for the six months ended 30 June 2023
COMMENTARY Results for the Group
Solid performance despite prevailing headwinds
Gold Fields continued to build momentum in its strategy implementation by positively advancing a number of strategic initiatives in H1 2023. The Group announced two corporate actions that underline our strategic imperative of pursuing value accretive deals to grow the value and quality of our portfolio: The proposed Tarkwa/Iduapriem JV in Ghana on 16 March 2023 and the Windfall JV with Osisko Mining in Canada on 2 May 2023.
We have also accelerated a number of internally focused initiatives which will further enhance the implementation of our strategy, by unlocking the full potential of our people and assets and drive improved business value. During H1 2023 the focus was on two of these initiatives: Rolling out our culture journey, termed the "Gold Fields Way", and Asset Optimisation.
Our operating environment remained challenging during the period, with elevated mining cost inflation and strong competition for skills in our key mining jurisdictions presenting significant headwinds. Despite these challenges, Gold Fields delivered solid operating results, with attributable production decreasing 4% (in line with plan) and all-in costs (AIC) rising only 3%. Normalised earnings decreased by 9% YoY and the Company generated free cash flow of US$140m, allowing us to declare an interim dividend of 325 SA cents.
Health and safety
The safety of our people remains our number one value, and it is therefore with deep regret that we had to report one operational fatality and three serious injuries during the first half of 2023, the same as in H1 2022. The fatal incident involving a contractor occurred at our Tarkwa mine in Q1 2023.
In late June 2023, we also suffered a non-operational fatal incident when a contractor working on the renovation and upgrade of the T&A Stadium in Tarkwa fell from the roof of the stadium. The project is funded by the Gold Fields Ghana Foundation. We extend our heartfelt sympathies and condolences to the family, loved ones and colleagues of the deceased.
H1 2023 operational performance
Attributable gold equivalent production for H1 2023 was 1,154koz, a 4% decrease YoY (H1 2022: 1,201koz), underpinned by the planned decline in production from Damang. AIC for H1 2023 was US$1,398/oz, 3% higher than H1 2022 (US$1,352/oz), as a result of lower gold sold and higher cost of sales before amortisation and depreciation, partially offset by lower non-sustaining capital expenditure. All-in sustaining cost (AISC) for H1 2023 was US$1,215/oz (H1 2022: US$1,148/oz), a 6% increase YoY.
Normalised earnings for the six months ended June 2023 decreased by 9% YoY to US$454m, or US$0.51 per share, compared to US$498m, or US$0.56 per share, for H1 2022.
In line with our dividend policy of paying out between 30% - 45% of normalised profit as dividends, we have declared an interim dividend of 325 SA cents per share (35.1% of normalised earnings), which compared with the 2022 interim dividend of 300 SA cents per share. This represents a 8% increase YoY.
Cash flow and balance sheet
During H1 2023, Gold Fields generated adjusted free cash flow of US$140m (after taking into account all costs and project capex), which compares to US$293m in H1 2022. The mines generated adjusted free cash flow from operations of US$482m in H1 2023 compared to US$518m in H1 2022.
While our balance sheet remains strong, with a net debt to EBITDA ratio of 0.42x at the end of June 2023, our net debt increased by US$324m during H1 2023 to US$1,028m. This increase was driven by the initial US$222m payment for the Windfall acquisition, US$34m in Windfall pre-construction capital and the US$215m dividend payments. Excluding lease liabilities, the core net debt was US$629m at the end of H1 2023.
In June, Gold Fields successfully refinanced its 2019 revolving credit facility (RCF), with a sustainability linked RCF. The facility has a principal loan amount US$1.2bn with the option to increase it by up to US$400m and a maturity of five years with an option to extend this through two one-year extensions. Loan repayment for the new facility is linked to the achievement of three of Gold Fields' key ESG priorities: gender diversity, decarbonisation and water stewardship.
Regional performance
Our Australian mines met their production plan for Q2 2023, though cost inflation in the region remained a significant headwind. The region produced 267koz at AIC of A$1,942/oz (US$1,299/oz) during Q2 2023, bringing production for H1 2023 to 509koz at AIC of A$1,879/oz (US$1,270/ oz).
The shortage of skilled staff continues to impact on the performance of our Australian mines, with turnover of some of the critical skills categories, such as mobile equipment operators, geologists and geotechnical engineers and supervisors, reaching annualised levels of 25% - 50% in H1 2023. This is also having an impact on mining costs, as salaries for these skills are continuing to escalate.
The impact of unfavourable ground conditions reported in Q1 2023 as well as staff shortages continued to impact South Deep during Q2 2023. The mine produced 68koz at AIC of R891,619/kg (US$1,479/oz) in Q2 which resulted in H1 2022 production of 156koz at AIC of R811,816/kg (US$1,387/oz). Skill shortages in key categories, such as artisans and Long Hole Stope rig operators are impacting on both fleet availability and utilisation. Annualised turnover levels at South Deep in these categories were 29% - 40% in H1 2023.
Our mines in Ghana produced 204koz (including 45% of Asanko) during Q2 2023 at AIC of US$1,227/oz. For H1 2023, Ghana produced 397koz at AIC of US$1,210/oz.
Cerro Corona produced 60koz (gold equivalent) at AIC of US$1,162 per gold equivalent ounce during the June quarter, resulting in 135koz (gold equivalent) being produced in the first half at AIC of US$990 per gold equivalent ounce.
