Gold Fields
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Certain forward looking statements

This report contains forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, with respect to Gold Fields' financial condition, results of operations, business strategies, operating efficiencies, competitive position, growth opportunities for existing services, plans and objectives of management, markets for stock and other matters. Such forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "aims", "continues", "expects", "hopes", "may", "will", "would" or "could" or, in each case, their negative or other various or comparable terminology.

These 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 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... read more

Salient features

US$49 million
cash inflow
from operating activities*
  Gruyere commissioned

Successful debt refinancing

Group returns to cash flow positive after a
two-year reinvestment period

US$88 million realised from disposal of
non-core investments

Net debt reduced

On track to achieve guidance
1,083
million ounces of
attributable gold production
 
US$1,106
per ounce of
All-in costs
 
Note: *Cash flow from operating activities less net capital expenditure, environmental payments and finance lease payments.
JOHANNESBURG. 15 August 2019: Gold Fields Limited (NYSE & JSE: GFI) today announced profit attributable to owners of the parent for the six months to 30 June 2019 of US$71m (US$0.09 per share). This compared with losses of US$367m (US$0.45 per share) for the six months to 30 June 2018. Normalised profit of US$126m for the six months to 30 June 2019 compared with US$43m for the six months to 30 June 2018.

An interim dividend of 60 SA cents per share (gross) is payable on 9 September 2019.
Statement by Nick Holland,
Chief Executive Officer of Gold Fields

Safety is our first value

It is with deep sadness that we have to report that Maria Ramela, an employee at South Deep, lost her life in a mining incident on 2 June 2019. The 38-year old trackless crew leader was fatally injured after being struck by a rock ejected from the rockface following a series of four seismic events in close proximity and quick succession.

Continue reading...

In addition, three serious injuries were reported for H1 2019, compared with two in H1 2018. These incidents serve as a stark reminder that our focus on safety has to be relentless. In this regard, in 2017 our Executive team initiated a Safety Leadership Group, which is chaired by Stuart Mathews, Executive Vice President Australia. One of the key strategic objectives of this group, is to develop a culture of safety leadership within the organisation and firmly embed safety management through systems, behaviour and leadership.

A workshop was held in July 2019, where a dedicated safety leadership training package called Courageous Safety Leadership was launched. The training will be rolled out across the organisation and will be standard for all new employees. We will also be extending our Australian behaviour-based programme, Vital Behaviours, to entrench safe behaviours and choices within every activity across the entire business.

Turning net cash flow positive in H1 2019

We are pleased to report that after a two-year reinvestment period (2017 and 2018), Gold Fields turned net cash flow positive in H1 2019, earlier than originally anticipated, generating US$49m for the six month period (after taking into account all costs in the business including debt service costs and all project capex), which compares to the net cash outflow of US$79m in H1 2018. We expect the Group's cash generating ability to increase in H2 2019 and into 2020 as the project capex reduces and contribution from the new projects increases.

Looking at the core operations (excluding project spending on Gruyere), the group generated net cash flow of US$198m in H1 2019 compared with US$128m generated in Q2 2019.

As reported in Q1 2019, Gold Fields adopted the new lease accounting standard (IFRS 16) on 1 January 2019, which has impacted the reporting of net debt and the net debt to EBITDA ratio. On the new classification, the net debt balance at the end of June 2019 was US$1.79bn, with a net debt to EBITDA ratio of 1.59x. Using the old classification (pre-IFRS 16), the net debt balance at the end of June 2019 was US$1.50bn, which is an improvement on that reported at the end of December 2018 of US$1.61bn. The net debt to EBITDA also improved over the six month period to 1.36x at the end of H1 2019 from 1.45x at the end of FY 2018.

As reported in the recent trading statement, attributable gold equivalent production for the six months ended 30 June 2019 increased by 9% YoY to 1,083koz (H1 2018: 994koz), mainly due to the inclusion of the contribution from Asanko in H1 2019.

