The table below provides an overview of the number of COVID-19
infections at our mines to date, as well as recovery rates and other data.
|
|
|
| Tested |
71,482 |
|
| Positive |
2,705 |
|
| Negative |
68,621 |
|
| Awaiting results* |
156 |
|
| Active cases* |
155 |
|
| Hospitalised* |
5 |
|
| Recovered |
2,541 |
|
| Died |
9 |
|
* Note: "Awaiting results", "Active cases" and "Hospitalised" refers to the current figures
Numbers exclude Asanko/Galiano
2020 in review
Regrettably, we had one fatality during 2020 at our South Deep mine.
Abel Magajane, a shaft timberman, died after an underground mining
incident on 3 June 2020. In addition, 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. Gold
Fields recorded no Level 3 – 5 environmental incidents for 2020, as was
the case for 2019.
Attributable gold equivalent production for 2020 was 2,236koz, a 2%
increase YoY (FY2019: 2,195koz), within the revised guidance range of
2,200-2,250koz. Original guidance of 2.275Moz – 2.315Moz was revised
in May 2020 to account for the impact of COVID-19 on the operations,
mainly South Deep and Cerro Corona.
AIC for 2020 was US$1,079/oz, marginally higher than 2019 (FY2019:
US$1,064/oz) and within the revised guidance range of US$1,070/oz –
US$1,090/oz. AISC for the year was US$977/oz (FY2019: US$897/oz),
again within the revised guidance range of between US$960/oz and
US$980/oz.
Headline earnings for 2020 increased more than fourfold to US$729m or
US$0.83 per share (2019: US$163m or US$0.20 per share). Normalised
earnings for the year more than doubled to US$879m or US$1.00 per
share (2019: US$343m or US$0.42 per share).
In line with our dividend policy of paying out 25% to 35% of normalised
earnings as dividends, we declared a final dividend of 320 SA cents per
share. This takes the total dividend declared for the year to 480 SA cents
per share (FY2019: 160 SA cents per share).
A combination of strong operational performance and an increase in the
gold price drove a significant increase in cash flow from operating activities
less net capital expenditure, environmental payments, lease payments
and redemption of Asanko preference shares of US$631m from US$249m
generated during 2019. Mine cash flow for the year, which excludes project
capital, was US$868m, compared to US$552m in 2019.
During 2020, there was a significant decrease in the net debt, ending
the year at US$1.069bn and a net debt to EBITDA ratio of 0.56x. This
compares with a net debt balance of US$1.664bn and a net debt to
EBITDA ratio of 1.29x at the end of December 2019. Excluding lease
liabilities, the core net debt was US$640m at the end of FY2020.
Regional overview
Ghana
Total production increased by 3% to 862koz in 2020 from 840koz in 2019,
primarily driven by the continued build-up in production at Damang. As
expected, Damang had a much improved H2 2020 as it moved into the
heart of the main orebody. All-in costs increased by 2% to US$1,060/oz
in 2020 from US$1,039/oz in 2019. The region produced net cash flow
(excluding Asanko) of US$252m in 2020 compared to US$174m in 2019.
Australia
Gold Fields' Australian operations delivered another strong operational
performance in 2020, once again surpassing the 1Moz annual production
level. Gold production increased by 11% to 1,017koz from 914koz in 2019,
with Gruyere contributing for the full year in 2020. All-in cost decreased
by 2% to A$1,388/oz (US$957/oz) from A$1,418/oz (US$986/oz) in 2019.
The Australia region generated net cash inflow of US$498m (A$723m) in
2020, a more than threefold increase from the US$139m in 2019.
Peru
Cerro Corona was the operation in the group that was most impacted
by COVID-19 from a production perspective. Equivalent gold production
decreased by 29% to 207.1koz from 292.7koz in 2019, mainly due
to the COVID-19 related disruptions and the lower copper price.
Consequently, total all-in costs per equivalent ounce increased by 38%
to US$1,119 per equivalent ounce from US$810 per equivalent ounce
in 2019. Despite the challenges, Cerro Corona generated net cash of
US$84m, which is more or less the same as 2019.
South Africa
South Deep was the other operation that was materially impacted
by COVID-19. Most of the impact was during H1 2020, with the mine
recovering well in H2 2020. Gold production at South Deep increased
by 2% to 7,056kg (226.9koz) from 6,907kg (222.1koz) in 2019, which
was marginally ahead of revised guidance of 7,000kg. Total all-in cost
increased by 13% to R663,635/kg (US$1,260/oz) from R585,482/kg
(US$1,259/oz) in 2019, primarily due to the increase in sustaining capital
during 2020 (as guided).
Encouragingly, South Deep generated net cash of US$34m (R558m) in
2020, more than double that generated in 2019.
Update on Salares Norte
Construction activities at Salares Norte were relatively unaffected
by the COVID-19 pandemic during 2020 and the project remained
largely on schedule. US$151m was spent on Salares Norte in 2020,
including district exploration of US$30m, initial capex of US$97m and
prepayments accounting for the majority of the balance. At the end of
December 2020, engineering progress was 97.2% complete, ahead of
the planned 90.0%.