Salares Norte progressing to revised plan
Construction and pre-commissioning activities at Salares Norte continued in line with the revised plan. Total construction progress stood at 94.9% at the end of June 2023 compared to 85.5% at end December 2022. US$202m was spent on the project in H1 2023, including US$180m in capital expenditure and US$15m on exploration activities
Total tonnes moved during the first six months of 2023 were in line with plan at 16.0Mt (8.9Mt in Q1 2023 and 7.1Mt in Q2 2023), bringing total tonnes moved to date to 66.6Mt. All of the 7.1Mt mined during Q2 2023 were waste material due to an infill drilling campaign and, as such, the cumulative stockpiled ounces at the end of June remained unchanged from the end of Q1 2023 at 176koz (79koz stockpiled in Q4 2022 and 97koz stockpiled in Q1 2023). We are on track with our plan to have 490koz on stockpile by the end of December 2023.
As guided in February 2023, first production is expected during Q4 2023, ramping up in 2024. The project capex remains on track to meet revised guidance of US$1,020m.
Encouragingly, the Chinchilla Relocation Plan proposed by the Salares Norte team was approved by the Chilean environmental authority in June 2023. Preparations are being made to implement the plan, which has a term of 36 months, from September this year onwards. While the delayed relocation has not impacted construction or the project schedule, the team has advanced a study on the option to mine the Agua Amarga orebody from underground (as opposed to the original open pit plan). The pre-feasibility study will be completed during H2 2023, at which point the team will decide on the best way to progress the mining of the Agua Amarga orebody.
Strategic initiatives (Pillar 1)
Gold Fields made significant headway on our journey towards our aspirational culture by launching the "Gold Fields Way" in April. A key milestone on this journey was The Gold Fields Way Summit, which was held in London in June, the first of its kind for Gold Fields. This brought together 92 leaders from across the business to align on the key actions leaders need to own and implement to propel our culture journey.
Asset Optimisation
(AO) has been identified as a key strategic initiative to enable Gold Fields to maximise the potential of its current assets. This initiative will also be integrated into the Gold Fields Way as part of our priority of 'working smarter together'.
Key elements of the initiative include analysis to safely improve, operational efficiencies and performance, ore and metal recoveries, the efficient use of energy and optimal use of renewables, modernisation and deployment of appropriate technologies. Asset reviews will be staged over a two-year period starting with our key assets and the benefits from the programme are expected from 2024 onwards. We will update the market on specific value opportunities in H1 2024.
ESG developments (Pillar 2)
Scope 1 and 2 CO2 emissions were 819kt for H1 2023 compared with 864kt during H1 2022, with the full impact of our recently commissioned renewable energy plants at the Gruyere and South Deep mines coming into play. These plants led to renewable energy in H1 2023 accounting for 16% of our total electricity consumption, an increase from 12% in H1 2022.
In early August, Gold Fields released Annual Tailings Disclosure reports for its Tarkwa and Cerro Corona mines, detailing their level of conformance against the Global Industry Standard on Tailings Management (GISTM). The three tailings storage facilities (TSFs) at Tarkwa have a 'Very High' consequence classification, while the TSF at Cerro Corona has an 'Extreme' consequence classification.
The disclosure reports show that all four of our priority TSFs partially conform to the GISTM. Gold Fields has successfully addressed all elements related to material dam safety and the environment, but has also identified areas for further improvement, particularly in community engagement and consultation and addressing human rights risks with respect to emergency response and preparedness.
Improving the quality of our portfolio (Pillar 3)
There were several positive developments during H1 2023 which will have a significant impact on the quality of our portfolio going forward.
In March, we announced the proposed Tarkwa/Iduapriem JV in Ghana with AngloGold Ashanti, which once approved by the Government of Ghana, will result in a material increase in production and reduction in AISC. Negotiations with the Government of Ghana are advancing, and we are working with all stakeholders towards concluding the JV.
In May, we announced our partnership with Osisko Mining to develop the Windfall Project in Canada. The teams have started working together to align our processes and systems. The projects Environmental Impact Assessment (EIA) was submitted in March and is expected to take 12 – 18 months to get approved, at which stage key construction activities will commence.
CEO search process
The process to appoint a permanent CEO is ongoing. The Board has held a first round of interviews with the shortlisted candidates with final interviews planned for September. Gold Fields will update the market when the Board has made its final decision and all contractual agreements have been made with the selected candidate.
Intention of early retirement of Executive Director and CFO
Paul Schmidt, Executive Director and Chief Financial Officer of Gold Fields, has advised the Board of Directors of his intention to proceed on early retirement. Paul has agreed to remain with the Company while the Board runs the recruitment process and until such time as a suitable successor has been identified and appointed. Paul joined Gold Fields in 1996, was appointed as Chief Financial Officer in 2008 and joined the Board as an Executive Director in 2009. We would like to thank Paul for his loyal service over the past 27 years and his valuable contribution in building Gold Fields into the successful business that it is today. The Company will keep Shareholders updated on progress with recruiting Paul's successor.
FY 2023 Guidance update
Gold Fields remains on track to meet the original production and cost guidance provided in February 2023, both at guided and forecast exchange rates. Attributable gold equivalent production (excluding Asanko) is expected to be between 2.25Moz – 2.30Moz (2022 comparable was 2.32Moz). AISC is expected to be between US$1,300/oz – US$1,340/ oz, with AIC expected to be US$1,480/oz – US$1,520/oz. The exchange rates used for our 2023 guidance are: US$1/R17 and A$1/US$0.70.
Given the operational performance in H1 2023, production guidance has been updated (positively or negatively) on an individual mine basis. High mining inflation continued to be a challenge and as such, the cost guidance has also been updated on an individual mine basis.
