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Forward looking statements
Certain statements in this document constitute “forward looking statements” within the meaning of Section 27A of the US Securities Act of 1933 and Section 21E of the US Securities Exchange Act of 1934.

Such forward-looking statements, including, among others, those relating to the future business prospects, revenues and income of Gold Fields, wherever they may occur in this report, are necessarily estimates reflecting the best judgement of the senior management of Gold Fields and involve a number of risks and uncertainties that could cause actual results to differ materially from more

Salient features
US$1,066 per ounce All-in-sustaining costs
US$1,114 per ounce All-in-costs
557,000 ounces of attributable gold production
US$54m cash flow from operating activities after taking account of net capital expenditure, environmental payments, debt service costs and non-recurring it

Cash generative with Group production and costs tracking guidance

JOHANNESBURG. 8 May 2014, Gold Fields Limited (NYSE & JSE: GFI) today announced normalised earnings from continuing operations for the March 2014 quarter of US$21 million compared with US$14 million for the December 2013 quarter and US$68 million for the March 2013 quarter. Net losses for the March 2014 quarter of US$0.3 million compared with net losses of US$491 million for the December 2013 quarter.

Statement by Nick Holland, Chief Executive Officer of Gold Fields:


During the March 2014 quarter, the Group continued to focus on improving execution and delivery across our portfolio of assets, with particular attention and effort on:

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Driving margins and cash flow across the portfolio;
Reducing net debt;
Rebasing South Deep to de-risk the build-up plan and achieve cash break-even by the end of 2014 or early 2015;
Consolidating the Damang turn-around;
Continuing to bed down and optimise the newly acquired Yilgarn South assets; and
Disposal of non-core projects.

It is pleasing to say that the Group had a fatality free quarter – which should be the norm.

Driving margins and cash flow

During the March 2014 quarter, Gold Fields achieved all-in sustaining costs (AISC) of US$1,066/oz and all-in costs (AIC) of US$1,114/oz, on 524,800 gold only ounces sold. Our AISC was 5% better than our guidance for the full year of US$1,125/oz and our AIC was 3% better than our AIC guidance of US$1,150/oz.

During the quarter, the Group generated US$54 million in cash flow from operating activities after taking account of net capital expenditure, environmental payments, debt service costs and non-recurring items, which is a 42% increase on the US$38 million generated in the December 2013 quarter.

The Group’s medium-term objective remains to generate a free cash flow margin of at least 15%, at a US$1,300/oz gold price. On that basis the Group generated a free cash flow margin of 13% in the March quarter (see table on page 7).

If South Deep is excluded from the results for the March quarter (as this project has not yet achieved commercial levels of production), then the Group’s AIC was US$1,053/oz and the free cash flow margin, at the achieved gold price, was approximately 18%.

When one compares the Group’s results for the March 2014 quarter to the March 2013 quarter, the Group’s AISC improved by 18% from US$1,303/oz to US$1,066/oz and its AIC improved by 25% from US$1,476/oz to US$1,114/oz. Over the same period the Group’s attributable equivalent gold production increased by 17% from 477,000 ounces to 557,000 ounces, mainly due to the additional production from the newly acquired Yilgarn South assets in Australia. Despite a 21% decline in the gold price over the same period, from US$1,625/oz to US$1,283/oz, cash flow from operating activities after taking account of net capital expenditure, environmental payments, debt service costs and non-recurring items; improved by 217% from a net cash outflow of US$46 million in the March 2013 quarter to a net cash inflow of US$54 million in the March 2014 quarter, a positive swing of US$100 million. This performance improvement over the past year is a direct result of our strategy of focusing on driving margins and cash flow.

Gold Fields remains on track to achieve its full-year guidance of AISC of US$1,125/oz and AIC of US$1,150/oz on attributable production of around 2.2 million gold equivalent ounces.

Reducing net debt

Our priorities with the cash that we generate are to reward our shareholders by paying out a dividend of between 25% and 35% of our normalised earnings, which is in line with our long-standing dividend policy and to reduce our debt. During the March quarter we reduced our net debt by US$49 million to US$1,686 million and thereby reducing our net debt to EBITDA ratio from 1.63 in the December 2013 quarter to 1.50 in the March 2014 quarter, based on a 12-month rolling historical average.

Debt levels will also be determined by the extent of project disposals and, subject to prevailing gold prices, we will target further debt reductions.

Rebasing South Deep

South Deep is the most important value driver in the Gold Fields portfolio.

