Business Context and Reporting Period
Company: Gold Fields Limited
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Quarter ended June 30, 2009 (Q4 Financial Year 2009)
Announcement Date: August 6, 2009
Gold Fields reported a strong operational quarter, beating guidance for production and costs despite safety-related stoppages at South African operations due to seismic activity. The company highlighted a 55% year-on-year improvement in safety performance for the full financial year, though eight fatalities occurred in the quarter.
Key Financial Metrics
| Metric | June 2009 (Q4) | March 2009 (Q3) | June 2008 (Q4 Prior Year) |
|---|---|---|---|
| Revenue (ZAR) | R7,779 million | R8,510 million | R6,452 million |
| Revenue (USD) | US$902 million | US$869 million | US$836 million |
| Net Earnings (ZAR) | (R293 million) Loss | R1,307 million | R843 million |
| Net Earnings (USD) | (US$29 million) Loss | US$140 million | US$105 million |
| Headline Earnings (ZAR) | R855 million | R1,512 million | R881 million |
| Normalized Earnings (ZAR) | R949 million | R1,369 million | R943 million |
| Operating Margin | 43% | 47% | 42% |
| Net Debt (ZAR) | R6.1 billion | R7.7 billion | N/A |
| Cash Balance (ZAR) | R2,804 million | R2,537 million | R2,007 million |
Material Changes vs. Prior Comparable Period
- Production: Attributable gold production increased 4% to 906,000 ounces compared to the March 2009 quarter. International production rose 6%, while South African production increased 2%.
- Costs: Total cash costs decreased 6% in Rand terms to R140,916/kg (US$512/oz) but increased 9% in USD terms due to the strengthening Rand. Notional cash expenditure (NCE) decreased 5% to R203,042/kg (US$738/oz).
- Profitability: Operating profit decreased 16% to R3,338 million (US$385 million) primarily due to a 12% decrease in the Rand gold price received. The net loss was driven by a R1,252 million exceptional loss, mainly from the impairment of the Rusoro investment.
- Dividends: A final dividend of 80 SA cents per share was declared, bringing the total dividend for Financial Year 2009 to 110 SA cents per share.
Guidance, Outlook, and Management Commentary
Management Commentary: CEO Nick Holland described the quarter as strong operationally, with production beating guidance. He emphasized that Financial Year 2009 was the best safety year in the company's history, despite eight fatalities in the quarter (seven seismically related). The company remains committed to eliminating serious accidents.
Outlook for September 2009 Quarter:
- Production: Forecast to be similar to the June quarter due to slower start-up following safety stoppages at Kloof and Driefontein.
- Costs: Total cash costs are forecast to increase 15% to US$590/oz (R151,000/kg) due to wage increases, electricity tariffs, and the stronger Rand.
- NCE: Forecast at US$850/oz (R220,000/kg).
Strategic Developments:
- Sold 19.9% stake in Sino Gold for US$282 million.
- Commenced construction of the Athena underground mine at St Ives.
- Offered to acquire Glencar (Komana project, Mali); 29.9% acquired to date.
Investor Verification Checklist
- Impairment Charge: Verify the valuation methodology and future outlook for the Rusoro investment, which caused a R1.1 billion impairment charge.
- Safety Performance: Monitor the impact of seismic activity on production schedules at West Wits mines (Kloof, Driefontein) and the effectiveness of new safety protocols.
- Exchange Rate Sensitivity: Assess the impact of the strengthening South African Rand on USD-denominated revenue and costs.
- Cost Inflation: Track the realization of forecasted cost increases (wages, electricity) in the September quarter.
- Acquisition Progress: Confirm the status of the Glencar acquisition and the integration of the Komana project.