However, the outlook for Gruyere and South Deep has changed slightly. Production from Gruyere for the full year is now expected to be 320koz – 350koz on a 100% basis (previous guidance: 340koz – 370koz) with costs likely to be at the upper end of the A$1,540/oz – A$1,660/oz guidance.
At South Deep, we had previously indicated that the mine was on a ram-pup to steady-state run rate of approximately 380koz by the end of 2024. However, unstable ground conditions together with skills shortages have impacted production in H1 2023. While the ground conditions have now been rehabilitated, guidance for FY 2023 is now expected to be 10,000kg (321,500oz) at AIC of R808,000/kg (US$1,356/oz). This downgrade, together with the ongoing skills challenges means the steady-state production run rate of 380koz will now be achieved in the second half of 2025.
The above is subject to safety performance which limits the impact of safety-related stoppages and the forward-looking statement.
2023 Effective mining inflation forecast
| Forecast Inflation as at July 2023 |
|
| Australia | 6.0 % |
|---|---|
| South Africa | 7.8 % |
| Ghana (US based) | 8.5 % |
| Chile (US based) | 5.7 % |
| Peru (US based) | 1.5 % |
| Group weighted | 6.5 % |
Martin Preece
Interim Chief Executive Officer
17 August 2023
Six months ended 30 June 2023 (H1 2023) compared with the six months ended 30 June 2022 (H1 2022)
Results for the Group
Health and safety
Following the fatal incident of a contractor at our Tarkwa mine in March, we regret to report another fatal incident after an employee of a Gold Fields Ghana Foundation contractor succumbed to his injuries following a fall from heights incident. The contractor was working on the renovation and upgrade of the T&A Stadium in Tarkwa, a project funded by the Gold Fields Ghana Foundation. We extend our heartfelt sympathies and condolences to the family, loved ones and colleagues of the deceased. Three serious injuries were recorded for the six months ended 30 June 2023. The Total Recordable Injury Frequency Rate (TRIFR) for the Group was 2.08 in H1 2023 from 2.32 for H1 2022.
| Six months ended | |||
| Safety | H1 23 | H1 22 | FY22 |
| Fatalities | 1 | 0 | 1 |
|---|---|---|---|
| TRIFR1 | 2.08 | 2.36 | 2.04 |
| Serious injuries5 | 3 | 3 | 5 |
| 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 |
Environmental
No level 3 – 5 environmental incidents were reported for the six months ended 30 June 2023, continuing the trend of preceding years.
Fresh water withdrawal was 5.3 gigalitres (GL) for the six months ended 30 June 2023, compared with 4.7 GL in H1 2022. Water recycled/reused was 71% of total water use for the six months ended 30 June 2023, compared with 75% in H1 2022, due to higher rainfall experienced at Cerro Corona. However the Group is on track to meet the annual target of 75% by the end of 2023.
Group energy spend was US$197m (18% of operating costs) for the six months ended 30 June 2023 compared with US$206m (21%) in H1 2022, reflecting lower fuel prices. For the six months ended 30 June 2023, energy savings of 603 terajoules (TJ) were achieved (9% of H1 energy consumption), compared with 482 TJ (6% of energy consumption) for H1 2022.
Scope 1 and 2 CO2 emissions were 819kt for the six months ended 30 June 2023 compared with 864kt during H1 2022, with contributions from our new renewable energy plants at the Gruyere and South Deep mines. CO2 emissions intensity decreased to 657kg CO2e/oz from 674kg CO2e/oz in H1 2022. These plants led to renewable energy in H1 2023 accounting for 16% of our total electricity consumption, an increase from 12% in H1 2022.
The Salares Norte Chinchilla Relocation Plan was approved by the authority in June 2023. Preparations are being made implement the plan, which has a term of 36 months. The relocation delay has not delayed construction of the project, which is on track for commissioning in Q4 2023.
Gold Fields published its fifth Climate Change Report for the 2022 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 and is studying the recently released International Financial Reporting Standards (IFRS) International Sustainability Standards Board (ISSB) standards for future implementation.
| Six months ended | |||
| Environmental | H1 23 | H1 22 | FY22 |
| Environmental incidents − Level 3 – 5 | 0 | 0 | 0 |
|---|---|---|---|
| Fresh water withdrawal (GL)1 | 5.3 | 4.7 | 8.5 |
| Water recycled/reused (% of total) | 71 | 75 | 75 |
| Energy consumption (PJ)2 | 7.0 | 7.0 | 14.1 |
| Energy intensity (MJ/t mined) | 78 | 70 | 71 |
| CO2 emissions (kt)3 | 820 | 864 | 1,715 |
| CO2 emissions intensity (kg CO2 /t mined) | 657 | 674 | 668 |
| 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 positive in-country and host community impact. The Group's value distribution to national economies was US$1.9bn for the six months ended 30 June 2023 compared with US$1.9bn for H1 2022, Gold Fields procurement from in-country suppliers was US$1.3bn for H1 2023 (97% of total procurement) compared with US$1.1bn for H1 2022 (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 8,878 people – 48% of the total workforce (excluding projects and corporate offices) for the six months ended 30 June 2023 compared with 9,342, 53% of the total workforce, for H1 2022. The 9% decrease in host community workforce employment is due to Western Australia's highly competitive labour market with historically low unemployment rates and major commodity prices in an upcycle and the One Mine Model implementation in Ghana and . Group host community procurement spend for the six months ended 30 June 2023 was US$426m (34% of total spend), compared with US$358m (30% of total) during H1 2022. Spending on socio-economic development projects in our host communities totalled US$5.8m for the six months ended 30 June 2023 compared with US$9.2m for H1 2022.