We have a critical understanding of this project’s value proposition; a sense of urgency for the execution and delivery of the project; and are resolute and confident in our commitment to make it work within the new timeframe published on 13 February 2014.

Since we took full ownership of the mine in April 2007, we have essentially built most of the mine and key infrastructure to support the build-up to full production. We have completed the Twin Shaft infrastructure, providing 330,000 tonnes of hoisting capacity per month, and upgraded the plant capacity commensurately; installed full life of mine tailings and backfill capacity on surface; and completed all of the key ancillary surface infrastructure. We have also completed a large proportion of the underground horizontal capital development required to access the new mine below 95-level (North of Wrench Fault). In September 2009 we stopped all conventional hand-held mining and converted South Deep to a fully mechanised operation. Importantly, we have significantly advanced our understanding and knowledge of the ore body through surface and underground drilling, including grade control drilling, 3D seismics and detailed high resolution resource modelling, to ensure that appropriate levels of confidence underpin all short and long-term planning.

A detailed six-month review, including an external review of the project late in 2013 and early 2014 found that the physical infrastructure was of world class quality and the long-term build-up plan was sound. However, the review also concluded that the expected build-up of the project was likely to take longer than the previous guidance provided in 2012. This expected delay related to execution constraints caused by the lack of a modern mechanised mining culture; the inadequate availability and utilisation of the mining fleet; sub-optimal mechanised mining skills levels; as well as discreet ore handling and logistical constraints underground.

Following this review, we published a revised build-up schedule for the project on 13 February 2014 (steady state production of between 650,000 and 700,000 ounces per year by the end of 2017, at an AIC of approximately US$900/oz). During the March 2014 quarter we fundamentally changed the way we manage and execute the South Deep project with the implementation of a comprehensive transformation process aimed at addressing the shortcomings identified during the review; de-risking the momentum and sustainability of the new build-up plan; and positioning South Deep to achieve cash break-even by late 2014 or early 2015, assuming prevailing rand gold prices.

Central to the transformation process is the introduction of a team of mechanised mining specialists from Australia, to assist South Deep to transform itself into a world-class mechanised mine. Despite the uncertainty which inevitably accompanies any transformation process, South Deep employees and their representative organisations have largely embraced the change and, while much remains to be done, the early signs are encouraging.

Having said that, the changes inevitably came with some temporary disruptions and at the expense of short-term momentum in production, destress mining and development, which compounded the effects of the Christmas break in the March quarter.

However, we expect that the transformation process will continue to gain traction through the June quarter and should result in greater stability and improved productivity during the second half of the year, which is also characterised by fewer interruptions from public holidays, compared to the first half of the year.

This should provide a strong foundation for improved performance from South Deep and de-risk the momentum and sustainability of the new build-up plan. As a result of the temporary disruption and loss of momentum caused by the implementation of the transformation process, production for the full year is expected to be around 10% lower than the full-year guidance of 360,000 ounces. However, destress mining is expected to be on guidance at 54,600m˛, thus providing an important underpin for the build-up plan. South Deep is expected to achieve its AISC guidance for the full year of US$1,290/oz and AIC of US$1,350/oz.

More details on the transformation process are provided in the South Deep section on page 8.

Australian operations

This was the second consecutive quarter of strong performance from the Yilgarn South assets (Granny Smith, Lawlers and Darlot) which were acquired from Barrick in October 2013. These assets contributed 115,000 ounces of gold production out of Australian production of 245,000 ounces for the quarter and contributed to all-in cost for the Australia region of US$1,103/oz for the quarter.

The integration of the Yilgarn South assets into the Gold Fields portfolio has been completed and the expected synergies largely realised through the combination of the Agnew and Lawlers operations, specifically, the closure of the Lawlers Mill, and the rationalisation of employee numbers across all of the operations. In order to secure the future of our Australian operations, including the Yilgarn South assets, we have committed approximately US$50 million (US$50 per ounce) to brownfields exploration at all of the mines in the region during 2014 and early indications are that we expect to translate some of that expenditure into a resource and reserve upgrade of the region by the end of 2014. We are pleased with the acquisition and are confident that the Yilgarn South assets will continue to perform to our expectations well into the future.

Consolidating the turn-around at Damang

During the March quarter, Damang further consolidated the turn-around achieved in the December 2013 quarter by reducing its AIC by 12% to US$1,111/oz from US$1,261/oz achieved in the December 2013 quarter, and increasing gold production by 3% to 46,700 ounces. This mine has now been restored to sustainable profitability and is expected to make a meaningful contribution to the Group’s strategy of generating cash flow for at least the next five years, and likely well beyond that.

