Gold Fields

Statement By Gold Fields CEO Chris Griffith

H1 2021

The past four and a half months as the new CEO has been an interesting one. Living in the current COVID-19 world means the majority of my interactions with my team and the operations has been virtual. But, we have achieved a lot in these past months. Firstly, the operations have had a good six months, despite the ongoing challenges presented by the pandemic. We continue to deliver the higher gold price to the bottom line, with a further increase in normalised earnings. Despite the ramp up in project capex at Salares Norte, the business has generated strong free cash flow in H1 2021. We maintain both our production and cost guidance for the full year and expect to have a strong H2 2021.

We also want to pay tribute to Vumile Mgcine, our colleague at South Deep, who we lost in a mining incident in April of this year. There is no more tragic reminder of the overriding importance of safety at our mines than the death of a colleague. This year we also lost 15 colleagues (as at 6 August 2021) to COVID-19 in South Africa and Peru. Our heartfelt condolences go out to the families, friends and colleagues of all the colleagues we have lost.

A large part of my time in recent months has been focused on interrogating the strategy of the Company. I'm pleased to say, that, as I anticipated, the business is in a strong position. We have a solid production profile above 2Moz a year for the next decade. However, during that time we anticipate that our annual production will grow to 2.7Moz by 2024 before declining as some of our mines come to the end of their lives. We believe that we must now start looking at ways of preserving the value we have created beyond 2024.

We will maintain our current strategic focus on a portfolio of quality assets in good geographical and political jurisdictions, growing our Mineral Reserve and Resource base, as well as focusing on value creation and capital discipline. This strategy has worked well for us over the past number of years.

In addition we will increase our efforts to maximise the value potential from our existing assets and organic growth options, work to increase the value and quality of our portfolio of assets and build on our leading commitment to Environmental, Social, Governance (ESG). This may entail value-accretive acquisition opportunities to enhance our pipeline of projects as well as in-production assets to expand our current production base beyond 2030.

Our work on these strategic focus areas will continue in the coming months and we will provide a more holistic strategic view at the appropriate time.

COVID-19 update
While the impact of the COVID-19 pandemic on our operational performance has been relatively limited, the impact on our workforce has been devastating, particularly amid the so-called third wave of the pandemic and the spread of new variants of the virus in Q2 2021. So far this year (as at 6 August 2021), we have recorded 13 deaths among our workforce at South Deep in South Africa and two in Peru. This brings the total number of COVID-19 related deaths in the Company to 18 since the beginning of the pandemic in early 2020.

Critically, we are seeking to accelerate COVID-19 vaccination among our workforce and are collaborating closely with our host governments in doing so. South Deep and Salares Norte have been the most successful to date. As at 10 August, almost 74% of employees and 80% of contractors, over 3,200 people, received their first dose of the Pfizer vaccine at South Deep, while at Salares Norte 98% of employees and contractors have been vaccinated as part of government's vaccination campaign. At our other operations, the roll-out of vaccines has been slower in line with host government programmes.

Apart from the vaccination campaigns, we continue to support our workforce through, amongst others, educational awareness programmes, implementing stringent safety protocols, rapid testing and offering medical assistance if employees contract the virus. Since the beginning of the pandemic, Gold Fields has undertaken almost 127,000 tests among its 20,000 strong workforce. To date we have had 4,500 COVID-19 positive cases among employees and contractors. Currently active cases are 92, of which five are receiving care in hospitals.

The table below provides an overview of the number of COVID-19 infections at our mines to date, as well as recovery rates, vaccinations and other data.

COVID-19 report (as at 6 August 2021) Total  
Tested 126,390  
Positive 4,500  
Negative 121,834  
Awaiting results1 56  
Active cases1 92  
Hospitalised1 5  
Recovered 4,390  
Vaccinated2 6,721  
Died 18  
1 "Awaiting results" , "Active cases" and "Hospitalised" refers to the current figures.
2 Has received at least one vaccination. Private vaccinations by employees are not always declared.
  Numbers exclude Asanko/Galiano.

