I started my tenure at Gold Fields during a very challenging time – COVID-19 was rampant and materially disrupting business and society at large. Some 10 months later, the world is starting to feel more normal. While infection rates remain high around the world, the severity of COVID-19 seems to be dissipating. The world is opening up again and I was even able to visit some of our operations at the start of this year.
Despite the challenges experienced during 2021, Gold Fields had a solid operational performance, achieving both production and cost guidance for the year. South Deep was the stand-out performer during 2021, with production exceeding the original guidance provided in February 2021 (despite the COVID-19 challenges). Our Salares Norte project remains largely on track, with the project achieving total completion of 63% at the end of the year. As previously guided, we expect first gold production by the end of Q1 2023.
During 2021, we undertook a detailed review of the company's strategy and determined that this was the time to build on a previously well executed strategy. As I have previously highlighted, we have a solid production profile above 2Moz a year for the next decade. However, during that time we anticipate that our annual production will grow to 2.7Moz by 2024 before declining as some of our mines come to the end of their lives. We believe that we must now start looking at ways of preserving the value we have created beyond 2024.
As a company, we ended the year on a high with the release of our 2030 targets for our most material ESG priorities. At the same time, we also launched our new purpose and vision statements which will guide Gold Fields into the future.
|Our Purpose:||Creating enduring value beyond mining|
|Our Vision:||To be the preferred gold mining company delivering sustainable, superior value|
Regrettably, we had one fatality during 2021. Vumile Mgcine, a shaft timberman at South Deep, died of injuries sustained in a mining incident in April, as reported in our H1 results. Another setback in our effort to achieve zero harm were the nine serious injuries reported during 2021, up from six serious injuries in 2020. Our goal remains no fatalities or serious injuries and we have intensified our safety efforts in the light of these setbacks.
JOHANNESBURG, 17 February 2022: Gold Fields Limited (NYSE & JSE: GFI) announced profit attributable to owners of the parent for the year ended 31 December 2021 of US$789m (US$0.89 per share). This compared with profit of US$723m (US$0.82 per share) for the year ended 31 December 2020.
A final dividend number 95 of 260 SA cents per share (gross) is payable on 14 March 2022, giving a total dividend for the year ended 31 December 2021 of 470 SA cents per share (gross).
Attributable gold equivalent production for 2021 was 2,340koz, a 5% increase YoY (FY2020: 2,236koz), at the upper end of the guidance range of 2,300koz - 2,350koz.
All-in cost (AIC) for 2021 was US$1,297/oz, higher than 2020 as a result of the increased project capex at Salares Norte (FY2020: US$1,079/oz) and below the lower end of the guidance range of US$1,310/oz – US$1,350/oz. At the 2020 exchange rates, AIC would have been US$1,236/oz. At the guidance exchange rates, the AIC would have been US$1,288/oz. Excluding the increased Salares Norte capital costs, and normalising for the exchange rate differences by using the same exchange rates as in 2020 for South Africa and Australia, the year on year increase in AIC was 5% from US$1,038/oz to US$1,089/oz.
All-in sustaining costs (AISC) for the year was US$1,063/oz (FY2020: US$977/oz), slightly higher than the guidance range of between US$1,020/oz and US$1,060/oz. At the 2020 exchange rates, AISC would have been US$1,006/oz. At the guidance exchange rates, the AISC would have been US$1,054/oz which is within the guidance range.
The average US Dollar/Rand exchange rate strengthened by 10% from R16.38 in 2020 to R14.79 in 2021. The average Australian/US Dollar exchange rate strengthened by 9% from A$1.00 = US$0.69 to A$1.00 = US$0.75.
Basic earnings for 2021 increased by 9% YoY to US$789m or US$0.89 per share (2020: US$723m or US$0.82 per share).
Headline earnings for 2021 increased 22% YoY to US$890m or US$1.00 per share (2020: US$729m or US$0.83 per share).
