The Group has not had a fatal injury since April 2021. Regrettably, 3 serious injuries were recorded for the six months ended 30 June 2022, though this was lower than the four injuries reported in the same period in 2021. Pleasingly the injury severity rate continues to decline. The Total Recordable Injury Frequency Rate (TRIFR) for the Group regressed to 2.36 for the six months ended 30 June 2022 from 1.85 for H1 2021 mainly attributed to the high turnover and lower skill level of new recruits in Australia.
Six months ended | |||
Safety | H1 22 |
H1 21 | FY21 |
Fatalities | 0 | 1 | 1 |
---|---|---|---|
TRIFR1 | 2.36 | 1.85 | 2.16 |
Serious injuries5 | 3 | 4 | 9 |
1 | 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 |
No Level 3 – 5 environmental incidents were reported for the six months ended 30 June 2022, continuing the trend of preceding years.
Fresh water withdrawal dropped by 6% to 4.7 gigalitres (GL) for the six months ended 30 June 2022, mainly due to a decrease in water withdrawal at Tarkwa as the operation improved its water recycling and reuse. Water recycled/reused was 75% of total water use for the six months ended 30 June 2022 compared with 74% in H1 2021. This is because Tarkwa installed a micro-filtration unit on a clarifier return line to the carbon-in-leach plant as well as optimized recycling/reuse at Cerro Corona during the dry season.
Group energy spend was US$206m (21% of operating costs) for the six months ended 30 June 2022 compared with US$150m (17%) in H1 2021, reflecting increased production, higher diesel prices and the inclusion of leasing costs in 2022. For the six months ended 30 June 2022, energy savings of 480 terajoules (TJ) were achieved (6% of H1 energy consumption), compared with 642 TJ (8% of energy consumption) for H1 2021.
Scope 1 and 2 CO2 emissions were 864kt for the six months ended 30 June 2022 compared with 841kt during H1 2021, as a result of a rise in tonnes mined over the period. CO2 emissions intensity increased slightly to 8.6kg CO2e/t mined from 8.5kg CO2e/t in H1 2021.
Renewable energy in H1 2022 accounted for 12% of our total electricity, with renewables providing 50% of electricity consumed by our Agnew mine in Australia and the electricity supply to our Cerro Corona mine in Peru was certified 100% renewable. The R715m, 50MW solar plant at South Deep and the USD20m, 12MW solar – 4.4MW battery plant at Gruyere are scheduled for completion in Q3 2022.
The Salares Norte Chinchilla Rescue and Relocation Plan remains suspended, pending review by the Authority of the revised Compliance Programme. The relocation delay is not expected to delay construction of the project.
Gold Fields published its fourth Climate Change Report for the 2021 financial year in line with the recommendations of the Taskforce 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 22 |
H1 21 | FY21 |
Environmental incidents − Level 3 – 5 | 0 | 0 | 0 |
---|---|---|---|
Fresh water withdrawal (GL)1 | 4.71 | 4.99 | 9.44 |
Water recycled/reused (% of total) | 75 | 74 | 75 |
Energy consumption (PJ)2 | 7.02 | 6.85 | 13.90 |
Energy intensity (MJ/t mined) | 70 | 70 | 69 |
CO2 emissions (kt)3 | 864 | 841 | 1,714 |
CO2 emissions intensity (kg CO2 /t mined) | 8.6 | 8.5 | 8.5 |
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. |
Gold Fields continues to focus on maximising in-country and host community economic impact. The Group's value distribution to national economies was US$1.9bn for the six months ended 30 June 2022 compared with US$1.9bn for H1 2021, Gold Fields procurement from in-country suppliers was US$1.1bn for the six months ended 30 June 2022 (97% of total procurement) compared with US$1.1bn for H1 2021 (97% 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 9,342 people – 53% of the total workforce (excluding projects and corporate offices) for the six months ended 30 June 2022 compared with 9,200, 52% of the total workforce, for H1 2021. Group host community procurement spend for the six months ended 30 June 2022 was US$358m (30% of total spend), compared with US$339m (31% of total) during H1 2021. Spending on socio-economic development (SED) projects in our host communities totalled US$9.2m for the six months ended 30 June 2022 compared with US$7.1m for H1 2021.
