Gold Fields

Year ended 31 December 2020 compared with year ended 31 December 2019

Results for the Group

Safety

We reported in our H1 results the tragic death of Abel Magajane at South Deep on 3 June 2020.

Regrettably, the total recordable injury frequency rate (TRIFR) for the Group regressed and the number of serious injuries increased in 2020. Our goal remains no fatalities or serious injuries and we have redoubled our safety efforts in the light of these setbacks. Despite the travel restrictions enforced by COVID-19, we continued to roll-out training of our Courageous Safety Leadership programme in all regions.

To further improve safety at our operations we have also started looking at implementing advanced collision avoidance technologies to eliminate vehicular incidents. In terms of health, our priority will be to reduce diesel particulate matter exposure underground through, among others, improved ventilation and exhaust filters, procurement of low-emission machinery, low sulphur fuel and continuing training and monitoring. We are also trialling electric vehicles in Australia. The latter initiative will also hold benefits in terms of reduced carbon emissions.

  Year ended
Safety 2020   2019  
Fatalities 1   1  
TRIFR1 2.40   2.19  
Serious injuries5 6   4  
1 Total Recordable Injury Frequency rate (TRIFR). (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, as per the Gold Fields definition, is an injury that incurs 14 or more days lost and results in, among others, bone fractures, internal haemorrhage, head trauma, loss of limbs or part of limbs, permanent loss or permanent disfigurement.

Environmental

No Level 3 – 5 environmental incidents were reported for 2020, as was the case for 2019, while the number of Level 2 incidents reduced from 37 in 2019 to 11 in 2020. This is a critical achievement as it signals not only sound environmental stewardship, but also limited impact of our operations on neighbouring communities.

An inaugural Group-wide Environmental, Health and Safety (EHS) Scorecard was launched during 2020. The EHS Scorecard includes both leading and lagging performance indicators to improve performance at an operational level. All operations met or exceeded their target of at least 80% compliance with the Scorecard.

Tailings management

The Global Industry Standard on Tailings Management (GISTM) was launched on 5 August 2020 by the Principles for Responsible Investment, the United Nations Environment Programme and the International Council on Mining & Metals (ICMM). We and all other ICMM members have committed that all tailings facilities with "Extreme" or "Very high" consequence category ratings will be in conformance with the GISTM by 5 August 2023 and that all other tailings facilities that we operate that are not in a state of safe closure will be in conformance with the GISTM by 5 August 2025. Soon after the launch, we commenced a detailed site specific analysis of each TSF against the new standard to identify gaps and confirm our compliance roadmap.

Water management

Reducing fresh water usage and optimising Group water recycling/reuse are key strategic intents for the company and we are making good progress on these. Fresh water withdrawal was 9.97 gigalitres (GL) in 2020 compared with 14.2GL in 2019 mainly due to a decrease in water withdrawal at Tarkwa, South Deep and Cerro Corona. At Tarkwa, process water is now reused for cooling at the power plant and for mixing explosives and some chemicals. At South Deep, treated sewage effluent is now utilised in the gold extraction process and the mine upgraded its potable water pipeline to reduce losses. At Cerro Corona, recycling/reuse increased due to lower rainfall during 2020 compared to 2019. Water recycled/reused was 71% of total water use in 2020, well ahead of the ICMM guidelines and higher than the 68% in 2019.

Gold Fields achieved an A ranking by the Carbon Disclosure Project (CDP) NGO for its water reporting disclosure, one of only 106 high-performing companies. This is the first time Gold Fields has achieved an A ranking. Its ranking in previous years ranged from B to A-.

Energy management and climate change

Group energy spend was US$257m (16% of operating costs) in 2020 compared with US$300m (20% of operating costs) in 2019, driven mainly by lower fuel spend following the oil price decline in 2020. Energy intensity was 5.6GJ/oz (2019: 5.7GJ/oz) and 72MJ/t processed (2019: 66MJ/t). Total energy consumption during 2020 rose by 5% to 13,126 terajoules (TJ) (2019: 12,498TJ). Energy efficiency initiatives at our operations saved 1,085TJ. Initiatives included compressor and pumping optimisation at South Deep, haulage efficiencies at Gruyere, use of variable speed tailings pumps at Damang and fan optimisation at Granny Smith.

Despite higher total energy consumption, scope 1 and 2 CO2 emissions remained unchanged at 1.45 million tonnes in 2020, due to the commissioning of the renewable microgrids at Agnew and Granny Smith. CO2 emissions intensity increased 4% to 7.9kg CO2e/t mined from the 7.7kg CO2e/t reported for 2019.

We will continue to pursue carbon emission reductions at all our operations, in part by continuing our successful roll-out of renewable energy projects. The Agnew microgrid is supplied power by 18MW wind turbines, 16MW gas turbines, 4MW solar and 14MWh battery energy storage system. Granny Smith has a 7MW solar power plant supplementing the gas power plant. During 2020, renewable electricity averaged 38% of total electricity supply at Agnew, 5% at Granny Smith, 8% for the Australia region and 3% of total Group electricity. These percentages are set to increase this year.

The Gruyere mine has also announced plans to add a 13MW solar farm and 4.4MW battery storage to its current gas engines. The microgrid is set to be up and running by end-2021. As part of the construction of our Salares Norte mine in Chile, which commenced in 2020, a 25.9MW hybrid energy solution, comprising a 9.9MW solar power plant and thermal power, will be installed.

Gold Fields continues to engage with the National Energy Regulator of South Africa (NERSA) to finalise the regulatory process for the approval of a 40MW solar plant at its South Deep mine. A decision by the full NERSA Board is expected over the next few weeks, after its electricity subcommittee recommended approval of the project in early February. South Deep has requested and received a cost estimate letter from South Africa's national energy utility Eskom and has submitted the budgetary quote letter. Eskom will provide consent in line with NERSA requirements post a site meeting to be held in the coming weeks.