On 14 November 2018, the World Gold Council (WGC) published an update to its guidance on the interpretation of all-in sustaining costs (AISC) and all-in costs (AIC). Gold Fields has adopted the revision prospectively from 1 January 2019. Based on the revised WGC guidance, AISC for the Group is US$891/oz for H1 2019. On the previous interpretation, AISC for the period was US$973/oz (H1 2018: US$965/oz), marginally higher YoY.

Whilst cognisant that Gold Fields has been funding two major projects (Damang and Gruyere) over the past two years, AIC for H1 2019 was 5% lower YoY at US$1,106/oz (H1 2018: US$1,169/oz) as project capital started to decrease. AIC reporting was not affected by the revised WGC guidance.

Normalised earnings for the six months ended June 2019 were US$126m or US$0.15 per share, compared with US$43m or US$0.05 per share in for the six months ended June 2018.

In line with our dividend policy of paying out between 25% and 35% of normalised profit as dividends, we have declared an interim dividend of 60 SA cents per share, which compared with the 2018 interim dividend of 20 SA cents per share.

Update on projects

Gruyere

Gruyere reached the milestone of pouring first gold just post the close of the June 2019 quarter, with three dore gold bars totalling 1,139oz being produced from the Carbon-in-Leach (CIL) and elution circuits. With delivery of first gold, focus shifted to commissioning of the final components of the processing plant, in particular the ball mill was completed and brought into production in July – August.

Mining activity has delivered 2.5 million tonnes of ore mined year-to-date and is ahead of plan. Ore delivery comprised 1.3 million tonnes of ore at a grade of 1.04g/t for 43koz, and a further 1.2 million tonnes of low grade at 0.61g/t for 22koz (100% basis). Low grade ore has been used for initial plant feed during commissioning, final construction and sheeting of the Run-of-Mine stockpile platform, reclaim stockpile, and planned building of low grade stockpiles for the longer term.

Practical completion (plant running uninterrupted for 96 hours) was achieved on 10 August and the ramp-up to steady state is progressing well.

As previously announced, production for FY 2019 is now expected to be between 75koz to 100koz (100% basis), while the Final Forecast Capital Cost estimate remains unchanged at A$621m (100% basis).

AIC for FY 2019 is expected to be A$4,450/oz (previously A$3,178/oz), based on gold sold (associated with the upper end of production guidance) and assuming commercial levels of production are achieved at the end of Q3 2019.

Damang

Damang put in another solid performance during H1 2019, beating plan on both production and costs, and is on track to meet full year guidance of 218koz. The mine produced 112koz during the first half (Q2 2019: 55koz) at AISC of US$652/oz (Q2 2019: US$673/oz), based on the original WGC interpretation, and AIC of US$1,061/oz (Q2 2019: US$1,097/oz). Encouragingly, Damang generated free cash after all capital for H1 2019.

At the end of the June 2019 quarter, and 30 months into the Damang Reinvestment Project (DRP), total material mined amounted to 103Mt, 19% ahead of the project schedule. Gold produced during the same period was 436koz, 27% above the DRP ounces of 344koz. The project capital spent to date is US$320m versus the original DRP budget to-date of US$275m, largely driven by the additional capital waste tonnes mined, which has generated additional production and got the project ahead of schedule.

Salares Norte

The focus at Salares Norte during H1 2019 was responding to queries related to the Environmental Impact Assessment (EIA) as well as progressing detailed engineering, which was at 33% completed at the end of the period. We expect the EIA to be granted within the next 12 months.

District exploration continued at Horizonte, a concession near the proposed processing plant site, with further encouraging results.

Regional performance in H1 2019

Australia

Gold production for the Australia region for the six months ended June 2019 was 2% lower YoY at 435koz from 442koz in H1 2018, due to lower production at all operations. AIC for the region (excluding Gruyere) increased by 26% YoY to A$1,465/oz (US$1,035/oz) from A$1,166/oz (US$900/oz). The increase in AIC during the period was mainly due to the net gold-in-process movement at St Ives of US$42m (reflects the change from a build-up in the previous year to a drawdown in the current year of stockpiled ore) and the extraordinary one-off capital of US$22m at Agnew that related to the construction of the new accommodation village. The GIP build-up at St Ives in 2018 related to mining significantly more material in the open pits than what could be processed (due to capacity and blending constraints) and in line with the mining plan that was optimised given that the Invincible open pit is nearing completion.

