GFI

Business Context and Reporting Period

Company: Gold Fields Limited (NYSE & JSE: GFI)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Quarter ended 30 September 2017
Reporting Date: 23 October 2017
Context: Gold Fields provided an operational update for the third quarter of 2017. Detailed financial results are reported on a six-monthly basis; this filing focuses on operational statistics, cash flow, and project updates.

Key Financial and Operational Metrics

Note: Cash flow figures are net of tax, net capital expenditure, environmental payments, and financing costs. Gold produced includes copper gold equivalents of approximately 6% of Group production.

Material Changes vs. Prior Periods

• Production: Attributable equivalent gold production increased 3% quarter-on-quarter (QoQ) and 6% year-on-year (YoY) to 567,000 ounces.
• Cost Efficiency: AISC decreased 5% QoQ and 12% YoY to US$906/oz. Total AIC decreased 5% QoQ and 1% YoY to US$1,032/oz.
• Cash Flow: The company generated a net cash flow of US$85 million, a positive swing of US$152 million compared to the US$67 million outflow in Q2 2017. Excluding growth capital expenditure of US$67 million, net cash flow would have been US$152 million.
• Debt Reduction: Net debt decreased to US$1,302 million from US$1,365 million at the end of June 2017, driven by cash generation and interim dividend payments.
• Regional Performance:
  • South Deep (South Africa): Production up 10% QoQ to 81,000 oz due to a 10% increase in reef grade. However, full-year production is now expected to be 5-10% below original guidance due to a weak Q1 impacted by fatalities.
  • Ghana: Managed production down 4% QoQ to 177,000 oz. Damang production decreased 22% QoQ due to lower head grade, while Tarkwa increased 2% QoQ.
  • Peru (Cerro Corona): Gold equivalent production surged 31% QoQ to 90,000 oz with AIC down 13% QoQ.
  • Australia: Production down 3% QoQ to 237,000 oz. St Ives production fell 13% QoQ due to lower grades and a seismic event limiting access.

Guidance, Outlook, and Management Commentary

• FY17 Guidance: Management stated that Group guidance remains intact despite the shortfall at South Deep.
  • Production: 2.10Moz to 2.15Moz.
  • AISC: US$1,010 to US$1,030 per ounce.
  • AIC: US$1,170 to US$1,190 per ounce.
• Project Updates:
  • Damang Reinvestment: On track. Year-to-date material moved is 28.4Mt against a revised plan of 41Mt. Capex spent is US$87m against a full-year budget of US$120m.
  • Gruyere: Engineering progress at 37.8% and construction at 19.8%. FY17 capital spend forecast reduced to A$200m (from A$280m) due to timing deferrals, but the project schedule is unaffected.
  • Salares Norte: Feasibility study on track for completion in H2 2018.
• Corporate Actions:
  • Darlot Sale: Completed on 2 October 2017. Gold Fields received cash and shares, resulting in a 19.9% stake in Red 5.
  • Cardinal Resources: Post-quarter-end, Gold Fields increased its stake to 19.9% in this Ghanaian exploration company.
• Risks/Contingencies: South Deep faces ongoing challenges recovering from Q1 fatalities, impacting high-grade corridor contributions. Seismic events at St Ives (Australia) temporarily limited access to stoping areas.

Investor Verification Checklist

• South Deep Recovery: Verify the extent of production recovery in Q4 to determine if the full-year guidance shortfall (5-10%) can be mitigated or if it will be permanent.
• Damang Capex: Monitor the Damang reinvestment project spending to ensure it stays within the US$120m full-year budget while meeting the 41Mt material movement target.
• Gruyere Schedule: Confirm that the deferral of A$80m in capital spend to FY18 does not impact the long-term project timeline or final capex estimates.
• Exchange Rate Sensitivity: Assess the impact of the strengthening South African Rand (13.14 vs 14.15 YoY) and Australian Dollar (0.79 vs 0.76 YoY) on future cost structures and reported US$ margins.
• Discontinued Operations: Review the final financial impact of the Darlot sale and the transition of the asset to Red 5.