Gold Fields

Results for the Group

Safety and Health

It is with deep sadness that we have to report that a colleague at our South Deep mine died in a mining incident in April. Vumile Mgcine (46), a shaft timberman, succumbed from injuries sustained while attempting to unblock a chute outlet on an underground conveyor belt. We also lost 15 colleagues this year (as at 6 August 2021) as a result of illnesses linked to COVID-19 infections, bringing to 18 the total number of Gold Fields employees and contractors lost to the pandemic. Our heartfelt condolences go out to the families, friends and colleagues of the deceased. The Total Recordable Injury Frequency Rate (TRIFR) for the Group improved to 1.81 for the six months ended 30 June 2021 from 2.58 for H1 2020.

  Six months ended
Safety H1 21   H1 20   FY20  
Fatalities 1   1   1  
TRIFR1 1.81   2.58   2.40  
Serious injuries5 4   3   6  
1 Total Recordable Injury Frequency rate (TRIFR). (TRIFR) = (Fatalities + Lost Time Injuries2 + Restricted Work Injuries3 + Medically Treated Injuries3) x 1,000,000/ number of hours worked.Total Recordable Injury Frequency rate (TRIFR). (TRIFR) = (Fatalities + Lost Time Injuries2 + Restricted Work Injuries3 + Medically Treated Injuries4) x 1,000,000/ number of hours worked.
2 A Lost Time Injury (LTI) is a work-related injury resulting in the employee or contractor being unable to attend work for a period of one or more days after the day of the injury. The employee or contractor is unable to perform any functions.
3 A Restricted Work Injury (RWI) is a work-related injury sustained by an employee or contractor which results in the employee or contractor being unable to perform one or more of their routine functions for a full working day, from the day after the injury occurred. The employee or contractor can still perform some of his duties.
4 A Medically Treated Injury (MTI) is a work-related injury sustained by an employee or contractor which does not incapacitate that employee and who, after having received medical treatment, is deemed fit to immediately resume his/her normal duties on the next calendar day, immediately following the treatment/re-treatment.
5 A Serious Injury is a work-related injury that incurs 14 days or more of work lost and results in a range of injuries detailed at goldfields.com/safety.php

Environmental

No Level 3 – 5 environmental incidents were reported for the six months ended 30 June 2021, continuing the trend of preceding years.

Fresh water withdrawal dropped by 12% to 4.9 gigalitres (GL) for the six months ended 30 June 2021, mainly due to a decrease in water withdrawal at Tarkwa and Cerro Corona as both operations improved their water recycling and reuse. Water recycled/reused was 74% of total water use for the six months ended 30 June 2021 compared with 70% in H1 2020. This is because process water is now reused for cooling at the power plant and for mixing some chemicals at Tarkwa as well as optimised recycling/reuse at South Deep and at Cerro Corona during the dry season.

Group energy spend was US$150m (17% of operating costs) for the six months ended 30 June 2021 compared with US$126m (16%) in H1 2020, reflecting increased production and higher diesel prices and power tariffs. For the six months ended 30 June 2021, energy savings of 642 terajoules (TJ) were achieved (8% of H1 energy consumption), compared with 468 TJ (7% of energy consumption) for H1 2020.

Scope 1 and 2 CO2 emissions were 0.88m tonnes for the six months ended 30 June 2021 compared with 0.71m tonnes during H1 2020, as a result of a sharp rise in tonnes mined over the period, with production from South Deep and Cerro Corona sharply curtailed in H1 2020 as a result of COVID-19 restrictions. CO2 emissions intensity increased to 8.9kg CO2e/t mined from 8.0kg CO2e/t in H1 2020 as the increased tonnages mine pushed up diesel consumption of our fleet.

Renewable energy in H1 2021 accounted for 5.5% of our total electricity consumption as the energy microgrids at our Agnew and Granny Smith mines in Australia reached near full-capacity. In April the Board gave the go-ahead for construction of the R660m, 40MW solar plant at South Deep after the mine had received regulatory approval a month earlier. The plant is on track for completion in Q2 2022.

The Chinchilla Rescue and Rehabilitation Plan, part of Salares Norte's Chinchilla habitat protection programme, is currently halted while the regulator considers additional information requested following the deaths of two chinchillas. Two other relocated chinchillas have adapted to their new habitat, and are being continually monitored. The relocation delay is not expected to delay construction of the project.

Gold Fields published its third Climate Change Report for the 2020 financial year in line with the recommendations of the Task force on Climate-related Financial Disclosures (TCFD). Gold Fields also includes the Sustainability Accounting Standards Board (SASB) key performance metrics in its non-financial data reporting.