Our total workforce at the end of June was 22,294 (including projects and corporate offices), comprising 6,251 employees and 16,043 contractors compared with a total workforce of 22,110 at year-end 2021. Women comprised 23% of Gold Fields' employees at the end of June 2022 compared with 22% at the end of 2021. Of the 23%, 54% work in core mining activities. Training spend was US$3.9m for the six months ended 30 June 2022 compared with US$3.9m in H1 2021.
Six months ended | |||
Social | H1 22 |
H1 21 | FY21 |
Host community procurement (% of total) | 30 | 31 | 31 |
---|---|---|---|
Host community workforce (% of total) | 53 | 52 | 54 |
Socio-economic development spending (US$m) | 9.2 | 7.1 | 16 |
Women in workforce (% of total) | 23 | 21 | 22 |
Training spend (US$m) | 3.9 | 3.9 | 8.3 |
The impact of the COVID-19 pandemic abated in the first half of 2022, especially in Q2, as governments relaxed restrictions and requirements for testing, movement, gatherings and masks. Having recorded no cases before February 2022, our Australia region experienced high numbers of cases, albeit mild, this did have some impact on production. We also saw the start of a 4th wave of Covid-19 in Chile in Q2 which did have some impact on contractor staff availability and Salares Norte construction. One person was hospitalized briefly during the quarter, in sharp contrast to the situation in H1 2021, when at least two employees were in hospital at any time.
The diminished effect of the pandemic on the company may be attributed to a combination of the milder omicron variant, vaccination programmes across the Group, strict adherence to all government regulations/protocols, rigorous implementation of risk-related work practices and social media awareness and return-to-work communication campaigns for employees, communities and others. By late July 2022, 88% of our total workforce was fully vaccinated, with the Americas and Australia regions and our corporate offices staff 100% fully vaccinated. 52% of our workforce had received at least one booster shot, again with the Americas and Australia regions at or close to 100%. 38% of our Americas workforce had received a second booster.
Since the beginning of the pandemic, Gold Fields has undertaken almost 280,000 tests among its 22,000 strong workforce. To date we have had 7,800 COVID-19 positive cases among employees and contractors. Regrettably, 20 employees and contractors have passed away, the last in H2 2021.
Spending on COVID-19 related programmes and projects totalled US$12m during H1 2022.
Managed equivalent gold production (including 45% share of Asanko) increased by 8% from 1,148,200oz for the six months ended 30 June 2021 to 1,245,300oz for the six months ended 30 June 2022. Attributable equivalent gold production, (including Asanko) increased by 9% from 1,104,100oz for the six months ended 30 June 2021 to 1,200,500oz for the six months ended 30 June 2022.
At the South Africa region, attributable gold production (96.4%) at South Deep increased by 28% from 3,828kg (123,100oz) for the six months ended 30 June 2021 to 4,915kg (158,000oz) for the six months ended 30 June 2022. Managed gold sold increased by 32% from 3,868kg (124,400oz) to 5,097kg (163,900oz).
Attributable gold production (90%) at the West African operations (including 45% of Asanko), decreased by 4% from 401,000oz for the six months ended 30 June 2021 to 385,800oz for the six months ended 30 June 2022 mainly due to planned decreased production at Damang and Asanko. Managed gold produced and sold at Tarkwa increased marginally from 256,900oz for the six months ended 30 June 2021 to 257,300oz for the six months ended 30 June 2022. At Damangmanaged gold produced and sold decreased by 6% from 133,500oz for the six months ended 30 June 2021 to 125,200oz for the six months ended 30 June 2022 mainly due to lower yield as a result of low-grade material fed from the stockpile to augment the expit material combined with a 1% drop in plant recovery when comparing to H1 2021. Attributable gold produced at Asanko decreased by 16% from 49,700oz for the six months ended 30 June 2021 to 41,600oz for the six months ended 30 June 2022 due to lower grade ore processed. Gold sold at Asanko decreased by 24% from 52,300oz (45%) to 39,700oz (45%).
