan and revolving credit facility	302
R1,500 million Nedbank revolving credit facility	129
R500 million Rand Merchant Bank revolving credit facility	21
Short-term Rand uncommitted credit facilities	142
	594

Net cash generated

As a result of the above, net cash generated increased by 2,075% from US$4 million in 2015 to US$87 million in 2016.

Cash and cash equivalents increased from US$440 million at 31 December 2015 to US$527 million at 31 December 2016.

Liquidity and capital resources – years ended 31 December 2015 and 31 December 2014

Cash resources

Cash flows from operating activities

Cash inflows from operating activities decreased by 8% from US$809 million in 2014 to US$744 million in 2015. The decrease of US$65 million was due to:

	US$ million
Decrease in cash generated from operations due to lower operating profit	(56)
Increase in interest received due to higher cash balances	2
Decrease in release of working capital	(40)
Decrease in interest paid due to lower borrowings	17
Decrease in royalties paid due to lower revenue	12
Increase in taxes paid	(13)
Decrease in dividends paid due to lower normalised earnings	13
	(65)

Dividends paid decreased from US$42 million in 2014 to US$29 million in 2015. The dividends paid of US$29 million in 2015 comprised dividends paid to ordinary shareholders of US$15 million, non-controlling interests in Ghana and Peru of US$12 million and South Deep BEE dividend of US$2 million.

The dividends paid of US$42 million in 2014 comprised dividends paid to ordinary shareholders of US$30 million, non-controlling interests in Ghana and Peru of US$10 million and South Deep BEE dividend of US$2 million.

Cash flows from investing activities

Cash outflows from investing activities increased by 23% from US$531 million in 2014 to US$652 million in 2015. The items comprising these numbers are discussed below.

Additions to property, plant and equipment

Capital expenditure increased by 4% from US$609 million in 2014 to US$634 million in 2015.

Capital expenditure at South Deep in South Africa decreased from R994 million (US$92 million) in 2014 to R848 million (US$67 million) in 2015:

This decrease was mainly due to lower expenditure on new mine development.

Capital expenditure at the Ghanaian operations increased from US$190 million in 2014 to US$221 million in 2015:

Tarkwa increased from US$174 million to US$204 million mainly due to increased expenditure on the purchase of mining fleet and additional capital waste stripping; and
Damang increased from US$16 million to US$17 million mainly due to increased expenditure on the processing plant upgrade and heavy vehicle equipment components.

Capital expenditure at Cerro Corona in Peru increased from US$51 million in 2014 to US$65 million in 2015:

The increase in expenditure was on the raising of the tailings management facility and expenditure on the new fuel station and camp.

Capital expenditure at the Australian operations increased from A$304 million (US$274 million) in 2014 to A$373 million (US$281 million) in 2015:

St Ives increased from A$130 million (US$118 million) to A$152 million (US$115 million) due to increased expenditure on exploration and pre-stripping at the Invincible pit;
Agnew/Lawlers increased from A$92 million (US$83 million) to A$97 million (US$73 million) due to increased exploration expenditure;
Darlot increased from A$16 million (US$15 million) to A$27 million (US$20 million) due to increased capital development at Lords South Lower as well as additional exploration expenditure; and
Granny Smith increased from A$65 million (US$59 million) to A$96 million (US$72 million) due to increased capital development and exploration.

Proceeds on disposal of property, plant and equipment

Proceeds on the disposal of property, plant and equipment decreased by 40% from US$5 million in 2014 to US$3 million in 2015. In both 2015 and 2014, this related to the sale of various redundant assets.

Proceeds on disposal of Chucapaca

During 2014, Gold Fields sold its 51% interest in Canteras del Hallazgo (entity that houses the Chucapaca project in Peru) for US$81 million to Compañía de Minas Buenaventura S.A.A.

Purchase of investments

Investment purchases decreased by 25% from US$4 million in 2014 to US$3 million in 2015.

The purchase of investments of US$3 million in 2015 comprised:

	US$ million
Mine Vision Systems	3
	3

The purchase of investments of US$4 million in 2014 comprised:

	US$ million
Rand Refinery Limited	3
Tocqueville Bullion Reserve Limited	1
	4

Proceeds on disposal of investments

Proceeds on the disposal of investments decreased from US$6 million in 2014 to US$nil in 2015.