During 2020 our operations spent approximately US$30m on COVID-19 related initiatives and interventions such as specialised camp accommodation, testing equipment and facilities, additional labour costs and transport facilities. A further US$3m was spent on donations to assist governments and communities in their fight against the pandemic. In H1 this year the respective figures were US$12.1m and US$1.7m, as we continued investing in employee and community focused support programmes and projects.

H1 2021 in review
Attributable gold equivalent production for the six months ended 30 June 2021 increased by 2% YoY to 1,104koz (H1 2020: 1,087koz). This was a strong performance from the operations given that H1 2020 had an extra 10 production days (5% more) following the decision in Q2 2020 to align the production month-end with the calendar month-end.

All-in sustaining costs (AISC) for the Group for H1 2021 of US$1,093/oz compared to US$987/oz in H1 2020, an increase of 11% YoY, driven primarily by the strengthening of both the South African Rand and the Australian Dollar. The average US Dollar/Rand exchange rate strengthened by 12% from R16.50 for the six months ended 30 June 2020 to R14.54 for the six months ended 30 June 2021. The average Australian/US Dollar exchange rate strengthened by 17% from A$1.00 = US$0.66 to A$1.00 = US$0.77. If the all-in sustaining costs are normalised for the strengthening of the currencies by using the same exchange rates as in the first six months of 2020, the all-in sustaining costs would be US$1,002/oz for the six months ended 30 June 2021, representing a 2% increase. All-in cost (AIC) for H1 2021 were 20% higher YoY at US$1,274/oz (H1 2020: US$1,065/oz) primarily due to the strengthening of both the South African Rand and the Australian Dollar as well as the ramp up of project capital at Salares Norte during H1 2021. Normalising for the exchange rate differences by using the same exchange rates as in the first six months of 2020, the total all-in cost would be US$1,164/oz for the six months ended 30 June 2021, a 9% increase when compared with the six months ended 30 June 2020.

Gold Fields continued to deliver the average 10% higher gold price over the period to the bottom line, despite the increase in net operating costs. Normalised earnings for the six months ended June 2021 increased by 33% YoY to US$431m, or US$0.49 per share, compared to US$323m, or US$0.37 per share, for H1 2020.

Consequently, we have further increased our interim dividend. 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 210 SA cents per share which compared with the 2020 interim dividend of 160 SA cents per share.

Strong cash generation and further improved balance sheet
During H1 2021, Gold Fields, generated free cash flow of US$180m for the six month period (after taking into account all costs in the business and all project capex), which compares to the free cash flow of US$320m in H1 2020. This is a notable achievement, given the increase in project capex at Salares Norte and higher tax payments in the six months ended 30 June 2021. Looking at the core operations, the Group generated free cash flow from operations of US$399m in H1 2021, which compares to US$405m in H1 2020, mainly due to the higher tax payments, partially offset by the higher earnings.

The net debt balance at the end of June 2021 was US$1.097bn and our net debt to EBITDA ratio was 0.49x. This compares with a net debt balance of US$1.069bn and a net debt to EBITDA ratio of 0.56x at the end of December 2020. Excluding lease liabilities, the core net debt was US$663m at the end of H1 2021.

Regional overview
The Australian region produced 246koz at AIC of A$1,554/oz (US$1,197/oz) and AISC of A$1,452/oz (US$1,118/oz) during Q2 2021, bringing production for H1 2021 to 481koz at AIC of A$1,542/oz (US$1,189/oz).

Our mines in Ghana produced 219koz (including 45% of Asanko) at AIC of US$1,150/oz and AISC of US$1,123/oz during Q2 2021. For the six months ended 30 June 2021, Ghana produced 440koz at AIC of US$1,114/oz.

Cerro Corona produced 53koz (gold equivalent) at AIC of US$1,165 per gold equivalent ounce and AISC of US$1,014 per gold equivalent ounce during the June quarter, resulting in 99koz (gold equivalent) being produced in H1 2021 at AIC of US$1,162 per gold equivalent ounce.