Gold Fields published its second climate change report for the 2019 financial year in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Gold Fields also included the Sustainability Accounting Standards Board (SASB) key performance metrics in our non-financial data reporting for the first time.

  Year ended  
Environmental 2020   2019  
Environmental Incidents – Level 3 – 5    
Water recycled/reused (% of total) 71.4   68.0  
Fresh water withdrawal (GL)1 10.0   14.2  
Energy consumption (PJ)2 13.1   12.5  
Energy intensity (MJ/t mined) 72.2   66.0  
CO2 emissions (kt)3 1,454   1,456  
CO2 emissions intensity (kg CO2/t mined) 7.9   7.7  
1 Relates to operations only.
2 Petajoules (1 PJ=1,000,000MJ).
3 CO2 emissions comprise Scope 1 and 2 emissions4.

Social

Gold Fields continues to focus on maximising in-country and host community economic impact. The Group's value distribution to national economies was US$2.849bn in 2020 compared with US$2.577bn in 2019. Gold Fields procurement from in-country suppliers, excluding corporate procurement spend, was US$1.779bn in 2020 (96% of total procurement).

Gold Fields aims to sustain the value delivered to host communities through employment, procurement and social investments. The Group host community workforce totalled 8,752 people – 53% of total workforce in 2020 (2019: 9,269 host community workforce, 55% of total workforce). Group host community procurement spend in 2020 was US$536m – 29% of total spend compared with 34% spend in 2019. The decrease was due to the impact of the COVID-19 pandemic and a change of mining contractor at Damang.

Gold Fields invested US$16.8m in socio-economic development (SED) projects in our host communities in 2020, compared with US$21.0m in 2019. The reduction was due to project delays as a result of COVID-19 restrictions. The SED investments are funded through Gold Fields' foundations, trusts and operations.

A key priority for Gold Fields is to build a diverse and inclusive workplace by increasing the participation of women and Indigenous People in our workforce. At the end of 2020 women comprised 20% of Gold Fields' workforce, the same level as in 2019. Training spend for 2020 was US$6.8m, compared with US$10.1m for 2019 (restated). Gold Fields was once again a constituent of the Bloomberg Gender-Equality Index for 2021.

Our first Report to Stakeholders was released in October last year, providing details of our relationships and value shared with our key stakeholders – employees, communities, shareholders and governments.

Year ended
Social 2020   2019  
Host community procurement (% of total) 29   34  
Host community workforce (% of total) 53   55  
Socio-economic development spending (US$m) 16.8   21.0  
Women in workforce (%) 20   20  
Training spend (US$m) 6.8   10.1  

COVID-19 report

The COVID-19 pandemic continues to challenge our lives and our business in many ways and is set to continue to do so in the coming months. The so-called second wave of COVID-19 infections, which started in late 2020, has taken a terrible toll at Gold Fields. As at 15 February 2021, 9 of our employees or contractors have passed away as a result of their COVID-19 infections. In addition, Galiano Gold, our JV partner in the Asanko gold mine in Ghana, reported one fatality. So far we've had a total of 2,705 positive cases in the Group, (excluding Galiano), of which 155 are currently active with 5 receiving care in hospitals.

The financial and operational impacts of the pandemic on our Company are further discussed in the CEO Statement as well as the Group's and mines' financial results.

The large number of positive cases reflects the high prevalence rate of the pandemic in neighbouring communities at our operations in Peru, Ghana and South Africa. There have been no cases to date at our Australian mines.

Since the start of the pandemic in March 2020, a Group Exco COVID-19 Crisis Management Team has met regularly to coordinate actions and strategies to mitigate the impact of the pandemic on operations. Regular meetings of the Risk Committee of the Board have also been held to provide governance oversight. Support to employees and contractors, with particular attention to their health and wellness, have been a focus. Regional and site committees have performed similar roles.

Combined the operations spent approximately US$30m on COVID-19 related initiatives and interventions such as specialised camp accommodation, testing equipment and facilities, additional labour costs and transport facilities. Where our mines were forced to shut down or curtail their activities due to government regulations, we continued to pay at least the monthly base pay for all employees, In South Africa we also continued to pay our SME suppliers during the shut-down. Furthermore, our operations and employees have actively supported host communities and governments to assist their efforts in controlling the pandemic and assisting people in need. These donations totalled over US$3m across the Group.

Our management teams are dealing with the challenges of the pandemic extremely well, maintaining sustainable and profitable production while at the same time safeguarding the health and safety of their employees.

Key activities to ensure safe operations include:

  • Strict adherence to all government regulations/protocols;
  • Closure of offices and imposition of travel restrictions;
  • Standard operating procedures on return to work;
  • Social distancing, sanitisation and mask wearing mandatory;
  • Counselling and mental wellness support initiatives;
  • Regular communication to employees about COVID-19;
  • A dedicated COVID-19 information portal; and
  • Social media awareness and communication campaigns for employees, communities and others.

In all our operating regions, except Australia, our operations have facilitated PCR tests for our employees and contractors, enabling us to quickly isolate and assist those affected.

Following are country reports on the impact of the pandemic and actions taken by our operations during 2020.

Peru

Impact on our workforce
COVID-19 report Peru (as at 15 February 2021) Total  
Tested 40,205  
Positive 960  
Negative 39,255  
Awaiting results* 10  
Active cases* 44  
Hospitalised* 1  
Recovered 915  
Died 1  

* Note: "Awaiting results", "Active cases" and "Hospitalised" refers to the current figures

As at 15 February 2021, we have had a total of 960 COVID-19 cases among employees and contractors at Gold Fields offices and sites. One employee sadly passed away after contracting the virus.

Mitigating actions

Peru has high rates of infections, which increased again in December, and while mining continues to be an essential industry, intra-provincial and international travel restrictions are, by and large, still operational.