Attributable equivalent gold production (99.5%) at Cerro Corona in Peru increased by 31% from 98,800oz for the six months ended 30 June 2021 to 129,300oz for the six months ended 30 June 2022 mainly due to higher grades of ore processed and higher recoveries. In H1 2021 production was also impacted by a revised mining sequence due to slope instability at the high-grade eastern side of the pit. Total managed gold equivalent production increased by 31% from 99,300oz for the six months ended 30 June 2021 to 129,900oz for the six months ended 30 June 2022. Gold equivalent ounces sold increased by 26% from 103,500oz to 130,500oz.
Gold production at the Australian (100%) operations increased by 10% from 481,200oz for the six months ended 30 June 2021 to 527,400oz for the six months ended 30 June 2022 mainly due to higher grades of ore mined and processed at Agnew, Granny Smith and Gruyere as well as improved mill performance at Gruyere. At St Ives, gold production increased by 1% from 188,500oz for the six months ended 30 June 2021 to 190,300oz for the six months ended 30 June 2022. Gold sold increased by 2% from 188,500oz to 191,700oz. At Agnew, gold production increased by 8% from 111,700oz for the six months ended 30 June 2021 to 120,500oz for the six months ended 30 June 2022 due to an increase in grade of ore mined and processed in line with the plan, partially offset by a decrease in ore milled. The highergrade ore was mainly sourced from the Kath lode orebody at Waroonga. Gold sold increased by 8% from 112,500oz to 121,000oz. At Granny Smith, gold production increased by 14% from 121,300oz for the six months ended 30 June 2021 to 138,300oz for the six months ended 30 June 2022 due to increased grade of ore mined at the Z120 mining area and increased grade of ore processed, partially offset by a decrease in ore milled. Gold sold increased by 13% from 122,600oz to 138,300oz. At Gruyere gold production (50% basis) increased by 31% from 59,700oz for the six months ended 30 June 2021 to 78,400oz for the six months ended 30 June 2022 due to higher grades of ore mined from Stages 2 and 3 of the Gruyere pit combined with higher grade of ore processed. Tonnes processed increased by 11% in H1 2022 when compared to H1 2021 with the processing improvement projects yielding the desired results. Gold sold increased by 31% from 60,600oz to 79,600oz.
The average US Dollar gold price achieved by the Group (excluding Asanko) increased by 3% from US$1,799/eq oz for the six months ended 30 June 2021 to US$1,851/eq oz for the six months ended 30 June 2022. The average Rand gold price increased by 11% from R838,127/kg to R926,383/kg. The average Australian Dollar gold price increased by 11% from A$2,340/oz to A$2,600/oz. The average US Dollar gold price for the Ghanaian operations (excluding Asanko) increased by 4% from US$1,801/oz for the six months ended 30 June 2021 to US$1,881/oz for the six months ended 30 June 2022. The average equivalent US Dollar gold price, net of treatment and refining charges, for Cerro Corona decreased by 6% from US$1,772/eq oz for the six months ended 30 June 2021 to US$1,668/eq oz for the six months ended 30 June 2022. The average US Dollar/Rand exchange rate weakened by 6% from R14.54 for the six months ended 30 June 2021 to R15.40 for the six months ended 30 June 2022. The average Australian/US Dollar exchange rate weakened by 6% from A$1.00 = US$0.77 to A$1.00 = US$0.72.
Gold equivalent ounces sold (excluding Asanko) increased by 10% from 1.10Moz to 1.21Moz. Revenue from Asanko is not included in Group revenue as Asanko results are equity accounted.
Revenue increased by 13% from US$1,984m for the six months ended 30 June 2021 to US$2,235m for the six months ended 30 June 2022 due to the 10% higher gold sold and 3% higher gold price received.
Cost of sales before amortisation and depreciation increased by 11% from US$832m for the six months ended 30 June 2021 to US$923m for the six months ended 30 June 2022 mainly due to inflationary increases of US$130m affecting all the regions partially offset by a US$39m impact of the weakening of the Australian Dollar and South African Rand.
At the South Africa region, at South Deep, cost of sales before amortisation and depreciation increased by 19% from R2,150m (US$148m) for the six months ended 30 June 2021 to R2,558m (US$166m) for the six months ended 30 June 2022. Limiting the increase in cost of sales before amortisation and depreciation to 19% demonstrates good cost control considering a 28% increase in production combined with inflationary cost pressures.