  Six months ended
Environmental H1 21   H1 20   FY20  
Environmental incidents – Level 3 – 5 0   0   0  
Water recycled/reused (% of total) 74   70   71  
Fresh water withdrawal (GL)1 4.9   5.6   10.0  
Energy consumption (PJ)2 6.85   6.49   13.13  
Energy intensity (MJ/t mined) 70   73   72  
CO2 emissions (kt)3 877   714   1,451  
CO2 emissions intensity (kg CO2 /t mined) 8.9   8.0   7.9  
1 Relates to operations only.
2 Petajoules (1 PJ=1,000,000MJ).
3 CO2 emissions comprise Scope 1 and 2 emissions4.
4 Scope 1 emissions arise directly from sources managed by the Company. Scope 2 are indirect emissions generated in the production of electricity used by the Company.

Social

Gold Fields continues to focus on maximising in-country and host community economic impact. The Group's value distribution to national economies was US$1.90bn for the six months ended 30 June 2021 compared with US$1.29bn for H1 2020, reflecting higher royalties and taxes to governments and dividend payments to shareholders as a result of improved earnings. Furthermore, supplier payments increased as a result of the construction of our Salares Norte mine in Chile. Gold Fields procurement from in-country suppliers was US$1.06bn for the six months ended 30 June 2021 (97% of total procurement) compared with US$814m for H1 2020 (96% of total).

Gold Fields aims to sustain the value delivered to host communities through employment, procurement and social investments. The Group host community workforce was 9,202 people – 52% of the total workforce (excluding projects and corporate offices) for the six months ended 30 June 2021 compared with 8,752, 53% of the total workforce, at the end of 2020. Group host community procurement spend for the six months ended 30 June 2021 was US$339m (31% of total spend), compared with US$260m (31% of total) during H1 2020. Spending on socio-economic development (SED) projects in our host communities totalled US$7.1m for the six months ended 30 June 2021 compared with US$8.4m for H1 2020.

Our total workforce at the end of June was 21,039 (including projects and corporate offices), comprising 5,818 employees and 15,221 contractors. The number has increased from year-end 2020, when we only employed 12,771 contractors, as a result of a temporary workforce of well over 2,000 contractors building the Salares Norte mine. The number of full-time employees has remained stable. Women comprised 21% of Gold Fields' workforce at the end of June 2021 compared with 20% at the end of 2020. Of the 21%, 54% work in core mining activities. Training spend was US$3.9m for the six months ended 30 June 2021 compared with US$3.2m in H1 2020.

  Six months ended
Social H1 21   H1 20   FY20  
Host community procurement (% of total) 31   31   29  
Host community workforce (% of total) 52   53   53  
Socio-economic development spending (US$m) 7.1   8.4   17.2  
Women in workforce (%) 21   20   20  
Training spend 3.9   3.2   6.8  

COVID-19 report

The political, social and economic impact of the COVID-19 pandemic continued to be felt across the world in the first half of 2021. It has affected all spheres of life and impacted our employees, contractors and other stakeholders on a personal and professional level.

The impact on our workforce has been devastating, particularly amid the spread of new variants of the virus. So far this year, we have recorded 15 deaths among our workforce (as at 6 August 2021), of which 13 were 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. We have provided financial and emotional support to the relatives and colleagues of those deceased and want to, once again, express our heartfelt condolences to them.

As a result of the high rate of COVID-19 infections, South Deep and Cerro Corona in Peru were also the most affected in terms of the impact of regulations imposed by the governments of those countries to curb the spread. At South Deep over 900 people were absent for a combined 20,200 man days during H1 2021. The impact on overall Group production though was minimal.

At our Salares Norte project in Chile, the Company had to cater for an additional 2,000-plus contractors on site during the construction process. This has been facilitated successfully and there have been no COVID-19 related delays to the construction programme to date.

Critically, we are seeking to accelerate COVID-19 vaccination among our workforce and are collaborating closely with our host governments in doing so. The Salares Norte project in Chile has been the most successful to date. As at mid-August, 98% of employees and contractors were fully vaccinated. South Deep also achieved a high vaccination rate, with almost 74% of its total workforce, a total of 3,200 people, receiving their first dose of the Pfizer vaccine by mid-August. At our other operations the roll-out of vaccines has been slower in line with the national vaccination programmes in the countries of operation. In Ghana, as at mid-August, 264 employees had been fully vaccinated and in Peru 110 employees. In Western Australia the vaccine roll-out is handled exclusively by the state government. Our reporting on this metric is dependent on employee disclosure.

Apart from the vaccination programme, we continue to support our workforce by trying to prevent them from contracting the virus and offering medical assistance if they do. 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 relatively high number of positive cases continues to reflect the high prevalence rate of the pandemic in neighbouring communities at our operations in Peru, Ghana and South Africa, particularly amid the third wave and the Delta variant of the COVID-19 virus that hit most countries in Q2 2021. Testing among our workforce is also more stringent than in public health facilities in these countries. Remarkably, there have been no positive cases to date at our Australian mines.

