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 leave 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.
Total capex for the Group for the year is expected to be between US$1.050bn and US$1.150bn. Sustaining capital is expected to be between US$625m and US$675m, with non-sustaining capex expected to be between US$425m and US$475m. The largest component of the capex budget for the year is Salares Norte project capital, with US$330m expected to be spent.
The above is subject to safety performance which limits the impact of safety-related stoppages and the forward-looking statement in Certain forward-looking statements and Certain forward-looking statements.
Basis of preparation
The condensed consolidated interim financial statements for the six months ended 30 June 2022 have been prepared in accordance with International Financial Reporting Standard (IFRS), IAS 34 'Interim Financial Reporting', the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the South African Companies Act of South Africa 71 of 2008 (Companies Act), as amended, and the JSE Limited Listings Requirements.
The condensed consolidated financial statements are prepared on a going concern basis.
The condensed consolidated financial statements are presented in United States Dollars, which is Gold Fields Limited's presentation currency. The accounting policies applied in the preparation of these condensed consolidated financial statements are in terms of International Financial Reporting Standards and are consistent with those applied in the previous annual financial statements.
Pro forma financial information
The preliminary financial statements contain certain non-IFRS financial measures in respect of the Group's financial performance, the statement of financial position and cash flows presented in order to provide users with relevant information and measures used by the Group to assess performance. These measures constitute pro forma financial information in terms of the JSE Limited Listings Requirements and are the responsibility of the Group's Board of Directors. They are presented for illustrative purposes only and due to their nature, may not fairly present Gold Fields' financial position, changes in equity, results of operations or cash flows.
The key non-IFRS measures used and defined in the media release include:
Normalised profit attributable to owners of the parent which is defined as profit excluding gains and losses on foreign exchange, financial instruments and non-recurring items after taxation and non-controlling interest effect;
Normalised profit per share attributable to owners of the parent;
Net debt which is calculated as borrowings plus the current portion of borrowings and lease liabilities plus current portion of lease liabilities less cash and cash equivalents;
Net debt (excluding lease liabilities) which is calculated as borrowings plus the current portion of borrowings less cash and cash equivalents;
Adjusted free cash flow is calculated as cash flow from operating activities less net capital expenditure, environmental payments, lease payments and redemption of Asanko preference shares;
Adjusted free cash flow from operations is calculated as cash flow from operating activities less net capital expenditure, environmental payments and lease payments from the eight mining operations;
Adjusted EBITDA is required to be determined in terms of loan and revolving credit facilities agreements to evaluate compliance with debt covenants;
Sustaining capital expenditure represents the majority of capital expenditures at existing operations, including mine development costs, ongoing replacement of mine equipment and other capital facilities and other capital expenditures at existing operations;
Non-sustaining capital expenditure represents capital expenditures for major growth projects as well as enhancement capital for significant infrastructure improvements at existing operations; and
All-in sustaining costs and total all-in cost are presented to provide transparency into the costs associated with producing and selling an ounce of gold and is a common measure presented within the mining industry.
This pro forma financial information has not been reported on by the Group's auditors, being PricewaterhouseCoopers Inc.
Auditor's review
The condensed consolidated financial statements of Gold Fields Limited for the six month period ended 30 June 2022 have been reviewed by the Company's auditor, PricewaterhouseCoopers Inc.
The auditor's report does not necessarily report on all of the information contained in this media release. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor's engagement they should refer to Certain forward-looking statements of the media release for a copy of the auditor's report.
Class action settlement
The Tshiamiso Trust has been established to carry out the terms of the class action settlement agreement reached between six gold mining companies (including Gold Fields) and claimant attorneys in the silicosis and TB class action. The Tshiamiso Trust is responsible for ensuring that all eligible current and former mineworkers across southern Africa with silicosis or work-related TB (or their dependants where the mineworker has passed away) are compensated pursuant to the silicosis and TB class action settlement agreement and Tshiamiso Trust Deed (collectively the "Settlement Agreement").
Financial provision
Gold Fields has provided for the estimated cost of the class action settlement based on actuarial assessments and the provisions of the Settlement Agreement. At 30 June 2022, the provision for Gold Fields' share of the settlement of the class action claims and related costs amounts to US$13.0m (R211.7m) (December 2021: US$13.1m (R209.6m)). The nominal value of this provision is US$16.2m (R263.9m). The ultimate outcome of this matter however remains uncertain, with the number of eligible workers successfully submitting claims and receiving compensation being uncertain. The provision is consequently subject to adjustment in the future.
Segment reporting
The net profit (excluding Asanko) per the income statement reconciles to the net profit in the segmental operating and financial results as follows:
Six months ended 30 June 2022 | US$'m |
Net profit | 533.6 |
---|---|
– Operating segments | 583.3 |
– Corporate and projects | (49.7)* |
Six months ended 30 June 2021 | US$'m |
Net profit | 410.1 |
---|---|
– Operating segments | 481.0 |
– Corporate and projects | (70.9)* |
* | Comprises mainly of non-mine interest and other costs. |
Chris Griffith
Chief Executive Officer
25 August 2022