At 31 December 2020, construction progress stood at 15.6% vs. plan
of 9.9%, contributing towards total project progress of 27.0% coming
in slightly ahead of plan of 24.4%. Camp Phase I construction was
completed during Q3 2020 while Phase II construction was three months
ahead of schedule at year-end. The mass earthworks contract was
awarded at the end of May, with the contractor commencing activities
on 21 September and completing the diversion channel earthworks
and precast installation by year-end. The mining contractor completed
mobilisation and began pioneering works on 1 October, as planned. Pre
stripping of the pit and construction of the processing plant commenced
during January 2021, in line with the project's construction schedule.
At the end of December 87% of the project Estimate at Completion
(EAC) budget (excluding remaining contingency) had a fixed and firm
price (excluding inflation factors) through contracts and purchase orders
awarded, significantly reducing the risk of price differences.
Salares Norte controls 84,000ha of mineral rights in the Salares Norte
district and has carried out extensive district-wide exploration within a
20km radius of the plant site. During 2020, a total of 17,504 district
exploration metres were drilled, focusing on the Horizonte Project, while
more work was also done on step-out potential at Agua Amarga North
and Brecha West targets near the Salares Norte project.
Chakana
During February 2021, Gold Fields increased its strategic shareholding
in Canadian listed, Chakana Copper Corp. from 16.8% to 19.99% for
C$2.9m (~US$2.3m) through its participating in a wider private placement
equity capital raise by that company. Chakana Copper Corp. is currently
advancing the prospective Soledad copper-gold-silver project located in
the Ancash region of Peru. The proceeds of the raise will be used for
the accelerated exploration and development of the high-grade project.
Since restarting its 15,000m Phase 3 drill program on 15 August 2020, Chakana has announced three new discoveries at Paloma East, Paloma
West, and at the Huancarama Breccia Complex where drilling is ongoing.
We continue to see Peru as a prospective region given the paucity of
exploration in the highly prospective Andean belt.
Regulus resources
Gold Fields optioned certain of its green fields exploration claims in the
Cerro Corona mine district to Canadian listed, Regulus Resources Inc.
during February 2021. The agreement grants Regulus the right to procure
a 60% joint venture interest in Gold Fields' claims upon successful
completion of US$3.5m exploration expenditure within a 3-year period,
with Gold Fields retaining a 40% joint venture interest.
Gold Fields retains a discretionary right to subsequently increase its joint
venture interest to a controlling 60% and reduce Regulus' position to 40%
for a cash payment of US$7.5m and US$5m in exploration commitments
over a further 5-year period. A successful claw back also grants Gold
Fields the right to direct that any ore mined from the joint venture be
processed at its nearby Cerro Corona facilities.
The arrangement allows Gold Fields the flexibility to maintain operational
focus within the Cerro Corona mine footprint, whilst opening the
exploration search space for additional ore sources in partnership with
Regulus who will be exploring the properties as part of its pre-existing
focus on its copper-gold Anatakori project immediately bordering our
district exploration claims. Gold Fields will monitor earn-in exploration
progress through its participation in a joint technical Advisory Committee
and will assess its claw back in future as appropriate.
Mineral reserves and mineral resources
In 2020, the Group had another good year with regards to reserve and
resource replacement. Some of the significant developments, include:
Group Resources increased 1% YoY, post depletion
- South Deep resources increased 4% due to lower cut-off grades (COG)
(NoW area 3.4 to 3.0g/t and SoW area 3.8 to 3.3g/t) and geology model
updates.
- Australia resources increased 5%, with Agnew and St Ives increasing
by 26% and 13%,respectively.
Group Reserves increased 2% YoY, post depletion
- Australia reserves increased 8% YoY, with Agnew and St Ives increasing
19% and 17%, respectively.
- South Deep had a 6% increase due primarily to lower COG and updated
mine design and schedule.
| |
|
|
Year ended |
| |
|
|
|
|
|
|
|
|
| December 2020 |
|
|
|
|
|
| Gold equivalent
resources |
Moz |
|
149.1 |
116.0 |
|
| Gold equivalent
reserves |
Moz |
|
56.1 |
52.1 |
|
| December 2019 |
|
|
|
|
|
| Gold equivalent
resources |
Moz |
|
148.7 |
115.7 |
|
| Gold equivalent
reserves |
Moz |
|
55.2 |
51.3 |
|
As at end-2020, 20.5Moz of Gold Fields' attributable gold equivalent
Reserves (excluding Gold Fields' 45% interest in the Asanko Gold Mine)
were outside South Africa, representing 39% of the Group's Reserve base.
Our 2020 Reserve and Resource declaration excludes our 45% in the
Asanko JV but is included in the 2019 estimates.
Our JV partner, Galiano, has informed Gold Fields that an updated
Mineral Resource and Reserve Estimate is expected to be released
in H2 2021 for Asanko. The Mineral Resource and Reserve Estimate
is expected to incorporate new exploration and infill drilling, updated
modifying factors, and updated geological modelling. As a result, Gold
Fields is not in a position to provide a reserve and resource estimate for
Asanko as at 31 December 2020. Gold Fields has excluded reserve
and resource estimates for Asanko at this time. Gold Fields does not believe that the reserves and resources attributable to Asanko are
material to the reserves and resources of the Gold Fields group taken
as a whole. Gold Fields will assess the work when it is completed by
Galliano in order to determine whether in its view, an updated reserve
and resource can be reported in H2 2021 or at the end of the year in
accordance with its normal reporting cycle.
