Consequently, we report a normalised loss of
US$13 million, compared to normalised
earnings of US$17 million in the December
2014 quarter. The loss included a negative
deferred tax adjustment of US$21 million to
account for exchange rate changes. Cash
outflow from operating activities less net
capital expenditure and environmental
payments amounted to US$29 million in the
March 2015 quarter compared with an inflow
of US$54 million in the December 2014
quarter. The FCF margin of negative 3 per
cent in the March quarter compared with
positive 9 per cent in the December quarter,
mainly due to lower gold sold and higher
seasonal taxation paid in Ghana and
Australia.
FY15 outlook maintained
Despite the seasonally weaker results for Q1,
previously published guidance for 2015, of
attributable gold equivalent production of 2.2
million ounces at AISC of US$1,055/oz and AIC
of US$1,075/oz, remains intact.
SOUTH AFRICA
Regrettably, we had a fatal accident at South
Deep on 8 March. Our sincere condolences go
out to the family, friends and colleagues of Mr
Kennedy Katongo, who tragically lost his life in
an engineering related accident.
During the March quarter, gold production at
South Deep decreased by 25 per cent quarter
on quarter to 1,129 kilograms (36,300 ounces),
mainly due to the extended Christmas break as
well as the previously flagged knock-on effects
of the four-month safety-related closure in the
second half of 2014. The work to ‘get the
basics right’, which we reported on previously,
is ongoing and good progress is being made on
recruiting additional skills at the mine. These
interventions are expected to gain traction
progressively through the remainder of the year
and, together with the ground-breaking three-year
wage deal signed post the end of the
quarter (discussed below), is expected to
contribute to a stronger performance during the
second half of the year. In addition, we have
implemented significant initiatives to improve
the culture of safety and productivity, the
benefits of which are only likely to be realised in
the medium term.
WEST AFRICA
Attributable gold production at the West African operations decreased
by 3 per cent quarter on quarter to 157,300 ounces. The decrease in
production at Damang was partially offset by the increase in
production at Tarkwa. AIC increased by 15 per cent quarter on
quarter to US$1,299/oz, mainly due to higher capital expenditure
related to a large fleet replacement at Tarkwa partially offset by lower
operating costs and an inventory credit to costs.
PERU
Attributable equivalent gold production at Cerro Corona decreased by
21 per cent to 66,300 ounces, mainly due to lower gold and copper
head grades treated, in line with the mine sequencing and the
production plan for the March quarter. AIC decreased by 2 per cent
quarter on quarter to US$671eq/oz on the back of lower gold sold and
lower by-product credits, partially offset by lower operating costs, an
inventory credit to costs and lower capital expenditure.
AUSTRALIA
Gold production at the Australian operations decreased by 7 per cent
quarter on quarter to 241,400 ounces, with lower production at all the
operations except St Ives. AIC increased by 14 per cent quarter on
quarter to A$1,240/oz (US$978/oz) mainly due to lower gold sold and
the gold inventory charge to cost, partially offset by the lower
operating costs and lower capital expenditure.
Marginal increase in net debt
Mainly as a result of the decrease in cash inflow from operating
activities from US$225 million in the December 2014 quarter to
US$150 million in the March 2015 quarter, net debt increased by
US$46 million from US$1,453 million at the end of December 2014 to
US$1,499 million at the end of March 2015. Net debt/EBITDA at the
end of the March 2015 quarter was 1.41x, compared to 1.30x at the
end of December 2014. We maintain our target of reducing the net
debt/EBITDA ratio to 1.0x by the end of 2016.
South Deep wage deal signed post quarter-end
On 10 April 2015, we signed a three-year wage and other conditions
of employment agreement with the registered trade unions at our
South Deep mine. The agreement is expected to result in average
annual wage increases of 10 per cent over the three-year period of
the deal, with the first increase effective on 1 April 2015.
The negotiations took place at a company-level in recognition of
South Deep’s significantly different operating model and labour profile
to that of the other gold mining companies in South Africa.
Specifically, South Deep is the only fully mechanised gold mine in
South Africa. This ground-breaking deal will contribute to a more
stable operating environment for South Deep over the next three
years and position the mine more competitively to attract and retain
the scarce mechanised mining skills required for it to achieve its full
potential. We thank our union partners for the constructive
engagement and look forward to working together to deliver South
Deep.
Reporting
The Group’s Integrated Annual Report, Annual Financial Statements
and Mineral Resource and Mineral Reserve Statements for the year
ended 31 December 2014 as well as the Form 20F, were all
published at the end of the quarter. These documents, which are
available on-line and in printed form from the Company Secretary,
were designed to provide all stakeholders with a comprehensive
overview of the Group’s performance as well as its operational,
financial and social strategies. Stakeholders are encouraged to
scrutinise these documents and to contact us with any comments or
questions.
Mining charter declarator court process
Gold Fields confirms that on 31 March 2015 the Mineral Resources
Minister Advocate Ngoako Ramatlhodi and the Chamber of Mines
confirmed that the Minister, the Department of Mineral Resources
(DMR) and the Chamber of Mines of South Africa would jointly
approach the courts to clarify, amongst others, the principles of
assessing the ownership element of the mining charter. Constructive
collaboration between the Minister, the DMR and the Chamber
continue in preparation for the declaratory process to be filed in due
course.