At the West Africa region, (excluding Asanko), cost of sales before amortisation and depreciation increased by 9% from US$233m for the six months ended 30 June 2021 to US$254m for the six months ended 30 June 2022 mainly due to increased prices on items such as diesel and explosives increasing the mining unit costs. These increases are on the back of the abnormal global inflation pressures seen at present.
At the South America region, at Cerro Corona, cost of sales before amortisation and depreciation increased by 2% from US$91m for the six months ended 30 June 2021 to US$93m for the six months ended 30 June 2022.
At the Australia region, cost of sales before amortisation and depreciation increased by 22% from A$466m (US$360m) for the six months ended 30 June 2021 to A$569m (US$409m) for the six months ended 30 June 2022. This increase is mainly due to a 10% increase in production and an increase in ore tonnes and operational waste tonnes mined at the Gruyere pit. The costs in the Australian region were also negatively impacted by abnormally high pressures on commodity inputs and employee costs which included retention payments in order to contain the abnormally high employee turnover in Australia during the six months ended 30 June 2022.
Amortisation and depreciation for the Group increased by 20% from US$315m for the six months ended 30 June 2021 to US$378m for the six months ended 30 June 2022 mainly due to a US$75m increase related to higher production partially offset by a US$12m impact of the weakening of the Australian Dollar and South African Rand.
Investment income remained similar at US$4m.
Finance expense for the Group increased by 6% from US$36m for the six months ended 30 June 2021 to US$38m for the six months ended 30 June 2022 due to an allocation of lease and rehabilitation interest partially offset by lower borrowings and higher interest capitalised during the six months ended 30 June 2022. Interest expense on borrowings of US$38m, interest lease liability of US$11m and rehabilitation interest of US$6m partially offset by interest capitalised of US$17m for the six months ended 30 June 2022 compared with interest expense on borrowings of US$41m, partially offset by interest capitalised of US$5m for the six months ended 30 June 2021.
The share of results of equity-accounted investees after taxation of a loss of US$5m for the six months ended 30 June 2022 compared to an income of US$17m for the six months ended 30 June 2021. The decrease is as a result of lower profitability at Asanko for the six months ended 30 June 2022.
The gain on foreign exchange of US$16m for the six months ended 30 June 2022 compared with a loss on foreign exchange of US$7m for the six months ended 30 June 2021 and related to the conversion of offshore cash holdings into their functional currencies.
The gain on financial instruments of US$23m for the six months ended 30 June 2022 compared with a loss of US$53m for the six months ended 30 June 2021.
Six months ended | ||
June 2022 | June 2021 | |
Ghana oil hedge | 14 | 10 |
---|---|---|
Australia oil hedge | 9 | 6 |
Salares Norte foreign currency hedge | – | (18) |
Peru copper hedge | – | (31) |
Australia gold hedge | – | (19) |
Maverix warrants – loss on fair value | – | (1) |
Gain/(loss) on financial instruments | 23 | (53) |
Unrealised gain/(loss) and prior year marked-to-market reversals on derivative contracts | 8 | (38) |
Realised gain/(loss) on derivative contracts | 15 | (14) |
Maverix warrants – loss on fair value | – | (1) |
Gain/(loss) on financial instruments | 23 | (53) |
Share-based payments for the Group decreased by 33% from US$6m for the six months ended 30 June 2021 to US$4m for the six months ended 30 June 2022 mainly due to lower forecast vesting percentages of share-based payments.
The long-term incentive plan decreased by 8% from US$12m for the six months ended 30 June 2021 to US$11m for the six months ended 30 June 2022 due to the current marked-to-market valuation of the plan reflecting forecast performance.
Other costs for the Group decreased by 66% from US$32m for the six months ended 30 June 2021 to US$11m for the six months ended 30 June 2022 and mainly related to the reallocation of lease interest and rehabilitation interest to the interest line in 2022.
Exploration expense remained flat at US$33m for the six months ended 30 June 2022. The US$33m spend for the six months ended 30 June 2022 included US$15m spend at Salares Norte and US$18m related to exploration spend at the other operations. 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 expenses of US$10m for the six months ended 30 June 2022 compared with an income of US$3m for the six months ended 30 June 2021.
