Denver Gold Forum - overendstudio.co.za · 9/11/2012 · …operating costs are increasing whilst...

Denver Gold Forum11 September 2012Nick HollandNick HollandChief Executive Officer

Forward Looking Statements

Certain statements in this document constitute “forward looking statements” within the meaning of Section 27A of the US Securities Act of 1933

and Section 21E of the US Securities Exchange Act of 1934.

In particular, the forward looking statements in this document include among others those relating to the Damang Exploration Target Statement;

the Far Southeast Exploration Target Statement; commodity prices; demand for gold and other metals and minerals; interest rate expectations;

exploration and production costs; levels of expected production; Gold Fields’ growth pipeline; levels and expected benefits of current and

l d it l dit f t d th i li ti l l d th t t f t ffi i i d i t bplanned capital expenditures; future reserve, resource and other mineralisation levels; and the extent of cost efficiencies and savings to be

achieved. Such forward looking statements involve known and unknown risks, uncertainties and other important factors that could cause the

actual results, performance or achievements of the company to be materially different from the future results, performance or achievements

expressed or implied by such forward looking statements. Such risks, uncertainties and other important factors include among others: economic,

business and political conditions in South Africa, Ghana, Australia, Peru and elsewhere; the ability to achieve anticipated efficiencies and other

cost savings in connection with past and future acquisitions, exploration and development activities; decreases in the market price of gold and/or

copper; hazards associated with underground and surface gold mining; labour disruptions; availability terms and deployment of capital or credit;

changes in government regulations particularly taxation and environmental regulations; and new legislation affecting mining and mineral rights;changes in government regulations, particularly taxation and environmental regulations; and new legislation affecting mining and mineral rights;

changes in exchange rates; currency devaluations; the availability and cost of raw and finished materials; the cost of energy and water; inflation

and other macro-economic factors, industrial action, temporary stoppages of mines for safety and unplanned maintenance reasons; and the

impact of the AIDS and other occupational health risks experienced by Gold Fields’ employees.

These forward looking statements speak only as of the date of this document. Gold Fields undertakes no obligation to update publicly or release

any revisions to these forward looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence

f ti i t d t

Gold Fields Limited | Denver Gold Forum | 11 September 2012Page 2

of unanticipated events.

Investors just seeking gold exposure can buy ETFs

Total global goldETF holdings (by quarter)

2,500t2,500t

1 500

2,000

1 500

2,000

1,000

1,500

1,000

1,500

500

,

500

,

002004 2005 2006 2007 2008 2009 2010 2011 2012


Note: ETFs and similar products, including closed-end gold fundsSource: World Gold Council

So gold mining stocks must provide returns that beat the ETF… but…


Note: Data indexed to 14th January 2000; index made up of 8 major gold producers’ total return indexes weighted by market capitalisation; Major Gold producers defined as: AngloGold Ashanti, Barrick, Harmony, Kinross, Goldcorp, Gold Fields, Newmont and Newcrest

Source: Bloomberg

The industry is struggling to grow production…

Investors are sceptical:• Can this be delivered?

• Is it growth or just g jreplenishment?


Note: Major Gold producers defined as: AngloGold Ashanti, Barrick, Harmony, Kinross, Goldcorp, Gold Fields, Newmont and Newcrest.Source: World Gold Council; Annual reports; Producer investor presentations

…operating costs are increasing whilst yields are declining…


Note: Cost per tonne is the weighted average of 8 major gold producers by total ore mined; average grade is the weighted average of 8 major gold producers by total ore mined; Major Gold producers defined as: AngloGold Ashanti, Barrick, Harmony, Kinross, Goldcorp, Gold Fields, Newmont and Newcrest.

Source: Gold Fields company data; annual reports

…and total expenditure has grown in line with the gold price…

CAGR(06 – 11)

21%21%

16%

G f G G G * C /Note: Major Gold producers defined as: AngloGold Ashanti, Barrick, Harmony, Kinross, Goldcorp, Gold Fields, Newmont and Newcrest; *Estimated NCE/oz based on total cash costs plus capex for existing operations, weight averaged by production (excludes new mine development capex)

Source: Bloomberg;,Annual reports


…yet we shoot ourselves in the foot by telling only half the story…

CAGR..whereas in practice, free cash flow is much lower

(06 – 11)

21%

once we include capital to sustain and grow our

businesses

21%Governments think we generate this

much cash…

16%

G f G G G *Note: Major Gold producers defined as: AngloGold Ashanti, Barrick, Harmony, Kinross, Goldcorp, Gold Fields, Newmont and Newcrest; *EstimatedNCE/oz based on total cash costs plus capex for existing operations, weight averaged by production (excludes new mine development capex)

