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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 and the exhibits to the report, are necessarily estimates reflecting the best judgment of the senior management of Gold Fields and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. As a consequence, these forward-looking statements should be considered in light of various important factors, including those set forth in this report. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, without more


Salient features
US$1,050 per ounce All-in-sustaining costs down 2%
US$1,093 per ounce All-in-costs down 2%
548,000 ounces of attributable gold production down 2%
US$65m cash flow up 21% cash flow from operating activities after taking account of net capital expenditure, environmental payments, debt service costs and non-recurring items
US$101m net debt decrease over the 6 months to June 2014
18% free cash flow margin

Operational performance leads to cash generation, dividend payments and further debt reduction.

JOHANNESBURG. 21 August 2014, Gold Fields Limited (NYSE & JSE: GFI) today announced normalised earnings from continuing operations for the June 2014 quarter of US$25 million compared with US$21 million for the March 2014 quarter and losses of US$36 million for the June 2013 quarter. Net earnings for the June 2014 quarter of US$19 million compared with US$nil for the March 2014 quarter and net losses of US$129 million for the June 2013 quarter.

Interim dividend of 20 SA cents per share is payable on 15 September 2014.

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


It is with deep regret that I have to report that South Deep had two fatal accidents in short succession on 17 and 27 May 2014. Our deepest sympathy and condolences are extended to the family, friends and colleagues of the deceased. These were industrial-type accidents associated with workshops and equipment, and precipitated the issuing of a Section 54 order by the Department of Minerals Resources, placing a moratorium on all workshop-related activities across the mine and effectively stopping production for a total of about two weeks. During this time a mine-wide reassessment of safety control systems was undertaken on the mechanised mining fleet as well as on working practices in all workshops.

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Coinciding with but independent from the closure of the mine by the DMR, the new management team appointed at the beginning of 2014, concluded a comprehensive mine-wide review of all safety protocols, procedures and standards. This is in line with the team’s mandate to improve the mechanised mining culture on the mine, with specific emphasis on introducing international best practice standards on equipment availability and utilisation as well as the mechanised mining skills of employees. As a result of the safety review, it was determined that approximately 1,000 metres of legacy ground support in some of the ramps serving production areas in the older part of the mine on 95-level and above, were below the international best practice standards applied at our international mines and presented a serious latent safety risk. Approximately 70 per cent of current production is sourced from these areas.

As a result of the safety review, and in line with our first value – ‘If we cannot mine safely we will not mine’ – all production and destress activities in the affected areas were stopped and a ground support remediation programme implemented. This programme is expected to be completed by the end of September.

While this intervention comes at an unfortunate time, it will contribute to de-risking South Deep’s build-up plan; will make the mine safer; and has provided management with an opportunity to fast-track a wide range of other interventions that will contribute to placing South Deep on a more stable footing over its 70-year mine life; and position the mine for an improved performance in 2015. These interventions are discussed in more detail in the South Deep section below.


During the June 2014 quarter, the Group continued to focus on improving the execution and delivery at all the mines in the portfolio, to improve margins and generate free cash flow. This effort has achieved appreciable success in the Australia, West Africa and South America regions, whilst in the South Africa region there is ongoing rebasing of South Deep to set it up for medium-term success. Specific focus areas during the quarter included:

Rewarding shareholders with the declaration of an interim dividend;
Improving the Group’s balance sheet by extending the tenor of certain of its syndicated bank credit facilities along with further net debt reduction;
Ongoing rebasing of South Deep to set it up for long-term success;
Normalising production at Tarkwa following the closure of the heap leach operations at the end of 2013;
Further consolidation and optimisation of our operations in Australia, in particular the newly acquired Yilgarn South assets; and
The disposal of non-core assets from our international project portfolio.

Improving margins and generating free cash flow

The safety interventions at South Deep during the quarter masked what was a better quarter for the Group as a whole, in terms of costs, margins and cash flows.

All activities undertaken in the Group and at operations are singularly focussed on the objective of generating a sustainable free cash flow margin of at least 15 per cent at a US$1,300/oz gold price, without compromising the long-term sustainability of our ore bodies through a lack of investment in ore reserve development and stripping, or through high grading.

During the quarter, Gold Fields exceeded this target for the first time by achieving a free cash flow margin of 18 per cent compared with 13 per cent in the March quarter (see table on page 9).

To achieve this, the Group recorded an all-in sustaining cost (AISC) of US$1,050/oz and all-in cost (AIC) of US$1,093/oz, from attributable gold equivalent production of 548,000 ounces.

