GOLD FIELDS – Unaudited results for the year ended 31 december 2017

For the fifth consecutive year, we have met or exceeded our production and cost guidance for the year. Attributable gold equivalent production for 2017 was 2.16Moz (FY16: 2.15Moz), exceeding guidance of 2.10-2.15Moz. All-in sustaining costs (AISC) and all-in costs (AIC) were US$955/oz (FY16: US$980/oz) and US$1,088/oz (FY16: US$1,006/oz), respectively, both below the lower end of the guidance range provided in February 2017 – AISC: US$1,010-1,030/oz and AIC: US$1,170-1,190/oz. The international operations all exceeded guidance for the year, once again highlighting the quality of these assets. South Deep was unable to recover from the tough Q1 2017 which was impacted by two fatalities and three falls of ground in the high grade corridors, with production for the year 11% below original guidance (costs were only 3% above guidance), as flagged in Q3 2017 operating results in October 2017.

As per our trading statement released on 8 February 2018, headline earnings for 2017 were US$194m or US$0.24 per share. Net loss for the year was US$35m or US$0.04 per share. Normalised earnings for the year was US$138m or US$0.17 per share.

In line with our dividend policy of paying out 25% to 35% of net earnings as dividends, we declared a final dividend of 50 SA cents per share. This takes the total dividend for the year to 90 SA cents per share (FY16: 110 SA cents per share).

On the back of the cash break even position from operating activities achieved for the year, the net debt at 31 December 2017 was US$1,303m, compared to US$1,166m at the end of FY16. This implies a net debt to adjusted EBITDA of 1.03x, compared to 0.95x at the end of December 2016 and largely in line with our target of 1.0x. Gold Fields balance sheet remains in a strong position to complete its reinvestment phase.

Update on projects

Damang

The Damang reinvestment project, which commenced on 23 December 2016, got off to a strong start and is currently tracking well against the project plan. During 2017, total tonnes mined were 40Mt vs. the original project schedule of 33Mt, driven by better than expected productivity. Gold produced of 144koz was 29% higher than guidance of 120koz, underpinned by additional volumes at higher grades from the Amoanda pit, while AIC of US$1,827/oz was significantly below guidance of US$2,250/oz.

Project capital of US$115m (included in the costs above) was spent during 2017, compared to the budget of US$120m. The cash outflow for the year was US$45m. Construction of the Far East Tailings Storage Facility (FETSF) commenced during Q1 2017, and the facility was commissioned by year-end, on time and within budget. The FETSF is planned to provide cost effective tailings capacity of 44Mt which is 10 years of capacity at steady state production. Decommissioning of the East Tailings Storage Facility (ETSF) commenced during Q1 2018.

Guidance for 2018 is production of 160koz at AIC of US$1,520/oz which includes project capital of US$105m. First ore from the main Damang pit is on track for Q2 2019.

Gruyere

Early work at Gruyere began in December 2016, with Gold Fields taking over management of the project on 1 February 2017. The project construction schedule remains unchanged, with engineering progress in line with budget at 72% and construction progress at 32% also in line with plan as at end-December 2017. The Gruyere village, which includes 648 rooms, offices and recreational facilities, was commissioned during H1 2017.

Costs incurred to date are also in line with the project budget, which was slightly increased to A$532m (US$400m) (100% basis) during H1 2017 following a detailed review of the feasibility study. A$477m (US$358m) of the total capital cost has been committed and priced, with A$186m (US$143m) already spent.

The Bulk Earthworks contract was awarded to MACA Civil in May 2017. The 28km Gruyere main access road and sealed airstrip have been completed, while the pit and tailings storage facility (TSF) areas were cleared during Q4 2017. Construction of the TSF embankment walls is scheduled for completion during H1 2018. The engineering, procurement and construction (EPC) contract for the Gruyere CIL processing plant and the associated infrastructure was awarded to Amec Foster Wheeler Cimvec JV. Construction of the seven carbon-in-leach tanks is progressing to plan. The SAG mill has been delivered while the Ball mill components, which are currently in Perth undergoing final inspection, is planned to be delivered in Q1 2018.

During H1 2017, a power supply contract was signed with APA Group, a leading Australian energy infrastructure business. APA has received final approval from the Western Australian Department of Mines for the 198km Yamarna gas pipeline from Laverton, which is scheduled for completion in H1 2018. Civil and structural works have also begun at the 45MW gas-powered Gruyere plant (build, own, operate model over life), which will be connected to the gas pipeline, and will supply the mine's energy needs for the life of mine.

The Yeo borefield is planned to serve as the main water source for the Gruyere processing plant. All 32 boreholes have been drilled and installation of the 95km water pipeline to the processing plant has commenced. Installation of the 22kV overhead power line servicing the borefield is scheduled to commence in Q2 2018. Finally, the mining services contract, which has a cost of A$400m (US$300m) over a five-year term, was executed with Downer EDI in Q4 2017. Downer began mobilising their workforce during Q1 2018 to begin construction of the mining infrastructure. Mining activities are planned to commence in Q4 2018.