Our total workforce at the end of June 2023 was 22,554 (including projects and corporate offices), comprising 6,162 employees and 16,392 contractors, compared with a total workforce of 23,084 at year-end 2022. Women comprised 24% of Gold Fields' employees at the end of June 2023 compared with 23% at the end of 2022. Of the 24%, 55% work in core mining activities. Training spend was US$4.4m for the six months ended 30 June 2023 compared with US$3.9m in H1 2022.
Gold Fields published its fourth Report to Stakeholders for 2022 outlining key stakeholder developments, performances and issues faced by the Group and the regions.
| Six months ended | |||
| Social | H1 23 | H1 22 | FY22 |
| Host community procurement (% of total) | 34 | 30 | 31 |
|---|---|---|---|
| Host community workforce (% of total) | 48 | 53 | 52 |
| Socio-economic development spending (US$m) | 5.8 | 9.2 | 21.2 |
| Women in workforce (% of total) | 24 | 23 | 23 |
| Training spend (US$m) | 4.4 | 3.9 | 8.9 |
H1 2023 operating performance
Managed equivalent gold production (including 45% share of Asanko) decreased by 4% from 1,245,300oz for the six months ended 30 June 2022 to 1,197,200oz for the six months ended 30 June 2023. Attributable equivalent gold production, (including Asanko) decreased by 4% from 1,200,500oz for the six months ended 30 June 2022 to 1,154,200oz for the six months ended 30 June 2023.
Gold production at the Australian (100% managed and attributable) operations decreased by 3% from 527,400oz for the six months ended 30 June 2022 to 509,300oz for the six months ended 30 June 2023 mainly due to lower gold produced at Granny Smith, St Ives and Agnew.
At Gruyere gold production (50% basis) increased by 1% from 78,400oz for the six months ended 30 June 2022 to 79,300oz for the six months ended 30 June 2023 due to increased ore volumes processed. Gold sold increased by 1% from 79,600oz to 80,100oz.
At Granny Smith, gold production decreased by 3% from 138,300oz for the six months ended 30 June 2022 to 134,100oz for the six months ended 30 June 2023 due to decreased grade of ore mined at the Z100, Z110 and Z120 mining areas and decreased grade of ore processed, partially offset by an increase in ore milled. Gold sold decreased by 3% from 138,300oz to 134,400oz.
At St Ives, gold production decreased by 3% from 190,300oz for the six months ended 30 June 2022 to 184,200oz for the six months ended 30 June 2023 mainly due to lower yield from processing lower grade material. Gold sold decreased by 2% from 191,700oz to 187,100oz.
At Agnew, gold production decreased by 7% from 120,500oz for the six months ended 30 June 2022 to 111,700oz for the six months ended 30 June 2023 due to a decrease in grade of ore mined and processed in line with the plan, partially offset by an increase in ore milled. The lower grade ore was mainly sourced from the Kath lode orebody at Waroonga and the Sheba ore body at New Holland. Gold sold decreased by 7% from 121,000oz to 112,800oz.
At the South African region, managed gold production (100%) at South Deep decreased by 5% from 5,097kg (163,900oz) for the six months ended 30 June 2022 to 4,841kg (155,700oz) for the six months ended 30 June 2023 as a result of reduced stope availability following ground related incidents that limited access to planned mining areas, further aggravated by a shortage of skilled operators and artisans for long-hole stoping drill rigs. Attributable gold production (96.4%). Attributable gold production (96.4%) at South Deep decreased by 5% from 4,915kg (158,000oz) for the six months ended 30 June 2022 to 4,669kg (150,100oz) for the six months ended 30 June 2023. Managed gold sold decreased by 7% from 5,097kg (163,900oz) to 4,743kg (152,500oz).
Managed gold production (100%) at the Ghana operations (including 45% of Asanko) decreased by 6% from 424,000oz for the six months ended 30 June 2022 to 396,900oz for the six months ended 30 June 2023. Attributable gold production (90%) at the Ghana operations, (including 45% of Asanko), decreased by 7% from 385,800oz for the six months ended 30 June 2022 to 360,200oz for the six months ended 30 June 2023 mainly due to planned decreased production at Damang and Asanko.
At Damang, managed gold produced decreased as planned by 37% from 125,200oz for the six months ended 30 June 2022 to 79,300oz for the six months ended 30 June 2023 mainly due to lower yield as a result of low-grade material fed from the stockpile and the Huni pit and the completion of mining from the higher grade Damang Pit Cut Back (DPCB) in December 2022. Managed gold sold at Damang decreased by 36% from 125,200oz for the six months ended 30 June 2022 to 80,400oz for the six months ended 30 June 2023. Managed gold produced at Tarkwa increased by 12% from 257,300oz for the six months ended 30 June 2022 to 287,700oz for the six months ended 30 June 2023. The increased production was mainly due to higher yield as a result of mining and processing higher grade material.
At Tarkwa, managed gold sold increased by 13% from 257,300oz for the six months ended 30 June 2022 to 290,300oz for the six months ended 30 June 2023.
At Asanko, attributable gold produced decreased as planned by 28% from 41,600oz for the six months ended 30 June 2022 to 29,900oz for the six months ended 30 June 2023 due to lower grade ore processed from stockpiles in the current year as a result of the temporary cessation of mining activities in July 2022. Gold sold at Asanko decreased by 23% from 39,700oz (45%) to 30,600oz (45%).
