Six months ended 31 December 2010 compared with six months ended 31 December 2009

Group attributable gold production for the six months ended 31 December 2010 was similar to the six months ended December 2009, at 1.8 million ounces.

At the South Africa region gold production decreased from 1,050,000 ounces for the six months ended December 2009 to 982,000 ounces for the six months ended December 2010.  KDC gold production decreased by 9 per cent from 695,000 ounces to 634,000 ounces mainly due to lower grades mined and processed.  At Beatrix, gold production decreased by 7 per cent from 217,000 ounces to 202,000 ounces due to lower mining volumes.  South Deep’s gold production increased by 7 per cent from 137,000 ounces to 146,000 ounces in line with the build-up plan. 

At the West Africa region total managed gold production increased from 445,000 ounces for the six months ended December 2009 to 479,000 ounces for the six months ended December 2010.  At Damang, gold production increased by 21 per cent from 97,000 ounces to 117,000 ounces mainly due to  the 13 day plant shutdown in December 2009 and the commissioning of the secondary crusher during the six months to December 2010, which improved throughput and grades.  Tarkwa’s production increased from 348,000 ounces to 362,000 ounces mainly due to an increase in CIL throughput. 

At the South America region, gold equivalent production at Cerro Corona increased from 187,000 ounces for the six months ended 31 December 2009 to 200,000 ounces for the six months ended 31 December 2010 due to the higher copper price and higher grades.

At the Australasia region, gold production increased from 289,000 ounces for the six months ended December 2009 to 323,000 ounces for the six months ended December 2010.  St Ives increased by 24 per cent from 196,000 ounces to 243,000 ounces mainly due to an increase in underground tonnes processed and higher head grades from underground and surface  operations. Production at Agnew decreased by 14 per cent from 93,000 ounces to 80,000 ounces, mainly due to the restricted underground stope access at Kim South.

Operating costs, including gold-in-process movements, increased by 10 per cent from R9,218 million (US$1,205 million) to R10,147 million (US$1,421 million).  The increase in costs was mainly due to annual wage increases at all the operations and an increase in electricity costs at the South African and Ghanaian operations due to tariff increases.  At Cerro Corona, the increase in costs was due to the production build-up and increased statutory workers participation in profit.  Total cash cost for the Group increased from R147,495 per kilogram (US$600 per ounce) to R163,416 per kilogram (US$712 per ounce) due to the increase in costs and the introduction of royalties in South Africa.

At the South Africa region operating costs increased by 8 per cent from R5,567 million (US$728 million) for the six months ended 31 December 2009 to R6,039 million (US$846 million) for the six months ended 31 December 2010.  This was due to annual wage increases, a 27.5 per cent increase in electricity tariffs and normal inflationary increases in stores and contractors.  This was partially offset by cost saving initiatives implemented during the six months to December 2010 which offset around 4 per cent of the total increase. 

At the West Africa region, operating costs including gold-in-process movements increased from US$226 million to US$282 million. This was mainly due to the increase in mining volumes and an increase in power costs. 

At the South America region, operating costs at Cerro Corona at US$76 million, were US$9 million more than in the six months ended 31 December 2009.  This was mainly due to the increase in production and increased statutory workers participation in profits because of the increase in earnings.

At the Australasia region, operating costs including gold-in-process movements increased from A$212 million to A$232 million due to the increased production, increased deferred waste charges and increased grade control drilling at St Ives.  At Agnew the increased cost was mainly due to the cost incurred in rehabilitation of poor ground conditions at Kim South.

Operating profit increased from R6,265 million (US$819 million) to R8,161 million (US$1,143 million). 

Negative non-recurring items of R2,467 million (US$346 million) for the six months ended 31 December 2010, compare with positive non-recurring items of R1,099 million (US$144 million) for the six months ended 31 December 2009.  The non-recurring items for the six months ended 31 December 2010 were as a result of the South Deep transaction of R825 million (US$116 million), share-based payments for the GFIMSA (Gold Fields’ South African operations) transaction of R73 million (US$10 million), voluntary separation packages of R214 million (US$30 million) and business process re-engineering costs of R107 million (US$15 million) at all the operations.

The non-recurring items for the six months ended 31 December 2009 included a  R447 million (US$58 million) profit on the sale of our stake in Sino Gold, a profit on the sale of Eldorado shares of R282 million (US$37 million), Gold Fields receiving an additional 4,1 million shares valued at R402 million (US$53 million) received as a result of Gold Fields exercising its top-up right in Eldorado and Sino Gold, whereby Eldorado acquired all of the outstanding issued shares of Sino Gold.  The balance of R30 million (US$6 million) included a profit on the sale of our stake in an exploration junior, partly offset by a R60 million (US$8 million) impairment of sundry offshore exploration investments.

After accounting for the sundry items, royalties and taxation, the net loss attributable to ordinary shareholders amounted to R76 million (US$11 million), compared with earnings of R2,416 million (US$316 million) for the six months ended 31 December 2009.