Business Context and Reporting Period
Company: Gold Fields Limited
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: First Quarter of Fiscal Year 2010 (Q1 F2010), ended September 30, 2009.
Release Date: October 1, 2009
Business Overview: Gold Fields is a major unhedged gold producer with operations in South Africa, Ghana, Australia, and Peru. The company reported attributable production of approximately 906,000 ounces (koz) for the quarter.
Key Financial and Operational Metrics
| Metric | Q1 F2010 Value |
|---|---|
| Total Attributable Production | 906 koz |
| Total Cash Cost | US$590/oz |
| Notional Cash Expenditure (NCE) | US$835/oz |
| Actual Rand/USD Exchange Rate | R7.82 (vs. R8.00 guidance) |
| South Africa Region Production | 527 koz (16,385 kg) |
| West Africa Region Production | 226 koz |
| Australasia Region Production | 146 koz |
| South America Region Production | 88 koz (Gold Equivalent) |
Note: The filing does not provide specific revenue, net profit, cash flow, debt, or liquidity figures for the quarter.
Material Changes vs. Prior Period
- South Africa: Production decreased slightly to 527 koz from 529 koz in Q4 F2009.
- Improvements: Beatrix production increased 8% to 111 koz; South Deep improved 25% to 65 koz.
- Declines: Driefontein (190 koz) and Kloof (161 koz) faced difficulties due to safety-related stoppages carried over from Q4 F2009.
- West Africa: Production increased marginally to 226 koz from 218 koz in Q4 F2009. Tarkwa met guidance at 175 koz despite wage negotiations.
- Australasia: Production decreased marginally to 146 koz from 154 koz in Q4 F2009. St Ives missed guidance due to rehabilitation work following a geotechnical fall of ground and unexpected gold lock-up.
- South America: Cerro Corona production increased to 88 koz (gold equivalent) from 84 koz in Q4 F2009.
Guidance, Outlook, and Management Commentary
Management Commentary: CEO Nick Holland stated results were broadly in line with guidance provided on August 6, 2009. The company achieved cost targets despite a stronger Rand exchange rate than anticipated.
- Production Outlook: Management expects the Group to build up to a production target of 925 koz to 950 koz per quarter for the remainder of F2010.
- Operational Focus: Priority is placed on ore reserve development to improve flexibility and stability at South African mines over the next 12 to 24 months.
- Specific Mine Outlook:
- Driefontein & Kloof: Targeting returns to ~6.5 tons and ~5.5 tons per quarter, respectively.
- St Ives: The unexpected gold lock-up is expected to reverse in Q2 F2010.
- Tarkwa: Expanded CIL plant is performing consistently at nameplate capacity (1 million tons/month).
Risks and Contingencies:
- Safety: Ongoing impact of safety stoppages at Driefontein and Kloof; geotechnical issues at St Ives.
- Operational: Rehabilitation work delays and gold lock-up issues.
- External: Wage negotiations (Tarkwa) and exchange rate fluctuations.
Key Facts for Investor Verification
- Verify the reversal of the "gold lock-up" at St Ives in Q2 F2010 results.
- Monitor production recovery at Driefontein and Kloof to ensure they meet the targeted 6.5 and 5.5 tons per quarter.
- Confirm if the Group achieves the revised quarterly production target of 925-950 koz in subsequent quarters.
- Review the impact of the stronger Rand (R7.82) on future cost guidance if the exchange rate remains volatile.
- Assess the timeline for ore reserve development projects intended to stabilize South African mine output.