ESG priorities
In recent years, successful management of environmental, social and
governance (ESG) issues has become a critical consideration for our
stakeholders. These stakeholders, particularly investors, are increasingly
expecting that the impact and management of ESG issues is disclosed
transparently and fully aligned with the strategy of the business.
Our ESG priorities are associated with wide-ranging objectives and
strategic intents outlined in the table below. These high-level priorities
and goals will be incorporated in an ESG Charter with detailed 2025
targets to be released later this year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partnering to ensure the safety, health and well-being of our workforce and alleviating such impacts on our communities
|
|
|
Elimination of fatalities, serious injuries, illnesses and mental harm that could arise from our mining activities
|
|
1. Eliminate fatalities.
2. Eliminate vehicular incidents by implementing advanced collision avoidance technologies.
3. Significantly reduce underground exposure to diesel particulate matter.
4. Minimise health and environmental impacts on our host communities.
|
|
|
Build a diverse and inclusive workplace
|
|
|
Increase the proportion of women and Indigenous people in our workforce
|
|
5. Increase the proportion of women in our workforce, including women in leadership and women in mining in all our operating regions.
|
|
|
Unlocking business, community and stakeholder value
|
|
|
Maximise in-country and host community employment and procurement
|
|
6. Maximise Group host community employment.
7. Maximise Group host community procurement spend.
8. Maximise Group in-country procurement.
|
|
|
Pursuing decarbonisation and building resilience to climate change in line with our commitment to the Paris Agreement on Climate Change
|
|
|
Reduce carbon emissions, freshwater use and exposure to climate-related risks to operations, stakeholders and the environment
|
|
9. Continue pursuing carbon emissions reductions at all our operations.
10. Increase Group renewable energy use and include at least 20% renewables in all new projects.
11. Introduce electric vehicles in our underground operations.
12. Reduce fresh water use and optimise Group water recycling and reuse levels.
|
|
|
Full compliance with the 2020 Global Industry Standard on Tailings Management (GISTM)
|
|
|
Safe and responsible tailings management
|
|
13. Achieve and maintain compliance with the GISTM as committed to by ICMM members.
|
|
Gold Fields again placed the top South African and fourth best mining
company, among 75 surveyed, in the annual Dow Jones Sustainability
Index (DJSI), behind Teck, Newmont and Anglo American. Gold Fields
has consistently achieved a Top 5 metals and mining ranking in the
DJSI since it started participating in 2011.
Outlook and 2021 guidance
As previously guided, 2021 is going to be a big capital expenditure year
for Gold Fields, given the peak spending at Salares Norte as well as the
increase in sustainable capex for the Group. This increase in sustaining
capex will enable us to spend on key projects that will allow us to sustain
our production base of 2.00Moz to 2.50Moz for the next 8-10 years.
The COVID-19 pandemic is expected to continue to impact our lives and
businesses in 2021, with many parts of the world experiencing second
waves. The effective roll-out of the vaccine creates additional uncertainty.
For 2021, attributable gold equivalent production is expected to be
between 2.30Moz and 2.35Moz. AISC is expected to be between
US$1,020/oz and US$1,060/oz, with AIC expected to be US$1,310/oz
to US$1,350/oz. If we exclude the very significant project capex at
Salares Norte, AIC is expected to be US$1,090/oz to US$1,130/oz.
The exchange rates used for our 2021 guidance are: R/US$15.50 and
US$/A$0.75.
Total capex for the Group for the year is expected to be US$1.177bn.
Sustaining capital is expected to be US$538m, with non-sustaining capex
expected to be US$639m. The largest component of the capex budget for
the year is Salares Norte, with the US$508m expected to be spent. We
expect Salares Norte to be at 70% completion by the end of 2021.
The other increases are driven by specific projects at some of our core
operations. These include the development of a second decline at the
Wallaby Underground mine at Granny Smith (A$51m), plant modifications
and increased development at Agnew to enhance the longer-term outlook
(A$38m), and finally increased new mine development, tailings facility
expansion and underground infrastructure expenditure at South Deep
(US$22m).
Group production and costs have been flexed for inherent operating
risks which relate to all or some of the mines. The risk of stoppages due
to COVID-19 has not been factored into any guidance estimates in the
group. The extent to which COVID-19 impacts on either production or
costs is indeterminable at this stage.
Succession
As has been announced, Chris Griffith will be taking over from me
as CEO on 1 April. I feel that I am leaving the business in a healthy
position with a strong executive committee in place and an accomplished
successor taking the reins.
I would like to take this opportunity to thank the Board, the Executive team
and all the people at Gold Fields for their dedication and commitment
through all my years at the company. Each and every one of you has
been an important part of the success of Gold Fields.
Yours in health and safety
Nick Holland
Chief Executive Officer
18 February 2021