The proceeds on disposal of investments of US$6 million in 2014 comprised:

	US$ million
Sale of shares in Robust Resources Limited	4
Sale of the Group’s interest in Talas (exploration project in Kyrgyzstan)	2
	6

Environmental trust funds and rehabilitation payments

The environmental trust fund and rehabilitation payments increased from US$10 million in 2014 to US$18 million in 2015.

During 2014, Gold Fields paid US$1 million into its South Deep mine environmental trust fund and US$6 million into its Tarkwa mine environmental trust fund and spent US$3 million on ongoing rehabilitation at the international operations, resulting in a total cash outflow of US$10 million for the year.

Cash flows from financing activities

Cash outflows from financing activities decreased by 30% from US$126 million in 2014 to US$88 million in 2015.

Equity contributions from non-controlling interest holders

Equity contributions from non-controlling interest holders decreased from US$2 million in 2014 to US$nil in 2015. The US$2 million received in 2014 related to cash advanced by Buenaventura in accordance with their obligations under the Chucapaca agreement. The reason for the decrease in equity contributions from non-controlling interest holders from 2015 to 2014 is the disposal of Chucapaca in August 2014.

Loans raised

Loans raised increased from US$464 million in 2014 to US$506 million in 2015.

The US$506 million loans raised in 2015 comprised:

	US$ million
US$70 million senior secured revolving credit facility	10
US$1,510 million term loan and revolving credit facilities	400
Short-term Rand uncommitted credit facilities	96
	506

The US$464 million loans raised in 2014 comprised:

	US$ million
La Cima revolving senior secured credit facility	42
US$70 million senior secured revolving credit facility	35
US$1,510 million term loan and revolving credit facilities	42
R500 million Rand Merchant Bank revolving credit facility	46
Short-term Rand uncommitted credit facilities	299
	464

Loans repaid

Loans repaid increased from US$592 million in 2014 to US$594 million in 2015.

The US$594 million loans repaid in 2015 comprised:

	US$ million
US$1,510 million term loan and revolving credit facility	302
R1,500 million Nedbank revolving credit facility	129
R500 million Rand Merchant Bank revolving credit facility	21
Short-term Rand uncommitted credit facilities	142
	594

The US$592 million loans repaid in 2014 comprised:

	US$ million
US$200 million non-revolving senior secured term loan	70
US$70 million senior secured revolving credit facility	35
US$1,510 million term loan and revolving credit facility	189
R500 million Rand Merchant Bank revolving credit facility	22
Short-term Rand uncommitted credit facilities	276
	592

Net loans repaid decreased from US$128 million in 2014 to US$88 million in 2015. The decrease in net loans repaid was mainly due to lower operating cash flows and higher investing activities cash flows.

Net cash generated

As a result of the above, net cash generated decreased from US$152 million in 2014 to US$4 million in 2015.

Cash and cash equivalents amounted to US$440 million at 31 December 2015, as compared to US$458 million at 31 December 2014.

Statement of financial position

Borrowings

Total debt (short and long-term borrowings) decreased from US$1,820 million at 31 December 2015 to US$1,693 million at 31 December 2016. Net debt (total debt less cash and cash equivalents) decreased from US$1,380 million at 31 December 2015 to US$1,166 million at 31 December 2016 as a result of lower debt and higher cash balance.

The Group monitors capital using the ratio of net debt to adjusted EBITDA. Adjusted EBITDA is defined as net operating profit before depreciation and amortisation, adjusted for exploration expenses and certain other costs. The definition of adjusted EBITDA is as defined in the US$1,290 million term loan and revolving credit facilities agreement. Net debt is defined as total borrowings less cash and cash equivalents. The Group’s long-term target is a ratio of net debt to adjusted EBITDA of one times or lower. The bank covenants on external borrowings require a net debt to adjusted EBITDA ratio of 2.5 or below and the ratio is measured based on amounts in United States Dollar. Net debt to adjusted EBITDA at 31 December 2016 was 0.95 (2015: 1.38), surpassing the Group’s target of 1.0 which was set at the start of 2015. Refer note 39 to the consolidated financial statements.

