| Thu 7 Nov 2002, 8:59 | | Gold Fields Limited - Announcement |
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Gold Fields Limited - Announcement
Release Date: 07/11/2002 07:55:09 Code(s): GFI
Gold Fields Limited - Announcement
Gold Fields Limited
Incorporated in the Republic of South Africa
Registration number 1968/004880/06
ISIN: ZAE 000018123
QUARTER ENDED 30 SEPTEMBER 2002
STOCK DATA
Number of shares in issue
- at 30 September 2002 471,657,696
- average for the quarter 471,259,295
Free Float 100%
ADR Ratio 1:1
Bloomberg / Reuters GFISJ / GFLJ.J
JSE SECURITIES EXCHANGE SOUTH AFRICA- [GFI]
Range - Quarter SAR94.00 - SAR155.05
Average Volume - Quarter 2,072,000 shares / day
NYSE - (GFI)
Range - Quarter $8.96 - $14.70
Average Volume - Quarter 1,837,000 shares / day
INVESTOR RELATIONS
Europe & South Africa
Willie Jacobsz
Tel: +27 11 644-2460
Fax: +27 11 484-0639
E-mail: investors@goldfields.co.za
North America
Cheryl A. Martin
Tel: +1 303 796-8683
Fax: +1 303 796-8293
E-mail: camartin@gfexpl.com
www.goldfields.co.za www.gold-fields.com
ANOTHER ROBUST OPERATIONAL QUARTER
HIGHLIGHTS
* Attributable gold production of 1,130,000 ounces.
* Unit cost increase restricted to 5.7 per cent quarter on quarter despite
annual wage increase in South Africa and increased mining activity.
* Operating profit of R1.6 billion achieved, in line with previous quarter.
* Net earnings excluding gains and losses on financial instruments and
foreign debt down to R735 million.
* Reduction in the marked to market value of currency financial instruments
and the unrealised loss on foreign debt due to a weakening of the Australian
Dollar led to net earnings of R542 million achieved in the quarter.
SALIENT FEATURES
SA Rand US Dollars
Quarter Quarter
Sept2001 June2002 Sept2002 Sept2002 June 2002 Sept2001
27,555 36,046 35,163 kg Gold produced* oz(000) 1,130 1,159 886
53,829 57,935 61,222 R/kg Total cash costs $/oz 183 171 200
7,675 11,014 10,831 000 Tons milled 000 10,831 11,014 7,675
73,646 105,024 104,542 R/kg Revenue $/oz 313 311 274
212 207 222 R/ton Operating costs $/ton 21 20 25
498 1,610 1,578 Rm Operating profit $m 152 157 59
203 1,180 542 Rm Net earnings $m 52 112 24
45 251 115 SA c.p.s. US c.p.s. 11 24 5
203 845 735 Rm Net earnings excluding $m 71 80 24
gains and losses on financial
instruments and foreign debt,
net of cash
45 180 156 SA c.p.s. US c.p.s. 15 17 5
*Attributable - All companies wholly owned except for Ghana (71.1%).
DEAR SHAREHOLDERS
It gives me great pleasure to report that, during the September Quarter, your
company again achieved a solid operational performance, backed by continued
improvement in the overall safety achievement on all of our mines. The latter is
particularly pleasing, considering the major effort made by all of our people to
mitigate risks and to "stop and fix" before these could translate to accidents
or injuries.
During the quarter our individual operations performed largely to plan,
enabling us to maintain our record of overall consistency. A highlight was the
continued revitalisation of Kloof, which has now again established itself on a
welcome level of performance.
Attributable gold production was maintained at approximately 1.1 million
ounces translating into an operating profit of R1.6 billion, which was in line
with previous quarter. This was achieved despite a lower average Rand gold price
received, a six per cent increase in area mined and a nine per cent increase in
development, as well as the annual wage increases in South Africa. Headline
earnings (excluding gains and losses on financial instruments and foreign debt)
declined to R735 million, mainly due to higher amortisation and tax charges.
At an operational level our most notable achievement during the quarter has
been the tight focus on costs. This quarter saw the implementation of a nine per
cent wage increase and South Africa experienced considerable inflation
pressures, precipitated by Rand weakness during the past year. Despite the
inflationary pressures, unit cost increases were well contained to below six per
cent.
Considerable time and energy was spent on ameliorating the impact of the
leaked Mining Charter and, subsequently, on engaging with government and other
stakeholders to draft a more acceptable agreement. Management is largely
satisfied with the final product and, while some of the issues are challenging,
Gold Fields is well positioned to meet the requirements within the prescribed
period.
During the quarter Management undertook an investor road show to Europe where
we had the opportunity to interact with a large number of shareholders and
potential new investors. A similar visit to Singapore was well received by the
growing number of shareholder and interested investors in that part of the
world. Similar visits are being planned for North America early in the New Year.