Normalised earnings for the year were 6% higher YoY at US$929m or US$1.05 per share (2020: US$879m or US$1.00 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 260 SA cents per share. This takes the total dividend declared for the year to 470 SA cents per share (FY2020: 480 SA cents per share).
As previously guided, 2021 was a year of big capex for the Group, driven primarily by the increase in project capex at Salares Norte. Despite this higher capex Gold Fields generated cash flow from operating activities less net capital expenditure, environmental payments, lease payments and redemption of Asanko preference shares of US$463m (FY2020: US$631m). Adjusted free cash flow from the operations for the year, which excludes project capital, was US$913m compared to the US$868m generated in 2020.
During 2021, there was a US$100m decrease in the net debt, ending the year at US$969m, with a net debt to adjusted EBITDA ratio of 0.40x. This compares with a net debt balance of US$1,069m and a net debt to adjusted EBITDA ratio of 0.56x at the end of December 2020. Excluding lease liabilities, the core net debt was US$553m at the end of FY2021.
While the impact of COVID-19 on our operational performance was relatively limited during the last three quarters of 2021, the impact on our workforce has been devastating. During 2021, we reported 17 deaths among our employees and contractors at South Deep, Ghana and Peru. It brings the total number of COVID-19 related deaths in the Company to 20 since the beginning of the pandemic in early 2020. Our heartfelt condolences again go out to the families, friends and colleagues of the deceased.
Vaccination remains our primary defense against the impact of the virus and by mid-February 2022, 83% of our employees and contractors were already fully vaccinated.
During 2021, our 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. Of this, US$2m was spent on donations to assist governments and communities in their fight against the pandemic. We also paid a US$5m COVID-19 Health Recovery levy in Ghana. In 2020, our total COVID-19 related spend was about US$33m. For more details click here.
Salares Norte made good progress in a year where construction activities were impacted by COVID-19 and severe weather conditions. The detailed engineering, which was 97% complete at the end of 2020 was completed during the early months of 2021. Although the total project progress of 63% was slightly behind plan (67%) at 31 December 2021, all critical path items of the project have tracked the plan and the bulk of the equipment (97%) had been fabricated and delivered. Pre-stripping of the pit and construction of the processing plant commenced during January 2021, in line with the project’s construction schedule. At 31 December 2021, 22.9Mt of earth had been moved, comfortably ahead of plan of 17.3Mt, while plant construction stood at 36% completion.
US$327m was spent on Salares Norte in 2021, made up of US$375m in capital expenditure, US$27m in exploration, US$9m in tax paid and US$15m in other costs, partially offset by a US$66m release of working capital and a credit of US$33m from the realised portion of the FX hedge.
Good progress was made on district exploration during 2021, with a total of 23,848 metres being drilled (plan: 18,090m). We will continue to invest in exploration within the area to add to the production pipeline.
In December 2021, Gold Fields was informed by the Chilean regulators that they had begun sanction proceedings against Salares Norte regarding the Chinchilla relocation process. We continue to collaborate with the authorities to resolve the sanction proceedings and ensure that the relocation process can commence. Importantly, the delay in the relocation does not in any way affect the construction schedule at Salares Norte.
Total managed production increased by 1% to 871koz in 2021 from 862koz in 2020, primarily driven by the increased production at Damang as the mine progressed into the main orebody at the base of the Damang Pit Cutback. All-in costs increased by 5% to US$1,112/oz in 2021 from US$1,060/oz in 2020. The region produced net cash flow (excluding Asanko) of US$292m in 2021 compared to US$252m in 2020. In addition, Gold Fields received US$5m from the redemption of preference shares from Asanko during 2021.
Gold Fields’ Australian operations delivered another strong operational performance in 2021, once again surpassing the 1Moz annual production level. Gold production increased marginally to 1,019koz in 2021 from 1,017koz in 2020. All-in cost increased by 10% to A$1,526/oz (US$1,146/oz) in 2021 from A$1,388/oz (US$957/oz) in 2020. All-in cost in US Dollar terms increased by 20% as a result of the strengthening of the Australian Dollar by 9% from A$1.00 = US$0.69 in 2020 to A$1.00 = US$0.75 in 2021. The Australia region generated a net cash inflow of A$621m (US$466m) in 2021, slightly lower than the A$723m (US$498m) generated in 2020.
