Revenue

As anticipated, attributable equivalent gold production from continuing operations decreased by 7 per cent from 598,000 ounces in the December quarter to 557,000 ounces in the March quarter in line with guidance. This decrease was mainly due to lower production at South Deep, Agnew/Lawlers, Tarkwa and St Ives.

Gold production at South Deep in South Africa, decreased by 26 per cent from 2,471 kilograms (79,400 ounces) to 1,840 kilograms (59,200 ounces).

Attributable gold production at the West African operations decreased by 7 per cent from 184,800 ounces in the December quarter to 172,700 ounces in the March quarter. Attributable equivalent gold production at Cerro Corona in Peru increased by 2 per cent from 78,800 ounces in the December quarter to 80,100 ounces in the March quarter. Gold production at the Australian operations, decreased by 4 per cent from 254,600 ounces in the December quarter to 245,200 ounces in the March quarter mainly due to lower production at Agnew/Lawlers and St Ives, partially offset by higher production at Darlot and Granny Smith.

At the South Africa region, production at South Deep decreased by 26 per cent from 79,400 ounces in the December quarter 59,200 ounces in the March quarter mainly due to a decrease in reef tonnes mined and processed as a result of the extended Christmas break and transformation implementation disruptions.

At the West Africa region, managed gold production at Tarkwa decreased by 9 per cent from 160,000 ounces in the December quarter to 145,200 ounces in the March quarter due to cessation of stacking at the North heap leach operations and lower CIL head grade, partially offset by higher CIL throughput. At Damang, managed gold production increased by 3 per cent from 45,400 ounces in the December quarter to 46,700 ounces in the March quarter due to higher throughput and higher recoveries.

At the South America region, total managed gold equivalent production at Cerro Corona increased by 2 per cent from 79,200 equivalent ounces in the December quarter to 80,500 equivalent ounces in the March quarter. This was mainly due to an increase in copper head grades and an increase in ore treated, partially offset by lower gold head grades.

At the Australia region, St Ives’ gold production decreased by 3 per cent from 99,100 ounces in the December quarter to 96,600 ounces in the March quarter mainly due to excessive rain affecting the open pit operations in January and February. At Agnew/Lawlers, gold production decreased by 20 per cent from 73,600 ounces in the December quarter to 59,200 ounces in the March quarter mainly due to lower grades mined and the once-off clean-up of the Lawlers mill in the December quarter. At Darlot, gold production increased by 16 per cent from 19,700 ounces in the December quarter to 22,900 ounces in the March quarter mainly due to increased head grade. At Granny Smith, gold production increased by 7 per cent from 62,200 ounces in the December quarter to 66,500 ounces in the March quarter mainly due to an increase in ore tonnes mined.

The average quarterly US dollar gold price achieved by the Group increased by 1 per cent from US$1,265 per ounce in the December quarter to US$1,283 per ounce in the March quarter. The average rand gold price increased by 7 per cent from R425,227 per kilogram to R453,152 per kilogram. The average Australian dollar gold price increased by 5 per cent from A$1,372 per ounce to A$1,438 per ounce. The average US dollar/Rand exchange rate weakened by 7 per cent from R10.11 in the December quarter to R10.85 in the March quarter. The average Rand/Australian dollar exchange rate weakened by 3 per cent from R9.41 to R9.70. The average Australian/US dollar exchange rate weakened by 4 per cent from A$1.00 = US$0.93 to A$1.00 = US$0.89.

As a result of the above mentioned factors, revenue decreased by 8 per cent from US$781 million in the December quarter to US$715 million in the March quarter.

Operating costs

Net operating costs decreased by 10 per cent from US$468 million in the December quarter to US$423 million in the March quarter.

At the South Africa region, net operating costs at South Deep decreased by 9 per cent from R781 million (US$77 million) in the December quarter to R714 million (US$66 million) in the March quarter mainly due to restructuring of the cost base.

At the West Africa region, net operating costs decreased by 18 per cent from US$168 million in the December quarter to US$137 million in the March quarter. This decrease in net operating costs was due to the lower production at Tarkwa as a result of the cessation of the North heap leach operation as well as lower tonnes mined and a bigger build-up of gold-in-circuit at Damang in the March quarter.

At Cerro Corona in South America, net operating costs decreased by 31 per cent from US$35 million in the December quarter to US$24 million in the March quarter mainly due to a build-up of concentrate inventory at the end of the March quarter as well as savings realised in processing costs.

At the Australia region, net operating costs increased by 9 per cent from A$201 million (US$189 million) in the December quarter to A$219 million (US$196 million) in the March quarter, mainly at St Ives due to the gold-in-process charge to cost in the March quarter compared with a credit to cost in the December quarter and at Granny Smith, due to increased production and a gold-in-process charge compared with a build-up in the December quarter. At Darlot, net operating costs increased due to a gold-in-process charge, compared with a build-up in the December quarter. This was partially offset by a decrease in net operating costs at Agnew due to a gold-in-process credit in the March quarter compared with a drawdown in the December quarter.

Operating profit

Operating profit for the Group decreased by 6 per cent from US$312 million in the December quarter to US$292 million in the March quarter due to the decrease in revenue, partially offset by the lower net operating costs.