Since the start of the pandemic in March 2020, a Group Exco COVID-19 Crisis Management Team has met regularly to coordinate actions and strategies to mitigate the impact of the pandemic on operations. Regular meetings of the Risk Committee of the Board have also been held to provide governance oversight. Regional and site committees have performed similar roles.

Key activities to ensure safe operations include:

  • Strict adherence to all government regulations/protocols;
  • Working with governments in providing access to vaccines for our employees and contractors;
  • Educating our workforce and communities around the benefits of vaccination;
  • Closure of offices and imposition of travel restrictions;
  • Standard operating procedures on return to work;
  • Social distancing, sanitisation and mask wearing mandatory;
  • Regular communication to employees about COVID-19, assisting them to work remotely and how to deal with the fall-out of the pandemic;
  • Dedicated COVID-19 information portals and communication;
  • Participation in ICMM knowledge sharing; and
  • Social media awareness and return-to-work communication campaigns for employees, communities and others.

Similarly, our operations have actively supported host communities and governments to assist their efforts in controlling the pandemic and assisting people in need. Support to communities has been tailored to country circumstances and has included:

  • Donations to government/industry response funds;
  • Donation of medical equipment;
  • Distribution of food/meals to vulnerable people;
  • Supporting local government efforts such as street sanitisation;
  • Distribution of masks; sanitisers; education leaflets and videos; and
  • Radio and TV campaigns to educate, raise awareness, dispel myths, encourage vaccination and address stigmatisation and gender-based violence.

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 (half of that in Cerro Corona) and US$1.7m, as we continued investing in employee and community focused support programmes and projects.

A noticeable trend over the past few months has been an increase in mental health issues among employees, with many of our colleagues making use both of private and company-provided medical support. The Company plans to focus more resources on this rapidly emerging health issue across all operations.

H1 Operating Performance

Attributable equivalent gold production, (including Asanko) increased by 2% from 1,086,700oz for the six months ended 30 June 2020 to 1,104,100oz for the six months ended 30 June 2021.

During 2020, a decision was taken to align the production month-end with the calendar month-end, which resulted in a once-off addition of 10 production days in H1 2020. Despite the additional 10 days in H1 2020 attributable production increased by 2% in H1 2021.

At the South Africa region, attributable gold production at South Deep increased by 23% from 3,123kg (100,400oz) for the six months ended 30 June 2020 to 3,828kg (123,100oz) for the six months ended 30 June 2021. The increase was due to the first half of 2020 being impacted more severely by COVID-19 related delays, notwithstanding the COVID-19 related challenges in Q1 this year. Managed gold sold increased by 27% from 3,042kg (97,800oz) to 3,868kg (124,400oz).

Attributable gold production at the West African operations (including Asanko), increased by 4% from 384,400oz for the six months ended 30 June 2020 to 401,000oz for the six months ended 30 June 2021 mainly due to increased production at Damang as mining progressed into the main ore body at the Damang Pit Cutback during H2 2020. Managed gold produced and sold at Tarkwa decreased by 5% from 271,700oz for the six months ended 30 June 2020 to 256,900oz for the six months ended 30 June 2021 mainly due to lower production days (10 days). At Damang, managed gold produced and sold increased by 52% from 87,800oz for the six months ended 30 June 2020 to 133,500oz for the six months ended 30 June 2021 mainly due to higher grade ore mined and processed as mining progressed to more consistently mineralised zones in the main ore body of the Damang Pit Cutback. Attributable gold produced at Asanko decreased by 18% from 60,900oz for the six months ended 30 June 2020 to 49,700oz for the six months ended 30 June 2021 due to lower grade ore mined and processed. Gold sold decreased by 10% from 58,100oz (45% basis) to 52,300oz (45% basis).

Attributable equivalent gold production at Cerro Corona in Peru decreased by 9% from 108,200oz for the six months ended 30 June 2020 to 98,800oz for the six months ended 30 June 2021 mainly due to lower grades of ore mined and processed as a result of a revised mining sequence triggered by slope instability at the high grade eastern side of the pit. Total managed gold equivalent production decreased by 9% from 108,700oz for the six months ended 30 June 2020 to 99,300oz for the six months ended 30 June 2021. Gold equivalent ounces sold decreased by 8% from 113,000oz to 103,500oz.