Since the beginning of the COVID-19 pandemic, Gold Fields has implemented strict protocols to avoid and mitigate its impact on Gold Fields personnel and contractors, both in the Lima office and at the Cerro Corona mine in Peru and the Salares Norte project in Chile.

For Cerro Corona to be allowed to operate, the existing protocols require the full screening of incoming shift personnel before starting the shift change, as well as testing on site. These procedures apply to both Gold Fields staff and contractors. Charter flights and exclusive buses have been in use since the beginning of the pandemic.

The Cerro Corona workforce has been configured to operate in small groups (working cells of 3 – 13 people) to minimise mixing, so that, in the event of a positive case at the site, contact tracing is more effective. Shift schedules have been modified to longer times on site to mitigate the impact of the 2nd wave of infections. When positive cases are detected, they are isolated at a fully equipped quarantine facility on site. Workers have also been issued with COVID-19 prevention kits for their families. These actions were in addition to the hygiene protocols, sanitisation and other educational programmes introduced at the mine.

By end-January 2021, Gold Fields Peru has made almost US$1m in donations to communities and government organisations in the form of PPE, sanitation campaigns in communities, food and medical supplies, etc. Cerro Corona has also sponsored educational programmes on local community radio.

Cost and production impact

Cerro Corona's COVID-19 additional direct related costs in 2020 were US$14.5m. Additional costs include capex for new site facilities US$5.7m, such as dining rooms and PCR testing facilities, PCR and serology tests and charter flights. The estimated production impact was a loss of 46,000oz, mostly during Q2 2020. We adjusted our original market guidance for 2020 accordingly in May.

Although at the beginning of the pandemic, provincial borders were closed, Cerro Corona engaged with the authorities to enable transport of concentrate to the Port of Salaverry. Since then vessels have been loaded uninterrupted with concentrate from the mine.

Chile

Impact on our workforce
COVID-19 report Chile (as at 15 February 2021) Total  
Tested 12,194  
Positive 190  
Negative 11,991  
Awaiting results* 13  
Active cases* 1  
Hospitalised* 0  
Recovered 189  
Died 0  

* Note: "Awaiting results", "Active cases" and "Hospitalised" refers to the current figures

As at 15 February 2021, we have had a total of 190 COVID-19 cases among employees and contractors, of which 21 were detected on the Salares Norte site.

Mitigating actions

Our Salares Norte project has similar access protocols on site as Cerro Corona in Peru. The protocols require full PCR tests in the week employees and contractors are scheduled on site. Only negative cases are permitted to bus to the project site, and once at the project, all workers are directed to working cells of 3 – 13 people.

If a worker at Salares Norte is reported to have symptoms, they are directed to the near-by town of Copiapo, where the worker is isolated and placed under quarantine and, depending on the health status directed home for quarantine, or to a hospital for treatment.

Salares Norte spent about US$244,000 during 2020 to assist communities and local authorities in fighting the pandemic, including donations of equipment and PPE to the local hospital in Diego de Almagro.

Cost and production impact

The extra costs related to COVID-19 initiatives and programmes totalled US$4.6m for the year, of which US$3.7m was committed to additional camp infrastructure and US$900,000 on testing, PPE and extra transportation. Construction of the mine was not interrupted and commenced in Q4 2020, with contractor deliveries and work plans having not been materially impacted by the pandemic. However, the management team demobilised the remaining exploration teams on site to ensure physical distancing in the camp.

Australia

Impact on our workforce

As at 15 February 2021, there have been no recorded cases of COVID-19 at Gold Fields mine sites, the Perth regional office, or any mining operation in Western Australia.

This is reflective of the stringent COVID-19 management by Australia's national and state governments. Even single cases have resulted in extensive lockdowns of impacted areas. Mining has been designated an "essential' industry by the federal and state governments. COVID-19 testing in Australia remains the responsibility of medical service providers and designated testing clinics across the country.

The size of Western Australia, the relatively small population, and remote mine sites have been to the region's advantage. Three of four mine sites are located in very remote areas and the majority of our employees and contractors are based on Fly In/Fly Out roster arrangements.

Mitigation actions

Since March 2020, a crisis management team at the Perth office has coordinated daily crisis management, implemented responses, developed communications plans and provided direction and guidance to sites. Infectious disease management plans and an appointed infectious disease manager are in place at each site.

Work rosters at the mines were initially changed to a predominantly two weeks on/two weeks off rotation, but reverted to previous arrangements from July. Similarly, charter flights were initially increased to site with maximum 60% loading and strict check-in and health check/declarations in place. As from July 2020 flight arrangements have reverted to normal travel, with sanitation procedures in place.

At our four mine sites, additional protocols have been put in place, such as physical distancing, increased sanitation and general hygiene measures and additional catering services personnel. As from July, all Perth office employees, which up until then had worked from home, returned to the office, though the Company has also approved over 50% of employees to work on flexible work arrangements.

Gold Fields in Australia has donated A$280,000 to assist charitable organisations during the pandemic, including Foodbank and Lifeline with A$100,000 each.

Cost and production impact

While there have been no production losses in the Australia region, additional costs totalled A$10.5m for 2020. These costs are mainly due to deliberate over-recruitment for critical production roles, additional charter flights, additional catering services arrangements and medical personnel.

South Africa

Impact on our workforce
COVID-19 report South Deep (as at 15 February 2021) Total  
Tested 13,483  
Positive 995  
Negative 12,370  
Awaiting results* 118  
Active cases* 30  
Hospitalised* 1  
Recovered 957  
Died 8  

* Note: "Awaiting results", "Active cases" and "Hospitalised" refers to the current figures

As at 15 February 2021, 8 employees and contractors have passed away at South Deep due to illnesses linked to COVID-19. All but one of them died after December 2020, when the second wave of infections spread in South Africa. Currently, South Deep has had a total of 995 positive cases, of which 30 are active.

