Corporate
South Deep operating model
On 2 October 2012, a formal agreement was reached with the
National Union of Mine Workers (NUM) to implement a new
operating model at South Deep. As a result, the Section 189
notice issued to NUM on 2 August 2012 was withdrawn. This
model was previously agreed to by UASA. This new model
will secure current jobs and is aimed at improving productivity,
allowing the mine to create an additional 400 full time
positions.
A key element of the agreement will introduce full calendar
operations (FULCO) and increase production time per day by
five hours. In addition, South Deep will have seven more
production days per year. Employees will on average work 50
days less per year. A new bonus system will be introduced
providing significant incentives for improved performance.
Competitive grading and compensation systems will also be
implemented under the new operating model. This agreement
has resolved all outstanding and unresolved issues with the
NUM dating back to the strike in 2010, and is reflective of our
desire to establish South Deep as a world class mine for the
next 50 years and more, to the benefit of all its stakeholders.
Silicosis
On 21 August 2012, a court application was served on Gold
Fields and various of its subsidiary companies on behalf of
three individual applicants purporting to represent a class of
mine workers who were previously employed by or who are
employees of Gold Fields and who allegedly contracted
occupational lung diseases (the class).
This is an application in terms of which the court is asked to
certify a class action to be instituted by the applicants on
behalf of the class. According to the applicants, this is the
first and preliminary step in a process, where if the court were
to certify the class action, the applicants will, in a second
stage, bring an action wherein they will attempt to hold Gold
Fields liable for the occupational disease and the resultant
consequences. The applicants contemplate in the second
stage dealing with what they describe as common legal and
factual issues regarding the claim arising for the entire class.
If the applicants are successful in the second leg, they
envisage that individual members of the class could later
submit individual claims for damages against Gold Fields.
The application does not identify the number of claims that will
be instituted against Gold Fields or the quantum of damages
the applicants may seek.
Gold Fields has filed a notice of its intention to oppose the
application. Gold Fields and its lawyers are engaging with the
applicants’ lawyers to try and establish a court sanctioned
process to agree timelines on procedural issues indicated and
specifically the date by which Gold Fields must file its papers
opposing the application.
2012 Strategic portfolio review
Gold Fields has concluded its 2012 strategic portfolio review
of all operating assets as well as brownfields and greenfields
projects. The purpose of the review was to maximise cash
generation and shareholder returns through a more rigorous
analysis of operating costs, capital expenditures and
production levels.
The outcomes of the review will have a significant impact on
Gold Fields’ strategy going forward and include the
implementation of the following broad principles:
- A more rigorous focus on value creation and cash returns
and not an undue focus on production levels;
- Ensuring that dividends have the first call on cash flows at
between 25 per cent and 35 per cent of normalised
earnings;
- A critical review of declining and/or low margin assets;
- Deploy scarce capital only on projects, brownfields or
greenfields, that provide the best risk-weighted returns;
- No M&A heroics while seeking opportunistic opportunities
to acquire producing assets where the path to value is
clear; and
- Maintaining the focus on gold and international
diversification.
These changes are in the process of being implemented and
specific outcomes will be communicated to the market as
notable changes are made.
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