News Release Q4 F2005 and Year F2005 Results
Record Gold Production at Both Ghana and Australia for the Quarter
JOHANNESBURG, South Africa, Aug. 4 /PRNewswire-FirstCall/ -- Gold Fields
Limited (NYSE & JSE: GFI) today announced June 2005 quarter headline earnings
of R135 million compared with R9 million in the March 2005 quarter and R129
million for the June quarter of 2004. In US dollar terms headline earnings for
the June 2005 quarter equated to US$21 million compared with US$2 million in
the March 2005 quarter and US$20 million for the June quarter of 2004. Net
earnings excluding gains and losses on financial instruments and foreign debt
net of cash and exceptional items were R230 million (US$37 million) for the
June 2005 quarter compared to R128 million (US$21 million) in the March
quarter.
June 2005 quarter salient features:
-- Attributable gold production maintained at 1.08 million ounces;
-- Total cash costs R67,773 per kilogram (US$330 per ounce);
-- Operating profit up 22 per cent to R656 million (US$103 million),
inclusive of a 35 per cent increase at the South African operations;
-- Mvela interest rate swap closed-out, resulting in a net cash inflow of
R264 million.
Year ended June 2005 salient features:
-- Attributable gold production increased 2 per cent to 4.22 million
ounces;
-- Total cash costs R66,041 per kilogram (US$331 per ounce), a 2 per cent
improvement on the previous year;
-- Harmony hostile bid successfully defended;
-- Earnings decreased from R768 million (US$111 million) to R180 million
(US$29 million) year on year;
-- Group cash R3.4 billion, providing a strong financial platform for
growth;
-- Offshore organic growth projects successfully completed and delivering
results;
-- Samrec/IASA award for best reporting of Mineral Reserves for the third
year in succession.
Final dividend of 40 SA cents per share, giving a total dividend of 70 SA
cents per share for the year.
Ian Cockerill,
Chief Executive Officer of Gold Fields said:
"Gold Fields has delivered another solid operating performance for the
June quarter 2005.
At the South African operations Driefontein and Beatrix posted good
performances with gold production increasing by 2 per cent and 6 per cent
respectively. Kloof had a disappointing quarter due to lower grades mined.
Costs have remained well controlled and this, together with higher prices
achieved, has contributed to a pleasing 35 per cent improvement in operating
profit from the South African operations.
The international operations have had another excellent quarter increasing
production by 4 per cent, as the benefits of the completed expansion projects
were realised. Tarkwa has increased production by a further 8 per cent quarter
on quarter. The completion of the new mill and the closure of the old mill at
St Ives in the June quarter means that it is now well positioned to produce at
lower costs. Damang and Agnew continue to deliver on the upside with Agnew
increasing production by 23 per cent and Damang increasing production by 8 per
cent.
While financial 2005 has been a particularly challenging one for Gold
Fields given the Harmony hostile bid and the strength of the rand, I am
pleased to note that Gold Fields has remained focused on delivering against
its stated objectives. Group production for the year has increased by 2 per
cent and costs have been well controlled with an improvement of 2 percent year
on year. At the South Africa operations production was marginally higher at
2.82 million ounces and costs were marginally lower despite wage increases at
the commencement of the year that were above inflation. Cost performance has
been excellent with Project 100 delivering 40 per cent above targeted savings
and Project Beyond delivering R103 million of contractual savings on historic
baseline expenditure in its first year. The latter savings will be realised in
costs in the next financial year. Our offshore organic growth projects have
been well executed on time and on budget and are now delivering results. The
group cash balance remains strong at R3.4 billion, providing us with an
excellent platform for future growth.
These results underpin our focus on delivering value to shareholders. Our
growth strategy of adding 1.5 million ounces of offshore production to our
portfolio by 2009 remains unchanged, and we continue to focus on building a
strong internationally diversified portfolio of high quality, long life
assets."
Stock data JSE Securities Exchange South Africa-
(GFI)
Number of shares in issue Range - Quarter ZAR58.15 - ZAR77.90
- at end June 2005 492,294,226 Average Volume -
Quarter 1,600,339 shares/day
- average for the NYSE - (GFI)
quarter 492,294,226 Range - Quarter US$9.40 - US$11.70
Free Float 100% Average Volume -
ADR Ratio 1:1 Quarter 1,522,032 shares/day
Bloomberg/Reuters GFISJ / GFLJ.J
Salient Features
SA Rand
Year ended Quarter
June June June March June
2004 2005 2004 2005 2005
Gold produced* kg 129,329 131,284 32,419 33,845 33,523
Total cash costs R/kg 67,075 66,041 66,218 64,957 67,773
Tons milled/treated 000 46,028 47,880 11,076 12,789 12,225
Revenue R/kg 85,905 84,218 83,731 81,952 88,076
Operating costs R/ton 204 198 213 184 202
Operating profit Rm 2,315 2,286 545 537 656
Operating margin % 20 19 19 18 21
Net earnings Rm 768 180 (186) 11 (14)
SA c.p.s. 158 37 (39) 2 (3)
Headline earnings Rm 763 291 129 9 135
SA c.p.s. 157 59 26 2 27
Net earnings excluding
gains and losses on Rm 587 452 102 128 230
financial instruments
and foreign debt net
of cash and
exceptional items SA c.p.s. 121 92 21 26 47
US Dollars
Quarter Year ended
June March June June June
2005 2005 2004 2005 2004
Gold produced* (000) oz 1,078 1,088 1,042 4,219 4,158
Total cash costs $/oz 330 340 312 331 302
Tons milled/treated 000 12,225 12,789 11,076 47,880 46,028
Revenue $/oz 429 428 395 422 387
Operating costs $/ton 32 31 32 32 30
Operating profit $m 103 90 83 368 336
Operating margin % 21 18 19 19 20
Net earnings $m (3) 2 (25) 29 111
US c.p.s. - - (5) 6 23
Headline earnings $m 21 2 20 47 111
US c.p.s. 5 - 4 10 23
Net earnings excluding
gains and losses on $m 37 21 16 73 85
financial instruments
and foreign debt net
of cash and
exceptional items US c.p.s. 8 4 4 15 18
* Attributable - All companies wholly owned except for Ghana (71.1%).
Health and Safety
We regret the 10 fatalities which occurred during the June quarter. As
previously reported, a seismic event at Driefontein 2 shaft claimed five lives
on 10 May 2005. The fatal injury frequency rate regressed as a result of the
above from 0.14 to 0.28 for the June quarter. This quarter has seen an
increase in seismic events at the West Wits operations, Driefontein and Kloof,
which has resulted in an increase in fall of ground accidents. As a result the
lost day injury frequency rate regressed from 12.2 to 14.1, and the serious
injury frequency rate regressed from 5.8 to 7.0 quarter on quarter.
Beatrix North and South achieved 3 million underground fatality free
shifts. Beatrix North shaft recorded 1.9 million, Driefontein 8 shaft 1.4
million and Kloof 8 shaft 0.9 million fatality free shifts.
The international operations continued their good safety performance, with
all four operations achieving year on year reductions in lost time injuries.
Financial Review
Quarter ended 30 June 2005 compared with quarter ended 31 March 2005
Revenue
Attributable gold production decreased by 1 per cent to 1,078,000 ounces
in the June 2005 quarter, compared with 1,088,000 ounces achieved in the March
2005 quarter. Production at the South African operations was 687,000 ounces,
which was 3 per cent lower than the previous quarter. Attributable production
at the international operations increased 4 per cent to 391,000 ounces. At the
South African operations, Driefontein and Beatrix increased production but
this was more than offset by the poor performance of Kloof, resulting from the
lower grades mined during the quarter. The 4 per cent increase at the
international operations was due to increased output at all the operations
except St Ives, which was lower as the old and new mill operated in parallel
for the whole of the previous quarter, with the old mill decommissioned at the
end of the previous quarter.