South Deep had an improved second quarter after the impacts of the second wave of COVID-19 were felt during Q1 2021. The mine produced 68koz during the second quarter at AIC of R658,180/kg (US$1,443/oz) and AISC of R615,178/kg (US$1,350/oz), bringing H1 2021 production to 128koz at AIC of R674,965/kg (US$1,444/oz). Encouragingly, trends continued to improve across key leading indicators during the quarter.

Update on Salares Norte
Salares Norte continues to track well against the project schedule. During Q2 2021, US$75m in capex was spent on the project, bringing total capex incurred on the project to date to US$230m. Total project progress stood at 41.9% at the end of June, ahead of the project plan of 41.4%. The ongoing impact of COVID-19 and severe weather has started to use up the time contingency that was built into the initial plan. The percentage completion is expected to be at c65% 'Total Project' completion at Dec 2021 compared to 70% previously guided. c4% of the non-critical project completion will be deferred to 2022 to preserve camp capacity for contractors employed on critical path activities given the COVID-19 restrictions in place. Project completion remains on track for Q1 2023. Relocation of the remaining Chinchilla on our property remains on hold until further notice from the authorities.

Construction progressed by 7.5% during Q2 2021, bringing the overall construction progress at the end of June to 30.8%, compared to the planned 31.1%. Severe weather conditions (snow and high winds) impacted construction activities during the month of June, while a pick-up in COVID-19 cases in the country impacted the availability of the workforce.

The remaining mass earthworks were completed during the June quarter. Good progress was made on construction of the process plant during Q2 2021, with installation of the leach and CIP tanks continuing. Foundational works for the Sag Mill, Ball Mill and thickeners continued to plan, while structural steel installation and construction of the reclaim tunnel progressed.

Approximately 4.9Mt of pre-strip was moved during Q2 2021 bringing the total volumes moved for the six months ended June 2021 to 6.1Mt.

The team remains focused on exploring the greater district, with US$5.0m spent on district exploration during the June 2021 quarter. 3,890 metres were drilled during Q2 2021 (plan: 2,700 metres), bringing total metres drilled during the first half of the year to 12,470 metres, comfortably ahead of the planned 10,800 metres.

Environment, Social, Governance (ESG)
In February this year, Gold Fields released its high-level environmental, social and governance (ESG) priorities accompanied by wide-ranging objectives and strategic intents. These high-level priorities and goals will be incorporated in an ESG Charter with detailed 2030 targets to be released later this year. This remains a key priority for Gold Fields as our critical stakeholders, including investors, are demanding that the impact of ESG issues is disclosed transparently, that mitigation measures are in place and that management of these issues is fully aligned with the strategy of the business.

During Q2 2021, Standard & Poor's (S&P), which manages the sustainability assessment of companies for the annual Dow Jones Sustainability Index (DJSI), undertook a rerating of Gold Fields' sustainability performance. As a result, Gold Fields is now ranked the third best mining company, among 75 surveyed. Previously we were fourth behind Teck, Newmont and Anglo American.

Outlook for 2021
FY 2021 production and cost guidance, as provided in February 2021, remains intact.

Attributable gold equivalent production is expected to be between 2.30Moz and 2.35Moz. AISC is expected to be between US$1,020/oz and US$1,060/oz, with AIC expected to be US$1,310/oz to US$1,350/ oz. If we exclude the very significant project capex at Salares Norte, AIC is expected to be US$1,090/oz to US$1,130/oz. The exchange rates used for our 2021 guidance are: US$/R15.50 and US$/A$0.75.

As reported in the Q1 update, two mines within the Group have been impacted by COVID-19 during H1 2021. As a result, production at South Deep is expected to be 300kg (9.3koz) lower at 8,700kg (280.0koz). Gold production at Cerro Corona is expected to be 20koz lower at 110koz, with copper production remaining at similar levels. However, the higher copper price has more than offset this impact on a gold-equivalent ounce basis. Consequently, Group guidance remains intact.

Potential further COVID-19-related disruptions increase the risk to Group production and cost guidance.

Chris Griffith
Chief Executive Officer

19 August 2021