Amortisation

Amortisation for the Group decreased by 13 per cent from US$183 million in the December quarter to US$159 million in the March quarter. This was mainly due to the lower amortisation at St Ives due to its lower cost base, as a result of the impairment in the December quarter and lower production for the Group in the March quarter.

Other

Net interest paid for the Group increased from US$16 million in the December quarter to US$19 million in the March quarter. In the March quarter interest paid of US$26 million was partially offset by interest received of US$1 million and interest capitalised of US$6 million. In the December quarter interest paid of US$24 million was partially offset by interest received of US$2 million and interest capitalised of US$6 million.

The share of equity accounted losses after taxation for the Group decreased from US$2 million in the December quarter to US$1 million in the March quarter and related to the ongoing study and evaluation costs at the Far Southeast project (FSE).

Share-based payments for the Group increased from US$3 million to US$11 million due to year-end forfeiture adjustments in the December quarter.

Other costs for the Group increased from US$6 million in the December quarter to US$11 million in the March quarter, mainly due to the inclusion of rehabilitation costs under other costs. It was previously reported under operating costs.

Exploration

Exploration expenditure increased from US$7 million in the December quarter to US$12 million in the March quarter due to the decision to expense expenditure at Chucapaca and at the Arctic Platinum project (APP). Previously these expenditures were capitalised.

Feasibility and evaluation costs

The Group did not incur any expenditure on feasibility and evaluation costs in the March quarter, compared with US$11 million in the December quarter, due to the deliberate reduction in feasibility and evaluation activities.

Non-recurring items

Non-recurring expenses decreased from US$713 million in the December quarter to US$27 million in the March quarter. The nonrecurring expenses in the March quarter included retrenchment costs of US$19 million at all the operations of which US$16 million was incurred at the Ghanaian operations. It also included US$5 million on the impairment of the Group’s associate stake of 21.6 per cent in Bezant Resources PLC, acquired in January 2013.

Included in the December quarter were impairments, net of tax, at St Ives, Damang and Tarkwa of A$297 million (US$264 million), US$173 million and US$51 million, respectively. In addition, the following were impaired during the December quarter:

Non-recurring costs in the December 2013 quarter also included US$20 million on restructuring costs across the Group and US$27 million related to transaction costs on the acquisition of the Yilgarn South assets. The profit on the sale of the Group’s interest in Talas amounted to US$5 million.

Royalties

Government royalties for the Group decreased from US$25 million in the December quarter to US$22 million in the March quarter mainly due to the lower revenue received on which royalties are calculated.

Taxation

The taxation charge of US$29 million in the March quarter compared with a credit for the Group of US$149 million in the December quarter.

Earnings

Net losses attributable to owners of the parent amounted to US$0.3 million or US$0.00 per share in the March quarter compared with net losses of US$491 million or US$0.66 per share in the December quarter.

Headline earnings of US$5 million or US$0.01 per share in the March quarter compared with headline losses of US$23 million or US$0.03 per share in the December quarter.

Normalised earnings of US$21 million or US$0.03 per share in the March quarter compared with normalised earnings of US$14 million or US$0.02 per share in the December quarter.

Cash flow

Cash inflow from operating activities for continuing operations of US$198 million in the March quarter compared with US$182 million in the December quarter, an increase of 9 per cent, mainly due to lower tax and royalties paid and a release of working capital.

Cash outflow from investing activities for continuing operations decreased from US$250 million in the December quarter to US$144 million in the March quarter, a decrease of 42 per cent. This was mainly due to the Yilgarn South asset purchase of US$105 million in the December quarter and capital expenditure which decreased from US$152 million in the December quarter to US$141 million in the March quarter.

Cash inflow from operating activities less net capital expenditure and environmental payments amounted to US$54 million in the March quarter compared with cash inflow of US$38 million in the December quarter. The US$54 million in the March quarter comprised: US$92 million generated by the eight mining operations, less US$22 million of interest paid (this excludes any interest paid by the mines), US$10 million for exploration (this excludes any mine based brownfields exploration) and US$6 million on non-mine based tax payments and costs.

In the South Africa region at South Deep, capital expenditure decreased from R365 million (US$35 million) in the December quarter to R282 million (US$26 million) in the March quarter. The majority of this expenditure was on development and infrastructure costs required in the build-up to full production.

At the West Africa region, capital expenditure increased from US$44 million in the December quarter to US$46 million in the March quarter. Tarkwa increased from US$38 million to US$39 million with expenditure mainly incurred on pre-stripping, the tailings storage facility and major fleet components. Capital expenditure at Damang increased from US$6 million to US$7 million with the majority of the expenditure on the tailings storage facility.

In South America, at Cerro Corona, capital expenditure decreased from US$14 million in the December quarter to US$7 million in the March quarter with the majority of the expenditure on the construction of the tailings storage facility.