2021 was another challenging year for Cerro Corona as the impacts of COVID-19 continued to be felt by the mine in Q1. Equivalent gold production increased by 20% to 248koz from 207koz in 2020, mainly due to the higher price factor. Total all-in cost per equivalent ounce decreased by 7% to US$1,040 per equivalent ounce from US$1,119 per equivalent ounce in 2020. Despite the increased production and lower costs, Cerro Corona generated net cash of US$57m, a 32% decrease from the US$84m generated in 2020.
South Deep continued to show significant operational improvements during 2021. After feeling the impacts of COVID-19 during Q1 2021, the mine staged a strong recovery, exceeding the original guidance for the year. Gold production at South Deep increased by 29% to 9,102kg (293koz) in 2021 from 7,056kg (227koz) in 2020. Total all-in cost decreased by 1% to R655,826/kg (US$1,379/oz) in 2021 from R663,635/kg (US$1,260/oz) in 2020, with the increased capital and cost inflation fully offset by the increased gold sales. All-in cost in US Dollar terms increased by 9% as a result of the strengthening of the South African Rand by 10% from R16.38 in 2020 to R14.79 in 2021.
Encouragingly, South Deep generated net cash of R1.4bn (US$97m) in 2021, 157% higher than the R558m (US$34m) generated in 2020.
Our most critical stakeholders, including investors, are demanding that the impact of ESG issues is disclosed transparently, that mitigation measures are in place and that management of these issues is fully aligned with the strategy of the business. We took a significant further step in this direction by making a firm commitment to a range of 2030 ESG targets in December 2021. These targets will now be fully integrated at our operations and prioritised for implementation this year.
Our ESG priorities, their respective 2030 targets and the 2021 performance against these targets are as follows:
|Priority||2030 Targets||2021 Performance|
50% absolute and 30% net emission reductions from a 2016 baseline (Scope 1+2)
Net zero emissions by 2050
18% reduction (absolute)
Compliance with the Global Industry Standard on Tailings Management (GISTM)
Reduce the number of active upstream raised TSFs to 3
80% water recycled/reused
45% reduction in freshwater use from a 2018 baseline
75% water recycled/reused
35% reduction in freshwater use
4.Safety, health, well-being and the environment
Zero serious injuries
Zero serious environmental incidents
9 serious injuries
Zero serious environmental incidents
|5.Gender diversity||30% women representation||22% women representation|
6.Stakeholder value creation
30% of total value created benefits host communities
6 flagship projects benefiting host
28% total value created
0 flagship projects
Net carbon emissions in 2021 were up 1% up against the 2016 base due to the higher gold production during 2021. However, absolute emission reductions were 18% over the 2016-2021 period largely as a result of energy savings initiatives and the roll-out of our renewable energy microgrids at our Agnew and Granny Smith mines in Western Australia.
At our South Deep mine in South Africa, we commenced with the construction of a R715m solar power plant in Q3 2021 and took a decision to increase its capacity from 40MW to 50MW in Q4. It is scheduled to be completed in H2 2022.
For our employees, we are seeking to further improve safety, health and well-being, and to achieve greater inclusion and diversity, by targeting a 30% female workforce by 2030. In 2021, we managed to achieve a 22% gender diversity level, up from 20% in 2020.
Among recent sustainability achievements, Gold Fields was again ranked the top South African-listed mining company on the prestigious Dow Jones Sustainability Index (DJSI) and 3rd among 81 mining companies assessed. The CDP Water NGO again placed Gold Fields on its A List for tackling water security, one of 118 high-performing companies out of almost 3,400 that made this year’s top level. Finally, Gold Fields was once again a constituent of the Bloomberg Gender-Equality Index for 2022.