Compared with the same quarter a year ago, the Group’s AISC improved by 26 per cent from US$1,416/oz to US$1,050/oz and the AIC improved by 30 per cent from US$1,572/oz to US$1,093/oz in the June 2014 quarter. Over the same period, attributable equivalent gold production increased by 22 per cent from 451,000 ounces to 548,000 ounces, reflecting the October 2013 acquisition of the Yilgarn South assets in Australia.

If the South Deep project (which is not at commercial levels of production), is excluded from the June quarter results, then the Group’s AIC was US$1,030/oz and the Group’s free cash flow margin approximately 23 per cent, which demonstrates the robustness of the portfolio.

Despite a 1 per cent decline in the realised gold price and a 2 per cent decline in gold production against the March 2014 quarter, cash flow from operating activities, after taking account of net capital expenditure, environmental payments, debt service costs, and non-recurring items, improved by 20 per cent from US$54 million in the March 2014 quarter to US$65 million in the June 2014 quarter.

Notwithstanding a 7 per cent decline in the gold price, from US$1,372/oz in the June 2013 quarter to US$1,275/oz in the June 2014 quarter, cash flow from operating activities, after taking account of net capital expenditure, environmental payments, debt service costs and non-recurring items, improved by 128 per cent from a net cash outflow of US$230 million in the June 2013 quarter to a net cash inflow of US$65 million in the June 2014 quarter, a positive swing of US$295 million.

This brings the total cash flow from operating activities, after taking account of net capital expenditure, environmental payments, debt service costs and non-recurring items for the year to date, to US$119 million, placing Gold Fields as one of the most cash generative gold mining companies in its peer group.

Despite the lower production expected from South Deep for the year, the Group 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 approximately 2.2 million gold equivalent ounces.

Rewarding shareholders

As previously stated, our priorities in terms of cash generation are to:

a) Reward our shareholders with dividends;
b) Improve our balance sheet by further reducing net debt; and
c) Pursue accretive acquisitions, ideally of “in-production ounces”.

Our strong cash generation for the year to date has enabled the Group to declare an interim dividend of 20 SA cents per share. This is in line with our well-established dividend policy of paying out between 25 per cent and 35 per cent of normalised earnings to shareholders.

Improving the balance sheet

Despite the robustness of our balance sheet, we have had a strategic objective for 2014 to further improve the strength of our balance sheet in terms of the maturity schedule of our outstanding debt, reducing the absolute amount of our debt, as well as improving our net debt to EBITDA ratio.

In pursuit of this objective, we reached agreement with our group of bankers during the quarter to amend and extend certain facilities under our syndicated bank credit facilities agreement. Under the amended agreement, the maturity date of commitments totaling US$715 million has been extended, on the same terms, by two years from November 2015 to November 2017.

In addition, during the June 2014 quarter, we reduced our net debt by a further US$52 million to US$1,635 million. This is in addition to the US$49 million repaid in the March quarter, which brings our net debt reduction for the year to date to US$101 million. Based on a 12-month rolling historical average our net debt to EBITDA ratio improved from 1.53 in the March 2014 quarter to 1.47 in the June 2014 quarter. If the June quarter EBITDA ratio is annualised it is 1.44. Our medium-term objective is to reduce our net debt to EBITDA ratio to approximately 1 times, which is consistent with our long-stated comfort zone.

Setting South Deep up for long-term success

At South Deep all mining related activities were severely curtailed towards the end of May, for the final one month of the quarter, following two fatal accidents in quick succession, as well as the separate and unrelated introduction of an extensive ground support remediation programme. As a consequence South Deep’s production declined by 14 per cent from 1,840 kilograms (59,200 ounces) in the March quarter to 1,591 kilograms (51,100 ounces) in the June quarter.

The remediation programme, which took all of the legacy haulages and arterial routes on 95-level and above - from where approximately 70 per cent of current production is sourced - out of service. The programme will continue for the entire September quarter with a commensurate impact on production (three months in the September quarter vs one month in the June quarter). While normal production is expected to resume at the start of the December quarter, the ground support remediation programme is delaying the opening up of a number of long-hole stopes that were planned to be mined in the December 2014 quarter, with a commensurate knock-on effect on production during that quarter.

Considering the total impact of the safety stoppages as well as the ground support remediation programme, production during the second half of the year is expected to be approximately similar to that of the first half of the year.