Yours sincerely
ID Cockerill
CHIEF EXECUTIVE OFFICER
7 November 2002
HEALTH AND SAFETY
The fatal injury frequency rate continued its improvement and at 0.22 was 14
per cent lower than the previous quarter. The lost day injury frequency rate
improved by 8 per cent. The serious injury frequency rate remained constant at
7 per million hours worked. The ongoing safety related initiatives, set in
place over the previous two quarters have had a positive impact on safety
statistics and are expected to result in further improvements towards achieving
the international benchmarks that we have set ourselves.
The Tripartite Task Team, established after the Corporate Safety Summit,
completed a proposed strategy on Health and Safety, which is currently being
reviewed.
The international operations continue to deliver a pleasing safety
performance.
MINING CHARTER
Gold Fields Limited supports the Broad-Based Socio-Economic Empowerment
Charter for the South African Mining Industry (the Charter) published on 9
October 2002 by the South African Government.
The Company endorses the Government`s objective of redressing historic social
and economic inequalities and is committed to playing a central and constructive
role in achieving a prosperous and inclusive economy for South Africa.
Management believes Gold Fields is well positioned to meet the requirements
of the Charter within the prescribed period. It has advanced stage projects
which addresses these issues and with respect to several of them, is already in
compliance with the Charter.
FINANCIAL
Quarter ended 30 September 2002
Gold Fields achieved operating profit of R1,578 million (US$152 million) in
the quarter ended September 2002 compared to an operating profit of R1,610
million (US$157 million) in the June 2002 quarter, a decrease of R32 million
(US$5 million). The slightly lower gold price of R104,542 per kilogram and
increase in costs of 6 per cent, were offset in part by an increase in total
gold sold to 1,219,000 ounces as compared to 1,171,000 ounces sold in the June
quarter.
Excluding unrealised losses on financial instruments and an unrealised
exchange loss on foreign debt together with the associated tax effects, earnings
for the September 2002 quarter were R735 million as compared to R845 million in
the June 2002 quarter.
The major items contributing to the reduction in the earnings quarter on
quarter are:
- R32 million or 2 per cent reduction in operating profit due to a 6 per
cent increase in costs (S.A. wage increases, increased area mined and increased
development) more than offsetting the 4 per cent increase in revenue,
- R67 million increase in amortisation,
- R85 million increase in deferred tax at Beatrix,
- partially offset by a R69 million decrease in deferred tax at Damang.
After taking account of the effects of the depreciation of the Australian
Dollar against the United States Dollar, which resulted in a reduction in the
marked to market valuation of the Australian Dollar currency financial
instruments as well as an unrealised exchange loss on foreign debt (as compared
to an increase in the marked to market valuation of the financial instruments
and an unrealised gain on the debt in the previous quarter) earnings for the
September quarter reduced to R542 million (US$52 million) compared to earnings
for the June 2002 quarter of R1,180 million (US$112 million).
Revenue for the quarter was R3,964 million (US$382 million), an increase of
R138 million or 4 per cent (in Rand terms) over revenue for the June 2002
quarter of R3,826 million (US$372 million).
Attributable gold production decreased 2 per cent from 1,159,000 ounces to
1,130,000 ounces in the current quarter. Production at the South African
operations decreased by 14,000 ounces and attributable gold production at the
international operations was 15,000 ounces lower than the previous quarter.
The Rand gold price received decreased from R105,024 per kilogram to R104,542
per kilogram mainly due to the strengthening of the quarterly average Rand/US
Dollar exchange rate from R10.51 during the June quarter to R10.38 in the
September quarter. The effects of the stronger Rand were partially offset by
the average US Dollar gold price increasing from $311 per ounce to $313 per
ounce quarter on quarter.
The increase in gold sold to 1,219,000 ounces in the September quarter is
mainly due to the selling of the gold inventory of 25,000 ounces at the West
Wits operations produced in the June quarter and the inclusion of gold sold at
Kloof 4 shaft of 29,000 ounces. As from 1 July 2002 Kloof 4 shaft is treated as
an operating shaft and accordingly revenue includes R96 million in respect of
Kloof 4 shaft. Revenue earned in previous quarters was credited to capital.
Costs and revenues associated with the shaft are expected to increase each
quarter as production levels increase, with full capacity anticipated to be
reached in the next 5 to 6 quarters.
Operating costs increased by 6 per cent to R2,402 million (US$231 million)
for the quarter from R2,261 million (US$219 million) during the June quarter.
In line with the decision to regard Kloof 4 shaft as an operating shaft as from
1 July 2002, operating costs include R54 million in respect of Kloof 4 shaft
which was previously capitalised. Excluding the effect of Kloof 4 shaft costs
now expensed, costs at the South African operations were kept to below an
increase of 6 per cent for the quarter despite the inclusion of a 9 per cent
wage increase, a 6 per cent increase in area mined together with a 9 per cent
increase in development. Costs at the international operations were in line
with those reported in the previous quarter.
Despite the 4 per cent increase in revenue in the September quarter
associated with increased gold sold, the 6 per cent increase in operating costs
resulted in operating profit for the September quarter of R1,578 million, only
slightly below the R1,610 million achieved in the June quarter.
Amortisation and depreciation increased from R275 million (US$28 million) in
the June 2002 quarter to R342 million (US$33 million) in the current quarter.
