GFI

Business Context and Reporting Period

Company: Gold Fields Limited
Filing Type: Form 6-K (Operational Update)
Reporting Period: Quarter ended 31 March 2021
Date of Filing: 6 May 2021
Context: This report provides an operational update for Q1 2021. Detailed financial results are reported on a six-monthly basis. The period was marked by the appointment of a new CEO, Chris Griffith, and ongoing impacts from the second wave of COVID-19 in South Africa and high rainfall in Peru.

Key Financial and Operational Metrics

Note: The filing does not provide specific net profit or cash flow figures for the quarter, as detailed financial statements are released semi-annually.

Material Changes vs. Prior Period

• Production: Group attributable production was 541koz, largely flat year-over-year (YoY) but down 9% quarter-over-quarter (QoQ). Production at South Deep was marginally lower YoY despite COVID-19 impacts, while Cerro Corona was impacted by high rainfall.
• Costs: AISC increased 11% QoQ and YoY to US$1,078/oz. AIC increased 18% YoY to US$1,249/oz, driven by ramping capital expenditure at the Salares Norte project.
• Debt: Net debt increased to US$1,224m from US$1,069m in December 2020, primarily due to the payment of a US$190m final dividend.
• Regional Performance:
  • Australia: Produced 236koz; AIC was US$1,181/oz.
  • Ghana: Produced 221koz (including 45% of Asanko); AIC was US$1,078/oz.
  • Peru (Cerro Corona): Produced 46koz (gold equivalent); AIC was US$1,160/oz.
  • South Africa (South Deep): Produced 60koz; AIC was US$1,444/oz.

Guidance, Outlook, and Risks

Guidance and Outlook

Management maintains the full-year 2021 guidance provided in February, despite additional capital projects approved post-quarter:

• Production: 2.30Moz to 2.35Moz attributable gold equivalent.
• AISC: US$1,020/oz to US$1,060/oz.
• AIC: US$1,310/oz to US$1,350/oz (excluding Salares Norte project capex, AIC is expected to be US$1,090/oz to US$1,130/oz).
• Capital Expenditure: Total expected at US$1.177bn for 2021.

Revised Mine Guidance:

• South Deep: Production guidance lowered by 9.3koz to 280koz due to COVID-19. AIC guidance revised to US$1,495/oz.
• Damang: Growth capex increased to US$25m; AIC guidance revised to US$840/oz following approval of the Huni Pit development.

Management Commentary

CEO Chris Griffith confirmed the strategy of shifting to mechanized operations and international exposure. The Salares Norte project is tracking ahead of schedule, with detailed engineering completed and pre-stripping commenced. The company approved a 40MW solar plant at South Deep to reduce electricity costs.

Risks and Contingencies

• Safety Incident: One fatality occurred at South Deep (Vumile Mgcine) in a mining incident.
• COVID-19: Total of 11 employee/contractor deaths and 3,457 positive cases reported to date. Active cases were 62 as of 2 May 2021. Operations in South Africa and Peru faced disruptions.
• Operational Risks: High rainfall in Peru, labor relations, power costs, and currency fluctuations (ZAR/AUD).

Key Facts for Investor Verification

• Cost Inflation: Verify the sustainability of the 11% QoQ increase in AISC and the 18% YoY increase in AIC, particularly regarding the impact of Salares Norte capex.
• Debt Position: Confirm the impact of the US$190m dividend payment on liquidity and the stability of the 0.59x net debt to EBITDA ratio.
• Production Guidance: Monitor if the revised lower production guidance for South Deep and Cerro Corona impacts the ability to meet the full-year 2.30Moz–2.35Moz target.
• Salares Norte Progress: Track the project's adherence to the "ahead of schedule" timeline and budget, as this is a key growth driver.
• Safety and ESG: Review the company's safety protocols following the fatality at South Deep and the ongoing management of COVID-19 across operations.