Disposal of project portfolio

In line with our strategic repositioning to a focus on growing cash flow and margins rather than ounces of production, we previously indicated that we had moved away from greenfields exploration and new project development as a strategy for growth, in favour of the acquisition of in-production ounces. Accordingly, our Growth and International Projects Division (GIP), which incorporated greenfields exploration as well as new project development, was disbanded and several of the projects in that portfolio earmarked for disposal.

The projects earmarked for disposal are the Talas project in Kyrgyzstan, the Yanfolila project in Mali, the Arctic Platinum project in Finland (APP) and the Woodjam project in British Columbia. Also earmarked for disposal is the Group’s extensive portfolio of royalties held over various projects and mines.

To date, the disposal of the Talas project has been concluded and negotiations are well advanced for the possible disposal of the Yanfolila project as well as the Royalty portfolio. Processes are also underway for the possible disposal of the Arctic Platinum and Woodjam projects. However, if reasonable considerations cannot be secured for the disposal of these assets, their sale will be deferred pending more conducive market conditions.

Expenditure on the Chucapaca project in Peru as well as the Far Southeast project (FSE) in the Philippines has been significantly reduced to essential holding costs only, pending decisions on the future of those projects. Most of our other greenfields exploration projects have been relinquished, with only five projects in the Americas retained pending completion of current work programmes, after which decisions will be made on the possible disposal of those projects.

Annual review

The Gold Fields Integrated Annual Review and Statutory Financial Reports for 2013 were published at the end of March 2014 and is available on our website.

On 25 April 2014 the Group filed its annual report on Form 20-F with the US Securities and Exchange Commission.

At 496,000 ounces, production for the September quarter was 10 per cent higher than the 451,000 ounces reported in the June quarter. This brings production for the year to date to 1,424,000 ounces, which is supportive of our existing guidance for the full year of between 1,825,000 and 1,900,000 ounces, excluding the Yilgarn South assets.

Group all-in sustaining cost (AISC) for the September quarter was US$1,089 per ounce, 23 per cent lower than the US$1,416 per ounce reported for the June quarter;
Group all-in cost (AIC) for the September quarter was US$1,176 per ounce, 25 per cent lower than the US$1,572 per ounce reported for the June quarter;
Total cash cost for the September quarter was US$772 per ounce, 10 per cent lower than the US$857 per ounce reported for the June quarter; and
Group NCE of US$1,064 per ounce for the September quarter was 14 per cent lower than the US$1,239 per ounce reported for the June quarter.

Despite the fact that South Deep is a developing project and is still operating significantly below full production, it is accounted for as a fully operational mine. If South Deep is excluded then the Group NCE is US$962 per ounce and AIC is US$1,088 per ounce for the September quarter. This gives a good indication of the robustness of the rest of the portfolio.

The newly acquired Yilgarn South assets are expected to produce between 90,000 and 100,000 ounces for the December quarter. As a consequence Group production guidance for the full year is revised up to between 1,915,000 and 2,000,000 ounces, while cost guidance remains unchanged with total cash costs of approximately US$830 per ounce and Notional Cash Expenditure (NCE) of approximately US$1,240 per ounce.

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During the September quarter Gold Fields made progress with its strategy to make a sustainable structural shift in the Group’s cost base with four of our six existing mines reporting much improved all-in costs: Cerro Corona achieved an AIC of negative US$21 per ounce; Agnew US$842 per ounce; St Ives US$1,116 per ounce and Tarkwa US$1,124 per ounce. The only exceptions were Damang in Ghana which reported AIC of US$1,727 per ounce and South Deep in South Africa, which is a build-up mine and reported AIC of US$1,599 per ounce.