The US dollar gold price was virtually unchanged at US$429 per ounce
compared with the March quarter. However, the weakening of the rand against
the US dollar, from an average of R5.95 to R6.39, resulted in the rand gold
price increasing 7 per cent, from R81,952 per kilogram in the March quarter to
R88,076 per kilogram in the June quarter.
The decrease in production was more than offset by the increase in the
rand gold price achieved resulting in revenue increasing from R2,950 million
(US$495 million) to R3,156 million (US$492 million) this quarter.
Operating costs
Operating costs for the June quarter, at R2,474 million (US$386 million),
increased by 5 per cent when compared with the March quarter's R2,351 million
(US$395 million).
Costs at the South African operations increased by R11 million to R1,660
million (US$258 million), which was less than 1 per cent higher than operating
costs in the previous quarter of R1,649 million (US$277 million) evidencing
continued good cost control.
Costs at the international operations, including gold-in-process changes,
were R840 million (US$132 million), 10 per cent higher than the R764 million
(US$128 million) reported in the March quarter. The increase in costs at the
international operations were mainly at Tarkwa due to increased costs
associated with the owner mining maintenance contract and increases in the
cost of consumables, together with the effect of translating costs at a weaker
rand. The 7 per cent weaker rand compared with the US dollar as detailed above
and the 6 per cent weakening of the rand against the Australian dollar, from
R4.62 to R4.91, resulted in an increase in costs of R56 million.
Operating profit margin
The net effect of the movements in revenue and costs, after taking into
account gold-in-process changes, was an operating profit of R656 million
(US$103 million). This is 22 per cent higher than the R537 million (US$90
million) achieved in the March quarter. The Group margin increased from 18 per
cent last quarter to 21 per cent in the June quarter, while the margin at the
South African operations increased from 9 per cent to 12 per cent. The margin
at the international operations increased to 34 per cent compared with 33 per
cent in the previous quarter.
Amortisation
Amortisation of R391 million (US$61 million) for the June quarter
increased 5 per cent when compared with the March quarter's R371 million
(US$62 million). This increase arose largely at the Australian operations due
to an increase in mining volumes, and the weakening of the rand against the US
dollar. Amortisation at the South African operations was constant at R168
million.
Other income
Net interest and investment income after taking into account interest paid
decreased from R34 million (US$6 million) in the March quarter to R15 million
(US$2 million) for the June quarter. This decrease in net interest is due to
gains on the Mvela interest rate swap of R33 million included in earnings in
the previous quarter compared with R23 million included this quarter, with the
balance of R9 million being our 33 per cent share of losses incurred at Rand
Refinery, which is equity accounted.
The gain on financial instruments of R100 million (US$16 million) compares
with a loss of R55 million (US$8 million) in the March quarter and represents
largely realised gains on these instruments. Included in the quarter is a
realised gain on the Mvela interest rate swap of R91 million (US$14 million),
a gain on the Tarkwa rand/US dollar forward cover of R13 million (US$2
million) and a gain on diesel call options in Ghana of R2 million, partially
offset by a R6 million (US$1 million) loss on the Australian dollar/US dollar
call options.
The interest rate swap was established in relation to the loan from Mvela
Gold and converted a fixed interest rate exposure to a floating rate. This
instrument was established as short-term rates were significantly lower than
long-term rates and the resultant upward sloping yield curve was expected to
prevail for some time. This strategy yielded positive results producing net
cash inflows on closure of R264 million (US$41 million) for the quarter and
R317 million (US$51 million) of positive cash flow from inception of the swap.
More details on these financial instruments are given on page 15 of this
report.
Exploration expenditure
Exploration expenditure increased from R43 million (US$7 million) to R61
million (US$10 million) in the June quarter - please refer the Exploration and
Corporate Development section for more detail.
Exceptional Items
The exceptional loss this quarter of R359 million (US$58 million) includes
the following impairments:
-- Beatrix North and South sections were impaired by R124 million (US$20
million) during the quarter, with the after tax value amounting to R100
million (US$16 million). The impairment was due to the effect of
restructuring at Beatrix South which is the old 2 shaft section of the
mine. The impairment was based on a calculated net present value, using
a gold price of R92,000 per kilogram at a real discount rate of 5 per
cent before tax and applying a 1.5 times multiple i.e. a one and a half
times multiple of market price to net present value. The carrying value
of the Beatrix North and South sections after the write-down is R1,967
million;
-- At Driefontein an impairment of R12 million (US$2 million), equal to R7
million (US$1 million) after taxation due to the closure of 10 shaft;
-- At Kloof an impairment of R11 million (US$2 million), equal to R7
million (US$1 million) after taxation due to the closure of no. 3
metallurgical plant;
-- At St Ives the write-off of the old mill, amounting to R61 million
(A$13 million); and
-- At Living Gold (the rose project at Driefontein) a write down of R52
million (US$8 million), which had no tax effect.
Also included in exceptional items are the final cost and provisions for
defending the Harmony hostile bid of R145 million (US$23 million), bringing
the total cost to R316 million (US$51 million). Added to this is a write-off
of critical spares relating to the old mill at St Ives of R17 million (A$4
million). The above were partially offset by gains on the sale of exploration
rights in Chile of R47 million (US$8 million) and the profit on the sale of
shares in African Eagle Resources Limited of R10 million (US$2 million).
The exceptional loss in the March quarter of R86 million (US$14 million)
was mainly related to costs incurred in defending the Harmony hostile bid.
Taxation
A taxation credit of R57 million (US$9 million) in the March quarter
compares with a credit of R62 million (US$10 million) in the June quarter. The
main reason for the credit this quarter is a deferred tax credit of A$36
million (R167 million) in Australia. This credit was due to a step up in tax
values of assets in Australia resulting from the consolidation of the
Australian operations for tax purposes as from 1 July 2003. Added to this is
the tax credit on the Beatrix impairment, which amounted to R24 million. These
were partially offset by the increase in taxable income due to the increased
profits for the quarter.
The credit last quarter was mainly deferred tax credits of R65 million
(US$11 million) at Tarkwa and R6 million (US$1 million) at Damang as a result
of a decrease in the tax rate in Ghana from 32.5 per cent to 28 per cent.
Earnings
After accounting for minority interests, a loss of R14 million (US$3
million) was incurred or negative 3 SA cents per share (US$0.00 per share),
compared with earnings of R11 million (US$2 million) or 2 SA cents per share
(US$0.00 per share) in the previous quarter.
Headline earnings i.e. earnings less the after tax effect of asset sales,
impairments and the sale of investments, was R135 million (US$21 million) or
27 SA cents per share (US$0.05 per share) compared with R9 million (US$2
million) or 2 SA cents per share (US$0.00 per share) last quarter.
Earnings, excluding exceptional items as well as net gains and losses on
financial instruments and foreign debt net of cash amounted to R230 million
(US$37 million) or 47 SA cents per share (US$0.08 per share) compared with
R128 million (US$21 million) or 26 SA cents per share (US$0.04 per share)
reported last quarter.
Cash flow
Cash flow from operating activities for the quarter was R708 million
(US$110 million), which was 9 per cent above the operating cash flow in the
March quarter of R653 million (US$106 million). This is due to the increase in
operating profit and the closure of the Mvela interest rate swap, which
resulted in a net inflow of R264 million (US$41 million), offset by the cost
of the Harmony defence and the increase in exploration and sundry costs.