The rise in cases at South Deep reflects the high number of positive COVID-19 infections in neighbouring communities, which has been exacerbated by the high number of migrant workers returning after the Christmas holiday from rural areas and neighbouring countries, where the virus often remains undetected.

Mitigation actions

South Deep continues to manage the COVID-19 pandemic, through a comprehensive plan, aligned with guidelines and regulations issued by the South African Government, the World Health Organisation and other institutions.

The government closed all mining activities in March, but subsequently starting easing lockdown levels and restrictions, starting with a return to 50% labour force capacity levels in April before allowing a gradual return to full capacity by June 2020.

For the mine to operate, it has to follow government departments' standard operating procedures (SOPs) and Code of Practice (COP). The mine's own SOPs and COP have been aligned to these. South Deep continues to engage with the Minerals Council of South Africa to collaborate and share best practice within the industry.

The impact of COVID-19 on site is mitigated primarily through rigorous on-site testing and screening. An employee self-declaration form, submitted via the WhatsApp social media platform, provides an access permit on successful completion and temperature monitoring.

The mine has purchased testing equipment which provides for about 80 tests a day. Mine medical protocols provide for COVID-19 positive and investigated cases to be quarantined at home or at the mine's isolation and quarantine facility managed by an external provider. A mine case manager monitors all cases and contact tracing.

Shaft schedules and rosters have also been amended to ensure physical distancing in vertical transport of employees underground.

Support for local community ranges from food donations to assisting local government in their anti-COVID-19 programmes. South Deep and Corporate Office directors, managers and employees made a R15m donation to South Africa's Solidarity Fund, aimed at offering social and economic support to organisations and businesses impacted by the pandemic.

Cost and production impact

In May, South Deep was forced to revise its gold production targets down from 8,000kg to 7,000kg for 2020 as a result of the various lockdowns imposed by government.

Operational costs incurred as a result of COVID-19 interventions were R86m in 2020 and included costs related to PPE, sanitisers, medical supplies, testing equipment and kits, and alterations to buildings to set up the mines quarantine and isolation facilities.

West Africa

Impact on our workforce
COVID-19 report Ghana (as at 15 February 2021) Total  
Tested 5,573  
Positive 560  
Negative 4,988  
Awaiting results* 25  
Active cases* 80  
Hospitalised* 3  
Recovered 480  
Died 0  

* Note: "Awaiting results", "Active cases" and "Hospitalised" refers to the current figures

As at 15 February 2021, we have had a total of 560 COVID-19 cases among employees and contractors, of which 80 are currently active. We have had no death at our Tarkwa and Damang mines, but at the Asanko mine, managed by Galiano Gold, Galiano COO Josephat Zvaipa passed away after contracting COVID-19.

Mitigation actions

After an initial surge in cases, mostly among contractors at the Tarkwa and Damang mines, Gold Fields Ghana has successfully managed its COVID-19 cases and contained the spread of the virus at the mine sites and the Accra office. During December 2020 and January 2021, when the country experienced a pick-up in COVID-19 infections, there has been a slight rise in the number of cases at our mines, but these have been picked up and isolated speedily.

Strict adherence to government and company protocols is key, including contact tracing, testing and isolation, full-body sanitising, appointing host community COVID-19 ambassadors, and travel restrictions, among others. A new four weeks-on, two weeks-off roster system was introduced to ensure less exposure by our employees to the virus outside the workplace, but the system has since reverted to the pre-pandemic roster schedule. Employees of the two major contractors (E&P and BCM) are subject to the same protocols, and, where feasible, are kept separate from Gold Fields employees.

The mines' isolation facilities have 86-bed capacity, with two facilities located at Tarkwa and one at Damang. The mines are seeking to conduct testing in-house, but have been delayed pending approval by the authorities.

Community support programmes and donations have been channelled via the Gold Fields Ghana Foundation. During 2020, the Foundation has spent about US$910,000, on items and supplies to local clinics and community organisations, including ambulances, sanitisers and PPE.

Cost and production impact

Gold Fields Ghana to date has spent just over US$2m on programmes and infrastructure to deal with the pandemic, including the community donations. On-site measures include isolation facilities, increased busing and testing facilities. Production output during 2020 was not affected.

Revenue

Attributable equivalent gold production, (including Asanko) increased by 2% from 2.195Moz in 2019 to 2.236Moz in 2020. Attributable equivalent gold production at Asanko decreased marginally from 113,000oz in 2019 to 112,500oz in 2020. Revenue from Asanko is not included in Group revenue as Asanko results are equity accounted.

During 2020, a decision was taken to align the production month-end with the calendar month-end, which resulted in a once-off addition of 10 production days in H1 2020. The impact of the extra production days is estimated at 45koz, while the lost production from COVID-19 related stoppages is approximately 78koz, comprising South Deep at 32koz and Cerro Corona at 46koz.

At the South Africa region, production at South Deep increased by 2% from 6,907kg (222,100oz) in 2019 to 7,056kg (226,900oz) in 2020. The increase was due to the productivity improvement programmes introduced in 2019 starting to bear fruit, despite the operation being negatively impacted by COVID-19 restrictions. Gold sold increased by 2% from 6,907kg (222,100oz) to 7,056kg (226,900oz).

Attributable gold production at the West African operations (including Asanko), increased by 3% from 767,700oz in 2019 to 786,900oz in 2020 mainly due to increased production at Damang as mining progressed into the main ore body at the Damang Pit Cutback (DPCB). Managed gold produced and sold at Tarkwa increased by 1% from 519,100oz in 2019 to 526,300oz in 2020. At Damang, managed gold produced and sold increased by 7% from 208,400oz in 2019 to 223,000oz in 2020. Gold production at Asanko decreased marginally from 113,000oz (45% basis) in 2019 to 112,500oz (45% basis) in 2020. Gold sold decreased by 2% from 112,000oz (45% basis) to 109,700oz (45% basis).