Total project capital of A$311m (US$249m) (100% basis) has been budgeted for 2018. Gold Fields budget for Gruyere in 2018 is A$181m, which includes items not picked up in the JV such as capitalised interest on the Gruyere debt facility drawn down to fund the project. Gruyere remains on track for first production during Q1 2019.

Salares Norte

The feasibility study for the Salares Norte project is tracking well for completion by the end of 2018. The interim results from the feasibility study indicate the following metrics for the project:

•	Resource of 23.3Mt at 4.9g/t Au and 66.0g/t Ag, with 95% in the indicated category (majority of which are oxide material);
•	Annual throughput: 2mtpa;
•	Life of mine gold equivalent production: c.3.5Moz - front ended;
•	AISC: US$575 per gold equivalent ounce; and
•	Project capex: US$850m (+/-5%).

The project envisages open pit operations with a processing plant that includes both CIP and Merrill Crowe processes, due to the high silver content. Dry stack tailings are expected to be used. Water and Land Rights are already secured and permitted for the future operational stage. The environmental impact assessment (EIA) is expected to be lodged with the Chilean authorities during April 2018.

US$83m is budgeted for 2018, which includes US$13m for district exploration.

Regional performance in FY17

Australia

Gold production in the Australia region for FY2017 was 1% lower YoY at 935koz (FY16: 942koz), but exceeded original guidance of 910koz, which included Darlot for the full year. All operations (excluding Darlot) performed better than plan. AIC for the region was 2% lower YoY in A$ terms at A$1,239/oz (FY16: A$1,261/oz) and marginally higher YoY in US$ terms at US$948/oz (FY16: US$941/oz). The region had another strong year of cash generation, with net cash flow of US$189m for FY17 (FY16: US$256m), excluding Gruyere.

There were a number of important developments in the region during 2017:

•	As previously announced, the sale of Darlot to Red 5 was completed on 2 October 2017. Gold Fields received the relevant cash sums as well as the issue of new shares as part of the consideration and as a consequence of the partial underwriting of a rights issue by the Group. The net result is that Gold Fields has a 19.9% shareholding in Red 5.
•	The brownfields exploration programme in Australia continued to show positive results in 2017, with the increase in reserves more than replacing depletion in 2017. For the first time in four years, Agnew more than replaced depletion, with the future looking positive from the current exploration activities. The total exploration spend for the year was A$95m.
•	Mining at Invincible underground commenced in Q4 2017. The Invincible complex continues to grow and is expected to remain a key contributor to production at St Ives for many years to come.
•	A favourable advanced scoping study on the Paleochannel project at St Ives has moved the project into prefeasibility stage. The first part of the study will focus on evaluating a viable mining method and is expected to be completed by end 2018. The inventory being assessed on this project exceeds 2-3Moz.
•	Following a positive feasibility study of Zone 110/120, the board has approved the development of this extension to the Wallaby underground mine at Granny Smith. This includes mineral reserves of 1.3Moz and will extend Granny Smith's life to 2027 with tangible upside beyond that.

West Africa

Attributable gold production from the West Africa region decreased by 1% YoY to 639koz (FY16: 644koz) due to lower production at both Tarkwa and Damang. However, Damang materially outperformed guidance of 120koz, producing 144koz due to better than expected performance from Amoanda. AIC for the region increased by 10% YoY to US$1,119/oz (FY16: US$1,020/oz) mainly as a result of the project capex spent on the Damang reinvestment project. Despite the increase in capex for the year, the region generated net cash flow of US$64m for FY2017 (FY16: US$100m).

During Q4 2017, a decision was made to move Tarkwa to contractor mining. The rationale for the change includes unsustainable wage increases and demands, increase in operational costs as the pits get deeper and haulage distances get longer; as well as the need to replace aging fleet. As part of the process and in terms of the Ghanaian labour law a retrenchment process will be initiated, though the contractor has agreed to re-employ a large number of the 1,700 affected employees. This decision by the operation was met with 3 Gold Fields 2017 Results resistance from the Ghana Mineworkers Union, who have subsequently approached the court on grounds that the redundancy process is not lawful. A hearing has been set down for mid-February 2018. An update regarding the hearing will be provided once the legal process has run its course.

South America

Attributable equivalent gold production at Cerro Corona increased by 13% YoY to 305koz (FY16: 269koz), mainly due to higher copper prices, higher gold head grades and higher gold recovery. AIC decreased by 59% YoY to US$203 per gold ounce (FY16: US$499 per gold ounce). AIC per equivalent ounce decreased by 12% YoY to US$673 per equivalent ounce (FY16: US$762 per equivalent ounce). On the back of the strong performance from the operation, Cerro Corona generated net cash flow of US$117m (FY16: US$77m).