Gold production at the Australian operations decreased by 3% from 493,800oz for the six months ended 30 June 2020 to 481,200oz for the six months ended 30 June 2021 mainly due to anticipated and planned lower grades of ore mined and processed at Granny Smith and Gruyere. H1 2020 also had ten additional production days due to the transition to a calendar month-end. At St Ives, gold production increased marginally from 188,100oz for the six months ended 30 June 2020 to 188,500oz for the six months ended 30 June 2021. Gold sold decreased by 4% from 197,100oz to 188,500oz. At Agnew, gold production increased by 5% from 105,900oz for the six months ended 30 June 2020 to 111,700oz for the six months ended 30 June 2021 due to an increase in grade of ore mined and processed in line with the plan, partially offset by a decrease in ore milled. Gold sold increased by 7% from 105,500oz to 112,500oz. At Granny Smith, gold production decreased by 10% from 134,100oz for the six months ended 30 June 2020 to 121,300oz for the six months ended 30 June 2021 due to decreased tonnes milled, as well as lower grades of ore mined and processed. Gold sold decreased by 8% from 133,900oz to 122,600oz. At Gruyere gold production decreased by 9% from 65,700oz for the six months ended 30 June 2020 to 59,700oz for the six months ended 30 June 2021 due to lower grades of ore mined and processed and processing plant disruptions. Gold sold decreased by 7% from 65,000oz to 60,600oz.

Revenue

The average US Dollar gold price achieved by the Group (excluding Asanko) increased by 10% from US$1,637/eq oz for the six months ended 30 June 2020 to US$1,799/eq oz for the six months ended 30 June 2021. The average Rand gold price decreased by 1% from R847,286/kg to R838,127/kg. The average Australian Dollar gold price decreased by 6% from A$2,493/oz to A$2,340/oz. The average US Dollar gold price for the Ghanaian operations (excluding Asanko) increased by 9% from US$1,646/oz for the six months ended 30 June 2020 to US$1,801/oz for the six months ended 30 June 2021. The average equivalent US Dollar gold price, net of treatment and refining charges, for Cerro Corona increased by 8% from US$1,638/eq oz for the six months ended 30 June 2020 to US$1,772/eq oz for the six months ended 30 June 2021. 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.

Gold equivalent ounces sold (excluding Asanko) increased by 3% from 1.07Moz to 1.10Moz. Revenue from Asanko is not included in Group revenue as Asanko results are equity accounted.

Revenue increased by 13% from US$1,754m for the six months ended 30 June 2020 to US$1,984m for the six months ended 30 June 2021 due to the 3% higher gold sold and 10% higher gold price received.

Cost of sales before amortisation and depreciation

Cost of sales before amortisation and depreciation increased by 8% from US$767m for the six months ended 30 June 2020 to US$832m for the six months ended 30 June 2021.

At the South Africa region, at South Deep, cost of sales before amortisation and depreciation increased by 26% from R1,705m (US$103m) for the six months ended 30 June 2020 to R2,150m (US$148m) for the six months ended 30 June 2021 mainly due to a 23% increase in production.

At the West Africa region, (excluding Asanko), cost of sales before amortisation and depreciation decreased by 12% from US$265m for the six months ended 30 June 2020 to US$233m for the six months ended 30 June 2021 mainly due to a gold-in-process credit at Damang of US$37m for the six months ended 30 June 2021 compared with a gold-in-process credit of US$nil for the six months ended 30 June 2020. In line with the mining sequence at Damang, for the six months ended 30 June 2021, ore tonnes mined were higher than tonnes processed with preferential processing of higher grade ore and stockpiling of lower grade material.

At the South America region, at Cerro Corona, cost of sales before amortisation and depreciation increased by 15% from US$79m for the six months ended 30 June 2020 to US$91m for the six months ended 30 June 2021 mainly due to an increase of 143% (6Mt) in operational waste tonnes mined in line with the waste recovery plan implemented at the end of 2020.

At the Australia region, cost of sales before amortisation and depreciation decreased by 4% from A$487m (US$320m) for the six months ended 30 June 2020 to A$466m (US$360m) for the six months ended 30 June 2021. This decrease is mainly due to a reduction in operational waste tonnes mined at the Neptune open pit at St Ives, lower tonnes mined and milled at Agnew and a gold-in-process credit at Gruyere of A$7m (US$6m) for the six months ended 30 June 2021 compared with a gold-in-process charge of A$1m (US$nil) for the six months ended 30 June 2020.

Amortisation and depreciation

Amortisation and depreciation for the Group increased by 3% from US$305m for the six months ended 30 June 2020 to US$315m for the six months ended 30 June 2021 mainly due to the appreciation of the Australian Dollar and South African Rand as well as an increase in production.

Other

Net interest expense for the Group decreased by 22% from US$41m for the six months ended 30 June 2020 to US$32m for the six months ended 30 June 2021 due to lower borrowings during the six months ended 30 June 2021. Interest expense of US$41m, partially offset by interest income of US$4m and interest capitalised of US$5m for the six months ended 30 June 2021 compared with interest expense of US$56m, partially offset by interest income of US$3m and interest capitalised of US$12m for the six months ended 30 June 2020.