No dividends other than those paid to Ghanaian minorities of R48 million
(US$7 million) were paid during the quarter. Last quarter R147 million (US$25
million) was paid in dividends.
Capital expenditure amounted to R442 million (US$68 million) compared with
R440 million (US$75 million) in the March quarter. Expenditure at the South
African operations was R24 million higher at R175 million (US$27 million). A
significant portion of this expenditure was directed at the major projects,
with R36 million at 1 tertiary and 5 shaft at Driefontein, R10 million at
Kloof 4 shaft and R28 million at Beatrix 3 shaft. The Australian operations
incurred capital expenditure of R122 million (A$24 million) compared with R151
million (A$32 million) in the March quarter. Expenditure at St Ives included
development costs at Argo and Leviathan underground, and Mars open pit. At
Agnew, the majority of the expenditure was spent on development, exploration
and upgrading of the metallurgical plant. At the Ghanaian operations, capital
expenditure amounted to R117 million (US$18 million) mainly on the new heap
leach projects at the North and South sections. This compares with R77 million
(US$13 million) in the previous quarter. Major projects are still forecast to
be in line with approved votes. Proceeds on disposal of various Group wide
mining assets amounted to R24 million (US$4 million) for the quarter.
Purchase of investments amounted to R17 million (US$3 million). R7 million
(US$1 million) of this included equipment financing at St Ives, with the
balance being the purchase of additional shares in African Eagle Resources
amounting to R10 million. Subsequently, the majority of our holding (8.5
million shares) held in African Eagle Resources was sold and proceeds amounted
to R19 million (US$3 million). The balance of the proceeds on investments sold
amounted to R47 million (US$7 million) and arose from the sale of the Angelina
project in Chile.
Net cash inflow for the quarter was R257 million (US$42 million). After
accounting for a positive translation adjustment for the quarter of R188
million (US$13 million negative) the cash balance at the end of the June
quarter was R3,375 million (US$504 million), which has increased from R2,931
million (US$474 million) at the end of March 2005.
Detailed and Operational Review
Group overview
Attributable gold production for the June 2005 quarter decreased
marginally to 1,078,000 ounces when compared with the March quarter.
Production from the South African operations at 687,000 ounces accounted for
64 per cent of the Group's total attributable production, compared with
711,000 ounces or 65 per cent last quarter.
At the South African operations, gold production decreased 3 per cent
compared with the previous quarter. At Kloof, the decrease of 38,900 ounces
was mainly due to a reduction of recovered yield during the quarter. The
decline at Kloof was partially offset by an increase at Driefontein of 4,400
ounces due to increased underground volumes, and an increase at Beatrix of
9,700 ounces as a result of the redeployment of crews to more productive
areas, particularly 4 shaft. Operating profit at the South African operations
increased from R166 million (US$28 million) to R224 million (US$35 million),
mainly as a consequence of the higher gold price, allied with continued good
cost control.
Production from the Australian operations was 1 per cent higher quarter on
quarter at 208,200 ounces. The increased production from the Songvang open pit
at Agnew together with an excellent performance from Kim underground, offset
the decrease at St Ives, which benefited from running both the old and new
mills last quarter. Operating profit from the Australian operations increased
quarter on quarter in rand terms from R120 million (A$26 million, US$20
million) to R159 million (A$33 million, US$25 million), primarily as a result
of the increased production at Agnew. The Ghanaian operations showed an 8 per
cent increase in attributable gold production to 183,000 ounces. Tarkwa and
Damang both increased gold production by approximately 8 per cent. At Tarkwa
the increase was due to slightly increased yield and volume, and at Damang the
increase was due to increased feed grade. Ghana contributed operating profit
of R274 million (US$43 million), a 9 per cent increase when compared with the
March quarter.
The international operations contributed R433 million (US$68 million) or
66 per cent of the total operating profit of R656 million (US$103 million).
This compares with R371 million (US$62 million) or 69 per cent of the total
operating profit of R537 million (US$90 million) last quarter.
Group ore processed decreased from 12.79 million tons to 12.23 million
tons, while overall yields increased 4 per cent to 2.9 grams per ton. Total
cash costs in rand terms increased 4 per cent to R67,773 per kilogram,
compared with R64,957 per kilogram in the March quarter. In US dollar terms,
total cash costs decreased 3 per cent to US$330 per ounce, compared with
US$340 per ounce last quarter, due to the weaker rand. Operating cost per ton
at R202 was 10 per cent above last quarter due to the decrease in surface tons
across the Group. At the South African operations surface tons reduced at all
the operations, which are in the process of replacing surface tonnage with
higher grade underground tons. At the international operations the decrease in
surface tons was mainly at St Ives due to the decommissioning of the old mill.
South African operations
During the September 2003 quarter management took the view that the South
African currency would remain stronger for longer. As a result it was decided
to reposition the South African operations. As previously reported this was
presented as reverting from the "Wal-Mart" strategy (more volume at lower
grade) to the "SAKS 5th Avenue" strategy (less volume at grades more in line
with Life of Mine ore reserve values).
To support this switch in strategy in September 2003, management
introduced an initiative called Project 500, which, in turn, was split into
two sub-projects called: Project 400 and Project 100.
Project 400 was aimed at optimising revenue such that an additional R400
million would be generated per annum on an ongoing basis. This was to be
achieved by eliminating non-contributing production and at the same time
reducing low grade surface outputs with higher margin underground material.
This strategy has proven successful and Beatrix returned a credible operating
profit for the first time this year as surface material was eliminated
completely from the mix. At the South African operations this strategy has led
to an increase in underground yields year on year from 7.1 to 7.4 grams per
ton at similar mining volumes, while surface tonnage in South Africa has been
managed down to 4.4 million tons, a decrease of over 20 per cent. The life of
mine grades are given in the table below.
Quarter ended Jun Sep Dec Mar Jun
2004 2004 2004 2005 2005
Driefontein:
Life of mine head grade as per
the 2003 and 2004 annual report 8.7 8.1 8.1 8.1 8.1
Life of mine head grade adjusted
for estimated metallurgical
recoveries 8.4 7.8 7.8 7.8 7.8
Driefontein (underground yields
achieved) 8.5 8.1 8.1 8.9 8.3
Kloof:
Life of mine head grade as per
the 2003 and 2004 annual report 9.8 10.5 10.5 10.5 10.5
Life of mine head grade adjusted
for estimated metallurgical
recoveries 9.5 10.2 10.2 10.2 10.2
Kloof (underground yields
achieved) 9.5 9.1 9.2 9.7 8.3
Beatrix:
Life of mine head grade as
per the 2003 and 2004 annual
report 5.1 5.5 5.5 5.5 5.5
Life of mine head grade
adjusted for estimated
metallurgical recoveries 4.9 5.3 5.3 5.3 5.3
Beatrix (underground yields
achieved) 4.7 4.4 4.7 5.2 5.6
Project 100 and Project 100+
Following the successful completion of Project 100 during December 2004,
Gold Fields established a new project, Project 100+, utilising the
capabilities and skills developed during Project 100. Project 100+ is focused
on achieving ongoing and sustainable cost savings across the South African
operations. It is an evergreen project management structure that maintains a
pipeline of value-adding projects, ensuring their progress from concept stage
to final realisation. At the end of June 2005, Project 100+ had identified
more than fifteen projects with potential savings of R200 million per annum.
Many of the projects are in the design phase with benefit realisation expected
during the 2006 financial period and beyond. Three projects, which are
expected to deliver annual savings from financial 2006 of R30 million, are
complete.
