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Reviewed Results | Six months ended 30 June 2022

Statement by Chris Griffth, CEO

Strong operational performance and cash generation in H1 2022

The operating environment during H1 2022 was dominated by elevated mining cost inflation driven by rising commodity and fuel prices. Despite these challenges, Gold Fields had a strong H1 2022, with production increasing 9% YoY and all-in costs rising only 6% YoY. As a result of the increased production combined with a 3% higher gold price, the company increased its normalised earnings by 16% YoY and generated strong free cash flow of US$293m. This enabled us to declare an interim dividend of 300 SA cents per share and further reduce our net debt by almost US$120m from the end of FY 2021.

The proposed acquisition of Yamana, announced at the end of May 2022, was the key focus during H1 2022. We maintain the view that the acquisition of Yamana represents the best option to accelerate Gold Fields' growth strategy and deliver long term shareholder value. Having explored both organic growth and bolt-on acquisitions, moving to completion stage of the transaction is the best opportunity to accelerate the next phase of the company's growth in value.

H1 2022 in review

The Group has not had a fatal injury since April 2021. Regrettably, three serious injuries were recorded for the six-month period compared with four serious injuries in H1 2021.

Attributable gold equivalent production for H1 2022 was 1,201koz, a 9% increase YoY (H1 2021: 1,104koz). AIC for H1 2022 was US$1,352/oz, 6% higher than H1 2021 (US$1,274/oz), as a result of an increase in operating costs driven by mining inflation and the increased project capex at Salares Norte. AISC for H1 2022 was US$1,148/oz (H1 2021: US$1,093/ oz), a 5% increase YoY.

Normalised earnings for the six months ended June 2022 increased by 16% YoY to US$498m, or US$0.56 per share, compared to US$431m, or US$0.49 per share, for H1 2021.

In line with our dividend policy of paying out between 25% and 35% of normalised profit as dividends, we have declared an interim dividend at the upper end of the payout ratio of 300 SA cents per share, which compared with the 2021 interim dividend of 210 SA cents per share. This represents a 43% increase YoY.

Strong cash generation and further improved balance sheet

During H1 2022, Gold Fields, generated adjusted free cash flow of US$293m (after taking into account all costs in the business and all project capex), which compares to the adjusted free cash flow of US$180m in H1 2021. Looking at the core operations, the Group generated adjusted free cash flow from operations of US$518m in H1 2022, which compares to US$399m in H1 2021.

There was a further improvement in the balance sheet during H1 2022. The net debt balance at the end of June 2022 was US$851m and our net debt to EBITDA ratio was 0.33x. This compares with a net debt balance of US$969m and a net debt to EBITDA ratio of 0.40x at the end of December 2021. Excluding lease liabilities, the core net debt was US$451m at the end of H1 2022.

Covid-19 update

The impact of the Covid-19 pandemic abated even further in H1 2022, especially in Q2, as governments relaxed restrictions and requirements for testing, movements and gatherings. By mid- August 2022, 87% of our 22,000 strong workforce was fully vaccinated. Since the beginning of the pandemic, Gold Fields has undertaken almost 280,000 tests and to date we have had 7,800 Covid-19 positive cases, while, sadly, 20 employees and contractors have passed away from Covid-related illnesses, though none so far in 2022. The one region where there has been an impact on operations is Chile where the 4th wave of Covid-19 has had an effect on Salares Norte's construction program. Spending on Covid-related programmes and projects totalled approximately US$12m in H1 2022.

ESG developments

Gold Fields continues to work on implementing programmes to achieve its ambitious 2030 ESG targets for its six key priority areas. Work is progressing well, particularly in decarbonising our operations. Electricity supply to our Cerro Corona mine in Peru was certified 100% renewable during April, while the R715m, 50MW solar plant at South Deep is set for commissioning during Q3 2022. In Australia, the US$20m, 12MW solar – 4.4MW battery plant at Gruyere was fully operational this month (August), while public consultations on the renewables microgrid for St Ives commenced in July.

Regional performance

The Australian region had a solid Q2 2022, producing 269koz at AIC of A$1,657/oz (US$1,183/oz) and AISC of A$1,508/oz (US$1,076/oz) and bringing production for H1 2022 to 527koz at AIC of A$1,685/oz (US$1,211/oz).

Our mines in Ghana produced 215koz (including 45% of Asanko) during Q2 2022 at AIC of US$1,246/oz and AISC of US$1,213/oz. For the six months ended 30 June, Ghana produced 424koz at AIC of US$1,230/oz.

Cerro Corona produced 74koz (gold equivalent) at AIC of US$957 per gold equivalent ounce and AISC of US$921 per gold equivalent ounce during the June quarter, resulting in 130koz (gold equivalent) being produced in the first half at AIC of US$981 per gold equivalent ounce.