The share of results of equity accounted investees after taxation decreased by 41% from US$29m for the six months ended 30 June 2020 to US$17m for the six months ended 30 June 2021. The decrease was mainly due to Gold Fields share of profits decreasing from US$29m to US$17m as a result of lower production at Asanko for the six months ended 30 June 2021.

The loss on foreign exchange of US$7m for the six months ended 30 June 2021 compared with a gain of US$12m for the six months ended 30 June 2020 and related to the conversion of offshore cash holdings into their functional currencies.

The loss on financial instruments decreased by 81% from US$275m for the six months ended 30 June 2020 to US$53m for the six months ended 30 June 2021.

The loss on financial instruments of US$53m for the six months ended 30 June 2021 comprised a loss on hedges of US$52m and a loss on valuation of options of US$1m. The loss on hedges of US$52m includes realised losses of US$14m and unrealised losses and prior year mark-to-market adjustments of US$38m. The realised losses of US$14m comprised losses realised on the Peru copper hedge of US$21m, the Australia gold hedge of A$20m (US$15m) and the Ghana oil hedge of US$1m, partially offset by a realised gain made on the Chilean currency hedge of US$23m. The unrealised losses of US$38m comprised losses on the Chilean currency hedge of US$41m, the Australia gold hedge of A$5m (US$4m) and the Peru copper hedge of US$10m, partially offset by gains on the Ghana oil hedge of US$11m and Australia oil hedge of A$8m (US$6m).

The loss on valuation of options of US$1m for the six months ended 30 June 2021 related to the Maverix options.

The loss on financial instruments of US$275m for the six months ended 30 June 2020 comprised a loss on hedges of US$274m and a loss on valuation of options of US$1m. The loss on hedges of US$274m included realised losses of US$166m and unrealised losses of US$108m. The realised losses of US$166m comprised losses realised on the South Deep gold hedge of R544m (US$33m), the Australia gold hedge of A$140m (US$92m), the Ghana gold hedge of US$36m, Ghana oil hedge of US$3m and Australia oil hedge of A$2m (US$2m). The unrealised losses of US$108m comprised losses on the South Deep gold hedge of R910m (US$54m), the Australia gold hedge of A$25m (US$16m), the Ghana gold hedge of US$23m, Ghana oil hedge of US$17m and Australia oil hedge of A$14m (US$9m), partially offset by an unrealised gain on the Chilean currency hedge of US$11m.

The loss on valuation of options of US$1m for the six months ended 30 June 2020 related to the Maverix options.

Share-based payments for the Group decreased by 14% from US$7m for the six months ended 30 June 2020 to US$6m for the six months ended 30 June 2021 mainly due to lower forecast vesting percentages of share-based payments. The long-term incentive plan decreased by 52% from US$25m to US$12m due to the current mark-to-market valuation of the plan reflecting forecast performance.

Other costs for the Group increased by 19% from US$27m for the six months ended 30 June 2020 to US$32m for the six months ended 30 June 2021 and mainly related to higher social spend at Ghana and Cerro Corona in the six months ended 30 June 2021.

Exploration expense

Exploration expense decreased by 8% from US$36m for the six months ended 30 June 2020 to US$33m for the six months ended 30 June 2021 mainly due to lower exploration spend as a result of the approval of the feasibility study of Salares Norte and the subsequent capitalisation of costs to the project as from 1 April 2020. The US$33m spend for the six months ended 30 June 2021 included US$13m spend at Salares Norte and US$20m related to exploration spend at the other operations.

Non-recurring items

Non-recurring income increased by 200% from US$1m for the six months ended 30 June 2020 to US$3m for the six months ended 30 June 2021.

Non-recurring income of US$3m for the six months ended 30 June 2021 mainly includes:

  • US$9m income related to profit on disposal of assets, partially offset by;
  • net impairment of FSE of US$4m. The impairment of FSE was based on the fair value less cost of disposal of the investment which was indirectly derived from the market value of Lepanto Consolidated Mining Company;
  • donations made to various bodies in response to COVID-19 of US$1m; and
  • other costs of US$1m.

Non-recurring income of US$1m for the six months ended 30 June 2020 mainly included:

  • US$20m income related to a submission of historic VAT claim for expenses incurred from 2010 to June 2020 to the Chilean tax authority which become claimable from the commencement of construction;
  • US$10m impairment of drilling costs at Damang. Based on technical and economic parameters of various studies, all assets related to the Amoanda-Tomento corridor were impaired;
  • net impairment of FSE of US$2m. The impairment of FSE was based on the fair value less cost of disposal of the investment which was indirectly derived from the market value of Lepanto Consolidated Mining Company;
  • donations made to various bodies in response to COVID-19 of US$2m; and
  • other costs of US$5m mainly related to the capital raising in February 2020.