Managed equivalent gold production (100%) at Cerro Corona in Peru increased by 4% from 129,900oz for the six months ended 30 June 2022 to 135,300oz for the six months ended 30 June 2023. Attributable equivalent gold production (99.5%) at Cerro Corona increased by 4% from 129,300oz for the six months ended 30 June 2022 to 134,600oz for the six months ended 30 June 2023 mainly due to higher grades of ore processed and higher metallurgical recoveries of both gold and copper. Total managed gold equivalent production increased by 4% from 129,900oz for the six months ended 30 June 2022 to 135,300oz for the six months ended 30 June 2023. Gold equivalent ounces sold increased by 6% from 130,500oz to 138,300oz.
Revenue
The average US Dollar gold price achieved by the Group (excluding Asanko) increased by 4% from US$1,851/eq oz for the six months ended 30 June 2022 to US$1,927/eq oz for the six months ended 30 June 2023. The average Australian Dollar gold price increased by 10% from A$2,600/oz to A$2,872/oz. The average Rand gold price increased by 21% from R926,383/kg to R1,118,515/kg. The average US Dollar gold price for the Ghanaian operations (excluding Asanko) increased by 3% from US$1,881/oz for the six months ended 30 June 2022 to US$1,936/oz for the six months ended 30 June 2023. The average equivalent US Dollar gold price, net of treatment and refining charges, for Cerro Corona increased by 13% from US$1,668/eq oz for the six months ended 30 June 2022 to US$1,878/eq oz for the six months ended 30 June 2023. The average Australian/US Dollar exchange rate weakened by 6% from A$1.00 = US$0.72 to A$1.00 = US$0.68. The average US Dollar/Rand exchange rate weakened by 18% from R15.40 for the six months ended 30 June 2022 to R18.21 for the six months ended 30 June 2023.
Gold equivalent ounces sold (excluding Asanko) decreased by 2% from 1.21Moz to 1.18Moz. Revenue from Asanko is not included in Group revenue as Asanko results are equity accounted.
Revenue increased by 1% from US$2,235m for the six months ended 30 June 2022 to US$2,266m for the six months ended 30 June 2023 due to the4% higher gold price received partially offset by 2% lower gold sold.
Cost of sales before amortisation and depreciation
Cost of sales before amortisation and depreciation increased by 2% from US$923m for the six months ended 30 June 2022 to US$939m for the six months ended 30 June 2023 mainly due to inflationary cost pressures impacting all regions, partially offset by the weakening of the Australian Dollar and South African Rand.
At the Australia region, cost of sales before amortisation and depreciation increased by 11% from A$569m (US$409m) for the six months ended 30 June 2022 to A$629m (US$425m) for the six months ended 30 June 2023. This increase is mainly due to inflationary pressures on commodity inputs, employee and contractor costs and structural increases in costs relating to higher support and paste fill costs at Granny Smith mine due to increased mining depth at the underground mine. In addition, higher open pit operational waste tonnes were mined at St Ives and Agnew.
At the South Africa region, at South Deep, cost of sales before amortisation and depreciation increased by 20% from R2,558m (US$166m) for the six months ended 30 June 2022 to R3,075m (US$169m) for the six months ended 30 June 2023. This increase was mainly due to inflationary increases on consumables, contractors electricity and employee costs as well as higher maintenance cost on the mobile fleet.
At the Ghana region, (excluding Asanko), cost of sales before amortisation and depreciation increased by 1% from US$254m for the six months ended 30 June 2022 to US$257m for the six months ended 30 June 2023 mainly due to increased operational waste tonnes mined at Tarkwa, partially offset by decreased operational waste tonnes mined at Damang. Ongoing inflationary increases were partially offset by lower fuel costs.
At the Americas region, at Cerro Corona, cost of sales before amortisation and depreciation increased by 2% from US$93m for the six months ended 30 June 2022 to US$95m for the six months ended 30 June 2023, mainly due to the ongoing high inflation related to commodities such as grinding media and energy, partially offset by lower tonnes mined and cost saving initiatives.
Amortisation and depreciation
Amortisation and depreciation for the Group increased by 12% from US$378m for the six months ended 30 June 2022 to US$424m for the six months ended 30 June 2023 mainly due to additional ounces mined at Tarkwa for the six months ended 30 June 2023.
Investment income
Investment income increased by 225% from US$4m for the six months ended 30 June 2022 to US$13m for the six months ended 30 June 2023 mainly due to higher cash balances.
Finance expense
Finance expense for the Group decreased by 13% from US$38m for the six months ended 30 June 2022 to US$33m for the six months ended 30 June 2023 due to lower borrowings and higher interest capitalised during the six months ended 30 June 2023. Interest expense on borrowings of US$40m, interest on lease liability of US$11m, rehabilitation interest of US$11m and silicosis unwinding interest of US$1m, partially offset by interest capitalised of US$30m for the six months ended 30 June 2023 compared with interest expense on borrowings of US$38m, interest on 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.
Share of results of equity-accounted investees after taxation
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 a gain of US$10m for the six months ended 30 June 2023. The gain of US$10m for the six month ended 30 June 2023 comprises share of equity-accounted earnings from Asanko of US$17m partially offset by share of equity-accounted losses from Windfall of US$5m, Lunnon US$1m and FSE of US$1m. The loss of US$5m for the six month ended 30 June 2022 comprises share of equity-accounted losses from Asanko of US$4m and Lunnon US$1m.
Gain on foreign exchange
The gain on foreign exchange decreased by 69% from US$16m for the six months ended 30 June 2022 to US$5m for the six months ended 30 June 2023 and related to the conversion of offshore cash holdings into their functional currencies.