The strategy to make a sustainable structural shift in the Group’s cost base includes the following interventions:

Reduction of marginal mining by closing down unprofitable production. As previously reported, marginal mining projects had already been stopped at St Ives (heap leach operations), Agnew (low grade Main and Rajah lodes) and Tarkwa (South heap leach operations). The benefits of these interventions are largely reflected in the September quarter results. At Tarkwa the North heap leach operation has also been earmarked to be stopped by the end of 2013, given that the Heap leach operation is loss-making at current gold price levels;
Restructuring and right-sizing of the Corporate office, as well as restructuring of all regional and operational structures to be fit-for-purpose with operational responsibility and accountability devolved to capable and appropriately resourced regions, which resulted in a 5 per cent reduction in head count across the portfolio;
Rationalisation and prioritisation of all capital expenditure and, where appropriate, the deferral of non-essential capital expenditure without compromising the future integrity of ore bodies and operations. Capital expenditure for 2013 has been reduced by approximately US$180 million from US$970 million to US$790 million;
Cancellation of brownfields growth projects that did not provide an adequate return. These include the Tarkwa Expansion Phase 6 project (TEP 6) and both of the Cerro Corona Oxides and Sulphides projects;
General cost savings and improved efficiencies brought about by site specific Business process re-engineering interventions and through the interrogation and, where appropriate, revision of operating budgets, procurement and supply contracts, and general expenditure at mine, regional and corporate level;
Damang and Darlot are implementing a range of operational improvements to reduce their cash burn, while the longer term future of both of these mines is being assessed;
South Deep’s cost base is being right-sized to match its slower than anticipated production build-up, without impeding the momentum of the build-up, that is mechanised mining (trackless and engineering) at South Deep has not been affected; and
The break-up of the Growth and International projects division (GIP) and the significant reduction of all associated expenditure, which is discussed below.
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Following the announcement on 22 August 2013 of the review of the Group’s GIP division, which included all international growth as well as greenfields exploration projects, it was decided during the September 2013 quarter to break-up the GIP Division and significantly downscale all associated growth activities, and to relocate the remaining activities to the existing relevant regional structures.

Greenfields exploration is being reduced from 16 projects around the world to a smaller nucleus of the most promising projects. All other greenfields exploration projects will either be relinquished or disposed of;
In the Australasia region, the key focus will be on brownfields exploration in the Yilgarn South region where Gold Fields has an extensive and highly prospective tenement position associated with its newly acquired and existing assets;
The Arctic Platinum project in Finland, the Woodjam project in British Columbia, the Talas project in Kyrgyzstan and the Yanfolila project in Mali have all been earmarked for disposal. Pending the sale of these projects, the burn-rate on these projects has been reduced. Where disposal proves impractical in the current market environment, some of the projects may be retained for optionality, but with a significantly reduced holding cost. No final decisions have been made on the sale of any of these projects;
Activities at the Far Southeast project in the Philippines have been limited to those associated with securing the FTAA and expenditure has been significantly reduced; and
At the Chucapaca project in Peru, expenditure has been limited to the completion of a scoping study focussed on exploring the viability of a smaller, higher grade underground option for this project. This work will continue into 2014.

As a consequence of these interventions the combined expenditure on all GIP related activities is expected to reduce from approximately US$220 million in 2012 to an estimated US$165 million in 2013 including once off costs of US$10 million relating to restructuring and retrenchment costs. Further cost reductions should be realised in 2014.

Break-up of the GIP division is well underway and is expected to be completed by year-end. While some of the anticipated savings are reflected in the results for the September 2013 quarter, the bulk of the savings will be realised over the remainder of 2013 and into the first half of 2014.

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Of the Group’s eight mines (including the recently acquired Yilgarn South assets) five are performing well and consistent with production and cost expectations (Tarkwa, St Ives, Agnew/Lawlers, Granny Smith and Cerro Corona), while three are in need of and receiving focussed attention (South Deep, Damang and Darlot) with a view to improving operational performances and reducing cost.

At Tarkwa in Ghana the South heap leach operation has now been decommissioned. The focus for the remainder of 2013 is on the closure of the North heap leach operation which has a cost structure higher than the prevailing gold price, and to transition the mine from a combined heap leach and CIL operation, to a CIL operation only. This will see the mining rate reduce in 2014 from approximately 130 million tonnes per annum to approximately 90 million tonnes per annum. Following the closure of the North heap leach operation Tarkwa’s production is expected to decline to between 525,000 ounces and 550,000 ounces in 2014, and to approximately 500,000 ounces per annum thereafter.

At Damang, also in Ghana, the focus remains on improving operational performance through improved quality mining and more consistent plant availability. The work to determine if it is economically viable to extract all or part of the four million ounce reserve continues, with a decision on the future of the mine expected in the first half of 2014. If a viable sustainable operational plan cannot be developed for this mine, care and maintenance will be considered.