Project Beyond, initiated in early 2004, is a procurement initiative
targeting annual savings of between R200 million and R300 million per annum
over three years, i.e. around 10 per cent of the amount expended on materials,
services and capital expenditure at the South African operations. During the
past financial year, the project targeted to deliver R100 million in
contractual savings. Three distinct blocks of strategic sourcing initiatives
were completed, focusing on overall procurement expenditure of almost R900
million, with roughly R200 million of spend still in progress. The project
delivered R103 million of contract savings (12.3 per cent) on historic
baseline expenditure. Savings were achieved on commodities such as grinding
media, foodstuffs, mill liners, ore transport, roof and timber support,
bearings, engineering repairs, and lubricants. Savings are realised as new
contracts come into force and are being utilised by the mining operations. As
a consequence these savings will largely be realised in the 2006 financial
year. Gold Fields will continue with procurement savings initiatives in
support of its cost leadership strategy and is targeting a further R75 million
to R100 million savings per annum at the local operations during the 2006
financial period. Relationships with suppliers have not been compromised as a
consequence of these initiatives.
It is noteworthy that, despite the achievement of major contractual
savings in procurement, expenditure with BEE companies increased to over 28
per cent during the quarter. Further, Gold Fields benchmarked its BEE
procurement outcomes with those of other South African major mining groups and
confirmed its leading position.
The scope of Project Beyond is being extended to include the Australian
and Ghanaian operations, as well as the Peruvian Cerro Corona project.
Preliminary indications are that savings of more than US$20 million per annum
may be achieved.
Driefontein
June 2005 March 2005
Gold produced - 000'ozs 297.9 293.5
Yield - underground - g/t 8.3 8.9
- combined - g/t 5.3 5.2
Total cash costs - R/kg 64,548 64,520
- US$/oz 314 337
Driefontein posted another encouraging set of results, with an increase in
gold production from 293,500 ounces to 297,900 ounces quarter on quarter. The
underground grade reduced from 8.9 grams to 8.3 grams per ton for the quarter
as the higher gold price allowed more mining from some of the marginal areas
on the western boundary of the operations. The combined yield from surface and
underground increased from 5.2 grams per ton in the March quarter to 5.3 grams
per ton due to improved underground volumes and mining mix this quarter.
Underground tonnage increased 7 per cent from 914,000 to 978,000 tons, while
surface mineralised waste tonnage reduced from 846,000 tons to 765,000 tons
quarter on quarter.
The increase in underground ore tonnage had a 2 per cent impact on
operating costs, which increased from R614 million (US$103 million) in the
March quarter to R625 million (US$97 million) in the June quarter. Total cash
costs remained flat in rand terms at R64,548 per kilogram. In US dollar terms,
total cash costs decreased by 7 per cent from US$337 per ounce to US$314 per
ounce as a result of the weaker rand.
Operating profit increased by 41 per cent from R133 million (US$22
million) in the March quarter to R188 million (US$30 million) in the June
quarter, as a result of the increase in the rand gold price and the increase
in gold output. Capital expenditure increased to R75 million (US$12 million)
for the June quarter from R37 million (US$6 million) in the March quarter, in
line with our policy to defer capital costs in a low rand gold price
environment as was the case in the March quarter.
Gold forecast for the September quarter is slightly lower than in the June
quarter. This is due to a further reduction in the surface grade and the last
of the gold clean-up from No 1 plant. This could be further influenced by the
outcome of the wage negotiations and calls from Cosatu for stay-aways. The
cost profile for the September quarter will be affected by the wage increases
implemented as from 1 July 2005.
Kloof
June 2005 March 2005
Gold produced - 000'ozs 225.5 264.4
Yield - underground - g/t 8.3 9.7
- combined - g/t 7.8 6.7
Total cash costs - R/kg 85,445 73,915
- US$/oz 416 386
Gold production at Kloof decreased 15 per cent from 264,400 ounces in the
March quarter to 225,500 ounces in the June quarter. This was largely due to a
16 per cent decrease in broken grade attributable to high grade panels lost
due to seismicity in the 3 shaft pillar and the 8 shaft complex. Number 3, 4
and 7 shafts experienced grade drop-offs due to more slope mining during the
quarter and a concomitant reduction in terrace mining. Slope mining is
generally associated with lower grades. The stopping of low grade surface
stockpile operations at number 3 metallurgical plant resulted in a decrease of
4,800 ounces quarter on quarter.
Despite the public holidays and industrial action underground tonnage
increased from 826,000 tons in the March quarter to 832,000 tons in the June
quarter. Unfortunately underground yields declined from 9.7 to 8.3 grams per
ton as a result of the issues previously mentioned. Surface tonnage decreased
significantly due to the closure of number 3 metallurgical plant. Further
surface treatment will depend on the economics of the low grade surface
stockpile.
Despite the increase in underground tons milled for the quarter, operating
costs at R624 million (US$97 million) for the quarter decreased by 1 per cent
compared with the previous quarter's cost of R634 million (US$107 million).
This resulted in an underground cost of R741 per ton, which was similar to the
previous quarter. However, total cash costs increased by 16 per cent to
R85,445 per kilogram (US$416 per ounce) compared with the previous quarter of
R73,915 per kilogram (US$386 per ounce) in line with the lower gold
production.
Operating profit decreased from R41 million (US$7 million) to a loss of R4
million (US$1 million) in the June quarter due to the decrease in gold
production. Capital expenditure decreased by 21 per cent to R48 million (US$7
million) for the quarter mainly due to lower expenditure at 4 sub-vertical
shaft.
Initiatives implemented to increase the mining grade are showing positive
results and gold production for the September quarter is forecast to improve
before returning to more historic levels in the December quarter. As a result
cash costs should improve but will be dependent on the outcome of the wage
negotiations.
Beatrix
June 2005 March 2005
Gold produced - 000'ozs 163.2 153.5
Yield - underground - g/t 5.6 5.2
- combined - g/t 5.6 4.8
Total cash costs - R/kg 78,010 81,064
- US$/oz 380 424
Gold production at Beatrix increased by 6 per cent from 153,500 ounces in
the March quarter to 163,200 ounces in the June quarter. Underground ore
volumes increased slightly from 897,000 tons in the March quarter to 910,000
tons in the June quarter, mainly due to increased sweepings during the
quarter. The overall yield increased by 17 per cent quarter on quarter from
4.8 to 5.6 grams per ton. This increase in yield was due to improved quality
mining at 1, 2 and 3 shafts (North and South sections) and more volume from
the higher grade zone 5 area at 4 shaft (West section). Also, no surface rock
dump material was milled in the June quarter due to the decision to stop
treatment of low grade surface dumps. Increased sweepings volumes and the
introduction of new mining cycles to facilitate dry sweepings resulted in
increased recovery rates. Continued focus on quality issues such as reduced
water usage, stope width control and increasing sweepings volumes from old
gold and backlog areas continue. The logistics project at West shaft made
further progress during the June quarter with only one level still to be
completed. However, ground control problems are being experienced at 20 level.
Operating costs increased 2 per cent to R411 million (US$64 million) in
line with the increase in underground volumes. However, total cash costs
decreased by 4 per cent to R78,010 per kilogram (US$380 per ounce) from
R81,064 per kilogram (US$424 per ounce) in the March quarter due to the
increased production and the continued strict control on overall costs. The
higher rand gold price, together with the above mentioned factors, resulted in
Beatrix recording an operating profit of R39 million (US$6 million) in the
June quarter, compared with a loss of R8 million (US$1 million) last quarter.