Non-recurring expenses of US$10m for the six months ended 30 June 2022 mainly includes:
Non-recurring income of US$3m for the six months ended 30 June 2021 mainly includes:
Government royalties for the Group increased by 9% from US$54m for the six months ended 30 June 2021 to US$59m for the six months ended 30 June 2022 in line with the higher revenue.
The taxation charge for the Group increased by 27% from US$216m for the six months ended 30 June 2021 to US$274m for the six months ended 30 June 2022 in line with the higher profit before tax. Normal taxation increased by 17% from US$192m for the six months ended 30 June 2021 to US$224m for the six months ended 30 June 2022. The deferred tax charge increased by 104% from US$24m for the six months ended 30 June 2021 to US$49m for the six months ended 30 June 2022 due to an additional charge of US$5m (R76m) as a result of the change in the effective tax rate at South Deep from 29% to 28% for the six months ended 30 June 2022.
Profit for the period increased by 30% from US$410m for the six months ended 30 June 2021 to US$534m for the six months ended 30 June 2022.
Net profit attributable to owners of the parent for the Group increased by 32% from US$387m or US$0.44 per share for the six months ended 30 June 2021 to US$510m or US$0.57 per share for the six months ended 30 June 2022.
Headline earnings attributable to owners of the parent for the Group increased by 31% from US$396m or US$0.45 per share for the six months ended 30 June 2021 to US$518m or US$0.58 per share for the six months ended 30 June 2022.
Normalised profit for the Group increased by 16% from US$431m or US$0.49 per share for the six months ended 30 June 2021 to US$498m or US$0.56 per share for the six months ended 30 June 2022.
Normalised profit reconciliation for the Group is calculated as follows:
Six months ended | ||
US$'m | June 2022 | June 2021 |
Profit for the period attributable to owners of the parent | 509.7 | 387.4 |
---|---|---|
Non-recurring items | 9.8 | (2.8) |
Tax effect of non-recurring items | (1.4) | 1.7 |
Non-controlling interest effect of non-recurring items | (0.1) | (0.1) |
(Gain)/loss on foreign exchange | (16.0) | 7.4 |
Tax effect of (gain)/loss on foreign exchange | 5.8 | (1.9) |
Non-controlling interest effect of (gain)/loss on foreign exchange | 0.7 | 0.1 |
(Gain)/loss on financial instruments | (23.4) | 53.1 |
Tax effect of (gain)/loss on financial instruments | 7.5 | (15.0) |
Non-controlling interest effect of (gain)/loss on financial instruments | 0.9 | 0.6 |
South Deep deferred tax change | 4.9 | – |
Normalised profit attributable to owners of the parent | 498.4 | 430.5 |
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 inflow from operating activities increased by 26% from US$689m for the six months ended 30 June 2021 to US$871m for the six months ended 30 June 2022. The increase was mainly due to a higher profit before royalties and taxation as well as a release of working capital. This was partially offset by a higher royalties and taxation payment for the six months ended 30 June 2022.
Dividends paid decreased by 21% from US$212m for the six months ended 30 June 2021 to US$168m for the six months ended 30 June 2022. The dividend paid of US$168m for the six months ended 30 June 2022 comprised dividends paid to owners of the parent of US$153m related to the 2021 final dividend and dividends paid to noncontrolling interest holders of US$15m. 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 non-controlling interest holders of US$22m.
Cash outflow from investing activities increased by 18% from US$469m for the six months ended 30 June 2021 to US$552m for the six months ended 30 June 2022.
Capital expenditure increased by 20% from US$456m for the six months ended 30 June 2021 to US$545m for the six months ended 30 June 2022. The capital expenditure of US$545m for the six months ended 30 June 2022 comprised of sustaining capital expenditure of US$340m and non-sustaining capital expenditure of US$205m. The capital expenditure of US$456m for the six months ended 30 June 2021 comprised of sustaining capital expenditure of US$262m and non-sustaining capital expenditure of US$194m.