A positive consequence of the ground support intervention, and in the absence of normal production pressures, is that it has afforded management the opportunity to fast track a number of other critical interventions aimed at setting South Deep up for long-term success:

The leadership structure on the mine has undergone a fit for purpose transformation aimed at the introduction and enforcement of greater levels of accountability and responsibility through-out the operation;
Management has embarked on a programme to address the surplus of old high cost equipment and people on the mine, both of which are prerequisites for an improved safety culture and improved productivity, and are deemed critical to de-risk the mine’s build-up to full production. After extensive discussions with the trade unions, a voluntary separation process was implemented which resulted in a rationalisation of the employee body by approximately 550 people (representing 14 per cent of employees). Further rationalisation is expected as certain contractors are exited and existing employees redeployed to fill their roles. Post the voluntary separation process, South Deep currently has 3,431 employees, as well as 1,909 contractors;
The process of rationalising the equipment is currently underway and includes the removal of surplus and redundant equipment as well as the limited introduction of more appropriate, specialised new equipment in certain areas;
In addition, management and the trade unions have reached agreement on changes to the shift roster which is expected to lead to the optimal re-deployment of employees to further improve productivity. The implementation of the amended shift roster is currently underway; and
The mine has utilised the hiatus in normal production activities to fast-track an extensive training programme aimed at improving the mechanised mining skills of employees.

It is expected that the ground support remediation programme will contribute to de-risking South Deep’s build-up plan to full production (a run rate of between 650,000 ounces and 700,000 ounces by the end of 2017); will make the mine safer; and will position the mine for an improved performance in 2015. Assuming current spot prices, South Deep is still anticipated to reach cash break-even by the middle of 2015, as previously advised.

Soon after the appointment of the new management team in February 2014, and in line with the team’s overall mandate to improve the mechanised mining culture on the mine, an International Geotechnical Advisory Board (IGAB), consisting of industry leaders from around the world, was appointed to review South Deep’s current destress mining methodology. The IGAB’s mandate was to consider the latest developments in the industry as well as the accumulation of new knowledge and experience in the application of the destress methodology at South Deep over the past five years, to determine if it was still the most appropriate method to use, and if there were safer and more cost effective alternative methods. After extensive studies and investigations over the past seven months, the IGAB has concluded that there are two alternative mining methods that hold significant promise and could potentially replace the current destress mining method.

The first method is the 4X4 Meter Destress Method, which effectively reduces destress mining from a three-pass system to a one-pass system by increasing the destress excavation dimensions from 2.2m high and 5.0m wide, to 4.0m high and 4.0m wide. This will allow for the use of conventional equipment throughout the mine as opposed to low-profile equipment which is currently used in destress areas. In addition to removing the need for footwall stripping to increase cavity sizes before mining, this will alleviate logistical constraints and facilitate a fully mechanised mining process.

The second method, and the most promising, is the Inclined Mining Slot Method which is a one-pass system which completely removes the need for conventional destress mining as well as the need for low-profile equipment. It also decreases the mining lead time from between three and six years per destress area, to closer to six months. This method entails the development of an access slot within an existing destress shadow, followed by the installation of a vertical 4.5m X 4.5m inclined slot at an angle of 55 degrees, thus providing a destress shadow in which the next access slot and inclined slot can be developed. The vertical inclined slots are installed at 15m intervals on a horizontal plane and the blocks between them mined out through longhole stoping and then backfilled.

Both of these methods, if successful, could significantly de-risk the South Deep build-up plan and future production profiles, and have a meaningful impact on costs. Both methods will be piloted in discrete areas of the mine during the period from Q4 2014 to Q2 2015. It is too early to assess whether either of these methods could be commercially deployed, the results of the pilot studies will determine this.

Normalising of production at Tarkwa in Ghana

At Tarkwa, the transition from a mixed heap leach and Carbon in Leach (CIL) operation, to a CIL only operation, progressed well after stacking was suspended at the North heap leach operations during the March quarter, resulting in the feed of all medium and high grade material to the CIL plant. There was a commensurate increase in yield from the CIL plant from 1.19 grams per tonne in the March quarter to 1.29 grams per tonne in the June quarter. The higher CIL head grades also benefit the much higher recoveries obtained in the CIL circuit, resulting in production of 140,700 ounces at an AIC of US$1,026/oz for the quarter.

With year to date production of 285,900 ounces at an AIC of US$1,021/oz, Tarkwa remains on track to achieve its 2014 guidance of 520,000 ounces of production at an AIC of US$1,100/oz. Tarkwa is a steady performer and is contributing significantly to the Group’s cash generation objectives.

During the quarter, Damang delivered another strong performance despite a nine-day mill shutdown, as a result of which gold production decreased by 13 per cent from 46,700 ounces to 40,500 ounces and AIC increased by 15 per cent from US$1,111/oz to US$1,282/oz.

With year to date production of 87,200 ounces at an AIC of US$1,192/oz, Damang remains on track to achieve its 2014 guidance of 165,000 ounces of production at an AIC of US$1,240/oz. Despite the unplanned nine-day mill shutdown, Damang has now consolidated its return to profitability from a loss making position a year ago, and is expected to continue to deliver steady performances for the foreseeable future.