Based on the revised WGC interpretation guidance, AISC for the Australia region was A$1,191/oz (US$841/oz) for H1 2019. The region remains on track to meet cost and production guidance provided in February 2019.

Net cash inflow from the region for the six months ended June 2019, excluding the US$65m spent on Gruyere, was US$92m (compared with US$86m in H1 2018).

During the six months ended June 2019, A$44m of the exploration budget was spent, with 190,512 metres drilled during the period. The Invincible complex at St Ives continues to grow laterally and at depth and is expected to be a key ore source for years to come. At Agnew, drilling at Waroonga North continued to yield positive results with indications of being open laterally and at depth. Similarly, Redeemer along with Barren Lands are emerging as likely new ore sources for the future. Resource and reserve delineation is underway and is expected to be completed by the next declaration, early in 2020.

On the back of the increased prospectivity at Agnew, Gold Fields has invested in two key projects at the mine:

The construction of a new accommodation village, which was completed during H1 2019, at a total cost of A$40m (US$28m) which is expected to be recouped within five years through lower operating costs; and
Gold Fields and global energy group EDL announced a A$112m investment in a world-leading energy microgrid combining wind, solar, gas and battery storage. The microgrid will be owned and operated by EDL, which will recoup its investment via a 10-year electricity supply agreement with Agnew. This will provide incremental power supply beyond the base at a lower cost.

Granny Smith has materially increased resources (4x) and reserves (3x) since acquisition. The mine is now operating at a depth approaching 1.2 kilometres. As mining is getting deeper there has been changing geotechnical conditions and risk as well as increased haulage distances to surface. Mineral reserves have been defined to Zone 135 level at a depth of approximately 1.4 kilometres and exploration has defined mineralisation extending to a potential Zone 150 level at a depth of up to 1.9 kilometres. The mine has committed to an in-depth mining method and haulage study which is expected to be completed over the next 18 months, including a possible shaft haulage option, to set up the mine for the longer term and realise the full value potential of the existing and future mineral resources.

West Africa

Attributable gold production at the West African operations (including Asanko), increased by 25% to 400koz in H1 2019 from 319koz in H1 2018 due to the inclusion of 55koz (45% basis) from Asanko for the six months ended 30 June 2019 as well as increased production at Tarkwa and Damang.

AIC for the region (including Asanko) decreased 10% YoY to US$1,007/oz from US$1,114/oz due to higher gold sold, lower sustaining capital and lower expenditure on the Damang reinvestment project. Capex for the Damang reinvestment project was US$46m for the six months ended June 2019, compared with US$66m for the six months ended June 2018. The AISC for the Ghana region (which excludes the project capex for Damang) decreased 3% YoY to US$892/oz.

The region (excluding Asanko) generated net cash inflow of US$72m for H1 2019 from an outflow of US$2m for the six months to June 2018.

South America

Attributable equivalent gold production at Cerro Corona increased 14% YoY to 156koz from 137koz in H1 2018 mainly due to mining of higher grade areas, in line with the mining sequence. AIC decreased by 5% YoY to US$698 per equivalent ounce from US$737 per equivalent ounce in H1 2018, due to higher equivalent ounces sold, partially offset by higher capital expenditure and higher cost of sales before amortisation and depreciation. Based on the revised WGC interpretation, AISC was US$684/oz for H1 2019. The mine generated net cash flow of US$52m, compared to US$41m for the six months ended June 2018.

South Deep

After an expected slow start in Q1 2019 following the restructuring at the end of 2018, South Deep continued to make positive progress on most of the performance metrics during the second quarter. Gold production increased by 67% to 1,782kg (57koz) in the June quarter from 1,069kg (34koz) in the March quarter and production performance was in line with expectations, supporting production guidance for the year.