Source: Bloomberg;,Annual reports


Counter to analyst expectations fundamentals have supported a strongly rising gold price…


Note: Consensus forecast is median forecast of all contributing analysts to Bloomberg; Forecast as of 10th May in each year, except 2006 which is from 30th June; Futures price curve based on contracts prices on 312t Aug 2012 for settlement at year-end in 2012, 2013, 2014 and 2015

Source: Bloomberg

There are strong indications that the gold industry recognises that investment cannot be sustained whilst returns remain low

“Barrick Gold slows down expansion”Financial Times, 26th July 2012

“N t t t $1b f

“The era of gold mega-projects may be

“Newmont to cut over $1bn from planned Peru project spend”Mineweb, 24th May 2012

“Kinross Gold hunts for ways

g g p j yfading. The industry is moving into an era of cash flow generation, yields and capital discipline”Sean Boyd CEO Agnico-Eagle

“Barrick replace CEO in board shake-up”

yto cut expenses”Financial Post, 8th August 2012

Sean Boyd, CEO, Agnico-Eagle

Barrick replace CEO in board shake-upFinancial Times, 6th June 2012

“…ounces at any cost…”Johann Steyn


Strategic response

It is not about ounces at any cost….• Review operating and growth portfolio to optimise cash generation and

investment payback

It is not about ounces at any cost….1

• Understand and manage all-in costs (Notional cash Expenditure)

P di id d f 25% t 35% f li d i

2

3• Pay dividends of 25% to 35% of normalised earnings

• Deliver South Deep

3

4

• Prioritise low risk high return brownfields growth opportunities5

• Pursue greenfields projects only if they offer truly attractive returns

• Leverage the balance sheet to grow value on a per share basis

6

7• Leverage the balance sheet to grow value on a per share basis7


Optimise cash generation

Q2 2012 NCE i 18% 2012 H1 21%

1,800

US$/oz

Q2 2012 NCE margin 18%; 2012 H1 21%

1,400

1,600

NCEMargin

1,000

1,200

600

800

-

200

400

Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12

Gold price Total cash costs NCE


Targeting a 25% NCE Margin

Leverage the Balance Sheet

Strong balance sheet

1,500 11,900 Net Debt

• Q2 2012 - Cash generated from operations R4 195m (US$514 million)

Strong balance sheet

1,400

1,450

10,500

11,200

US$

mill

ion

R m

illio

n

operations R4,195m (US$514 million)

• Net debt R11,457 million (US$1,366 million)

1,300

1,350

9,100

9,800

1Q2011 1Q2012 2Q2012ZAR million USD million

million)

• Net Debt/EBITDA ratio of 0.53

8 000

10,000 Debt Maturity

ZAR million USD million

• Conservative debt maturity schedule

• Committed unutilised facilities of

4,000

6,000

8,000 R7.7bn (US$918m)

R m

illio

n

-

2,000

2012 2013 2014 2015 2016 2017 2018 2019 2020

Pursue Value on a Per Share Basis


Prioritise Dividends

Leading dividend payer in the peer group

Dividends as a % of EPS

Leading dividend payer in the peer group

Dividend Yield

50%

60%

2 0%

2.5%

3.0%

30%

40%

1.0%

1.5%

2.0%

10%

20%

0.0%

0.5%

0%

0%2007 2008 2009 2010 2011 Interim: 2012

Gold Fields Industry Average

Source: Bloomberg, Company results Source: Bloomberg, company information

Dividend Payment of 25% to 35% of Normalised Earning

New Dividend Policy Aligned To Investor Expectations


Dividend yield calculated based on dividend declared for 2011 divided by average share price for 2011

South Africa Region

Stable performance in line with expectations

• KDC producing within 1.0 to 1.1 Moz p.a. range (Dec 2011 Analyst Day guidance)

Stable performance, in line with expectations

• Beatrix producing with 325 to 350 Koz p.a. range (Dec 2011 Analyst Day guidance)

• Q2 2012 NCE margin 17%

450

500

South Africa RegionProduction (koz)