South Deep continued its strong momentum into Q2 2022, producing 86koz at AIC of R705,902/kg (US$1,410/oz) and AISC of R673,899/kg (US$1,347/oz). This resulted in H1 2022 production of 164koz at AIC of ZAR705,623/kg (US$1,425/oz).

Update on Salares Norte

Total project progressed from 62% at the end of 2021 to 77.0% at the end of H1 2022. Construction progressed 9.3% during the June quarter, bringing the overall construction progress at the end of June to 73.1%. Plant construction progressed 14.9% during Q2 2022, bringing cumulative plant construction to 63.6%.

Construction activities at Salares Norte were impacted by Covid and severe weather conditions during the latter part of Q2 2022. US$94.2m was spent on the project during the quarter. A total of US$172m was spent on the project during the six months ended 30 June 2022.

Pre-stripping at the Brecha Principal pit continued as planned and 9.0Mt was stripped during Q2 2022, bringing the total volumes moved for H1 2022 to 19.8Mt. Total volumes moved for the project to date stand at 42.7Mt, slightly ahead of plan.

The team remains focused on exploring the greater district, with US$15m on district exploration during H1 2022. A total of 11,103 metres were drilled during the first six months of 2022, comfortably ahead of the planned 9,057 metres.

Relocation of Chinchilla remains on hold until further notice from the authorities, however the team continues to monitor the two surviving Chinchilla that had already been relocated.

After managing to keep the project on track through the challenges of the past two years – Covid and elevated mining inflation – severe weather events during recent months have resulted in marginal delays in the project timeline. While work is being done to clawback the recent lost time, we estimate up to a three-month delay to the commencement of production. Consequently, there may be a knock-on impact on the ramp up to full production. Given the uncertainty around the actual extent of the delay (0-3 months) as well as the mitigation actions, we anticipate being able to provide an update to production guidance at the end of the year.

The current guidance is for first production at the end of March 2023 which will result in 200koz eq being produced in 2023. In the event that there is a one-month delay and first production is only achieved on 30 April 2023, Salares Norte will produce 165koz eq in 2023. If the delay is slightly longer and first gold is poured on 31 May, Salares Norte will produce 118koz eq in 2023 or on 15 June 2023, the mine will produce 102koz eq in 2023.

As guided in our Q1 operating update, we expect the project capex to be 5-7% higher than original guidance of US$860m real (US$920m nominal) which would have resulted in capex spend of US$920m – in line with the US$920m nominal number. Given the potential delay, capex could be in the range of US$920m-US$940m.

Proposed acquisition of Yamana

On 31 May 2022, Gold Fields and Yamana Gold Inc. announced that they have entered into a definitive agreement, under which Gold Fields will acquire all of the outstanding common shares of Yamana, pursuant to a plan of arrangement. Under the terms of the Transaction, all of the outstanding Yamana shares will be exchanged at a ratio of 0.6 of an ordinary share in Gold Fields or 0.6 of a Gold Fields American depositary share for each Yamana share.

The transaction is subject to the approval by both Gold Fields' and Yamana's shareholders. At this stage, we expect the shareholder meetings to take place in end October/early November 2022, with a potential closing of the transaction by the end of mid November 2022.

The transaction is also subject to, among other conditions precedent, the approval by the Ontario Superior Court of Justice (Commercial List), applicable regulatory approvals. At the end of July 2022, Gold Fields received approval by the South African Reserve Bank for the proposed acquisition of Yamana.

FY 2022 guidance unchanged

Given the solid operational performance in H1 2022, we are on track to achieve the Group production guidance provided in February 2022. Mining inflation has been higher than initially expected, however the higher-than-expected copper by-production credit and weaker exchange rates (R/US$15.84 and US$/A$0.70) has partially offset the higher cost inflation. Consequently, we are leaving our cost guidance for the year unchanged.

For 2022, attributable gold equivalent production (excluding Asanko) is expected to be between 2.25Moz and 2.29Moz (2021 comparable 2.25Moz). Including Asanko, attributable gold equivalent production is expected to be between 2.31Moz and 2.36Moz. AISC (excluding Asanko) is expected to be between US$1,140/oz and US$1,180/oz, with AIC (excluding Asanko) expected to be US$1,370/oz to US$1,410/oz.

The exchange rates used for our 2022 guidance are: R/US$15.55 and US$/A$0.76.

2022 Effective mining inflation forecast

  Forecast
inflation as at
February 2022
Forecast
inflation as at
April 2022
Forecast
Inflation as at
July 2022
Australia 9.4 % 10.2 % 11.9 %
Ghana 10.9 % 12.2 % 11.5 %
Peru 6.8 % 10.5 % 13.1 %
South Africa 11.2 % 8.6 % 8.3 %
Chile 2.7 % 8.9 % 8.4 %
Group 9.9 % 10.5 % 10.9 %

Chris Griffith
Chief Executive Officer

25 August 2022