Destress mining increased by 63% to 6,310 square metres in the June quarter from 3,881 square metres in the March quarter. This improvement was due to enhanced operational performance and an increase in the number of destress cuts available. Longhole stoping increased by 34% to 137,500 tonnes from 102,500 tonnes.

AIC decreased by 34% to R590,492/kg (US$1,275/oz) in the June quarter from R900,408/kg (US$1,992/oz) in the March quarter, mainly due to higher gold sold and lower sustaining capex. Encouragingly, net cash flow for the quarter was a positive R71m.

For the six months to 30 June 2019, production at South Deep decreased by 5% YoY to 2,851kg (92koz) from 3,003kg (97koz) for the six months ended June 2018. Underground reef yield increased by 24% YoY to 6.5g/t mainly due to loading of previously mined ore in higher grade areas which was inaccessible due to ramp rehabilitation work and higher grade ore mined from the proximal portion of the orebody (the proximal section of the orebody is generally associated with higher in-situ grade), in line with the geotechnical mining sequence.

As part of the restructuring in 2018, the mobile underground production fleet was rationalised. The drill rig fleet was reduced by 29% from 21 rigs to 15 rigs. Coupled with the reduced fleet and in line with the productivity interventions introduced, the average metres per rig (development and destress) have increased by 49% YoY to 55 metres per rig per month for the six months ending June 2019 from 37 metres per rig per month for the six months ending June 2018. Similarly, there was a significant increase in stoping tonnes per rig (long hole stoping and benching) to 10,253 tonnes per rig per month in H1 2019 from 5,518 tonnes per rig per month in H1 2018.

AIC for the six months ended June 2019 decreased 2% YoY to R698,982/kg (US$1,529/oz) (H1 2018: R715,373/kg or US$1,816/oz). Net cash outflow for the six months ended 30 June 2019 was R238m (US$17m) compared to an outflow of R656m (US$54m) in H1 2018.

The focus at South Deep remains on optimising the entire value chain to open, mine and fill voids as efficiently as possible along with enabling factors around fleet management, training and coaching, all underpinned by a commitment to safety and health.

Successful debt refinancing

New bonds issued

On 9 May 2019 Gold Fields successfully concluded the raising of two new bonds – a US$500m 5-year bond with a coupon of 5.125% and a US$500m 10-year bond with a coupon of 6.125% – raising a total of US$1 billion at an average coupon of 5.625%.

The proceeds of the bond raising were used to repay amounts outstanding under the US$1,290m Credit Facilities Agreement and to buyback US$250m of the outstanding 2020 notes at 102% of par.

US$1,200 million revolving credit facility

On 25 July 2019, Gold Fields Orogen Holding (BVI) Limited and Gold Fields Ghana Holdings (BVI) Limited entered into a US$1,200 million revolving credit facilities agreement, with a syndicate of international banks and financial institutions. The new facilities which became effective on the same day comprise two tranches:

US$600m 3+1+1 (upfront extension option subject to bank consent) year revolving credit facility (RCF) – at a margin of 1.45% over Libor; and
US$600m 5+1+1 (upfront extension option subject to bank consent) year revolving credit facility (RCF) – at a margin of 1.70% over Libor.

Gold Fields was upgraded to Baa3 by Moody's on 26 June 2018 and the new transaction allowed the Company to align the documentation to Investment Grade terms and conditions. Gold Fields has also adopted IFRS 16 and improved its financial covenants to accommodate the treatment of operating leases as follows:

Net Debt to EBITDA covenant has moved from ≤2.5 times to ≤3.5 times; and
Consolidated EBITDA to Consolidated Net Finance Charges covenant has been reduced from ≥5 times to ≥4 times.

The purpose of the new facilities is:

to refinance the US$1,290m credit facilities agreement dated 6 June 2016;
to repay the Gold Fields bonds maturing in 2020; and
to fund general corporate and working capital requirements of the Gold Fields group.