Attributable equivalent gold production at Cerro Corona in Peru, decreased by 29% from 291,300oz in 2019 to 206,100oz in 2020 mainly as a result of COVID-19 restrictions on production (46Koz) and a lower price factor (22Koz), as well as lower grades mined in line with the current year plan. Total managed gold equivalent production decreased by 29% from 292,700oz in 2019 to 207,100oz in 2020. Gold equivalent ounces sold decreased by 31% from 296,900oz to 205,500oz.

Gold production at the Australian operations increased by 11% from 914,300oz in 2019 to 1,016,800oz in 2020 mainly due to the inclusion of Gruyere for a full year in 2020 with the operation reaching commercial levels of production at the end of September 2019. At St Ives, gold production increased by 4% from 370,600oz in 2019 to 384,900oz in 2020. Gold sold increased by 8% from 363,300oz to 393,800oz. At Agnew, gold production increased by 6% from 219,400oz in 2019 to 233,300oz in 2020. Gold sold increased by 6% from 219,600oz to 233,500oz. At Granny Smith, gold production decreased by 2% from 274,800oz in 2019 to 269,600oz in 2020. Gold sold decreased by 3% from 274,800oz to 265,200oz. At Gruyere gold production (100% basis) increased by 161% from 99,100oz in 2019 to 258,200oz in 2020. The Group's share of gold production at Gruyere increased by 161% from 49,500oz in 2019 to 129,100oz in 2020. Gold sold increased by 280% from 33,700oz in 2019 to 128,000oz in 2020.

The average US Dollar gold price achieved by the Group (excluding Asanko) increased by 27% from US$1,388/eq oz in 2019 to US$1,768/eq oz in 2020. The average Rand gold price increased by 41% from R659,111/kg to R928,707/kg. The average Australian Dollar gold price increased by 27% from A$2,007/oz to A$2,551/oz. The average US Dollar gold price for the Ghanaian operations (excluding Asanko) increased by 28% from US$1,387/oz in 2019 to US$1,773/oz in 2020. The average equivalent US Dollar gold price, net of treatment and refining charges, for Cerro Corona increased by 34% from US$1,344/eq oz in 2019 to US$1,795/eq oz in 2020. The average US Dollar/Rand exchange rate weakened by 13% from R14.46 in 2019 to R16.38 in 2020. The average Australian/US Dollar exchange rate weakened by 1% from A$1.00 = US$0.70 to A$1.00 = US$0.69.

Gold equivalent ounces sold (excluding Asanko) increased by 3% from 2.14Moz in 2019 to 2.20Moz in 2020.

Revenue increased by 31% from US$2,967m in 2019 to US$3,892m in 2020 due to the higher gold sold and higher gold price received.

Cost of sales before amortisation and depreciation

Cost of sales before amortisation and depreciation increased by 5% from US$1,424m in 2019 to US$1,489m in 2020.

At the South Africa region, at South Deep, cost of sales before amortisation and depreciation increased by 7% from R3,503m (US$242m) in 2019 to R3,751m (US$229m) in 2020 mainly due to increased volumes mined and processed as well as inflationary increases.

At the West Africa region, (excluding Asanko), cost of sales before amortisation and depreciation increased by 3% from US$457m in 2019 to US$469m in 2020 mainly due to a 10Mt increase in operational waste tonnes mined (capital waste tonnes decreased by 17Mt) at Damang following the intersection of the main orebody, partially offset by a gold-in-process credit to cost of US$59m in 2020 compared with gold-in-process credit of US$23m in 2019. The gold-in-process movement for 2020 at Tarkwa was a US$2m charge to cost and at Damang it was a US$61m credit to cost compared to a US$14m credit to cost at Tarkwa and a US$9m credit to cost at Damang in 2019. In line with the current year plan Tarkwa is supplementing ore feed to the plant with lower grade stockpile material, while Damang is adding lower grade ore to the stockpile.

At the South America region, at Cerro Corona, cost of sales before amortisation and depreciation decreased by 5% from US$162m in 2019 to US$154m in 2020 mainly due to a 4Mt decrease in operational tonnes mined.

At the Australia region, cost of sales before amortisation and depreciation increased by 14% from A$808m (US$562m) in 2019 to A$924m (US$637m) in 2020 mainly due to the inclusion of Gruyere for a full year in 2020 with the mine reaching commercial levels of production at the end of September 2019 as well as inflationary increases at the other three operations.

Amortisation and depreciation

Amortisation and depreciation for the Group increased by 8% from US$610m in 2019 to US$661m in 2020 mainly due to the inclusion of Gruyere with the mine reaching commercial levels of production at the end of September 2019.

Other

Net interest expense for the Group increased by 29% from US$82m in 2019 to US$106m in 2020 mainly due to lower interest capitalised in 2020 with the Damang Pit Cutback project reaching commercial levels of production in 2020 and Gruyere being in production for the full 2020 year. Net interest expense of US$106m comprised of interest expense of US$106m and lease interest of US$22m, partially offset by interest income of US$9m and interest capitalised of US$13m in 2020. In 2019, interest expense of US$113m and lease interest of US$19m were partially offset by interest income of US$7m, interest capitalised of US$41m and lease interest capitalised of US$2m.

The share of results of equity accounted investees after taxation (before the impairment as described below) increased from US$3m in 2019 to US$47m in 2020. The equity accounted earnings of Asanko in 2020 of US$49m compared with US$4m in 2019. The increase is mainly due to the higher gold price in 2020. The balance under share of results of equity accounted investees after taxation relates to expenditure incurred at FSE.