Provisions

Long-term provisions increased by 3% from US$284 million at 31 December 2015 to US$292 million at 31 December 2016 and included a provision for environmental rehabilitation costs of US$283 million (2015: US$275 million) and other long-term provisions of US$9 million (2015: US$9 million).

Provision for environmental rehabilitation costs

The amount provided for environmental rehabilitation costs increased by 3% from US$275 million at 31 December 2015 to US$283 million at 31 December 2016. The increase is largely due to the increase in the gross closure costs at the Ghanaian and Peruvian operations. This provision represents the present value of closure, rehabilitation and other environmental obligations incurred up to 31 December 2016. This provision is updated annually to take account of inflation, the time value of money and any new environmental obligations incurred.

The inflation and range of discount rates applied in 2016 and 2015 for each region are shown in the table below:

2016	5.5%	2.2%	2.5%	2.2%
	South Africa	Ghana	Australia	Peru
Inflation rates
2015	5.4%	2.2%	2.5%	2.2%
Discount rates
2016	9.7%	9.7 – 9.8%	1.9 – 3.0%	3.7%
2015	10.1%	7.8 – 8.8%	2.0 – 2.8%	3.5%

The interest charge decreased by 8% from US$12 million in 2015 to US$11 million in 2016 mainly due to lower present values of the rehabilitation liabilities which resulted from an increase in discount rates used in the 2015 rehabilitation liabilities calculation.

Adjustments for new disturbances and changes in environmental legislation during 2016 and 2015, after applying the above inflation and discount rates were:

	2016 US$ million	2015 US$ million
South Africa	(2)	(6)
Ghana	8	5
Australia	(8)	(4)
Peru	7	(9)
Total	5	(14)

The South African and Ghanaian operations contribute to dedicated environmental trust funds to provide financing for final closure and rehabilitation costs. The amount invested in the fund is shown as a non-current asset in the financial statements and increased by 29% from US$35 million at 31 December 2015 to US$45 million at 31 December 2016. The increase is mainly as a result of contributions amounting to US$8 million and interest income of US$1 million in 2016. The South African and Ghanaian operations are required to contribute annually to the trust fund over the remaining lives of the mines, to ensure that sufficient funds are available to discharge commitments for future rehabilitation costs.

Other long-term provisions

Other long-term provisions remained flat at US$9 million and include the South Deep dividend of US$7 million (2015: US$7 million) and other provisions of US$2 million (2015: US$2 million).

Credit facilities

At 31 December 2016, the Group had committed unutilised banking facilities of available under the following facilities, details of which are discussed in note 24 to the consolidated financial statements:

US$632 million available under the US$1,290 million term loan and revolving credit facilities;
US$68 million available under the US$150 million revolving senior secured credit facility;
US$25 million available under the US$70 million senior secured revolving credit facility;
US$148 million available under the US$1 billion notes as the notes bought back were never cancelled; and
US$107 million (R1,500 million) available under R1,500 million Nedbank revolving credit facility.

Substantial contractual arrangements for uncommitted borrowing facilities are maintained with several banking counterparties to meet the Group’s normal contingency funding requirements.

As of the date of this report, the Group was not in default under the terms of any of its outstanding credit facilities.

Contractual obligations and commitments as at 31 December 2016

	Payments due by period
	Total	Less than 12 months	12 – 36 months	36 – 60 months	After 60 months
	(US$ million)
Long-term debt
Notes issue
Capital	852.4	—	—	852.4	—
Interest	157.1	41.6	83.1	32.4	—
US$150 million revolving senior secured credit facility
Capital	82.0	82.0	—	—	—
Interest	1.9	1.9	—	—	—
US$1,290 million term loan and revolving credit facility
Capital	658.5	—	658.5	—	—
Interest	50.2	20.6	29.6	—	—
US$70 million senior secured revolving credit facility
Capital	45.0	45.0	—	—	—
Interest	0.5	0.5	—	—	—
Short-term Rand credit facilities
Capital	61.0	61.0	—	—	—
Interest	5.1	5.1	—	—	—
Operating lease obligations	549.7	42.5	116.2	113.7	277.3
Other long-term obligations
Environmental obligations^{1, 2}	380.8	3.6	7.7	22.1	347.4
Total contractual obligations	2,844.2	303.8	895.1	1,020.6	624.7

¹	Gold Fields makes full provision for all environmental obligations based on the net present value of the estimated cost of restoring the environmental disturbance that has occurred up to the reporting date. Management believes that the provisions made for environmental obligations are adequate to cover the expected costs of such obligations.
²	Represents the undiscounted liability.