250

300

350

400

450

50

100

150

200

-3Q2011 4Q2011 1Q2012 2Q2012

KDC Beatrix South Deep


Q2 2012 Free Cash Flow of US$161m

South Africa Region

South Deep Project

Production build-up to run-rate of 700koz by end of 2015

South Deep Project

Destress mining improved as planned

88% self-funding* in Q2 2012

Section 189 process initiated on 2 August 2012

Key Infrastructure Projects On Budget And On Time

2010 2011 2012E 2013E 2014E 2015E Status

94 Level Refrigeration Plant Commissioned

Tailings Storage Facility CommissionedTailings Storage Facility Commissioned

Twin Vent Shaft On-track

Plant Expansion On-track

Backfill Infrastructure On trackBackfill Infrastructure On-track

New Mine Development On-track


* Calculated as cash flow from operations divided by Capital Expenditure

Key Infrastructure Projects On Track For Completion Q4 2012

South Africa Region

West Rand Surface Resources Project

• Positive scoping study – Gold Fields and Gold One

West Rand Surface Resources Project

• Synergies in treating combined tailings of both parties utilising the following:

• An integrated reclamation network

• A high grade uranium leach facility

• A single low grade gold and uranium extraction facility g g g y

• Depositing tailings on two residue disposal facilities

• Extract U O Au and Sulphur• Extract U3O8, Au and Sulphur

• Include historical surface dumps as well as current arisings of both parties

• 4Moz of gold and 65 million pounds of U3O8 to be recovered over a 20-year life

• Pre-feasibility study under consideration


A Significant Opportunity

West Africa Region

14Moz of Reserves and 25Moz of Resources• Minority buy-outs increases interest from 71% to 90%

• Tarkwa production in 700 to 750 Koz range – world-class operation with upside

14Moz of Reserves and 25Moz of Resources

p g p p

• Damang a mine in transition – focus on restoring production to ~180 Koz p.a.

• Q2 2012 Regional NCE margin of 28%

West Africa Region

• Significant opportunities for value creation

200

250

gProduction (koz)

50

100

150

-3Q2011 4Q2011 1Q2012 2Q2012

Tarkwa Damang


Tarkwa - A World-class Mine With Upside Potential

West Africa Region

Tarkwa Expansion Phase 6 (TEP 6)

• 8Mtpa CIL plant to replace North Heap Leach

• Adds ~100koz p.a. on improved recoveries – to provide ~800koz p.a. production profile

Tarkwa Expansion Phase 6 (TEP 6)

p p p p p p

• Additional 1Moz over life of mine based on lower cut-off grade and improved recoveries

• Double digit IRR, accretive on cash flow and NPV basis

• Capital ~US$450m

• Pre-feasibility study completed end of year

80

100

CIL/TEP 6 Gold Recovery (%)

-

20

40

60

2009 2010 2011 2012E

Actual Heap Leach Recoveries Indicative TEP 6\CIL Recoveries


An ~800koz p.a. Profile

West Africa Region

Damang - a mine in transitionDamang - a mine in transition

• High level of stripping to secure future mining – impacts NCE

• Lower production from high grade Damang pit due to safety concerns• Lower production from high-grade Damang pit due to safety concerns

• Super-pit project work on slow burn, focus on restoring profitability and cash flow

Juno – 490koz

Huni – 1,733koz

Damang – 293koz

Insert plan view of pits including reserve per pitPeet/Kevin


Targeting Steady State 45koz Per Quarter

Australasia Region

St Ives at steady state Agnew needs work

• St Ives steady state production 450koz p.a.

A t t 180 K

St Ives at steady state, Agnew needs work

• Agnew to recover to ~180 Koz p.a.


Ch k it l lif t i d i i i• Chunky capital on life extensions and owner mining conversion

• Transition to owner mining at St Ives completed by Q1 2013Australasia Region

140

160

180

200

gProduction (koz)

40

60

80

100

120

0

20

3Q2011 4Q2011 1Q2012 2Q2012St. Ives Agnew


Significant Exploration Potential at St Ives and Agnew

Australasia Region

St Ives – Cave Rocks ExtensionSt Ives – Cave Rocks Extension

Coloured blocks indicateColoured blocks indicate three-year mining plan

D thDepth500m

9m @5.2g/t3m @37.4g/t

5m @52.8g/t

5m @2.4g/t

South@ g


Potential for Two Years Plus Life Extension

Australasia Region

St Ives – InvincibleSt Ives – Invincible

Cave Rocks

NeptuneInvincible

Neptune

Leviathan

Existing ug mines

Existing op mines

Argo


Exciting New Discovery in Major High Grade Corridor

Australasia Region

Agnew – Waroonga ComplexAgnew – Waroonga Complex

Mining Pre-2008

Kim Lode

Main Lode

g

Mining Post 2008

Current Reserves

500m

Fitzroy Target

Bengal Target

5

Hastings Target

Link Target

Fitzroy –Bengal-

Hastings High Grade Shoots

Link target

Reserve Level 2011(1500m bs)


Significant Upside

South America Region

Cerro Corona - Now a 6Moz 16-year fully developed asset

• Production ~340 Koz eq p.a.

