Gold Fields Limited — FY2021 Form 20-F
Reporting period: Fiscal year ended 31 December 2021; filed 31 March 2022. This is an annual report, not a quarterly filing. The consolidated financial statements are prepared under IFRS and presented in U.S. dollars. Gold Fields operates mines in South Africa, Ghana, Australia and Peru, with the Salares Norte project under construction in Chile.
Financial and operating performance
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | US$4.195bn | US$3.892bn |
| Profit attributable to owners | US$789m | US$723m |
| Normalised profit attributable to owners | US$929m | US$879m |
| Basic earnings per share | US$0.89 | US$0.82 |
| Attributable gold-equivalent production | 2.34Moz | 2.24Moz |
| AISC per ounce | US$1,063 | US$977 |
| AIC per ounce | US$1,297 | US$1,079 |
| Adjusted free cash flow | US$463m | US$631m |
| Net debt, including lease liabilities | US$969m | US$1.069bn |
Revenue rose 8%, reflecting higher gold sales and a slightly higher realised gold price (US$1,794/oz versus US$1,768/oz). Production increased 5%. Profit attributable to owners increased 9%; normalised profit rose 6%. AISC increased 9%, while AIC increased 20%, principally due to stronger Australian and South African currencies, cost inflation and Salares Norte growth spending. The company states that AIC excluding Salares Norte project capital and currency effects would have risen 5%.
Net cash from operations before dividends was US$1.600bn, up from US$1.258bn. The cash flow statement reports US$1.230bn of cash flows from operating activities after US$370m of dividends paid. Investing cash outflow was US$1.071bn, including US$1.089bn of property, plant and equipment additions. Cash and cash equivalents fell to US$525m from US$887m. Total assets were US$7.349bn and total liabilities US$3.219bn at year-end. Borrowings were US$1.078bn; net debt-to-adjusted EBITDA improved to 0.40x from 0.56x.
The final and interim dividends totalled R4.70 per share for FY2021, compared with R4.80 in FY2020. The final dividend was R2.60 per share and was declared after year-end.
Gold Fields reports attributable production of 2.34Moz, including its 45% share of Asanko; consolidated revenue excludes Asanko, which is equity-accounted. The filing also presents certain AISC, AIC, adjusted free cash flow, net debt and normalised profit figures as non-IFRS measures; definitions and reconciliations are provided in the report.
Material changes and operating developments
- South Deep production rose 29% to 293koz; the mine generated US$97m of adjusted free cash flow, compared with US$34m in 2020.
- Australian production was broadly flat at 1.019Moz. Ghana-region production, including attributable Asanko production, rose 1%; Cerro Corona gold-equivalent production rose 20%, mainly due to the copper-to-gold price factor.
- Capital expenditure increased 86% to US$1.089bn, including US$375m spent on Salares Norte. Total project progress was 63% at year-end; first gold remained targeted for Q1 2023.
- Attributable gold-equivalent Mineral Reserves declined 6% to 48.6Moz, mainly due to depletion and higher costs affecting cut-off grades. Gold Fields did not report an updated Asanko reserve estimate because its JV partner’s geological modelling remained incomplete.
- Energy costs and exchange-rate movements contributed to cost pressure. The average Rand and Australian dollar strengthened against the U.S. dollar, increasing translated costs.
Outlook, risks and unusual items
FY2022 guidance, excluding Asanko: attributable gold-equivalent production of 2.25–2.29Moz; AISC of US$1,140–1,180/oz; and AIC of US$1,370–1,410/oz, or US$1,230–1,270/oz excluding Salares Norte project capital. Capital expenditure guidance was US$1.05–1.15bn. The business plan assumes a gold price of US$1,600/oz and exchange rates of R15.55/US$ and US$0.76/A$.
Management targets production of 2.375–2.425Moz in 2023 and 2.720–2.770Moz in 2024, assuming Salares Norte commissioning and ramp-up. Salares Norte’s total project budget is approximately US$860m; management expected first gold by end-Q1 2023. The report cautions that COVID-related stoppages are not included in guidance and their production and cost impacts are indeterminable.
- Cost and commodity exposure: inflation, supply-chain constraints and higher oil, gas and other input prices could raise costs. The Russia-Ukraine conflict had already contributed to commodity-price volatility after year-end. Higher gold prices could support revenue; oil hedges mitigate only part of the fuel-cost exposure.
- Project and operating execution: Salares Norte delivery, South Deep’s production ramp-up, contractor performance in Ghana, mine-life extensions and replacing depleted reserves remain significant execution risks. Damang is expected to enter declining production after 2022 absent a viable life-extension project.
- Chile environmental matter: two of four chinchillas relocated at Salares Norte died. The regulator suspended the relocation programme and began sanction proceedings; Gold Fields submitted a compliance programme. Management said this did not then affect the construction schedule.
- Other contingencies: the company reported a US$13m provision for its share of the South African silicosis settlement, a US$510.5m gross mine-closure cost estimate, and contingent matters including litigation and potential acid-drainage liabilities. The filing discusses a substantial Randgold and Exploration claim; the company says it has defences and has not recognised a provision.
- Unusual financial items: financial-instrument losses were US$100m, down from US$239m, including a US$46m realised copper-hedge loss and US$31m realised Australian gold-hedge loss. A US$41m expected-credit-loss provision was recognised against a Ghana contractor loan; a US$53m share of Asanko impairment was also recorded.
- Safety and ESG: one work-related fatality occurred at South Deep in 2021, and 17 employees and contractors died from COVID-19 during the year. Gold Fields set 2030 targets including 30% net Scope 1 and 2 emissions reduction from a 2016 baseline, zero fatalities and serious injuries, 30% women representation, and increased water recycling and host-community value creation.
PwC issued an unqualified opinion on the IFRS financial statements and effective internal control over financial reporting. The South Deep impairment assessment was identified as a critical audit matter because of significant estimates and assumptions; no impairment or reversal was recorded for South Deep in 2021.
Important facts for investors to verify
- Track Salares Norte’s construction progress, total cost, regulatory proceedings and chinchilla relocation approvals against the Q1 2023 first-gold target.
- Review South Deep’s production, cost and cash-flow performance against its ramp-up plan, including the assumptions supporting its long-dated reserve and impairment valuation.
- Seek updated Asanko operating, reserve and resource information, and assess the effect of the reported impairment and contractor credit exposure.
- Compare actual FY2022 production, AISC, AIC and capital spending with guidance, particularly under continued inflation and currency volatility.
- Review gold and copper prices, hedges, liquidity and debt maturities, as well as the adequacy and funding of closure provisions and material litigation contingencies.
- Assess reserve replacement, the expected decline at Damang, and progress against the company’s stated environmental, safety and diversity targets.