Gain on financial instruments
The gain on financial instruments of US$23m for the six months ended 30 June 2022 compared with nil for the six months ended 30 June 2023 due to all contracts reaching their maturity.
| Six months ended | ||
| June 2023 | June 2022 | |
| Australia oil hedge | – | 9 |
|---|---|---|
| Ghana oil hedge | – | 14 |
| Gain on financial instruments | – | 23 |
| Unrealised gain and prior year marked-to-market reversals on derivative contracts | – | 8 |
|---|---|---|
| Realised gain on derivative contracts | – | 15 |
| Gain on financial instruments | – | 23 |
Share-based payments
Share-based payments for the Group increased by 25% from US$4m for the six months ended 30 June 2022 to US$5m for the six months ended 30 June 2023 mainly due to higher forecast vesting percentages of share-based payments.
Long-term incentive plan
The long-term incentive plan increased by 118% from US$11m for the six months ended 30 June 2022 to US$24m for the six months ended 30 June 2023 due to the current marked-to-market valuation of the plan reflecting forecast performance.
Other costs, net
Other costs for the Group increased by 91% from US$11m for the six months ended 30 June 2022 to US$21m for the six months ended 30 June 2023 and mainly related to higher offshore office costs in 2023 as well as facility cancellation fees on unused portion of loan facility due to loan facility renewal.
Exploration expense
Exploration expense increased by 15% from US$33m for the six months ended 30 June 2022 to US$38m for the six months ended 30 June 2023. The increase is due to higher spend in the Australian region.
Non-recurring items
Non-recurring expenses of decreased by 80% from US$10m for the six months ended 30 June 2022 to US$2m for the six months ended 30 June 2023.
The expense of US$2m for the six months ended 30 June 2023 mainly comprises restructuring costs at Tarkwa.
Non-recurring expenses of US$10m for the six months ended 30 June 2022 mainly includes:
- impairment of FSE of US$6m. 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; and
- write-off of redundant assets at Salares Norte and Cerro Corona of US$4m.
Royalties
Government royalties for the Group increased by 2% from US$59m for the six months ended 30 June 2022 to US$60m for the six months ended 30 June 2023 in line with the higher revenue.
Mining and income taxation
The taxation charge for the Group increased marginally from US$274m for the six months ended 30 June 2022 to US$275m for the six months ended 30 June 2023. Normal taxation increased by 13% from US$224m for the six months ended 30 June 2022 to US$253m for the six months ended 30 June 2023. The deferred tax charge decreased by 55% from US$49m for the six months ended 30 June 2022 to US$22m for the six months ended 30 June 2023.
Profit for the period
Profit for the period decreased by 11% from US$534m for the six months ended 30 June 2022 to US$475m for the six months ended 30 June 2023.
Net profit attributable to owners of the parent for the Group decreased by 10% from US$510m or US$0.57 per share for the six months ended 30 June 2022 to US$458m or US$0.51 per share for the six months ended 30 June 2023.
Headline earnings attributable to owners of the parent for the Group decreased by 12% from US$518m or US$0.58 per share for the six months ended 30 June 2022 to US$458m or US$0.51 per share for the six months ended 30 June 2023.
Normalised profit for the Group decreased by 9% from US$498m or US$0.56 per share for the six months ended 30 June 2022 to US$454m or US$0.51 per share for the six months ended 30 June 2023.
Normalised profit
Normalised profit reconciliation for the Group is calculated as follows:
| Six months ended | ||
| US$’m | June 2023 | June 2022 |
| Profit for the period attributable to owners of the parent | 457.8 | 509.7 |
|---|---|---|
| Non-recurring items | 2.1 | 9.8 |
| Tax effect of non-recurring items | (0.5) | (1.4) |
| Non-controlling interest effect of non-recurring items | (0.1) | (0.1) |
| Gain on foreign exchange | (4.6) | (16.0) |
| Tax effect of gain on foreign exchange | 0.2 | 5.8 |
| Non-controlling interest effect of gain on foreign exchange | (0.7) | 0.7 |
| Gain on financial instruments | – | (23.4) |
| Tax effect of gain on financial instruments | – | 7.5 |
| Non-controlling interest effect of gain on financial instruments | – | 0.9 |
| South Deep deferred tax change | – | 4.9 |
| Normalised profit attributable to owners of the parent | 454.2 | 498.4 |
| 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 flow from operating activities
Cash inflow from operating activities decreased by 16% from US$871m for the six months ended 30 June 2022 to US$735m for the six months ended 30 June 2023. The decrease was mainly due to a lower profit before royalties and taxation as well as an investment in working capital mainly due to inventory build up at Tarkwa of US$51m, St Ives of US$33m and Gruyere of US$7m as well as an increase in accounts receivable due to unsold gold at Granny Smith and a pre-payment at St Ives for an accommodation camp. This was partially offset by lower royalties and taxation payment for the six months ended 30 June 2023.
Dividends paid
Dividends paid increased by 33% from US$168m for the six months ended 30 June 2022 to US$223m for the six months ended 30 June 2023. The dividend paid of US$223m for the six months ended 30 June 2023 comprised dividends paid to owners of the parent of US$215m (declared and paid 445 SA cents) related to the 2022 final dividend and dividends paid to non-controlling interest holders of US$8m. The dividend paid of US$168m (declared and paid 260 SA cents) 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 non-controlling interest holders of US$15m.
Cash flow from investing activities
Cash outflow from investing activities increased by 40% from US$552m for the six months ended 30 June 2022 to US$773m for the six months ended 30 June 2023.
