Business Context and Reporting Period
Company: Gold Fields Limited
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Date: February 24, 2014
Reporting Period: Mineral Reserves and Resources as of December 31, 2013
Gold Fields Limited is a globally diversified gold producer with operations in Australia, Ghana, Peru, and South Africa. The filing announces the 2013 Mineral Reserve and Mineral Resource declaration, reflecting a strategic shift over the past 18 months from an emphasis on production ounces to a primary focus on driving margins and cash flow. This strategy involved eliminating marginal mining, reducing the growth portfolio, unbundling Sibanye Gold in South Africa (February 2013), and acquiring Yilgarn South assets in Australia (October 2013).
Key Financial and Operational Metrics
Gold Mineral Resources (Managed): 136.7 million ounces (Dec 2012: 149.3 million ounces)
Gold Mineral Reserves (Managed): 52.6 million ounces (Dec 2012: 59.4 million ounces)
Copper Mineral Resources (Managed): 14,038 million pounds (Dec 2012: 15,237 million pounds)
Copper Mineral Reserves (Managed): 712 million pounds (Dec 2012: 1,039 million pounds)
Attributable Figures (Gold):
- Resources: 113.4 million ounces (Dec 2012: 125.5 million ounces)
- Reserves: 48.6 million ounces (Dec 2012: 54.9 million ounces)
Regional Breakdown of Managed Gold Resources:
- South Africa: 56%
- West Africa: 12%
- Australasia: 9%
- Americas: 2%
- Growth Projects: 21%
Regional Breakdown of Managed Gold Reserves:
- South Africa: 73%
- West Africa: 16%
- Australasia: 7%
- Americas: 4%
Note: The filing does not provide specific revenue, profit, cash flow, debt, or liquidity figures for the period. It focuses exclusively on mineral resource and reserve declarations.
Material Changes Versus Prior Period
The decline in both Gold Mineral Resources and Reserves compared to December 2012 is primarily driven by two factors:
- Gold Price Assumption: The 2013 declaration utilized a gold price of US$1,300/oz, compared to US$1,500/oz in the 2012 declaration. This lower price threshold rendered certain deposits economically unviable.
- Mining Depletion: Approximately 2.3 million ounces of gold were depleted through mining operations.
Specific Operational Changes:
- West Africa: Reserves at Damang dropped from 4.1 million to 1.1 million ounces as Main Pit Cutback 2 is not viable at US$1,300/oz. Tarkwa reserves declined due to the exclusion of underground resources and downsized pit shells.
- Americas: Cerro Corona reserves decreased by approximately 400,000 ounces after the company decided not to proceed with the Tailings Storage Facility (TSF) raise on economic grounds.
- Australasia: Figures include the newly acquired Yilgarn South assets (4.2 million oz Resources, 1.2 million oz Reserves). However, open pit reserves at Granny Smith were excluded due to the lower gold price.
- Growth Projects: Resources declined due to the sale of the Talas Project in Kyrgyzstan in December 2013.
Guidance, Outlook, and Risks
Strategic Outlook: Management continues to execute a structural shift in the production and cost base, prioritizing margin and cash flow over volume. The company has achieved greater regional diversification through recent M&A activity.
Commodity Price Sensitivity: The filing highlights significant sensitivity to gold prices. The US$1,300/oz price used for reserves is lower than the three-year trailing average (US$1,550/oz) and aligns with current spot prices. The Mineral Resource price includes a 15% premium over the Reserve price.
Contingencies and Risks:
- Economic Viability: Several projects (Damang Cutback 2, Granny Smith open pit, Cerro Corona TSF raise) were excluded or reduced because they are not economically viable at the current price assumptions.
- Future Options: The Cerro Corona mine retains the option to construct the TSF raise in the future if economic conditions improve.
Key Facts for Investor Verification
- Reserve Decline Drivers: Verify the impact of the US$1,300/oz gold price assumption versus the previous US$1,500/oz on the specific exclusion of assets at Damang, Tarkwa, and Granny Smith.
- Attributable vs. Managed: Confirm the distinction between managed and attributable ounces, particularly in joint ventures, as attributable reserves are significantly lower (48.6 million oz vs 52.6 million oz).
- Future Capital Expenditure: Assess the implications of the decision to halt the Cerro Corona TSF raise and the potential future costs to resume it.
- Regional Concentration: Note that 73% of managed gold reserves are concentrated in South Africa, exposing the company to regional operational and regulatory risks.
- Reporting Standards: Confirm that the declaration complies with SAMREC, JORC, NI 43-101, and SEC Industry Guide 7 standards as stated.