The share of results of equity accounted investees – impairment of Asanko related to an impairment of US$50m of the Asanko Gold Mine following the identification of an impairment trigger. Due to the re-evaluation of the geological modelling by our JV partner, Galiano, Gold Fields is not in a position to provide a reserve and resource estimate for Asanko as at 31 December 2020. Taking this into consideration, management has modelled various scenarios for the Asanko Life of Mine (LOM) in order to determine their best estimates of the future cash flows of the Asanko gold mine. The various LoM scenario runs were undertaken in an attempt to model Asanko's future cash flows in the absence of a revised Resource and Reserve for 31 December 2020. These scenarios are based on the pre-feasibility study completed in 2019, in order to declare a Reserve at 31 December 2019, but were modified where appropriate to reflect prevailing circumstances.

The gain on foreign exchange of US$9m in 2020 compared with a loss of US$5m in 2019 and related to the conversion of offshore cash holdings into their functional currencies.

The loss on financial instruments of US$239m in 2020 comprised a loss on hedges of US$240m and a gain on valuation of options of US$1m. The loss on hedges of US$240m includes realised losses of US$417m, partially offset by unrealised gains and prior year mark-to-market reversals of US$177m. The realised losses of US$417m comprised losses realised on the South Deep gold hedge of R1,563m (US$95m), the Australian gold hedge of A$292m (US$201m), the Australian oil hedge of A$5m (US$3m) the Ghanaian gold hedge of US$115m and the Ghanaian oil hedge of US$7m, partially offset by realised gains of US$4m on the Chilean currency hedge. The unrealised gains and prior year mark-to-market reversals of US$177m comprised gains on the South Deep hedge of R176m (US$11m), the Australian gold hedge of A$106m (US$73m), the Ghanaian gold hedge of US$36m and the Chilean currency hedge of US$86m, partially offset by a loss on the Peruvian copper hedge of US$14m, the Ghanaian oil hedge of US$10m and the Australian oil hedge of A$7m (US$5m).

In 2020, the gain on valuations of options of US$1m relates to the Maverix warrants.

In 2019, the US$238m comprised US$245m losses on hedges and US$7m gain on the mark-to-market on Maverix warrants. The US$245m included US$132m realised losses and US$113m unrealised losses. The realised losses of US$132m comprised losses realised on the South Deep gold hedge of R220m (US$15m), the Australian gold hedge of A$163m (US$113m) and Australian currency hedge of A$22m (US$14m), partially offset by gains made on the Ghanaian oil hedge of US$5m, Ghanaian gold hedge of US$2m and Australian oil hedge of A$4m (US$3m).

The unrealised losses of US$113m comprised losses on the South Deep gold hedge of R153m (US$11m), the Ghanaian gold hedge of US$39m, the Australian gold hedge of A$94m (US$66m), the Ghanaian oil hedge of US$3m and Australian oil hedge of A$1m (US$1m), partially offset by a gain on Australian currency hedge of A$12m (US$7m).

In 2019, the gain on valuations of options of US$7m relates to the Maverix warrants.

Share-based payments for the Group decreased by 29% from US$21m in 2019 to US$15m in 2020 mainly due to the vesting of the 2020 share-based instruments during 2020. The long-term incentive plan increased by 467% from US$9m in 2019 to US$51m in 2020 due to the current mark-to-market valuation of the plan reflecting current performance as well as the allocation in 2020.

Other costs for the Group decreased by 22% from US$50m in 2019 to US$39m in 2020 and mainly related to lower spend due to the completion of the Damang road in 2019. 

Exploration and project expenses

Exploration and project expenses decreased by 40% from US$84m in 2019 to US$50m in 2020 mainly due to lower exploration spend as a result of the approval of the feasibility study of Salares Norte and the subsequent capitalisation of costs to the project as from 1 April 2020. The US$50m spend in 2020 included US$30m spend at Salares Norte which relates to exploration and project expenses. The balance of US$20m related to exploration at the other operations.

Non-recurring items

Non-recurring income of US$34m in 2020 compared with non-recurring expenses of US$24m in 2019.

Non-recurring income of US$34m in 2020 mainly includes:

  • US$24m income related to a submission of VAT claims for expenses incurred from 2010 to June 2020 at Salares Norte to the Chilean tax authority which become claimable from the commencement of construction;
  • net reversal of impairment of FSE of US$62m and is limited to previous impairments recognised. The reversal of 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;
  • expected credit loss against a contractor loan of US$29m at Tarkwa;
  • US$10m impairment of drilling costs at Damang. Based on technical and economic parameters of various studies, all assets related to the Amoanda-Tomento corridor were impaired;
  • US$2m write-off of redundant assets in Peru;
  • donations made to various bodies in response to COVID-19 of US$3m;
  • a cost arising on the rehabilitation year-end adjustments of US$2m; and
  • other costs of US$5m mainly related to the capital raising in February 2020.

The non-recurring expenses for 2019 included:

  • a positive silicosis provision adjustment (US$2m/R23m);
  • net impairment of FSE of US$10m. 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;
  • profit on sale of Maverix holding of US$15m;
  • loss on repurchase of 2020 bond of US$5m; 
  • contract termination cost of US$13m at Damang; and
  • a cost arising on the rehabilitation year-end adjustments of US$13m.

Royalties

Government royalties for the Group increased by 42% from US$74m in 2019 to US$105m in 2020 in line with the higher revenue.

Taxation

The taxation charge for the Group of US$433m in 2020 compared with US$176m in 2019. Normal taxation increased by 92% from US$191m in 2019 to US$367m in 2020 in line with the higher profit before tax. The deferred tax charge of US$66m in 2020 compared with a credit of US$15m in 2019.

Profit

Net profit attributable to owners of the parent of the Group of US$723m or US$0.82 per share in 2020 compared with net profit of US$162m or US$0.20 per share in 2019.

Headline earnings attributable to owners of the parent of the Group of US$729m or US$0.83 per share in 2020 compared with headline earnings of US$163m or US$0.20 per share in 2019.

Normalised profit for the Group of US$879m or US$1.00 per share in 2020 compared with US$343m or US$0.42 per share in 2019.

