Commentary Corporate

2021 Climate change report published

Gold Fields Limited published its Climate Change Report 2021 (CCR), which is part of its integrated annual reporting suite. The CCR is the Company’s fourth report aligned to the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

The CCR provides an extensive overview of the climate change-related risks we are facing, how we seek to mitigate these risks, the opportunities we are investigating and our climate change performance to date. It also provides an insight into our decarbonisation strategy, which headlines one of the three pillars of Gold Fields’ new strategy, namely “Building on our leading commitment to environmental, social and governance issues”.

The decarbonisation targets, announced last year, are to reduce Scope 1 and 2 carbon emissions by 30% by 2030. As we plan to raise our production profile over the same period, this translates to a 50% emission reduction in real terms. We are also committed to net-zero carbon emission by 2050. The CCR describes the steps we plan to take to meet the targets.

Renewable energy and energy efficiency projects at our mines will account for about two-thirds of these reductions by 2030 and have already delivered 18% emission reductions against business as usual between 2016 and 2021.

Renewables currently account for about 12.5% of the Group’s electricity mix, due to the two completed renewable micro-grids at Granny Smith and Agnew in Western Australia as well as the contribution of our Cerro Corona mine, which derives all its electricity from hydropower. Cerro Corona’s supply was certified as renewable in March this year.

With new solar plants coming on stream at Gruyere in Western Australia and South Deep in South Africa this year, at Salares Norte in Chile in 2024 as well as an extensive renewables-led microgrid at St Ives in Western Australia, also in 2024, we expect that renewables will account for about 22% of the Group’s electricity mix by 2025.

Gold Fields is also committed to reviewing its Scope 3 emissions over the next few years and will develop Scope 3 emission reduction targets in its decarbonisation strategy by 2023.

The CCR also includes the outcomes of our second, five-yearly climate change risks and vulnerability assessment at all our mines and their surrounding communities. The surveys outline the adverse impacts of rising temperatures, increased rainfall, longer droughts, more intense storms, and other effects of the changing climate on our operations and stakeholders.

S&P Global Ratings upgrades Gold Fields credit rating

S&P Global Ratings upgraded Gold Fields’ credit rating to 'BBB-' from 'BB+' as well as the debt ratings on the Group's senior unsecured notes. S&P also raised the short-term rating on the Group to 'A-3' from 'B' and affirmed its 'zaAAA/zaA-1+' South African national scale ratings.

Gold Fields provides comprehensive ESG information update

In May 2022, Gold Fields provided comprehensive environmental, social and governance (ESG) information via a number of released reports and presentations.

These address the increased data and information expectations of our stakeholders, including our shareholders, and reflects the company’s commitment to transparent disclosure of its ESG performance, opportunities and risks.

The disclosures focus on Gold Fields’ six key ESG priorities – decarbonisation; tailings management; water stewardship; safety, health, well-being and environment; diversity; and stakeholder value creation. 2030 targets and accompanying strategies and programmes for each of these priorities were announced by the company in December last year.

Gold Field’s proposed acquisition of Yamana Gold – a combination for long-term value creation focused on quality growth, financial discipline and shareholder returns

Transaction creates a top-4 global gold major with a diversified portfolio of high-quality, long-life assets with tangible near and long-term growth opportunities.
Strengthened financial and operational capacity with complementary cash flow and growth profiles.
Combined Group will be headquartered in Johannesburg with operations across South Africa, Ghana, Australia, Canada and South America.
All-share offer by Gold Fields at an Exchange Ratio of 0.6 Gold Fields Consideration Shares for each Yamana share implying a valuation for Yamana of US$6.7bn.

On 31 May 2022 Gold Fields and Yamana Gold Inc. (Yamana), announced that they have entered into a definitive agreement (the “Arrangement Agreement”), under which Gold Fields will acquire all of the outstanding common shares of Yamana (Yamana Shares) pursuant to a plan of arrangement (the Transaction).

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 (each whole share, a “Gold Fields Share”) or 0.6 of a Gold Fields American depositary share (each whole American depositary share, a Gold Fields ADSs) for each Yamana Share (the Exchange Ratio).