Capital expenditure
Capital expenditure decreased by 7% from US$545m for the six months ended 30 June 2022 to US$508m for the six months ended 30 June 2023. The capital expenditure of US$508m for the six months ended 30 June 2023 comprised of sustaining capital expenditure of US$340m and non-sustaining capital expenditure of US$168m. 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.
Sustaining capital expenditure, (excluding Asanko), remained flat at US$340m.
Non-sustaining capital expenditure (excluding Asanko), decreased by 18% from US$205m for the six months ended 30 June 2022 to US$168m for the six months ended 30 June 2023. This movement is mainly attributable to a reduction in the project capital incurred while constructing Salares Norte as well as no growth capital expenditure at South Deep and Damang for the six months ended 30 June 2023. Growth expenditure of US$168m for the six months ended 30 June 2023 comprised US$123m at Salares Norte, US$37m at the Australian operations and US$8m at Cerro Corona. 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$11m at South Deep, US$5m at Damang and US$4m at Cerro Corona.
At the Australia region, capital expenditure decreased by 6% from A$231m (US$166m) for the six months ended 30 June 2022 to A$216m (US$146m) for the six months ended 30 June 2023.
At Gruyere, capital expenditure (50% basis) increased by 21% from A$22m (US$16m) for the six months ended 30 June 2022 to A$27m (US$18m) for the six months ended 30 June 2023 with the increase relating to the construction of a third pebble crusher to maintain plant throughput.
At Granny Smith, capital expenditure increased by 8% from A$58m (US$41m) for the six months ended 30 June 2022 to A$63m (US$42m) for the six months ended 30 June 2023 with the increase mainly due to expenditure on the underground workshop facility and mobile equipment purchases.
At St Ives, capital expenditure decreased by 13% from A$83m (US$59m) to A$72m (US$49m) reflecting the Neptune stage 7 pre-strip activities included in capital expenditure for the six months ended 30 June 2022.
At Agnew, capital expenditure decreased by 20% from A$69m (US$49m) to A$55m (US$37m) mainly due to the mill crushing circuit replacement project and the expansion of the accommodation village included in the capital expenditure for the six months ended 30 June 2022.
At the South Africa region at South Deep, capital expenditure decreased by 33% from R978m (US$64m) for the six months ended 30 June 2022 to R659m (US$36m) for the six months ended 30 June 2023 mainly due to decreased spending on the solar plant which is now completed as well as lower spend on the Doornpoort tailings storage facility.
At the Ghana region, (excluding Asanko), capital expenditure decreased by 18% from US$153m for the six months ended 30 June 2022 to US$126m for the six months ended 30 June 2023. Capital expenditure at Damang decreased by 89% from US$33m to US$4m due to no capital waste stripping expenditure for the six months ended 30 June 2023. At Tarkwa, capital expenditure increased by 1% from US$120m to US$122m with expenditure mainly relating to capital waste mining.
Capital expenditure at Asanko (on a 100% basis) increased by 173% from US$6m for the six months ended 30 June 2022 to US$16m for the six months ended 30 June 2023 and related mainly to the TSF stage 7 construction. The Asanko capital expenditure is not included in the Group capital expenditure.
In the Americas region, capital expenditure increased by 23% from US$162m for the six months ended 30 June 2022 to US$200m for the six months ended 30 June 2023.
At Salares Norte, total capital expenditure increased by 24% to US$180m for the six months ended 30 June 2023 from US$145m for the six months ended 30 June 2022. Sustaining capital expenditure increased by 100% to US$56m for the six months ended 30 June 2023 (six months ended 30 June 2022 nil) mainly due to the mining moving from pre-strip to normal capital waste mining. Non‑sustaining capital expenditure decreased by 15% to US$123m for the six months ended 30 June 2023 from US$145m for the six months ended 30 June 2022. The non-sustaining capital consists mainly of the project construction capital and also included the pre-strip activities during H1 2022. As Salares Norte is still under construction, all project and operational expenditure is capitalised at present.
At Cerro Corona, capital expenditure increased by 23% from US$16m for the six months ended 30 June 2022 to US$20m for the six months ended 30 June 2023, with the increase mainly due to infrastructure relocation located at the north side of the pit.
Windfall capital contribution
Gold Fields contributed US$34m (C$45m) to the Windfall joint venture in terms of its obligation under the JV agreement.
Proceeds on disposal of property, plant and equipment
Proceeds on disposal of property, plant and equipment of US$1m for the six months ended 30 June 2023 compared with US$nil for the six months ended 30 June 2022.
Purchase of investments
Purchase of investments increased by 117% from US$6m for the six months ended 30 June 2022 to US$13m for the six months ended 30 June 2023. The purchase of US$13m for the six months ended 30 June 2023 comprised purchases of bonds for the insurance captive of US$12m as well as a purchase of Hamelin Gold shares of US$1m. The purchase of investments of US$6m for the six months ended 30 June 2022 related to a purchase of 6.6m shares in Chakana.
Purchase of equity-accounted investee
Gold Fields entered into a partnership agreement with Osisko Mining Inc. to develop and mine the world class underground Windfall Project in Québec, Canada. Under the agreement, Gold Fields was required to contribute US$222m (C$300m) for its 50% stake in the joint venture. This payment was made in May 2023.
Environmental payments
Environmental payments decreased by 81% from US$26m for the six months ended 30 June 2022 to US$5m for the six months ended 30 June 2023. The contributions of US$5m for the six months to 30 June 2023 comprise US$4m by the Ghanaian region and US$1m by South Deep in South Africa. In addition, US$20m was set aside for rehabilitation purposes in Australia and Peru. If added to the contributions to rehabilitation funds, the total environmental funds set aside for the six months ended 30 June 2023 were US$25m. The contributions of US$26m for the six months to 30 June 2022 comprise US$16m by the Australia region, US$5m by Cerro Corona in Peru, US$4m by the Ghanaian region and US$1m by South Deep in South Africa.