Royalties

Government royalties for the Group increased by 13% from US$48m for the six months ended 30 June 2020 to US$54m for the six months ended 30 June 2021 in line with the higher revenue.

Taxation

The taxation charge for the Group increased by 110% from US$103m for the six months ended 30 June 2020 to US$216m for the six months ended 30 June 2021 in line with the higher profit before tax. Normal taxation increased by 25% from US$153m for the six months ended 30 June 2020 to US$192m for the six months ended 30 June 2021. The deferred tax charge of US$24m for the six months ended 30 June 2021 compared with a credit of US$49m for the six months ended 30 June 2020.

Profit

Net profit attributable to owners of the parent for the Group increased by 148% from US$156m or US$0.18 per share for the six months ended 30 June 2020 to US$387m or US$0.44 per share for the six months ended 30 June 2021.

Headline earnings attributable to owners of the parent for the Group increased by 129% from US$173m or US$0.20 per share for the six months ended 30 June 2020 to US$396m or US$0.45 per share for the six months ended 30 June 2021.

Normalised profit for the Group increased by 33% from US$323m or US$0.37 per share for the six months ended 30 June 2020 to US$431m or US$0.49 per share for the six months ended 30 June 2021.

Normalised profit

Normalised profit reconciliation for the Group is calculated as follows:
  Six months ended 
US$'m   June 2021     June 2020    
         
Profit for the period attributable to owners of the parent  387.4     155.5    
Non-recurring items  (2.8)    (1.0)   
Tax effect of non-recurring items  1.7     (4.0)   
Non-controlling interest effect of non-recurring items  (0.1)    (0.7)   
Loss/(gain) on foreign exchange  7.4     (12.0)   
Tax effect of loss/(gain) on foreign exchange  (1.9)    2.5    
Non-controlling interest effect of loss/(gain) on foreign exchange  0.1     0.3    
Loss on financial instruments  53.1     275.0    
Tax effect of loss on financial instruments  (15.0)    (86.9)   
Non-controlling interest effect of loss on financial instruments  0.6     (5.3)   
Normalised profit attributable to owners of the parent  430.5     323.4    

Normalised profit is considered an important measure by Gold Fields of the profit realised by the Group in the ordinary course of operations. In addition, it forms the basis of the dividend pay-out policy. Normalised profit is defined as profit excluding gains and losses on foreign exchange, financial instruments and non-recurring items after taxation and non-controlling interest effect.

Cash flow

Cash inflow from operating activities increased by 26% from US$549m for the six months ended 30 June 2020 to US$689m for the six months ended 30 June 2021. The increase was mainly due to a higher profit before royalties and taxation and a lower investment in working capital. This was partially offset by a higher royalties and taxation payment and the long-term incentive plan payment in February 2021. No long- Gold Fields H1 2021 Results 9 term incentive plan payment was made for the six months ended 30 June 2020.

Dividends paid increased by 300% from US$53m for the six months ended 30 June 2020 to US$212m for the six months ended 30 June 2021. The dividend paid of US$212m for the six months ended 30 June 2021 comprised dividends paid to owners of the parent of US$190m related to the 2020 final dividend and dividends paid to noncontrolling interest holders of US$22m. The dividend paid of US$53m for the six months ended 30 June 2020 related to dividends paid to owners of the parent of US$53m related to the 2019 final dividend.

Cash outflow from investing activities increased by 87% from US$251m for the six months ended 30 June 2020 to US$469m for the six months ended 30 June 2021. Capital expenditure increased by 93% from US$236m for the six months ended 30 June 2020 to US$456m for the six months ended 30 June 2021.

Sustaining capital expenditure, (excluding Asanko), increased by 46% from US$180m for the six months ended 30 June 2020 to US$262m for the six months ended 30 June 2021, while non-sustaining capital expenditure (excluding Asanko), increased by 246% from US$56m for the six months ended 30 June 2020 to US$194m for the six months ended 30 June 2021. This movement is mainly attributable to the project capital incurred while constructing Salares Norte. Growth expenditure of US$194m for the six months ended 30 June 2021 comprised US$133m at Salares Norte, US$35m at the Australian operations, US$12m at Cerro Corona, US$10m at South Deep and US$4m at Damang. Growth expenditure of US$56m in the six months ended 30 June 2020 comprised US$21m at the Australian operations, US$19m at Salares Norte, US$11m at Cerro Corona and US$5m at Damang.

At the South Africa region at South Deep, capital expenditure increased by 77% from R242m (US$15m) for the six months ended 30 June 2020 to R428m (US$29m) for the six months ended 30 June 2021 mainly due to reduced overall spending as a result of the COVID-19 pandemic in 2020.

