Business Context and Reporting Period
This Form 6-K filing by Gold Fields Limited, dated February 6, 2019, serves as a trading statement for the full fiscal year ended December 31, 2018 (FY 2018). Gold Fields is a globally diversified gold producer with operations in Australia, Ghana, Peru, and South Africa. The company operates seven mines and holds significant gold and copper reserves. The financial data presented in this statement is unaudited and preliminary, with full results scheduled for release on February 15, 2019.
Key Financial Metrics and Performance
Earnings Per Share (EPS)
- Headline EPS (FY 2018): Expected to range from US$0.05 to US$0.09 per share, representing a 65-81% decrease from the US$0.26 reported in FY 2017.
- Basic Loss Per Share (FY 2018): Expected to range from US$0.40 to US$0.44 per share, a significant increase in loss compared to the US$0.02 basic loss in FY 2017.
- Normalised EPS (FY 2018): Expected to range from US$0.01 to US$0.05 per share, a 74-95% decrease from the US$0.19 reported in FY 2017.
Production and Costs
- Full Year 2018 Production: Attributable gold equivalent production is expected to be 2.04 million ounces (Moz), exceeding revised guidance of 2.00 Moz but down from 2.16 Moz in FY 2017.
- Q4 2018 Production: Expected at 509,000 ounces (koz), down from 533 koz in Q3 2018.
- All-In Sustaining Costs (AISC): Full year expected at US$981/oz (FY 2017: US$955/oz); Q4 expected at US$1,016/oz.
- All-In Costs (AIC): Full year expected at US$1,173/oz (FY 2017: US$1,088/oz); Q4 expected at US$1,213/oz.
The filing does not provide specific values for total revenue, net profit, cash flow, debt levels, or liquidity ratios, noting only that revenue was lower and cost of sales was lower than the prior year.
Material Changes Versus Prior Period
The deterioration in earnings and the increase in basic loss for FY 2018 compared to FY 2017 are attributed to the following factors:
- Revenue Decline: Primarily driven by lower gold sold at the South Deep mine due to restructuring and industrial action in Q4 2018, as well as the prior-year sale of the Darlot asset.
- Cost of Sales: Lower than FY 2017, mainly due to reduced amortization at Cerro Corona and South Deep.
- Non-Recurring Costs: Significantly higher in FY 2018 due to:
- An impairment charge at South Deep (reported in H1 2018).
- Higher retrenchment costs at Tarkwa and South Deep.
- Losses on the sale of inventory and assets at Tarkwa due to a conversion to contractor mining.
- Offsetting Items: A tax credit from the South Deep Tax Dispute Settlement and an accounting credit from the Asanko acquisition partially mitigated the non-recurring costs.
Guidance, Outlook, and Risks
Gold Fields expects full-year 2018 AISC and AIC to remain below the lower end of the guidance range provided in February 2018. While the rest of the portfolio exceeded guidance, the South Deep operation significantly underperformed due to a strike, accounting for the majority of the production shortfall against original guidance. The company notes that the financial information is unaudited. No specific forward-looking guidance for FY 2019 is provided in this document.
Investor Verification Checklist
- Verify the final audited FY 2018 financial results scheduled for release on February 15, 2019.
- Confirm the specific impact of the South Deep industrial action on Q4 production and cash flow.
- Review the details of the South Deep Tax Dispute Settlement and the Asanko acquisition accounting credit.
- Assess the sustainability of the cost reductions in amortization versus the increase in retrenchment and impairment charges.
- Monitor the company's liquidity position and debt levels, which are not detailed in this trading statement.