At South Deep in South Africa trends remain positive and supportive of the mine’s continued production build-up. In the September 2013 quarter production increased by a further 5 per cent to 81,900 ounces (2,547 kilograms) and AIC decreased by 16 per cent to US$1,599 per ounce (R513,149 per kilogram), despite three days of wage related industrial action during the quarter. The critical destress mining increased by a further 6 per cent to 14,986 meters in the September quarter and is now at a run rate of double of what it was 2 years ago. Particularly noteworthy is that the excessive accumulations of blasted stock underground, due to logistical bottlenecks, have at the time of writing been cleared. A new “clean mine policy” has been implemented whereby smaller but more frequent blasts now take place in open stopes and mining areas are cleared of blasted stock before the next blast can take place. This has had a positive impact on the underground yield which improved from 4.8 grams per tonne in the June quarter to 5.0 grams per tonne in the September quarter. The process of right-sizing the cost-base of the mine in line with its production profile is underway, with a particular focus on reducing senior management structures, replacing contractors with own employees where practical and optimising all support service costs. This process is expected to be completed by the end of 2013. The process of interrogating and recalibrating the production build-up plan of South Deep is progressing as scheduled and the new build-up plan is targeted for disclosure with the announcement of the December 2013 results in February 2014.

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The acquisition of the Yilgarn South assets from Barrick, which is in line with our strategy to improve the Group’s cash generating ability, was concluded on 1 October, after the close of the September quarter, and the integration of the Granny Smith, Lawlers and Darlot mines into the Gold Fields portfolio has commenced. A thorough operational review has been concluded on each of the mines and the most appropriate strategy determined to realise the benefits of the acquisition through the application of Gold Fields’ proven low cost model in Australia, which has been successful in repositioning Gold Fields competitively on the cost curve in Australia. The transition to Gold Fields’ management was seamless at all three mines and our attention will now turn to optimising the value of these operations.

In order to maximise the operating synergies between Lawlers and the adjacent Agnew, the two mines were immediately integrated and the Lawlers processing plant is expected to be closed by the end of November. All newly mined ore from Lawlers is now being treated at the Agnew plant. The consolidation of other services, infrastructure and human resources are progressing well. At the Darlot mine the focus is on improving the operational performance and gaining a greater understanding of the reserve potential of the property.

For the December 2013 quarter, Gold Fields will report on all three of the mines, with Agnew/Lawlers being reported as a single entity. It is expected that the three mines will collectively add between 90,000 and 100,000 ounces to Gold Fields’ production in the December quarter at an NCE of approximately US$1,165 per ounce (A$1,215 per ounce).

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Gold Fields’ approach to environmental management is in accordance with international standards and practices. ISO 14001 accreditation is a Group standard and we were the first mining signatory to the International Cyanide Management Code that obtained certification for all of its eligible operations. Our most material environmental performance indicators, i.e. carbon emissions, energy usage, water withdrawal, re-use/recycling and environmental incidents, are reported annually and externally assured. The alignment of our policies, guidelines and practices to the International Council of Mining and Metals’ (ICMM) 10 Sustainability Principles, which include environmental management, is also assured annually. Gold Fields reports environmental incidents using a grading scale of 1 to 5. Levels 1 and 2 involve minor incidents or non-conformances with negligible or limited impact. A level 3 incident is a limited non-conformance or noncompliance with limited environmental impact, but is often a repeat of the same incident. Level 4 and 5 incidents include major non-conformances or non-compliances that could result in long-term environmental impact with company or operation threatening implications and potential major damage to the company’s reputation.

No level 4 or 5 environmental incidents have been recorded at any of Gold Fields’ operations in the past five years. Six level 3 environmental incidents were recorded during 2012 compared with two during the first half of 2013. No level 3 environmental incidents were recorded during the September 2013 quarter.

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As announced on September 10, 2013, the Company has been informed that it is the subject of a regulatory investigation in the United States by the US Securities and Exchange Commission relating to the Black Economic Empowerment transaction associated with the granting of the mining license for its South Deep operation. Given the early stage of this investigation, it is not possible to estimate reliably what effect, the outcome this investigation, any regulatory findings and any related developments may have on the Company.

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Stock data
Number of shares in issue   Range – Quarter US$3.00 – US$4.36
– at end March 2014 768,651,164   Average Volume – Quarter 5,964,818 shares/day
– average for the quarter 767,841,289   JSE Limited – (GFI)  
Free Float 100 per cent  
ADR Ratio 1:1   Range – Quarter ZAR31.72 – ZAR45.95
Bloomberg/Reuters GFISJ/GFLJ.J   Average Volume – Quarter 2,229,689 shares/day