At the West Africa region, (excluding Asanko), capital expenditure increased by 55% from US$76m for the six months ended 30 June 2020 to US$118m for the six months ended 30 June 2021. At Tarkwa, capital expenditure increased by 59% from US$68m to US$108m mainly as a result of higher capital waste expenditure driven by increased capital waste tonnes mined and higher mining unit rates. Capital expenditure at Damang increased by 25% from US$8m to US$10m.

Capital expenditure at Asanko (on a 100% basis) decreased by 25% from US$28m for the six months ended 30 June 2020 to US$21m for the six months ended 30 June 2021. The Asanko capital expenditure is not included in the Group capital expenditure.

At the South America region at Cerro Corona, capital expenditure was similar at US$19m for the six months ended 30 June 2021.

At the Australia region, capital expenditure increased by 25% from A$161m (US$106m) for the six months ended 30 June 2020 to A$202m (US$156m) for the six months ended 30 June 2021. At St Ives, capital expenditure increased by 16% from A$57m (US$37m) to A$66m (US$51m) mainly due to expenditure on the new paste plant at the Invincible underground mine and pre-stripping at the Delta Island open pit. At Agnew, capital expenditure increased by 38% from A$40m (US$26m) to A$55m (US$42m) mainly due to increased development expenditure in order to access the Kath Lower and Sheba Extension ore bodies as well as works to replace the mill crushing circuit. At Granny Smith, capital expenditure increased by 8% from A$49m (US$32m) for the six months ended 30 June 2020 to A$53m (US$41m) for the six months ended 30 June 2021 mainly due to the development of the second decline at Wallaby. At Gruyere, capital expenditure increased by 93% from A$15m (US$10m) for the six months ended 30 June 2020 to A$29m (US$22m) for the six months ended 30 June 2021 mainly due to increased pre-stripping of Stages 2 and 3 of the pit.

Proceeds on disposal of property, plant and equipment of US$2m for the six months ended 30 June 2021 compared with US$nil for the six months ended 30 June 2020.

Purchase of investments of US$3m for the six months ended 30 June 2021 related to a purchase of 6.6m shares in Chakana Copper Corporation.

Redemption of Asanko preference shares decreased by 87% from US$38m for the six months ended 30 June 2020 to US$5m for the six months ended 30 June 2021.

Loan advanced to contractors in Ghana for fleet replacement for the six months ended 30 June 2020 amounted to US$68m. These loans are interest bearing, secured and are recoupable over three years.

Proceeds on disposal of investments decreased from US$23m for the six months ended 30 June 2020 to US$nil for the six months ended 30 June 2021. Proceeds on disposal of investments of US$23m for the six months ended 30 June 2020 related to the sale of 81m shares in ASX-listed Cardinal Resources Limited.

Environmental payments remained similar at US$5m for the six months ended 30 June 2021.

Cash inflow from operating activities less net capital expenditure, environmental payments, redemption of Asanko preference shares and lease payments decreased by 44% from US$320m for the six months ended 30 June 2020 to US$180m for the six months ended 30 June 2021 mainly due to higher capital expenditure.

The US$180m cash inflow from operating activities less net capital expenditure, environmental payments, redemption of Asanko preference shares and lease payments for the six months ended 30 June 2021 comprised: US$399m free cash generated by the eight mining operations (after royalties, taxes, capital expenditure and environmental payments) less US$149m spend at Salares Norte (comprising US$133m in capex, US$13m in exploration, a US$12m investment in working capital, a tax payment of US$9m and other costs of US$5m, partially offset by a credit of US$23m from the realised portion of the FX hedge) plus redemption of Asanko preference shares of US$5m, less US$33m of net non-mine interest paid as well as US$42m on non-mine based costs mainly due to working capital movements.

The US$320m cash inflow from operating activities less net capital expenditure, environmental payments, redemption of Asanko preference shares and lease payments for the six months ended 30 June 2020 comprised: US$405m free cash generated by the eight mining operations (after royalties, taxes, capital expenditure and environmental payments) plus redemption of Asanko preference shares of US$38m, less US$51m of net non-mine interest paid, US$47m at Salares Norte on exploration and construction capital, as well as US$25m on non-mine based costs mainly due to working capital movements.

Net cash outflow from financing activities of US$197m for the six months ended 30 June 2021 compared with an inflow of US$210m for the six months ended 30 June 2020. The cash outflow for the six months ended 30 June 2021 related to the repayment of US$361m on offshore loans and payment of principal lease liabilities of US$41m, partially offset by loan drawdowns of US$205m. The cash inflow of US$210m for the six months ended 30 June 2020 related to shares issued of US$249m and a loan drawdown of US$41m, partially offset by the repayment of US$58m on offshore loans and payment of principal lease liabilities of US$22m.