• Outstanding cost performance - highest margin operation in the Group - ~50%+

Cerro Corona Now a 6Moz, 16 year, fully developed asset

Outstanding cost performance highest margin operation in the Group 50%


• Maintain high profitability and cash flowCerro Corona

Au eq Production (koz)

• Maintain high profitability and cash flow

60

70

80

90

100

20

30

40

50

60

-

10

20

3Q2011 4Q2011 1Q2012 2Q2012


Production figures stated on a equivalent ounce basis

Advancing Organic Growth Opportunities

South America Region

Cerro Corona - Now a 6Moz 16-year fully developed assetCerro Corona Now a 6Moz, 16 year, fully developed asset

Progress future production growth projects • Sulphide plant extension (Feasibility 2013)

H l h ti f id (F ibilit (2013)


Advancing Organic Growth Opportunities• Heap leach option for oxides (Feasibility (2013)

Growth Portfolio

Chucapaca Project

• Feasibility study Q4 2012

Chucapaca Project

• Submit EIA Q4 2012

• Start value engineering andStart value engineering and

optimisation Q4 2012

• Re-establish exploration in 2013


Growth PortfolioFar Southeast Project - First Gold Fields declared resource a Sou eas ojec s Go d e ds dec a ed esou ce

Completion of Maiden Inferred Mineral Resource

19.8Moz Au & 4.5Mt Cu*19.8Moz Au & 4.5Mt Cu

Equivalent - 43.1Moz AuEq**

Deposit remains open

Resource drilling progressing well focused on:

U di fid Upgrading resource confidence

Testing new high-value positions

FPIC and FTAA processes continues FPIC and FTAA processes continues

Community engagement and support remains the highest priority

* Attributable metal is 11.9Moz Au and 2.7Mt Cu to Lepanto and

PFS timing depends on progress towards community acceptance and FTAA


7.9Moz Au and 1.8Mt Cu to Gold Fields.** Equivalent calculation based on $1,650/oz Au & $8,600t Cu

Growth PortfolioFar Southeast Project - First Gold Fields declared resourcea Sou eas ojec s Go d e ds dec a ed esou ce

Mineral Resource Tonnes Grade Gold Metal Gold Grade

CopperMetal

CopperClassification (Mt) Gold(Au g/t) (Au Moz) Copper

(Cu %)Copper(Cu Mt)

Measured - - - - -IndicatedIndicated - - - - -Inferred 891.7 0.7 19.8 0.5 4.5Total 891.7 0.7 19.8 0.5 4.5

Notes:Notes:1. These Mineral Resources are not Mineral Reserves as an assessment to a minimum of a prefeasibility study is required.2. The Mineral Resource is reported in accordance with the SAMREC Code.3. The Mineral Resource is reported within an optimised underground bulk mining shell that is derived using scoping study mining,

processing and cost parameters, and commodity prices of USD 1,650/oz Au and USD 8,600/t Cu. All Inferred Resource material within the shell is reported.the shell is reported.

4. The Mineral Resource is reported without dilution and ore loss parameters.5. Rounding-off of figures may result in minor computational discrepancies, where this happens, it is not deemed significant.6. Lepanto Consolidated Mining Company holds a 60% interest, while Gold Fields holds a 40% interest in the Far Southeast Project.

Attributable metal is 11.9Moz Au and 2.7Mt Cu to Lepanto and 7.9Moz Au and 1.8Mt Cu to Gold Fields.


Growth Portfolio

Arctic Platinum ProjectArctic Platinum Project• Suhanko North drilling complete

(targeting a 2 to 4Moz 2PGE + Au Resource in

addition to existing Greater Suhanko Resource of

~7Moz 2PGE + Au)

• Initial Platsol amenability tests on Suhanko NorthInitial Platsol amenability tests on Suhanko North

complete

• Platsol risk review completed

• Second integrated pilot plant planned for Q1 2013

• EIA baseline study in progress – Greater Suhanko

Project footprintProject footprint

• Product marketing and strategic positioning of the

project in progress

• Pre-feasibility study due by Q2 2013


Growth Portfolio

Damang Super-pit Project

• Resource 10.1Moz (+116% y-o-y)

Damang Super pit Project

• Reserve 3.4Moz (+63% y-o-y)( y y)

• Focus on returning the operation to a• Focus on returning the operation to a

stable base

• Super-pit project work on slow-burn

while prioritising operationalwhile prioritising operational

performance


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Denver Gold Forum - overendstudio.co.za · 9/11/2012 · …operating costs are increasing whilst...

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