Ratings agency MSCI upgraded its ESG rating of Gold Fields from BBB to A for the first time, while rating group ISS assigned Gold Fields a top rating of E 1 S 1 G 1.
Group Resources decreased 4% YoY, post depletion. The Resource changes are primarily due to year on year decreases post depletion at South Deep of 1.5Moz (-2%) due to updated resource models and increased cut-off grade. The Australia region returned a 0.63Moz (3%) increase with strong positive contributions from Gruyere 50% (0.34Moz or 10%) and Agnew (0.24Moz or 7%).
Group Reserves decreased 7% YoY, post depletion. The Reserve changes are primarily due to year on year decreases post depletion at South Deep of 2.7Moz (-8%) due to increased unit cost, increased cut-off grade, enhanced south of wrench resource model and updated mine design and scheduling. The Australia region returned a 0.38Moz (5%) increase with strong positive contributions from Gruyere 50% (0.49Moz or 28%) and Agnew (0.1Moz or 11%).
|Gold equivalent resources||Moz||142.9||111.8|
|Gold equivalent reserves||Moz||52.3||48.6|
|Gold equivalent resources||Moz||149.1||116.0|
|Gold equivalent reserves||Moz||56.1||52.1|
The Mineral Resources and Mineral Reserve supplement will be published with the Integrated Annual Report at the end of March 2022.
2022 is going to be another big capex year for Gold Fields, given the deferral of spending at Salares Norte as well as the elevated level of sustaining capex across the portfolio, in order to maintain the production base of the Group.
At this point in time, Gold Fields is not in a position to provide 2022 production guidance for Asanko. Consequently, Group guidance excludes our share of the Asanko Joint Venture. We expect Galiano, who are the operators of the Asanko Mine, to update the market on the outlook for Asanko by the end of Q1 2022.
For 2022, attributable gold equivalent production (excluding Asanko) is expected to be between 2.25Moz and 2.29Moz (2021 comparable 2.25Moz). AISC is expected to be between US$1,140/oz and US$1,180/oz, with AIC expected to be US$1,370/oz to US$1,410/oz. If we exclude the very significant project capex at Salares Norte, AIC is expected to be US$1,230/oz to US$1,270/oz.
The exchange rates used for our 2022 guidance are: R/US$15.55 and US$/A$0.76.
Total capex for the Group for the year is expected to be between US$1.050bn and US$1.150bn. Sustaining capital is expected to be between US$625m and US$675, with non-sustaining capex expected to be between US$425m and US$475m. The largest component of the capex budget for the year is Salares Norte project capital, with US$330m expected to be spent.
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.
Longer term guidance
After a strong performance in 2021, South Deep is set to continue on the growth trajectory previously outlined. We expect production to grow by a further 20-30% to 345koz – 375koz over the next 3-4 years. We expect the growth to be more or less linear over the coming years and forecast production for 2022 of 312koz (c.7% increase from 2021).
As we continue to deliver into the Damang Reinvestment Plan, 2022 will be the last full production year at the mine, with production expected to be c.230koz for the year. Thereafter, we expect production to decline to c.150koz in 2023 with production for the last two years of life (2024 and 2025) derived from stockpile treatment. In the meantime, project studies are underway to determine whether life extension projects are financially viable. We will provide an update on these projects later in the year.
Salares Norte continues to progress according to plan. Total project progress is expected to be 90% by the end of 2022. First gold remains on track for end Q1 2023. The plant is expected to take twelve months to ramp up to full production. Based on this ramp up, we expect production to be c.200koz in 2023, with 2024 being the first full year, with production of c.550koz.
Production at the other assets in the portfolio is expected to be stable over the next three years. Taking into account the above, we expect production for the next three years to be:
2022: 2,250koz – 2,290koz
2023: 2,375koz – 2,425koz
2024: 2,720koz – 2,770koz
Chief Executive Officer
17 February 2022