Capital expenditure was virtually unchanged quarter on quarter at R52
million (US$8 million). The majority of this expenditure was spent on
underground development to increase flexibility and hydropower at 3 shaft.
Gold production for the September quarter should be lower than the June
quarter as haulage access problems at 20 level, 4 shaft are being encountered.
Smectite swelling has resulted in the closure of the haulage preventing access
to the stoping horizon. The actions that have been put in place to open up the
haulage will restrict mining from these stoping areas for approximately eight
weeks. The threat of stay-aways and the outcome of wage negotiations could
also affect production levels and costs in the September quarter.
International operations
Ghana
Tarkwa
June 2005 March 2005
Gold produced - 000'ozs 199.1 185.0
Yield - Heap Leach - g/t 1.0 0.9
Yield - CIL Plant - g/t 1.7 1.6
Total cash costs - US$/oz 240 226
Tarkwa's gold production increased by 8 per cent from 185,000 ounces in
the March quarter to 199,100 ounces in the June quarter, slightly above
forecast due to out performance from the heap leach plant. The heap leach
operation contributed 135,700 ounces, up 10,000 ounces from the previous
quarter and the CIL plant contributed some 63,400 ounces, an increase of 4,100
ounces on the previous quarter, reflecting the second full quarter of CIL
plant production.
A total of 5.4 million tons of ore was processed during the quarter. The
CIL plant processed 1.2 million tons at a yield of 1.72 grams per ton, while
ore stacked on the leach pads was 4.2 million tons at a head grade of 1.29
grams per ton, compared with 1.16 grams per ton in the March quarter. The
increase in grade was in line with expectation; with March's grade being below
expectation due to mining constraints in the higher grade pits. The increase
in heap leach gold production versus the previous quarter reflects the larger
amount of recoverable gold placed on the heaps during the quarter due to the
increase in grade, the slight increase of 154,000 tons placed on the heaps and
metallurgical adjustments undertaken earlier in the year. Gold-in-process
release during the period at 6,000 ounces was similar to the March quarter.
The tons mined increased by 0.75 million tons for the quarter to 21.9
million tons breaking the previous quarter's record, reflecting ongoing
optimisation of the new mining fleet. The stripping ratio decreased from 3.3
to 3.2 but is still being kept above the planned 2.8 for the year in order to
increase mining flexibility. Mining costs were US$0.81 per ton for the quarter
compared with US$0.73 per ton last quarter reflecting the increase in the
maintenance cost of the fleet as stipulated in the MARC (Maintenance and
Repair Contracts) due to the number of hours the units have been operating,
and the increasing cost of consumables such as diesel. A diesel hedge has been
put in place at Tarkwa and Damang to cap the diesel fuel cost for the next
twelve months and provides a cap on global diesel prices beyond US$0.45/litre,
which approximates a Brent crude oil price of around US$56 per barrel (bbl). A
US$10/bbl increase in global oil prices would result in a US$4 per ounce
increase in total cash costs at the Ghanaian operations.
Operating costs at US$48 million (R306 million), including gold-in-process
adjustments, were US$6 million higher than the previous quarter, reflecting
the increased mining and process volumes, increases in the price of
consumables such as cyanide, diesel, crusher and mill steel liners and the
maintenance costs of the fleet. Operating cost per ton treated was US$8.73 per
ton as against US$7.90 per ton in the March quarter, reflecting these
increased costs. Total cash costs at US$240 per ounce compare with the March
quarter's US$226 per ounce. This level reflects the increase in commodity
prices and the fleet maintenance cost.
Operating profit at US$37 million (R239 million) was the same as in the
previous quarter, with the increased gold production offsetting the increase
in costs. The average gold price received was US$428 per ounce, US$2 per ounce
below the previous quarter. Net earnings for the quarter decreased from US$28
million (R171 million) to US$18 million (R116 million) as a result of the one-
off US$11 million deferred tax release in the March quarter, which resulted
from a reduction in the Ghanaian company tax rate.
The surge in global commodity prices and its impact on input costs remains
a concern at this operation particularly. The increasing productivity of the
new mining fleet has been key in offsetting many of the increased diesel, tyre
and steel consumable price impacts to date. Initiatives that have been
reported previously continue to be expanded to seek both supply chain and
consumption optimisation.
Capital expenditure increased from US$10 million (R57 million) in the
previous quarter to US$16 million (R101 million) in the June quarter. The
majority of expenditure was spent on the construction of heap leach pads at
both the North and South facilities.
Gold production and unit costs for the September quarter are expected to
be similar to that of the June quarter, subject to gold-in-process movements
which remain difficult to predict.
Damang
June 2005 March 2005
Gold produced - 000'ozs 58.2 53.9
Yield - g/t 1.4 1.3
Total cash costs - US$/oz 340 346
Gold production increased from 53,900 ounces during the March quarter to
58,200 ounces in the June quarter. This is directly attributable to the
increase in feed grade to the plant from 1.44 grams per ton in the previous
quarter to 1.54 grams per ton this quarter. The increase in grade resulted
from the increase in ore mining in the new pits against treatment of lower
grade stockpiles. Mill throughput for the quarter was steady at 1,262,000 tons
compared with 1,257,000 in the March quarter.
Total tons mined increased from 3.12 million tons to 3.81 million tons as
planned, at a strip ratio of 3.44. Mining operations continued in the Amoanda
and Juno 2SE pits, with ore tonnages mined increasing from 459,000 tons in the
previous quarter to 858,000 tons in the June quarter, at an average grade of
1.63 grams per ton compared with 1.43 grams per ton in March. These pits are
the main source of oxide feed to the plant, although towards the end of the
quarter the Juno 2SE pit was moving into the deeper fresh ore zone. The
permitting process for the Tomento pit has been completed and this pit will
provide an additional source of oxide feed in the new quarter.
Operating costs, including gold-in-process adjustments, increased to US$20
million (R125 million) from US$18 [L1] million (R109 million) in the March
quarter reflecting higher tonnages mined, an increase in contract mining costs
and haulage costs associated with the increased distance between the Amoanda
pit and the plant. Cost per ton milled increased from US$13.27 to US$15.52.
Total cash costs reduced slightly to US$340 per ounce. A diesel hedge has been
put in place to cap the diesel fuel cost for the next twelve months.
Operating profit increased marginally to US$5 million (from R27 million to
R35 million), the increased revenue being offset largely by the increase in
operating costs. The average gold price received increased quarter on quarter
from US$425 per ounce to US$431 per ounce.
Capital expenditure incurred during the quarter amounted to US$3 million
(R17 million). The majority of this expenditure was incurred in the raising of
the tailings dam, the resettlement and compensation associated with the
establishment of the Tomento pit, the Damang pit cutback feasibility study and
the Abosso Deeps feasibility study.
Gold production and costs are expected to be similar for the September
quarter.
Australia
St Ives
June 2005 March 2005
Gold produced - 000'ozs 143.1 154.1
Yield - Heap Leach - g/t 0.5 0.6
Yield - Milling - g/t 3.5 3.4
Total cash costs - A$/oz 450 451
- US$/oz 348 350
Gold production for the quarter was 143,100 ounces, 7 per cent down from
last quarter's 154,100 ounces. This decrease largely reflects the closure of
the old mill before commencement of the quarter. The Lefroy mill ramped up to
full production and achieved design throughput for the quarter, producing
121,000 ounces, though a breakdown in the gold elution system at quarter end
actually resulted in a further 7,000 ounces being accumulated in this system.
The contribution from the heap leach operation was similar to the March
quarter at 10,000 ounces. Clean-up around the old mill accounted for the
remaining gold production.