Sale of non-core assets

During H1 2019, in-line with its key strategic objective of paying down its debt, Gold Fields sold its shareholdings in two of its non-core investments, Maverix Metals and Red 5, for combined proceeds of US$88m, which were used to retire debt. Both positions were sold at a significant premium to the look-through acquisition costs.

2019 outlook and guidance – unchanged

Attributable equivalent gold production for the Group for 2019 is expected to be between 2.13Moz and 2.18Moz. AISC is expected to be between US$980/oz and US$995/oz based on the original WGC interpretation. AIC is planned to be between US$1,075/oz and US$1,095/oz. These expectations assume exchange rates of R/US$:13.80 and A$/US$:0.75.

Production for South Deep is expected to be 6,000kg (193koz), with AIC of R610,000/kg (US$1,394/oz).

For 2019, Gold Fields has undertaken certain gold price hedging, in order to secure short-term cash flow and protect the balance sheet from the volatility of the gold price as we complete our investment phase and ramp up the projects.

Post H1 2019 events

Tarkwa-Damang road

On 9 July 2019, Gold Fields officially commissioned the reconstructed 33km road in Ghana's Western Region linking the Tarkwa and Damang mines. The asphalt road, which cost approximately GHS145m (US$27m) and has a life span of over 20 years, cuts travel times by more than half and reduces safety risks significantly. It also serves several communities along the road and is expected to ease transportation of people, goods and services as well as boost economic activities. Ghanaian contractors undertook the construction, with the Ghana Highway Authority responsible for managing and maintaining the road. It is the largest-ever public infrastructure project funded by Gold Fields and a notable example of our philosophy of shared value working in practice.

Silicosis settlement

On 26 July 2019, the Johannesburg High Court approved the R5.2bn settlement of the silicosis and tuberculosis class action suit between the Occupational Lung Disease Working Group – representing Gold Fields, African Rainbow Minerals, Anglo American SA, AngloGold Ashanti, Harmony and Sibanye Stillwater – and lawyers representing affected mineworkers. After a mandatory three-month period, during which potential beneficiaries can opt out of the settlement agreement, the settlement funds will be used to establish the Thiamiso Trust. The trust will track and trace class members, process all submitted claims, including the undertaking of benefit medical examinations, and pay benefits to eligible claimants. Gold Fields has provided R384m for its share of the settlement cost.

Asanko update

Asanko and Gold Fields have agreed to a way forward on a revised life of mine plan. The updated Mineral Resources and Reserves are expected to be released in Q1 2020 and will be based on the following key assumptions:

Mine plan based on the open pit mineral reserves at Esaase and Nkran (reflecting Cut 2 with stripping now nearing completion and a further Cut 3 pushback) as well as mineral resources from satellite pits at Akwasiso, Adubiaso, Abore and Asuadai;
Production based on the existing processing plant and infrastructure treating 5.4 million tonnes per annum of ore;
Targeting a remaining life of mine of 8-10 years with gold production of 225koz to 250koz per year;
Ore will continue to be transported from the Esaase pit to the processing facility via road trucks. The existing 27km haul road will be upgraded as required to support higher haulage rates in the future;
Significant capital expenditure is expected to be limited to the relocation of the Tetrem village (commencing in Q3 2019), an upgrade to the Esaase ore haul road (anticipated in 2022), waste stripping of Nkran Cut 3 and ongoing Tailing Storage Facility capital.

In addition, the JV partners are progressing an updated exploration strategy over the entire land package.

Nick Holland
Chief Executive Officer
15 August 2019



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STOCK DATA FOR THE 6 MONTHS ENDED 30 JUNE 2019
 
Number of shares in issue     NYSE – (GFI)      
– at 30 June 2019   828,632,707     Range – Quarter   US$3.61 – US$5.57  
– average for the six months   826,499,428     Average Volume – six months   6,495,354 shares/day  
Free Float   100 per cent     JSE LIMITED – (GFI)      
ADR Ratio   1:1     Range – Quarter   ZAR50.83 – ZAR84.11  
Bloomberg/Reuters   GFISJ/GFLJ.J     Average Volume – six months   2,626,012 shares/day