Sustaining capital expenditure, (excluding Asanko), increased by 30% from US$262m for the six months ended 30 June 2021 to US$340m for the six months ended 30 June 2022 mainly due to increases from South Deep, Damang and Tarkwa.
Non-sustaining capital expenditure (excluding Asanko), increased by 6% from US$194m for the six months ended 30 June 2021 to US$205m for the six months ended 30 June 2022. This movement is mainly attributable to the project capital incurred while constructing Salares Norte. Growth expenditure of US$205m for the six months ended 30 June 2022 comprised US$145m at Salares Norte, US$40m at the Australian operations, US$4m at Cerro Corona, US$11m at South Deep and US$5m at Damang. 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.
At the South Africa region at South Deep, capital expenditure increased by 128% from R428m (US$29m) for the six months ended 30 June 2021 to R978m (US$64m) for the six months ended 30 June 2022 mainly due to increased spending on the solar plant of R375m (US$24m), mining fleet and the Doornpoort phase 2 construction.
At the West Africa region, (excluding Asanko), capital expenditure increased by 30% from US$118m for the six months ended 30 June 2021 to US$153m for the six months ended 30 June 2022. At Tarkwa, capital expenditure increased by 11% from US$108m to US$120m mainly as a result of timing on TSF construction activities and higher capital waste expenditure driven by higher mining unit rates. Capital expenditure at Damang increased by 227% from US$10m to US$33m due to the capital waste stripping at the Huni pit (US$25m) not included in H1 2021.
Capital expenditure at Asanko (on a 100% basis) decreased by 71% from US$21m for the six months ended 30 June 2021 to US$6m for the six months ended 30 June 2022. The Asanko capital expenditure is not included in the Group capital expenditure.
At the South America region at Cerro Corona, capital expenditure decreased by 13% from US$19m for the six months ended 30 June 2021 to US$16m for the six months ended 30 June 2022, mainly due to the Arpon waste storage facility construction (US$8m) included in the capital for H1 2021. At Salares Norte, capital expenditure increased by 9% from US$133m for the six months ended 30 June 2021 to US$145m for the six months ended 30 June 2022.
At the Australia region, capital expenditure increased by 14% from A$202m (US$156m) for the six months ended 30 June 2021 to A$231m (US$166m) for the six months ended 30 June 2022. At St Ives, capital expenditure increased by 24% from A$66m (US$51m) to A$83m (US$59m) due to increased pre-strip activities at Neptune stage 7 pit. Agnew, capital expenditure increased by 25% from A$55m (US$42m) to A$69m (US$49m) mainly due to increased expenditure incurred on the mill crushing circuit replacement project. At Granny Smith, capital expenditure increased by 10% from A$53m (US$41m) for the six months ended 30 June 2021 to A$58m (US$41m) for the six months ended 30 June 2022 mainly due to increased expenditure on development of the Z135 area. At Gruyere, capital expenditure (50% basis) decreased by 23% from A$29m (US$22m) for the six months ended 30 June 2021 to A$22m (US$16m) for the six months ended 30 June 2022 reflecting the completion of pre-stripping stage 3 of the pit.
Proceeds on disposal of property, plant and equipment of US$nil for the six months ended 30 June 2022 compared with US$2m for the six months ended 30 June 2021.
Purchase of investments increased by 100% from US$3m for the six months ended 30 June 2021 to US$6m for the six months ended 30 June 2022. The purchase of US$6m for the six months ended 30 June 2022 comprised purchases of bonds for the insurance captive of US$5m as well as a purchase of Chakana Copper Corporation shares of US$1m. The purchase of investments of US$3m for the six months ended 30 June 2021 related to a purchase of 6.6m shares in Chakana.
Redemption of Asanko preference shares of US$5m for the six months ended 30 June 2021 compared to US$nil for the six months ended 30 June 2022.
Environmental payments increased by 420% from US$5m for the six months ended 30 June 2021 to US$26m for the six months ended 30 June 2022. The contributions of US$26m for the six months to 30 June 2022 comprise US$15m by the Australia region, US$4m by the Ghanaian region, US$5m by Cerro Corona in Peru and US$1m by South Deep in South Africa. The contributions of US$5m for the six months to 30 June 2021 comprised US$4m by the Ghanaian region and US$1m by South Deep in South Africa.