We are pleased to announce the successful extension of Cerro Corona's life to 2030. The life extension is to be achieved by a combination of a higher density factor along with an increase in the dam walls of the current tailings dam to 3,803m above sea level (which adds two years to the existing TSF) and in-pit tailings (which adds five years). The increased tailings storage comes at minimal additional capex and allows for an increase in reserves of 1.4Moz eq (40.1Mt at 0.5g/t Au and 0.4% Cu) (a 58% net increase), which converts 80% of resources. Cerro Corona remains a key asset for the Group and the life extension provides longevity for this highly cash generative region. Work on a scoping study for further life extension will be undertaken in 2018. As a result of the increased life, a previous impairment of US$53m (gross) has been reversed.

South Deep

2017 was a year of two halves for South Deep, with Q1 2017 negatively impacted by two fatal accidents and three falls of ground in the higher grade section of the mine which resulted in a deferral of mining higher grade areas. Production recovered through the rest of the year, with production in H2 2017 increasing by 36% to 5,038kg (162koz) from 3,710kg (119koz) in H1 2017.

Production for the year was 11% below original guidance, as flagged in the Q3 2017 operating results in October 2017, at 8,748kg (281koz), compared to 9,032kg (290koz) in FY16. AIC increased 3% YoY to R600,109/kg (US$1,400/oz) from R583,059/kg (US$1,234/oz) in FY16, 3% higher than guidance of R585,000/kg. Performance of key activities included:

o	As previously announced, the sale of Darlot to Red 5 was completed on 2 October 2017. Gold Fields received the relevant cash sums as well as the issue of new shares as part of the consideration and as a consequence of the partial underwriting of a rights issue by the Group. The net result is that Gold Fields has a 19.9% shareholding in Red 5.
o	The brownfields exploration programme in Australia continued to show positive results in 2017, with the increase in reserves more than replacing depletion in 2017. For the first time in four years, Agnew more than replaced depletion, with the future looking positive from the current exploration activities. The total exploration spend for the year was A$95m.
o	Mining at Invincible underground commenced in Q4 2017. The Invincible complex continues to grow and is expected to remain a key contributor to production at St Ives for many years to come.
o	A favourable advanced scoping study on the Paleochannel project at St Ives has moved the project into prefeasibility stage. The first part of the study will focus on evaluating a viable mining method and is expected to be completed by end 2018. The inventory being assessed on this project exceeds 2-3Moz.
o	Following a positive feasibility study of Zone 110/120, the board has approved the development of this extension to the Wallaby underground mine at Granny Smith. This includes mineral reserves of 1.3Moz and will extend Granny Smith's life to 2027 with tangible upside beyond that.

While good progress has been made on the technical front, with the implementation of the mining method receiving positive feedback from the Geotechnical Review Board (GRB - a group of pre-eminent international recognised geotechnical experts), the execution of the full mining value chain remains sub-optimal.

The goodwill impairment of R3.5bn (US$278m) (gross and after tax) related to the slow start of the rebase plan (announced in February 2017) over the past year and a reduction in the gold price and resource price assumptions used in the life of mine model. It is expected that the ramp-up will be more gradual. The steady state production target of c.500koz in 2022 has not changed. Post this impairment, the carrying value of South Deep is R24.7bn (US$1.96bn).

As a result of the slow start to the rebase plan in 2017, we expect a more gradual build up to steady state production of c.500koz by 2022. In October 2017, we noted that there would be a knock-on impact on 2018 production. We expect production for 2018 to be 10,000kg (322koz), 10% lower than the rebase plan. However, we expect AIC to be R540,000/kg, compared to R567,910/kg in the rebase plan.

Outlook for 2018

Attributable equivalent gold production for the Group for 2018 is expected to be between 2.08Moz and 2.10Moz with the main difference between 2017 and 2018 due to the sale of Darlot. AISC is expected to be between US$990/oz and US$1,010/oz. AIC for the Group is planned to be between US$1,190/oz and US$1,210/oz. These expectations assume exchange rates of R/US$:12.00 and A$/US$:0.80. AISC is planned to increase by between 4 to 6%, ~4% of which is due to stronger exchange rates and ~2% of which is due to increases in costs in local currency. AIC is planned to increase by between 9 to 11%, ~4% of which is due to stronger exchange rates and ~6% which is due increases in growth capital expenditure.

Capital expenditure for the Group is planned at US$835m. Sustaining capital expenditure for the Group is planned at US$549m and growth capital expenditure is planned at US$286m. The US$286m of growth capital expenditure comprises US$105m for Damang, A$181m (US$145m) for Gruyere, as well as R434m (US$36m) for South Deep. In addition, US$83m is planned for Salares Norte.

In 2017, total capital expenditure was US$840m with sustaining capital expenditure of US$624m and growth capital expenditure of US$216m. Expenditure on Salares Norte of US$53m in 2017.

Sale of Artic Platinum

Post year-end (as announced on 24 January 2018), Gold Fields completed the sale of its palladium-rich, polymetallic Arctic Platinum Project (APP) in northern Finland to a Finnish subsidiary of private equity fund CD Capital Natural Resources Fund III. The purchase consideration comprises US$40m cash and royalty (2% NSR (net smelter return) on all metals, with 1% capped at US$20 million and 1% uncapped).