Normalised profit

Normalised profit reconciliation for the Group is calculated as follows:

Year ended
US$'m 2020    2019   
Profit for the period attributable to owners of the parent 723.0    161.6   
Non-recurring items (34.1)   23.8   
Tax effect of non-recurring items (6.1)   (7.8)  
Non-controlling interest effect of non-recurring items (3.8)   (0.9)  
Share of results of equity accounted investees – Asanko impairment 49.5    –   
(Gain)/loss on foreign exchange (8.6)   5.2   
Tax effect of gain on foreign exchange 1.9    (0.3)  
Non-controlling interest effect of gain on foreign exchange 0.6    –   
Loss on financial instruments 238.9    238.0   
Tax effect of loss on financial instruments (76.1)   (73.8)  
Non-controlling interest effect of loss on financial instruments (6.4)   (2.4)  
Normalised profit attributable to owners of the parent 878.8    343.4   

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 inflow from operating activities of US$1,257m in 2020 compared with US$893m in 2019. The increase of 41% was mainly due to a higher profit before royalties and taxation. This was partially offset by higher royalties and taxation payments of US$381m in 2020 compared to US$254 in 2019, as well as an investment in working capital of US$172m in 2020 compared to US$25m in 2019. The investment in working capital of US$172m in 2020 was due to an increase in prepayments, a US$66m build-up of gold-in-process mainly at Damang as well as a fifth creditor cycle payment as a result of the change to a calendar month end.

Dividends paid of US$145m in 2020 compared with US$48m in 2019 and comprised dividends paid to owners of the parent of US$138m and related to the final 2019 and interim 2020 dividend, as well as dividends paid to non-controlling interest holders of US$8m.

Cash outflow from investing activities increased by 36% from US$447m in 2019 to US$607m in 2020. Capital expenditure decreased by 5% from US$613m in 2019 to US$584m in 2020.

Sustaining capital expenditure, (excluding Asanko), increased by 27% from US$323m in 2019 to US$409m in 2020, while non-sustaining capital expenditure (excluding Asanko), decreased by 40% from US$290m in 2019 to US$175m in 2020. This movement is mainly attributable to Australia where projects like Invincible South and Hamlet North at St Ives, Zone 110-120 at Granny Smith and Gruyere development all turned cash flow positive resulting in a movement from growth to sustaining capital expenditure in accordance with the revised World Gold Council interpretation. Growth expenditure of US$175m for 2020 comprised US$97m at Salares Norte, US$41m at the Australian operations, US$26m at Cerro Corona, US$6m at Damang and US$5m at South Deep. Growth expenditure of US$290m in 2019 comprised US$207m at the Australian operations, US$71m at Damang and US$12m at Cerro Corona.

In the South Africa region at South Deep, capital expenditure increased by 68% from R479m (US$33m) in 2019 to R804m (US$49m) in 2020 mainly due to the Doornpoort expansion project, the purchase of new TM3 equipment and the recommencement of the growth development programme.

At the West Africa region, (excluding Asanko), capital expenditure decreased by 17% from US$202m in 2019 to US$167m in 2020. At Tarkwa, capital expenditure increased by 18% from US$125m in 2019 to US$147m in 2020 due to higher capital waste tonnes mined. Capital expenditure at Damang decreased by 74% from US$76m in 2019 to US$20m in 2020 mainly due to lower capital waste tonnes mined.

Capital expenditure at Asanko (on a 100% basis) amounted to US$69m in 2020 compared with US$60m in 2019. The Asanko capital expenditure is not included in the Group capital expenditure.

At the South America region at Cerro Corona, capital expenditure decreased by 11% from US$56m in 2019 to US$50m in 2020 mainly due to the impact of COVID-19 restrictions on construction activities.

At Salares Norte, capital expenditure increased by 100% to US$97m in 2020 from US$nil in 2019 due to the approval of the feasibility study and commencement of capitalisation of the project from 1 April 2020.

At the Australia region, capital expenditure decreased by 30% from A$458m (US$319m) in 2019 to A$319m (US$220m) in 2020. At St Ives, capital expenditure decreased by 24% from A$141m (US$98m) to A$107m (US$74m) mainly due to the development of the Invincible and Hamlet North underground mines in 2019. At Agnew, capital expenditure decreased by 31% from A$109m (US$76m) in 2019 to A$75m (US$52m) in 2020 mainly due to expenditure on the new accommodation village in 2019. At Granny Smith, capital expenditure decreased by 8% from A$104m (US$72m) in 2019 to A$96m (US$66m) in 2020 mainly due to a decrease in capitalised drilling cost. At Gruyere, capital expenditure decreased by 61% from A$104m (US$72m) in 2019 to A$41m (US$28m) in 2020. The 2019 capital expenditure was primarily to complete the Gruyere construction project and stripping activities at the Gruyere pit.

Proceeds on disposal of assets of US$1m in 2020 compared with disposal of assets of US$4m in 2019.

Purchase of investments of US$1m in 2020 related to a purchase of 3.4m shares in Lefroy Exploration Ltd and compared with US$7m in 2019 (related to Chakana Copper).

In 2019, purchase of Asanko of US$20m related to the additional purchase of preference shares in accordance with the Joint Venture transaction with Asanko Gold Inc. which was completed on 31 July 2018.

Redemption of Asanko preference shares amounted to US$38m in 2020 compared to US$10m in 2019.

Proceeds on disposal of Maverix amounted to US$67m in 2019 and related to the sale of the Group's 19.9% holding in Toronto-listed gold and royalty streaming company Maverix.

Proceeds on disposal of subsidiary amounted to US$6m in 2019 and related to the sale of Norperuana.

Loan advanced to contractors in Ghana for fleet replacement in 2020 amounted to US$68m. These loans are interest bearing, secured and are recoupable over three years (2021 – 2024).

