GFI

Gold Fields Limited Q3 2014 Results Summary

Business Context and Reporting Period

This Form 6-K filing reports the unaudited condensed consolidated financial results for Gold Fields Limited for the quarter ended September 30, 2014. The company operates gold and copper mines across South Africa, Ghana, Peru, and Australia. The reporting period highlights a strategic shift toward cash generation and balance sheet strengthening, with all seven international mines reporting as cash generative.

Key Financial Metrics

Operational Performance

• Production: Attributable gold equivalent production increased 2% quarter-over-quarter to 559,000 ounces. Year-to-date production stands at 1,664,000 ounces.
• Costs: All-in sustaining costs (AISC) were US$1,074/oz. Total all-in costs (AIC) were US$1,096/oz. Excluding the South Deep project, AIC was US$1,025/oz.
• Regional Highlights:
  • South Africa (South Deep): Production declined 18% to 41,700 ounces due to safety-related ground support remediation and a fatal accident in July. Costs rose significantly to US$1,912/oz AIC.
  • West Africa (Ghana): Tarkwa and Damang consolidated profitability. Damang production increased 6% to 42,800 ounces with AIC declining to US$1,245/oz.
  • South America (Peru): Cerro Corona reported strong performance with gold equivalent production up 10% to 84,700 ounces and AIC at US$718/eq oz.
  • Australia: Operations exceeded guidance with 268,800 ounces produced at an AIC of US$990/oz. Granny Smith remained the lowest-cost performer at US$792/oz AIC.

Material Changes and Outlook

Material Changes: Revenue decreased 6% compared to Q2 2014, driven by lower gold sold (552,800 oz vs 586,000 oz) and a slight decrease in the realized gold price (US$1,265/oz vs US$1,275/oz). Net debt was reduced by US$137 million during the quarter, aided by US$81 million in proceeds from the sale of a 51% interest in Chucapaca.

Guidance and Outlook:

• 2014 Production: Forecast at approximately 2.2 million ounces.
• 2014 Costs: Revised guidance expects AISC at US$1,090/oz and AIC at US$1,130/oz, lower than initial February guidance.
• Capital Expenditure: Forecast at US$640 million for the full year.
• South Deep: Updated 2015 guidance reflecting safety-related delays will be published in February 2015. The ground support program is largely complete, but knock-on effects on production are being assessed.

Risks and Contingencies

• South Deep Tax Dispute: The South African Revenue Service (SARS) issued a letter disallowing an Additional Capital Allowance of R688 million (US$62 million) for South Deep. Gold Fields has lodged an objection and intends to defend its position vigorously.
• Occupational Lung Disease (OLD): Gold Fields joined an industry working group to address compensation and medical care for OLD in South Africa. The company is a respondent in related lawsuits but believes it has sustainable defenses.
• Native Title Claim (Australia): A Federal Court decision found certain St Ives tenements invalid regarding native title rights. Gold Fields plans to appeal the decision to the Full Court. Operations continue as usual pending the determination.
• SEC Investigation: No further update provided beyond previous disclosures.

Investor Verification Checklist

• Verify the impact of the South Deep ground support remediation on 2015 production guidance when released in February 2015.
• Monitor the status of the SARS tax dispute regarding the Additional Capital Allowance at South Deep.
• Track the progress of the Native Title appeal process at St Ives and any potential operational impacts.
• Confirm the realization of the revised 2014 cost guidance (AISC US$1,090/oz) given the volatility in gold prices.
• Assess the sustainability of the 12% free cash flow margin against the company's 15% target at a US$1,300/oz gold price.