Total tons processed during the quarter amounted to 1.70 million, a
decrease of 16 per cent from the March quarter due to the closure of the old
mill. During the March quarter the old mill and the new Lefroy mill ran
concurrently during the commissioning of the latter. For the quarter,
1,101,000 tons were processed through the Lefroy mill, compared with 840,000
tons last quarter. Heap leach operations treated 597,000 tons of ore, up 7 per
cent from last quarter.
The average head grade processed at 2.9 grams per ton was marginally above
the March quarter's 2.7 grams per ton. Yield at the heap leach operation was
0.5 grams per ton compared with 0.6 grams per ton last quarter, while the
yield at the Lefroy mill at 3.5 grams per ton was higher than the 2.7 grams
per ton in the previous quarter. The initial stages of commissioning of Lefroy
in the March quarter involved processing of low grade ores.
While the Lefroy mill achieved design capacity during the quarter,
operations have been interrupted and recovery affected by some shortcomings in
the plant piping and materials handling systems. These problems are typical of
a new plant and rectification of these issues was largely completed during the
quarter, with benefits seen towards the end of the period. Continued emphasis
on the gravity and carbon circuits in the September quarter is expected to
result in additional recovery improvements.
Mining operations produced 1.64 million tons of ore during the quarter as
planned, an increase of 27 per cent on the previous quarter's 1.29 million
tons. Open pit head grade improved from 1.51 to 1.64 grams per ton quarter on
quarter as planned. Waste movement was reduced and will reduce somewhat
further in the September quarter, as the target ore zones become exposed,
particularly in the Mars open pit. During the quarter, 4.5 million tons of
open pit ore and waste were mined at an average strip ratio of 3.1 (March
quarter: 5.6 million tons at a strip ratio of 6.1).
Overall the underground mining operations performed to expectation,
producing 538,000 tons of ore at 5.6 grams per ton (March 501,000 tons at 5.5
grams per ton). A reduction in ore volumes from Junction, at which mining was
completed in May, was offset by increased output from Argo and the Leviathan
complex. Leviathan continued to exceed expectations, while improvements at
Argo resulted in its best quarter to date.
Operating costs, including gold-in-process adjustments, decreased from
A$72 million (R331 million) to A$67 million (R327 million), reflecting the
lower volumes milled but also improvements in unit costs, particularly on the
underground mines. Total cash costs at A$450 per ounce (US$348 per ounce) were
unchanged quarter on quarter and remained considerably beyond our target of
below A$400 per ounce. This was primarily due to the milling of high cost
stockpiles (GIP charges contributed A$31 per ounce), some costs associated
with the ramp up of the Lefroy mill and a further A$24 per ounce due to the
write-down of stockpile carrying values and the costs associated with selling
the old mill. By quarter end underlying cost performance of the mining
operations were on near term target.
Operating profit at A$13 million (R65 million) in the June quarter
equalled that of the March quarter despite the decrease in gold production.
This was due to the closure of the high-cost old mill at the end of last
quarter, plus an improved performance from the underground mines, and despite
the additional charges referred to above.
Capital expenditure for the June quarter amounted to A$16 million (R86
million) compared with A$15 million (R72 million) in the March quarter. This
increase was driven by an increase in development mainly at Leviathan and the
final costs for the Lefroy mill.
As a result of a slow start up in July, production for the September
quarter is expected to be slightly lower than the June quarter. Costs are
expected to trend downwards over the September quarter as the operation
reaches steady state.
Agnew
June 2005 March 2005
Gold produced - 000'ozs 65.1 52.8
Yield - g/t 6.4 5.6
Total cash costs - A$/oz 265 300
- US$/oz 205 233
Gold produced at Agnew increased from 52,800 ounces in the March quarter
to 65,100 ounces in the June quarter, well above forecast. This was primarily
due to a 7 per cent increase in mill throughput to 315,000 tons and an 18 per
cent increase in head grade due to an excellent performance from the Kim
underground mine.
Underground mining from the Waroonga underground complex (Kim and Main
Lodes) increased 26 per cent to 122,000 tons of ore resulting in gold
production increasing to 52,000 ounces, against 42,000 ounces in the March
quarter, reflecting ongoing increases in productivity in the Kim mine and the
ramp up of the new Main Zone mine. Limited stope production at Kim South,
referred to in the March report, indicated its similarity to the main Kim ore
body.
Open pit mining at Songvang continued at the planned rate. Although this
phase of mining is predominantly waste stripping, ore production from this
mine now exceeds mill capacity and of the 237,000 tons of ore mined only
198,000 tons was treated, accounting for 13,000 ounces of the quarter's gold
production. Ore stockpiling is now underway at the Agnew mill.
Operating costs, including gold-in-process adjustments, increased in line
with the increase in production from A$16 million (R74 million) in the March
quarter to A$17 million (R82 million) in the June quarter. Total cash costs
decreased from A$300 per ounce (US$233 per ounce) in the March quarter to
A$265 per ounce (US$205 per ounce) in the June quarter. This decrease was a
result of the increase in gold production, from the increased tons and grade
mined at the Waroonga complex.
Agnew's operating profit increased from A$13 million (R60 million) to A$20
million (R94 million) in the June quarter, reflecting the increase in mining
activity. Capital expenditure decreased from A$17 million (R80 million) to A$7
million (R36 million) in the June quarter. This decrease is predominantly a
result of decreased waste stripping at the Songvang open pit.
Gold production for the September quarter is expected to be lower than the
June quarter due to lower grade ore to the mill, as projection of the Kim out
performance is not warranted. This also reflects a planned decrease in the
Waroonga underground ore grade as stoping commences in the lower-grade Main
Lode. Cash costs are expected to increase with the drop in mill feed grade.
Year ended 30 June 2005 compared with year ended 30 June 2004
Safety performance
Financial 2005 saw an improvement in all safety statistics when compared
with the previous year. The fatal injury frequency rate (FIFR) improved 33 per
cent from 0.27 to 0.18 per million hours worked, a record for Gold Fields. The
days lost frequency rate improved 8 per cent from 384 to 353 per million hours
worked, while the serious injury and the lost day injury frequency rates
improved 6 and 9 per cent respectively. Beatrix and the international
operations achieved the Canadian benchmark of 0.10 FIFR, with Beatrix North
and South achieving more than 3 million fatality free shifts.
Financial and operational performance
Attributable gold production increased 2 per cent from 4.16 million ounces
for the year ended June 2004 to 4.22 million ounces produced in financial
2005. At the South African operations production increased marginally from
2.80 million ounces to 2.82 million ounces, mainly due to an increase in
underground yields from 7.1 to 7.4 grams per ton. This was as a result of the
reduction in marginal areas and low grade surface material, as we changed from
the high-volume low-grade "Wal-Mart" strategy to the lower-volume higher-grade
"Saks 5th Avenue" strategy. At the international operations production
increased 3 per cent from 1.35 million ounces to 1.40 million ounces. This was
mainly due to the increase achieved at Tarkwa from the commissioning of the
new growth projects during the year.
Revenue decreased marginally in rand terms (increased 11 per cent in US
dollar terms) from R11,773 million (US$1,706 million) to R11,756 million
(US$1,893 million). This was due to a reduction in the rand gold price
achieved, from R85,905 per kilogram (US$387 per ounce) in financial 2004 to
R84,218 per kilogram (US$422 per ounce) in financial 2005.