Proceeds on disposal of investments in 2020 amounted to US$23m and related to the sale of 81m shares in ASX-listed Cardinal Resources Limited. Proceeds on disposal of investments in 2019 of US$113m related to the disposal of the Group's holdings in Red 5, Gold Road and Bezant Resources.

Environmental payments increased from US$7m in 2019 to US$9m in 2020.

Cash inflow from operating activities less net capital expenditure, environmental payments, redemption of Asanko preference shares and lease payments of US$631m in 2020 compared with a cash inflow of US$249m in 2019 mainly due to higher inflow from operating activities and lower capital expenditure.

The US$631m cash flow from operating activities less net capital expenditure, environmental payments, redemption of Asanko preference shares and lease payments in 2020 comprised: US$868m net cash generated by the eight mining operations (after royalties, taxes, capital expenditure and environmental payments) plus redemption of Asanko preference shares of US$38m, less US$92m of net interest paid, US$151m at Salares Norte on exploration and construction capital, as well as US$32m on non-mine based costs mainly due to working capital movements.

The Salares Norte expenditure of US$151m comprises the following:

US$'m   
Exploration expenditure (30)  
Capital expenditure (97)  
Investment into working capital (24)  
Total spend (151)  

The US$249m inflow in 2019 comprised: US$414m net cash generated by the eight mining operations (after royalties, taxes, capital expenditure and environmental payments), less US$86m of net interest paid, US$55m for exploration mainly at Salares Norte (this excludes any mine based brownfields exploration which is included in the US$414m above), as well as US$24m on non-mine based costs. Included in the US$414m above is US$71m capital expenditure on the Damang reinvestment project and A$96m (US$67m) on growth capital expenditure at Gruyere. If these two amounts are excluded, then the mining operations generated US$552m in net cash.

Net cash outflow flow from financing activities of US$140m in 2020 compared with US$105m in 2019. The outflow in 2020 related to shares issued of US$249m and loan drawdowns of US$689m, partially offset by repayment of US$1,014m on offshore loans (including the 2020 bond of US$602m) and payment of lease payments of US$64m. The outflow in 2019 related to the repayment of US$1,604m on offshore and local loans and US$38m from lease payments, partially offset by a drawdown of US$1,538m.

The net cash inflow for the Group of US$364m in 2020 compared with US$294m in 2019. After accounting for a translation adjustment of US$8m on non-US Dollar cash balances, the cash inflow in 2020 was US$372m. The cash balance of US$887m in 2020 compared with US$515m in 2019.

All-in sustaining and total all-in cost

The Group all-in sustaining costs increased by 9% from US$897/oz in 2019 to US$977/oz in 2020 mainly due to higher sustaining capital expenditure, higher cost of sales before amortisation and depreciation and higher royalties (due to higher gold price realised), partially offset by higher gold sold.

Total all-in cost increased by 1% from US$1,064/oz in 2019 to US$1,079/oz in 2020 due to higher cost of sales before amortisation and depreciation, higher sustaining capital expenditure and higher royalties, partially offset by higher gold sold and lower non-sustaining capital expenditure.

Royalties paid increased by US$12/oz or 31% from US$39/oz in 2019 to US$51/oz in 2020.

COVID-19 related costs are estimated at approximately US$12/oz for 2020 and are included in the AISC and AIC.

Statement of financial position

Net debt decreased from US$1,664m at 31 December 2019 to US$1,069m at 31 December 2020.

Net debt excluding lease liabilities decreased from US$1,331m in 2019 to US$640m in 2020.

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 0.56x in 2020 compared with 1.29x in 2019.

Adjusted EBITDA

Adjusted EBITDA for calculating net debt/adjusted EBITDA is based on the year ended 31 December 2020 profit, which is determined as follows in US$ million:

US$'m 2020   
Revenue 3,892   
Cost of sales before amortisation and depreciation (1,489)  
Exploration and project costs (50)  
Realised hedge losses* (417)  
Other costs* (26)  
Adjusted EBITDA 1,910   
Adjusted EBITDA is defined by the Group as profit or loss for the year adjusted for interest, taxation, amortisation and depreciation and certain other costs.
* Based on information underlying the reviewed condensed consolidated financial statements of Gold Fields Limited for the year ended 31 December 2020.

Free cash flow margin

The free cash flow (FCF) margin is revenue less cash outflow divided by revenue expressed as a percentage.

The FCF for the Group for the year ended 2020 is calculated as follows:

Year ended  
US$'m    US$/oz  
Revenue1 3,748.0      1,7714   
Less: Cash outflow (2,710.8)     (1,281)  
AIC (2,258.3)2   (1,067)  
Adjusted for:
Share-based payments (non-cash) 14.5      
Long-term employee benefits (non-cash) 51.3     24   
Exploration, feasibility and evaluation costs outside of existing operations* 31.4     15   
Non-sustaining capital expenditure (Damang reinvestment and Salares Norte) 102.8     49   
Revenue hedge (realised)* (411.3)    (194)  
Redemption of Asanko preference shares 37.5     18   
Tax paid (excluding royalties which is included in AIC above) (278.7)    (132)  
Free cash flow3 1,037.2     490   
FCF margin 28%    
Gold sold only – 000'oz 2,116.7    
1 Revenue from income statement at US$3,892.1m less revenue from Cerro Corona by-products in AIC at US$144.1m equals US$3,748.0m.
2 AIC for the Group of US$2,402.7m less AIC for Asanko of US$144.4m.
3 Free cash flow does not agree with cash flows from operating activities less capital expenditure in the statement of cash flows mainly due to working capital adjustments and non-recurring items included in the statement of cash flows.
4 Calculated by dividing revenue by gold sold only.
* Based on information underlying the reviewed condensed consolidated financial statements of Gold Fields Limited for the year ended 31 December 2020.

The FCF margin of 28% in 2020 at a gold price of US$1,771/oz compared with 21% in 2019 at a gold price of US$1,399/oz.