	Amounts of commitments expiring by period
	Total	Less than 12 months	12 – 36 months	36 – 60 months	After 60 months
	(US$ million)
Other commercial commitments
Guarantees¹	—	—	—	—	—
Capital expenditure	46.2	46.2	—	—	—
Total commercial commitments	46.2	46.2	—	—	—

¹The Group provides environmental obligation guarantees with respect to its South African, Peruvian and Ghanaian operations. These guarantees amounted to US$100.1 million at 31 December 2016.

Working capital

Management believes that Gold Fields’ working capital resources, by way of internal sources and banking facilities, are sufficient to fund Gold Fields’ currently foreseeable future business requirements.

Off-balance sheet items

At 31 December 2016, Gold Fields had no material off-balance sheet items.

Internal control over financial reporting

Gold Fields management is responsible for establishing and maintaining adequate internal control over financial reporting. The United States Securities Exchange Act of 1934 defines internal control over financial reporting in Rule 13a-15(f) and 15d-15(f) as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorisations of management and directors of the Company; and
provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Gold Fields management assessed the effectiveness of its internal control over financial reporting as of 31 December 2016. In making this assessment, Gold Fields management used the criteria set forth in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based upon its assessment, Gold Fields management concluded that, as of 31 December 2016, its internal control over financial reporting is effective based upon those criteria.

Trend and outlook

Attributable equivalent gold production for the Group for 2017 is expected to be between 2.10 million ounces and 2.15 million ounces, unchanged from the updated guidance provided in 2016. The Australian operations are expected to produce around 910,000 ounces. Cerro Corona’s gold equivalent production of around 290,000 ounces is higher than 2016 with the increase mainly due to the positive impact of the higher copper/gold price ratio. Lower production is expected at Damang given the reinvestment currently underway and South Deep is expected to increase production to around 9,800 kilograms (315,000 ounces).

The all-in-sustaining cost for the Group is expected to be between US$1,010 per ounce and US$1,030 per ounce.

Gold Fields plans to embark on a year of reinvestment in 2017 with the focus on new growth and development projects, and to target both sustaining and growing free cash flow. Apart from the growth invested in South Deep, three other major projects namely the Damang reinvestment project, the Gruyere development project and the Salares Norte project require significant investment. Growth expenditure at South Deep is planned to increase to R287 million (US$20 million) in 2017 (2016: R115 million/US$8 million). In 2017, US$120 million will be invested in future growth at Damang, while A$153 million (US$112 million) is planned to be spent on the development of Gruyere. In Chile, Salares Norte received water rights and the project is on track to complete a pre-feasibility study in the second half of 2017. The plan is to increase expenditure to US$64 million at Salares Norte in 2017 (2016: US$39 million).

As a result of the above, AIC for the Group is planned to increase significantly to between US$1,170 per ounce and US$1,190 per ounce. Group capital expenditure for the year is planned at US$870 million. It includes US$120 million at Damang and A$153 million (US$112 million) for Gruyere, as well as R287 million (US$20 million) at South Deep. These expectations assume exchange rates of R/US$: 14.14 and A$/US$: 0.73.

Paul Schmidt

Chief Financial Officer
20 March 2017

Management's discussion and analysis of the financial statements

South Africa

Ghana

Australia

Peru

South Africa

Ghana

Australia

South African operation

Ghanaian operations

Peruvian operation

Australian operations

Operating costs

Gold inventory change

Amortisation and depreciation

All-in sustaining and total all-in cost

Operating costs

Gold inventory change

Amortisation and depreciation

All-in sustaining and total all-in cost

Cash resources

Net cash generated

Cash resources

Net cash generated

Borrowings

Provisions

Provision for environmental rehabilitation costs

Other long-term provisions

Credit facilities

Contractual obligations and commitments as at 31 December 2016

Working capital

Off-balance sheet items

At 31 December 2016, Gold Fields had no material off-balance sheet items.

Internal control over financial reporting

Trend and outlook

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