The net cash outflow for the Group of US$190m for the six months ended 30 June 2021 compared with an inflow of US$454m for the six months ended 30 June 2020. After accounting for a positive translation adjustment of US$7m on non-US Dollar cash balances, the cash outflow for the six months ended 30 June 2021 was US$183m. The cash balance at 30 June 2021 of US$704m compared with US$941m at 30 June 2020.

All-in sustaining and total all-in cost

The Group all-in sustaining costs increased by 11% from US$987/oz for the six months ended 30 June 2020 to US$1,093/oz for the six months ended 30 June 2021 mainly due to the strengthening of both the South African Rand and Australian Dollar, higher sustaining capital expenditure and higher cost of sales before amortisation and depreciation, partially offset by higher gold sold and higher copper byproduct credits resulting from higher copper prices. 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. This represents a 2% increase in all-in sustaining costs compared with the six months ended 30 June 2020.

Total all-in cost increased by 20% from US$1,065/oz for the six months ended 30 June 2020 to US$1,274/oz for the six months ended 30 June 2021 mainly due to the strengthening of both the South African Gold Fields H1 2021 Results 10 Rand and Australian Dollar, higher sustaining and non-sustaining capital expenditure and higher cost of sales before amortisation and depreciation, partially offset by higher gold sold and higher copper byproduct credits resulting from higher copper prices. The higher nonsustaining capital expenditure was mainly at Salares Norte which increased from US$19m for the six months ended 30 June 2020 to US$133m for the six months ended 30 June 2021 in line with the project progress. Normalising for the exchange rate differences, 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.

Statement of financial position

Net debt increased marginally from US$1,069m at 31 December 2020 to US$1,097m at 30 June 2021.

Net debt excluding lease liabilities increased marginally from US$640m at 31 December 2020 to US$663m at 30 June 2021.

Net debt is defined by the Group as total borrowings and lease liabilities less cash and cash equivalents.

Net debt/adjusted EBITDA

The net debt/adjusted EBITDA ratio of 0.49 at 30 June 2021 compared with 0.84 at 30 June 2020. The net debt/adjusted EBITDA ratio of 0.49 at 30 June 2021 is based on net debt of US$1,097m and adjusted EBITDA of US$2,225m.

The net debt/adjusted EBITDA ratio of 0.84 at 30 June 2020 is based on net debt of US$1,239m and adjusted EBITDA of US$1,470m.

Adjusted EBITDA

Adjusted EBITDA for calculating net debt/adjusted EBITDA is based on the profit for the 12 months ended 30 June 2021 and is determined as follows in US$ million:

US$'m  June 2021    
Revenue  4,121    
Cost of sales before amortisation and depreciation  (1,553)   
Exploration and project costs  (47)   
Other costs*  (296)   
  2,225    
* Other costs relate mostly to the hedge losses for the year.

Adjusted EBITDA is defined by the Group as profit or loss for the year adjusted for interest, taxation, amortisation and depreciation and certain other costs.

Free cash flow margin

The free cash flow (FCF) margin is revenue less cash outflow divided by revenue expressed as a percentage.

The FCF margin for the Group for the six months ended 30 June 2021 is calculated as follows:

  Six months ended 
   US$'m     US$/oz    
Revenue1  1,877.2     1,8014   
Less: Cash outflow  (1,475.7)    (1,416)   
AIC  (1,318.7)    (1,265)   
Adjusted for:         
Share-based payments (non-cash) 6.4       
Long-term incentive plan (non-cash) 11.5     11    
Long-term incentive plan (payment) (37.3)    (36)   
Exploration, feasibility and evaluation costs outside of existing operations  13.2     13    
Non-sustaining capital expenditure (Salares Norte) 112.7     108    
Revenue hedge (realised) (36.1)    (35)   
Redemption of Asanko preference shares  5.0       
Tax paid (excluding royalties which is included in AIC above) (232.4)    (223)   
Free cash flow3  401.5     385    
FCF margin  21%       
Gold sold only – 000'oz  1,042.2       
1 Revenue from income statement at US$1,983.6m less revenue from Cerro Corona by-products in AIC at US$106.4m equals US$1,877.2m.
2 AIC for the Group of US$1,394.5m less AIC for Asanko of US$75.8m.
3 Free cash flow does not agree with cash flows from operating activities less capital expenditure in the statement of cash flows on page 26 mainly due to working capital adjustments and non-recurring items included in the statement of cash flows.
4 Calculated by dividing revenue by gold sold only.
The free cash flow margin (adjusted for realised revenue hedges and redemption of Asanko preference shares) is used as a key metric in the determination of the longterm incentive plan.

The FCF margin of 21% for the six months ended 30 June 2021 at a gold price of US$1,801/oz compared with 26% for the six months ended 30 June 2020 at a gold price of US$1,636/oz.