The Transaction implies a valuation for Yamana of US$6.7bn and represents a premium of 33.8% to the 10-day Volume-Weighted Average Price (VWAP) of Yamana’s Shares of US$5.20¹ on Friday, May 27, 2022, being the last trading day on the NYSE prior to the date of this announcement, based on the 10-day VWAP of Gold Fields ADSs of US$11.592. Upon closing of the Transaction, it is anticipated that Gold Fields Shareholders and Yamana Shareholders will own approximately 61% and 39% of the Combined Group, respectively.

The acquisition of Yamana by Gold Fields significantly strengthens the ability of the combined company (the Combined Group) to deliver on Gold Fields’ three strategic pillars: maximizing asset potential; advancing ESG commitment; and growing the value and quality of its asset portfolio. The Combined Group has the potential to create significant long-term value for shareholders through greater scale, an industry-leading portfolio of assets, an enhanced production profile with significant growth potential, operational and geological synergies, and a strengthened financial profile for future growth and shareholder returns.

Gold Fields’ Board believes that offering the Gold Fields Consideration Shares is the best way to capture and unlock growth opportunities while still maintaining financial flexibility, capital and operational discipline, and providing attractive returns to shareholders. Strong near-term operating cash flows from Gold Fields’ producing assets complement the manageable capital requirements of Yamana’s world class, high return project portfolio, providing greater capacity to fund the combined growth pipeline internally, while maintaining shareholder returns in line with Gold Fields’ existing policy.

Yamana is a natural strategic fit for Gold Fields, with its high quality, diversified portfolio of long life assets located in mining friendly rules-based jurisdictions across the Americas (including its five producing mines and pipeline of development projects and exploration properties) and with a shared focus on health and safety and ESG performance.

With the combination of Gold Fields’ and Yamana’s portfolio of assets, Gold Fields will become a new global gold major able to create value at every stage of its pipeline.

The Combined Group will maintain its presence in all regions while continuing to honour commitments to stakeholders. Gold Fields believes that this Transaction offers employees and communities more opportunities in the long-term given its track record of ongoing investment in the regions in which it operates.

The Transaction has been unanimously approved by the Board of Directors of both Gold Fields and Yamana and is expected to close in the second half of 2022 subject to and following the satisfaction of the conditions precedent to the Transaction.

The acquisition will be implemented by way of a plan of arrangement of Yamana under the Canada Business Corporations Act pursuant to the Arrangement Agreement entered into between Gold Fields and Yamana dated 31 May 2022. The consideration payable to the shareholders of Yamana will consist of either, at the election of a Yamana shareholder, newly issued Gold Fields Shares or newly issued Gold Fields ADSs, which each represent one Gold Fields Share, in accordance with the Exchange Ratio. The Gold Fields Shares are listed on the Johannesburg Stock Exchange and the Gold Fields ADSs are listed on the NYSE. If shareholders approve the Transaction, our intention is to obtain a secondary listing on the Toronto Stock
Exchange.

Expected timing 2022 (base case scenario)

Publication of circulars: End September/early October
Shareholder votes: End October/early November
Transaction close: Mid November

¹	As traded on the New York Stock Exchange (“NYSE”)
²	As traded on the NYSE

Cash dividend

In line with the Company’s dividend policy, the Board has approved and declared an interim dividend number 96 of 300 SA cents per ordinary share (gross) in respect of the six months ended 30 June 2022. The interim dividend will be subject to the Dividend Withholding Tax of 20 per cent. In accordance with paragraph 11.17 of the JSE Listings Requirements, the following additional information is disclosed:

The dividend has been declared out of income reserves;
The gross local dividend amount is 300 SA cents per ordinary share for shareholders exempt from dividends tax;
The Dividend Withholding Tax of 20 per cent (twenty per centum) will be applicable to this dividend;
The net local dividend amount is 240 SA cents per ordinary share for shareholders liable to pay the dividends tax;
Gold Fields currently has 891,248,083 ordinary shares in issue; and
Gold Fields’ income tax number is 9160035607.

Shareholders are advised of the following dates in respect of the final dividend:

Interim dividend number 96: 300 SA cents per share;
Declaration date: Thursday, 25 August 2022
Last date to trade cum-dividend: Tuesday, 13 September 2022;
Sterling and US Dollar conversion date: Wednesday, 14 September 2022;
Shares commence trading ex-dividend: Wednesday, 14 September 2022;
Record date: Friday, 16 September 2022; and
Payment of dividend: Monday, 19 September 2022.

Share certificates may not be dematerialised or rematerialised between Wednesday, 14 September 2022 and Friday, 16 September 2022, both dates inclusive.