Operating costs, including gold-in-process movements, increased from
R9,458 million to R9,471 million, a minimal increase considering the increased
production, above inflation wage increases in South Africa and the significant
price increase of important inputs -- namely fuel, steel and cyanide to
mention but a few. The minimal increase was due to cost saving initiatives and
the impact of translating costs at the international operations into South
African rand at a stronger rand US and Australian dollar exchange rate than
the corresponding year. The rates strengthened from an average of US$1 = R6.90
to US$1 = R6.21, a 10 per cent increase and from A$1 = R4.92 to A$1 = R4.66, a
6 per cent increase year on year. Total cash costs in rand terms, year on
year, were actually down 2 per cent from R67,075 per kilogram (US$302 per
pounce) to R66,041 per kilogram (US$331 per ounce) due to the above factors.
At the South African operations costs were marginally lower at R6,660 million
for the year compared with R6,683 million the previous year. This was despite
above inflation wage increases and the slightly higher production referred to
above, as this was offset by the cost saving initiatives implemented over the
year. At the international operations unit cash costs increased from US$251
per ounce to US$273 per ounce, mainly due to lower production at Damang and St
Ives. Damang lost high grade ore as the main pit was depleted while St Ives
closed its high grade Junction mine.
Operating profit at R2,286 million (US$368 million), compared with R2,315
million (US$336 million) in the previous year.
Earnings excluding gains and losses on financial instruments and foreign
debt and exceptional items amounted to R452 million (US$73 million) this year
compared with R587 million (US$85 million) in financial 2004.
Net earnings were R180 million (US$29 million) compared with R768 million
(US$111 million) in the previous year. The reduction in earnings was due to
the cost of defending the Harmony hostile bid and the cost of the failed
IAMGold transaction at R316 million (US$51 million) and R58 million (US$9
million) respectively. Added to this was the increase in amortisation of R276
million (US$64 million), mainly at Tarkwa due to the commissioning of the new
mill and owner mining projects and due to the impact of a reclassification of
ore reserves from 7 shaft to 4 shaft, at Kloof.
Capital and development projects
Damang pit cutback project
During the quarter, the decision was taken to proceed with the large scale
cutback of the Damang pit at the Damang mine in Ghana. This pit had previously
been the source of high grade ores for this mine but the original pit had
reached the end of its life in the March quarter.
The cutback will be undertaken largely on the east and west walls and
initial mining is underway. The cutback will involve the mining of some 51
million tons of waste and 9 million tons of ore over a 5 year period,
delivering some 710,000 ounces of gold to the Damang mill. The total capital
investment will be US$44 million. Significant ore production from this source
will only commence in the latter part of financial 2007. The execution of this
project will secure a life for this mine through to 2010, creating further
opportunities for unlocking other deposits in the Damang lease area.
Exploration drilling is continuing on this mine with current focus on the
expansion of the Amoanda, Rex and Tomento reserves, resource drilling at
Abosso Deeps along with early stage testing of various other anomalies on the
lease.
Cerro Corona in Peru
During the past quarter, the final Environmental Impact Study was
submitted to the Peruvian Ministry of Energy and Mines (MEM) for review,
comment and approval. In addition to this, a voluntary round of public
information workshops were held in the project's area of influence to keep the
local populace up to date on the project status and site activities. Local
support for the project remains very strong in spite of the difficulties the
mining industry is experiencing in Peru at this time.
During the September quarter, a third round of official workshops will be
held in six communities with the assistance of MEM. The public hearing for the
project, which will be directed by MEM is to be held in the nearby community
of Hualgayoc and permit approval is still expected in late October 2005.
Site work during the period was largely focused on geotechnical activities
in support of the ongoing design engineering work being developed by Hatch,
the EPC contractor. Additionally, a number of monitoring wells and a primary
pumping well for future pit dewatering were largely completed.
The detailed engineering design work for the plant and tailings facility
are on schedule with 40 per cent of the drawings and the generation of a +/-10
per cent capital and operating cost estimate due in the September quarter. As
a result of these two timelines a project decision is expected in the last
quarter of the calendar year.
Arctic platinum project
At the end of the March quarter we announced that the feasibility study
had been completed and it had been determined that we would not be proceeding
with the development of the large scale Suhanko Project, which was the basis
of the feasibility study. Accordingly, staff numbers were reduced during the
quarter to a bare minimum to reduce holding costs.
Discussions are continuing with a number of companies that have expressed
an interest in participating in the development of this project.
Exploration and corporate development
Gold Fields continued its exploration programme with drilling on five
projects during the quarter.
At the Essakan project in Burkina Faso, Gold Fields together with joint
venture partner Orezone Resources Inc. (TSX: "ORZ") continues to drill the
Essakan Main Zone as part of a planned pre-feasibility study expected to be
completed during calendar 2005. The project continues to deliver results
suggesting potential resource upgrades. On the 100 per cent owned Bibiani
project in Ghana, an agreement in principle has been reached with Newmont for
sale of the asset subject to Ghanaian government approval. At the 100 per cent
Telikan project in Guinea, field work consisting of geochemical sampling and
geologic mapping is ongoing. At the 80 per cent owned Kisenge project in the
southern DRC, mechanised auger sampling of the extensive termite geochemical
anomalies continues. A formal process of marketing the prospect to a potential
partner has begun.
Initial core drilling at the Central Victoria project in Australia has
confirmed a mineralised horizon in two holes within a 3.2 kilometre gold-in-
bedrock anomaly on Gold Fields 100 per cent owned Lockington tenement. Follow-
up work on this target will take place during the first quarter of the new
fiscal year. In China, initial core drilling was completed on the Heishan
joint venture (JV) in Shandong province, part of the Shandong JV with Sino
Gold. Field work continues on the Fujian JV with partners Zijin Mining (HKSE:
"2899"). Our 8.4 per cent equity holding in Sino Gold (ASX: "SGX") continues
to deliver interesting results with the granting of their mining licence at
Jinfeng and interesting drill results at their White Mountain prospect.
Comaplex Minerals Corp (TSX: "CMF"), a Canadian company that is developing
the Meliadine project in the Nunavut province in which Gold Fields owns a 19.8
per cent interest, has begun drilling during the summer season. Gold Fields
is providing technical assistance to Comaplex during this program. GoldQuest
Mining Corporation (TSX Venture: "GQC") in which Gold Fields has a 9.2 per
cent interest has reported encouraging drill results from its Cerro Dorado
prospect in Dominican Republic. During the quarter, Gold Fields and 4.5 per
cent owned Committee Bay Resources (TSX: "CBR") reached a letter agreement
whereby CBR would spend the next C$10 million in exploration on the Committee
Bay JV after which Gold Fields would have an option to spend the next C$15
million, thereby retaining its 55 per cent interest, or sell its interest for
7 million shares in CBR. Drilling has commenced on the project with
encouraging results reported by CBR at the Raven prospect. Drilling has also
commenced in Nevada on property controlled by CMQ Resources Inc. (TSX Venture:
"CMQ") in which Gold Fields has a 9.7 per cent interest.
Corporate
Norilsk Nickel joins Gold Fields board
Following an invitation from Gold Fields to Norilsk Nickel to nominate two
members to the Gold Fields board, Mr. Sergei Stefanovich and Dr. Artem
Grigorian were officially appointed as non-executive directors of Gold Fields
Limited on 21 June 2005. Norilsk Nickel is Gold Fields' largest shareholder
with an interest of 20 per cent in the company.