At the Australia region, capital expenditure increased from A$58 million (US$54 million) in the December quarter to A$71 million (US$63 million) in the March quarter. At St Ives, capital expenditure increased from A$29 million (US$27 million) to A$37 million (US$33 million), with expenditure mainly on pre-strip at the Neptune open pit. At Agnew/Lawlers, capital expenditure increased from A$19 million (US$18 million) to A$23 million (US$21 million). The increase was mainly due to additional capital development at the New Holland mine and additional exploration activity. At Darlot, capital expenditure was similar at A$2 million (US$2 million) and at Granny Smith, capital expenditure was similar at A$8 million (US$7 million).

Purchase of investments of US$2 million in the March quarter related to the Group’s subscription in the Tocqueville Bullion Reserve (TBR). TBR provides professionally managed warehousing of physical gold bullion and is targeted at strategic long term gold holders as a global alternative to gold Exchange Traded Funds (ETFs). Gold Fields assisted TBR in its launch because the Group is of the view that it may benefit the gold mining industry by creating the first global institutional solution for bullion ownership in a format that does not permit leverage, shorting and speculation.

Proceeds on the disposal of investments of US$2 million related to the sale of the Group’s interest in the Talas Gold Copper project in Kyrgyzstan.

Net cash inflow from financing activities for continuing operations of US$9 million in the March quarter compared with an outflow of US$77 million in the December quarter. The inflow in the March quarter comprised a net inflow of rand borrowings, partially offset by dollar loans repaid. In the March quarter US$49 million was repaid on offshore dollar facilities.

The net cash inflow for the Group for continuing operations of US$47 million in the March quarter compared with a net cash outflow of US$145 million in the December quarter. After accounting for a positive translation adjustment of US$2 million on offshore cash balances, the cash inflow for the March quarter was US$49 million. As a result, the cash balance increased from US$325 million at the end of December to US$374 million at the end of March.

All-in sustaining and total all-in cost

The World Gold Council has worked closely with its member companies to develop definitions for “all-in sustaining costs” and “allin costs”. These non-GAAP measures are intended to provide further transparency into the costs associated with producing and selling an ounce of gold. The new standard was released by the World Gold Council on 27 June 2013. It is expected that these new metrics will be helpful to investors, governments, local communities and other stakeholders in understanding the economics of gold mining. The “all-in sustaining costs” incorporate costs related to sustaining current production. The “all-in costs” include additional costs which relate to the growth of the Group.

Gold Fields adopted and implemented these metrics as from the June 2013 quarter. All-in sustaining costs and total all-in cost are reported on a per ounce basis – refer to the detailed table on page 22 to page 25 of this report.

The Group all-in sustaining costs increased by 1 per cent from US$1,054 per ounce in the December quarter to US$1,066 per ounce in the March quarter mainly due to the decreased gold sold and the higher non-cash remuneration (share-based payments) partially offset by lower operating costs, royalties, community costs and sustaining capital expenditure. Total all-in cost increased by 2 per cent from US$1,095 per ounce in the December quarter to US$1,114 per ounce in the March quarter for the same reasons as all-in sustaining costs as well as the decrease in exploration and non-sustaining capital expenditure.

In the South Africa region, at South Deep, all-in sustaining costs per kilogram increased by 3 per cent from R454,581 per kilogram (US$1,399 per ounce) to R469,227 per kilogram (US$1,345 per ounce) due to the lower gold sold, partially offset by the lower capital expenditure and lower operating costs. The total all-in cost increased by 19 per cent from R466,908 per kilogram (US$1,436 per ounce) to R557,078 per kilogram (US$1,597 per ounce) due to lower gold sold, partially offset by lower operating costs.

At the West Africa region, all-in sustaining costs and total all-in cost per ounce decreased by 8 per cent from US$1,132 per ounce in the December quarter to US$1,039 per ounce in the March quarter due to lower operating costs, partially offset by the higher capital expenditure and the lower gold sold.

At the South America region, all-in sustaining costs and total all-in cost per ounce decreased by 53 per cent from US$207 per ounce in the December quarter to US$97 per ounce in the March quarter mainly due to a bigger gold-in-process credit to costs and lower operating costs, partially offset by the decrease in by-product credits and the lower gold sold. All-in sustaining costs and total all-in cost per equivalent ounce decreased by 18 per cent from US$708 per equivalent ounce to US$581 per equivalent ounce.

At the Australia region, all-in sustaining costs and total all-in cost per ounce increased by 15 per cent from A$1,072 per ounce (US$998 per ounce) in the December quarter to A$1,234 per ounce (US$1,103 per ounce) in the December quarter mainly due to the lower gold sold, higher operating costs, the gold-in-process charge to cost compared with the credit to cost in the December quarter and higher capital expenditure.

Free cash flow margin

The Group has shifted focus from principally ounces of gold in production to cash generation, reflecting our new goal of a Group 15 per cent free cash flow margin at a gold price of US$1,300 per ounce. The free cash flow (FCF) margin is revenue less cash outflow divided by revenue expressed as a percentage. The FCF for the Group for the March 2014 quarter is calculated as follows:

The Group achieved a FCF margin of 13 per cent in the March quarter compared with 11 per cent in the December quarter.

Balance sheet

Net debt (long-term loans plus the current portion of long-term loans less cash and deposits) decreased from US$1,735 million at the end of December to US$1,686 million at the end of March.