Cash flow from financing activities
Net cash inflow from financing activities increased by 130% from US$69m for the six months ended 30 June 2022 to US$159m for the six months ended 30 June 2023. The cash inflow for the six months ended 30 June 2023 related to the draw-down of US$469m on offshore loans, partially offset by loan repayments of US$274m and payment of principal lease liabilities of US$36m. The cash inflow for the six months ended 30 June 2022 related to the draw-down of US$207m on offshore loans, partially offset by loan repayments of US$105m and payment of principal lease liabilities of US$33m.
Net cash (utilised)/generated
The net cash outflow for the Group of US$102m for the six months ended 30 June 2023 compared with an inflow of US$220m for the six months ended 30 June 2022. After accounting for a negative translation adjustment of US$17m on non-US Dollar cash balances, the cash outflow for the six months ended 30 June 2023 was US$119m. The cash balance at 30 June 2023 of US$651m compared with US$724m at 30 June 2022.
Adjusted free cash flow
Adjusted free cash flow decreased by 52% from US$293m for the six months ended 30 June 2022 to US$140m for the six months ended 30 June 2023 due to lower cash flows from operating activities, higher investment in working capital, higher dividends and Windfall capital contributions, partially offset by lower capital expenditure.
The US$140m adjusted free cash flow for the six months ended 30 June 2023 comprised: US$482m free cash generated by the eight mining operations (after royalties, taxes, capital expenditure and environmental payments) less US$202m spend at Salares Norte (comprising US$180m in capex, US$15m in exploration and a US$7m investment in working capital and other, less US$33m of net non‑mine interest paid, US$54m on non-mine based costs mainly due to working capital movements, capital contributions to Windfall joint venture of US$34m and voluntary contributions to cash for environmental purposes in Australia and Peru of US$19m.
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$21m on non-mine based costs mainly due to working capital movements.
Adjusted free cash flow is calculated as follows:
| Six months ended | ||
| US$’m | June 2023 | June 2022 |
| Cash flows from operating activities | 735.2 | 871.0 |
|---|---|---|
| Capital expenditure – additions | (507.5) | (545.0) |
| Capital expenditure – working capital | 4.7 | 25.2 |
| Capital expenditure – Windfall capital contribution | (33.6) | – |
| Proceeds on disposal of property, plant and equipment | 1.1 | 0.2 |
| Environmental trust funds contributions | (5.0) | (25.6) |
| Contributions to secured cash deposit for future rehabilitation purposes in Australia and Peru | (19.2) | – |
| Payment of lease liability | (35.5) | (33.1) |
| Adjusted free cash flow | 140.2 | 292.7 |
| 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. |
Statement of financial position
Net debt increased by 46% from US$704m at 31 December 2022 to US$1,028m at 30 June 2023.
Net debt excluding lease liabilities increased by 103% from US$310m at 31 December 2022 to US$629m at 30 June 2023.
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 0.42 at 30 June 2023 compared with 0.33 at 30 June 2022. The net debt/adjusted EBITDA ratio of 0.42 at 30 June 2023 is based on net debt of US$1,028m and adjusted EBITDA of US$2,424m.
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$2,590m.
Adjusted EBITDA
Adjusted EBITDA for calculating net debt/adjusted EBITDA is based on the profit for the 12 months ended 30 June 2023 and 30 June 2022 and is determined as follows in US$ million:
| US$’m | June 2023 |
| Revenue | 4,318 |
|---|---|
| Cost of sales before amortisation and depreciation | (1,780) |
| Exploration and project costs | (86) |
| Other costs* | (28) |
| 2,424 |
| * | Other costs include other non-mine based costs. |
Adjusted EBITDA is defined by the Group as profit or loss for the year adjusted for interest, taxation, amortisation and depreciation and certain other non-operating costs.
| US$’m | June 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.
All-in sustaining and total AIC
The Group AISC increased by 6% from US$1,148/oz for the six months ended 30 June 2022 to US$1,215/oz for the six months ended 30 June 2023 mainly due to lower gold sold and higher cost of sales before amortisations and depreciation, partially offset by the 6% weakening of the Australian Dollar against the US Dollar and the 18% weakening of the South African Rand against the US Dollar. Normalising for the exchange rates by using the same exchange rates as in the first six months of 2022, the AISC would be US$1,284/oz for the six months ended 30 June 2023. This represents a 12% increase in AISC compared with the six months ended 30 June 2022.
Total AIC increased by 3% from US$1,352/oz for the six months ended 30 June 2022 to US$1,398/oz for the six months ended 30 June 2023 mainly due to lower gold sold and higher cost of sales before amortisations and depreciation, partially offset by lower non-sustaining capital expenditure, the 6% weakening of the Australian Dollar against the US Dollar and the 18% weakening of the South African Rand against the US Dollar. The lower non-sustaining capital expenditure was mainly at Salares Norte which decreased by 15% from US$145m for the six months ended 30 June 2022 to US$123m for the six months ended 30 June 2023 in line with the project progress. Total capital expenditure at Salares Norte including both sustaining and non-sustaining capital expenditure increased by 24% from US$145m for the six months ended 30 June 2022 to US$180m for the six months ended 30 June 2023.
Normalising for the exchange rate differences, the total AIC would be US$1,469/oz for the six months ended 30 June 2023, a 9% increase when compared with the six months ended 30 June 2022.