The strategy of revisiting historically mined open pits along the 27 kilometres of strike between Damang and Tarkwa, which were last drilled when the gold price was between US$300/oz and US$400/oz, is starting to bear fruit and is expected to contribute to an appreciable addition to Reserves and Resources by the time of the next declaration early in 2015. Success in this programme will redefine the future of Damang in the Gold Fields portfolio, and has the potential to extend the life of this mine substantially.

Further consolidation and optimisation of our operations in Australia, in particular the newly acquired Yilgarn South assets

The Group’s Australian operations had an excellent quarter, recording AIC of US$1,042/oz on gold production of 256,900 ounces. This brings total production for the year to date to 502,100 ounces at an AIC of US$1,072/oz against guidance for the full year of 975,000 ounces at an AIC of US$1,130/oz.

Central to this performance are the newly acquired Yilgarn South assets which have now been fully integrated into the Australia region and are exceeding our expectations. The star performer was the Granny Smith mine which contributed 84,600 ounces at an AIC of US$692/oz for the quarter. Year to date, the mine has produced 151,100 ounces at an AIC of US$788/oz, against full year guidance of 240,000 ounces at an AIC of US$1,060/oz.

A key focus of the Australian portfolio is the accelerated US$52 million near-mine exploration programme at all of the mines in the region, aimed at increasing the Resource and Reserve position of these mines by the end of 2014. Appreciable progress has been made, in particular, at St Ives with the newly discovered high-grade-Invincible deposit, and at Granny Smith where exploration results are indicating significant Resource and Reserve expansion potential at the Wallaby underground deposit. Good progress is also being made at Agnew/Lawlers with potential extensions to the Waroonga underground mine as well as the New Holland and Genesis underground ore bodies. During the quarter, we hosted a series of site visits to our Australian mines, to give the investment community some insight into the outstanding potential of these assets. The presentations are available on our website at

During the quarter, the Australian legislature repealed the controversial carbon tax laws which will bring welcome tax relief to the gold mining sector in particular. The savings to the mines in the Gold Fields portfolio is approximately A$15 million per annum.

The disposal of non-core assets from our international project portfolio

During the quarter, good progress was made with the disposal of two further non-core assets in our International Projects portfolio, with the disposal of both the Yanfolila project in Mali as well as the Chucapaca project in Peru.

Gold Fields sold its 85 per cent interest in the Yanfolila project in Mali to London-listed Hummingbird Resources for US$20 million in the form of Hummingbird shares. The consideration represents an acquisition price of US$16/oz, which was higher than both (a) the weighted average enterprise value per resource ounce of listed West African gold companies; and (b) recent M&A precedents of West African exploration/development assets, of US$14/oz. Through our shareholding in Hummingbird, which also holds the Dugbe asset in Liberia, we see real potential for Gold Fields to receive significant growth in the value of its shareholding, which was a key consideration in favouring this bid.

The latest sale is that of the Chucapaca project in southern Peru. Gold Fields has agreed to sell its 51 per cent stake in Canteras del Hallazgo S.A.C (the Chucapaca project) to its joint venture partner in the project, Compañía de Minas Buenaventura S.A.A. (Buenaventura). Buenaventura is Peru’s largest publicly traded, precious metals mining company and previously owned 49 per cent in the Chucapaca project. The total agreed sale price is US$81 million all paid on closing of the agreement and Gold Fields will also receive an uncapped 1.5 per cent net smelter royalty on all future gold, silver and copper sales emanating in the area of interest. Not only does the consideration ensure that all of our historical costs on the project are recouped, the consideration also represents an acquisition price of US$26 per attributable gold ounce (gold resource of 6.07 Moz), which is higher than the weighted average enterprise value per resource ounce of listed companies with projects in Latin America (average of US$22/oz) and those with open pit projects globally (average of US$26/oz). The royalty of 1.5 per cent on all future production provides us with further future upside, especially as we see a quality company like Buenaventura moving this project swiftly ahead. As a result, the Chucapaca project has been classified as held for sale at 30 June 2014.

The sale of our holdings in these projects is in line with our strategy of focusing on growing cash flow through quality assets. This focus has also led us to move away from greenfields exploration as a strategy for growth, in favour of the acquisition of inproduction ounces such as the Yilgarn South assets and near-mine exploration and development at our Australian, Ghanaian and Peruvian assets.

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$3.47 – US$4.32
– at end June 2014 768,905,142   Average Volume – Quarter 3,062,742 shares/day
– average for the quarter 768,872,415   JSE Limited – (GFI)  
Free Float 100 per cent  
ADR Ratio 1:1   Range – Quarter ZAR36.90 – ZAR44.85
Bloomberg/Reuters GFISJ/GFLJ.J   Average Volume – Quarter 1,957,814 shares/day