Net cash inflow from financing activities of US$69m for the six months ended 30 June 2022 compared with an outflow of US$197m for the six months ended 30 June 2021. The cash inflow for the six months ended 30 June 2022 related to the drawdown of US$207m on offshore loans, partially offset by loan repayments of US$105m and payment of principal lease liabilities of US$33m. 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 net cash inflow for the Group of US$220m for the six months ended 30 June 2022 compared with an outflow of US$190m for the six months ended 30 June 2021. After accounting for a negative translation adjustment of US$21m on non-US Dollar cash balances, the cash inflow for the six months ended 30 June 2022 was US$199m. The cash balance at 30 June 2022 of US$724m compared with US$704m at 30 June 2021.
Adjusted free cash flow increased by 63% from US$180m for the six months ended 30 June 2021 to US$293m for the six months ended 30 June 2022 due to higher cash flows from operating activities and lower dividends, partially offset by higher capital expenditure.
The US$293m adjusted free cash flow for the six months ended 30 June 2022 comprised: US$518m free cash generated by the eight mining operations (after royalties, taxes, capital expenditure and environmental payments) less US$172m spend at Salares Norte (comprising US$145m in capex, US$15m in exploration, a US$6m investment in working capital and other costs of US$8m, partially offset by a credit of US$2m from the realised portion of the FX hedge) less US$32m of net non-mine interest paid as well as US$21m on nonmine based costs mainly due to working capital movements.
The US$180m adjusted free cash flow 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.
Net debt decreased by 12% from US$969m at 31 December 2021 to US$851m at 30 June 2022.
Net debt excluding lease liabilities decreased by 18% from US$553m at 31 December 2021 to US$451m at 30 June 2022.
Net debt is defined by the Group as total borrowings and lease liabilities less cash and cash equivalents.
The net debt/adjusted EBITDA ratio of 0.33 at 30 June 2022 compared with 0.49 at 30 June 2021. The net debt/adjusted EBITDA ratio of 0.33 at 30 June 2022 is based on net debt of US$851m and adjusted EBITDA of US$2,590m.
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$2,225m.
Adjusted EBITDA for calculating net debt/adjusted EBITDA is based on the profit for the 12 months ended 30 June 2022 and is determined as follows in US$ million:
US$'m | June 2022 |
Revenue | 4,447 |
---|---|
Cost of sales before amortisation and depreciation | (1,753) |
Exploration and project costs | (60) |
Other costs* | (44) |
2,590 |
* | Other costs include other non-mine based costs and hedge losses. Adjusted EBITDA is defined by the Group as profit or loss for the year adjusted for interest, taxation, amortisation and depreciation and certain other non-operating costs. |
US$'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 include other non-mine based costs and hedge losses. Adjusted EBITDA is defined by the Group as profit or loss for the year adjusted for interest, taxation, amortisation and depreciation and certain other non-operating costs. |
The Group all-in sustaining costs increased by 5% from US$1,093/oz for the six months ended 30 June 2021 to US$1,148/oz for the six months ended 30 June 2022 mainly due to higher sustaining capital expenditure and higher cost of sales before amortisation and depreciation, partially offset by higher gold sold. If the all-in sustaining costs are normalised for the weakening of the currencies by using the same exchange rates as in the first six months of 2021, the all-in sustaining costs would be US$1,196/oz for the six months ended 30 June 2022. This represents a 9% increase in all-in sustaining costs compared with the six months ended 30 June 2021.
Total all-in cost increased by 6% from US$1,274/oz for the six months ended 30 June 2021 to US$1,352/oz for the six months ended 30 June 2022 mainly due to higher sustaining and non-sustaining capital expenditure and higher cost of sales before amortisation and depreciation, partially offset by higher gold sold. The higher nonsustaining capital expenditure was mainly at Salares Norte which increased from US$133m for the six months ended 30 June 2021 to US$145m for the six months ended 30 June 2022 in line with the project progress.
Normalising for the exchange rate differences, the total all-in cost would be US$1,404/oz for the six months ended 30 June 2022, a 10% increase when compared with the six months ended 30 June 2021.