Harmony hostile offer defeated
On 20 May 2005 the High Court of South Africa (Witwatersrand Local
Division) handed down a judgement, the effect of which is that:
-- Harmony's offer lapsed on 18 December 2004;
-- Gold Fields has not, subsequent to 18 December 2004, been subject to
the provisions of the Securities Regulation Panel Code or any Code
Rules affecting a target company or an offeree company;
-- the Harmony offer was not capable in law of being revised or reinstated
after it lapsed on 18 December 2004 and is not capable in law of being
revised or reinstated at the current time; and
-- Harmony is precluded from making any further offer for the shares of
Gold Fields for a period of 12 months from 18 December 2004.
Reflecting on the seven-month hostile bid, Gold Fields Chief Executive Ian
Cockerill said: "It has been a long, drawn-out and costly process, but here at
Gold Fields we have already put it firmly behind us. We are looking ahead and
focusing entirely on our Company's operations and our future. We did not want
this hostile bid, but during the offer period, I believe we proved beyond
doubt that Gold Fields is a strong and competitive gold player, with the
assets, the people, the strength and the strategy to deliver superior value
for our shareholders. Now our sole aim is to concentrate on further improving
our performance and on growth."
Of the 11.5 per cent of the Gold Fields shares acquired by Harmony,
approximately 30 million or 6 per cent were sold to institutions during the
second week in June.
Legal
A purported class action lawsuit was filed against Gold Fields Limited in
the New York State Supreme Court on 6 May 2003. On 9 July 2004, a separate
lawsuit was filed in the New York federal district court by six individuals
against Gold Fields and a number of other defendants. These lawsuits allege
purported human rights violations and other wrongful acts among other
allegations. Plaintiffs in either action have not effected service of the
complaints within the normal prescribed periods. However, in the event the
complaints are served, Gold Fields will vigorously defend itself and
anticipates moving to dismiss the claims on numerous grounds.
Social Responsible Investment Index
In the second round of the JSE Social Responsibility Investment Index,
Gold Fields has been ranked in the top 20 per cent of high impact companies.
Ranking is based on positive social and economic investment, corporate
governance and environmental performance. High impact companies include those
with the most potential to cause damage to the environment and include 22
companies, the majority of which are mining companies.
Gold Fields corporate citizenship initiatives include:
-- An extensive corporate social investment programme benefiting many
communities in far-flung and remote rural parts of Southern Africa;
-- An innovative venture capital programme aimed at establishing new
businesses in mining communities, which can grow into industries to
eventually replace mining as the main source of economic activity in
these communities. The Living Gold cut rose facility in Merafong, which
has more than 300 employees, is an example of such a non-mining
alternative livelihood project;
-- Gold Fields has been a leader in the field of HIV/Aids in South Africa
with a comprehensive programme encompassing all facets of prevention
and treatment. An estimated 1,600 employees are enrolled in the
Company's HIV/Aids Wellness programme; and
-- Gold Fields has over the past two decades been a pioneer in the support
and promotion of environmental education throughout Southern Africa and
has been instrumental in establishing more than 20 environmental
education facilities and programmes throughout the SADC region. One
such example is the Gold Fields Participatory Course in Environmental
Education run by the Gold Fields Environmental Education and
Sustainability Unit at Rhodes University, which has been attended by
thousands of students over the past ten years.
Awards
ISO 14000, achieved at all the South African operations three years ago
came up for review during the quarter. All the South African operations once
again achieved the upgraded ISO 14001 : 2004 certificate. The international
operations come up for review next year.
Gold Fields was among the most honoured companies at the recent annual
awards in Johannesburg hosted by the Investment Analysts Society of Southern
Africa (IASA). Gold Fields picked up Squirrel awards for "best reporting and
communication" in the resources, diamonds, precious metals and minerals
category for the 2004 calendar year. The group also received the Samrec/IASA
award for the best reporting of mineral reserves according to the Samrec code.
This is the third year in succession that Gold Fields has received both
awards.
Dividend
The company's policy is to pay out 50 per cent of its earnings, subject to
investment opportunities and after excluding impairments. Earnings are
adjusted to exclude unrealised gains and losses on financial instruments and
foreign debt, but are adjusted to include cash payments and receipts in
relation to such underlying financial instruments. A final dividend has been
declared payable to all shareholders as follows:
-- final dividend number 63: 40 SA cents per share
-- last date to trade cum-dividend: Friday 19 August 2005
-- sterling and US dollar conversion date: Monday 22 August 2005
-- trading commences ex-dividend: Monday 22 August 2005
-- record date: Friday 26 August 2005
-- payment date: Monday 29 August 2005
Share certificates may not be dematerialised or rematerialised between
Monday, 22 August 2005 and Friday, 26 August 2005, both dates inclusive.
Outlook for September 2005 quarter
Gold production for the September quarter is forecast to be slightly lower
than the June quarter and could also be impacted by industrial action at the
South African operations. Operating costs should increase due to the wage
increases effective from 1 July at the South African operations. Added to
this is the effect of converting the US dollar based operations in Ghana at a
weaker rand.
Basis of accounting
The unaudited quarter and year-end results have been prepared on the
International Financial Reporting Standards (IFRS) basis. The detailed
financial, operational and development results for the June 2005 quarter and
financial 2005 are submitted in this report.
These consolidated quarterly statements are prepared in accordance with
IAS 34, Interim Financial Reporting. The accounting policies used in the
preparation of this report are consistent with those applied at the previous
year-end.
Audit review
The year-end results have been reviewed in terms of Rule 3.23 of the
listing requirements of the JSE Securities Exchange SA by the Company's
auditors, PricewaterhouseCoopers Inc. This unqualified review opinion is
available upon request from the Company Secretary and on the web site.
I.D. Cockerill
Chief Executive Officer
4 August 2005
SOURCE Gold Fields Limited
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Related links:
http://www.goldfields.co.za
http://www.gold-fields.com
CONTACT:
Investor relations: South Africa: Willie
Jacobsz, Telephone: +27-11-644-2460, Facsimile: +27-11-484-0639,
e-mail: williej@goldfields.co.za; Nerina Bodasing, Telephone:
+27-11-644-2630, Facsimile: +27-11-484-0639, e- mail:
nerina.bodasing@goldfields.co.za; North America: Cheryl A Martin,
Telephone: +1-303-796-8683, Facsimile: +1-303-796-8293, e-mail:
camartin@gfexpl.com; Transfer Secretaries: South Africa:
Computershare Investor Services 2004 (Proprietary) Limited,
Ground Floor, 70 Marshall Street, Johannesburg, 2001, P O Box
61051, Marshalltown, 2107, Telephone: +27- 11-370-5000,
Facsimile: +27-11-370-5271; United Kingdom: Capital Registrars,
Bourne House, 34 Beckenham Road, Beckenham, Kent BR3 4TU ,
England , Telephone: +44-20-8639-2000, Facsimile:
+44-20-8658-3430; Corporate Secretary Cain Farrel, Telephone:
+27-11-644-2525, Facsimile: +27-11-484-0626, e-mail:
cain.farrel@goldfields.co.za; Registered offices: Johannesburg:
Gold Fields Limited, 24 St Andrews Road, Parktown
ïöªÀïj¾ÄBñ°c
, Johannesburg, 2193, Postnet Suite 252 , Private Bag x 30500,
Houghton 2041, Tel: +27-11-644-2400, Fax: +27-11-484- 0626;
London: St James 's Corporate Services Limited, 6 St James 's
Place, London SW1A 1NP, United Kingdom, Telephone:
+44-20-7499-3916, Facsimile: +44- 20-7491-1989: American
Depository Receipts Transfer Agent: Bank of New York, Shareholder
Relations, P O Box 11258, New York, NY20286 -1258,US toll-free
telephone: +1-888-269-2377, e-mail: shareowner-svcs@mail.bony.com
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