The increase in the amortisation charge is mainly due to an increase in ounces
mined at the Australian operations and normalisation of the charge at these
operations in the current quarter, as compared to the decrease in the June
quarter. This decrease resulted from a reallocation of a portion of tenement
assets to undeveloped tenements, which are not depreciated. Also, a change in
the above infrastructure reserves at Kloof and Beatrix (which is the denominator
used for amortisation purposes) resulted in an increase in the amortisation
charge at these operations.
As previously reported, the Australian operations have established currency
financial instruments to protect the cash flows of these operations against a
strengthening of the Australian Dollar against the United States Dollar. At the
quarter end, US$450 million was outstanding under these instruments.
Outstanding debt at the Australian operations at the end of the quarter amounted
to US$149 million.
The Australian Dollar weakened against the US Dollar from 57.7 cents at the
end of the June quarter to 54.6 cents at the end of the current quarter. This
contrasted with a strengthening of the Australian Dollar in the previous quarter
from 53.0 cents to 57.7 cents. The weakening of the Australian Dollar in the
current quarter resulted in an unrealised loss on foreign debt of R72 million
(US$7 million) as compared to an unrealised gain of R134 million (US$13 million)
in the June quarter. Earnings for the September quarter were also negatively
impacted by a reduction of R258 million (US$25 million) in the marked to market
value of the Australian Dollar currency financial instruments as a consequence
of the weaker Australian Dollar. This contrasts with an increase in the marked
to market valuation of R297 million (US$30 million) in the June quarter. At the
end of the September quarter, the marked to market value of the financial
instruments was a positive R171 million (US$16 million).
Realised gains on financial instruments were R56 million (US$5 million) in
the current quarter compared to R48 million (US$4 million) in the previous
quarter. Included in the September quarter is R32 million (US$3 million) in
respect of the close out of US$25 million of the US Dollar / Australian Dollar
currency financial instruments. The balance of realised gains on financial
instruments is the amortisation of deferred hedging gains at Damang of R24
million. Details of the financial instruments are provided on page 9 of this
report.
Exploration expenditure in the September quarter increased by R25 million to
R46 million as compared to R21 million in the June quarter and includes
increased exploration activity of the Group at its Australian properties.
Profit before taxation at R961 million (US$93 million) compares to R1,782
million (US$171 million) recorded in the June 2002 quarter. Taxation at R386
million is 31 per cent below the previous quarter as a result of the lower
deferred tax at the Australian operations due to the significant decrease in the
value of the currency financial instruments and the unrealised exchange loss on
foreign debt partly offset by the increase in deferred tax at Beatrix.
Previously deferred tax was not provided at Beatrix as unutilised allowances
exceeded the deferred tax liability. As these have now been utilised deferred
tax is provided. The impact is an increase in deferred tax of R86 million
quarter on quarter.
Net earnings after deducting minorities was thus R542 million (US$52 million)
or 115 cents per share (US11 cents) compared to R1,180 million (US$112 million)
or 251 cents per share (US 24 cents) in the previous quarter.
Operating cash flow for the quarter was R996 million (US$95 million), a
decrease of R450 million from operating cash flow in the June quarter of R1,446
million (US$140 million). The decrease is mainly due to an increase in taxes
paid at the South African operations amounting to R455 million and a decrease in
working capital of R178 million, due to the settlement of accounts payable in
the normal course of business. The final dividend for fiscal 2002 amounting to
R1,039 million (US$97 million) was distributed to shareholders during the
quarter.
Capital expenditure was R557 million (US$54 million) as compared to R542
million (US$52 million) in the June 2002 quarter. At the South African
operations R300 million was spent on capital with the significant expenditure
directed at the major projects, R80 million at the 1E and 5E shafts and R26
million on the 2 plant new mill installation at Driefontein, with further
development at Kloof 4 shaft of R58 million and Beatrix 3 shaft of R54 million.
The Australian operations incurred capital expenditure of R205 million, the
majority on development of existing projects and exploration in an effort to
improve the ore reserve base at those operations.
Net cash outflow for the quarter was R594 million (US$54 million) after
taking account of investing activities, as compared to an inflow of R362 million
(US$36 million) in the June quarter. The cash balance at the end of September
2002 was R1,439 million (US$136 million) as compared to R2,027 million (US$196
million) at the end of the June 2002 quarter. Debt at the end of September was
R1,933 million (US$182 million) as compared to R1,886 million at the end of June
2002. Cash net of both long and short term debt at the end of the quarter was a
negative R494 million.
Quarter ended 30 September 2002 compared to quarter ended 30 September 2001.
Attributable gold production increased 28 per cent from 886,000 ounces to
1,130,000 ounces mainly due to the acquisition of St Ives and Agnew in Australia
and Damang in Ghana. Operating cost increased from R1,611 million (US$193
million) to R2,402 million (US$231 million) mainly as a result of these
acquisitions.
Revenue increased 89 per cent in Rand terms (53 per cent in US Dollar terms)
from R2,091 million (US$250 million) to R3,964 million (US$382 million) due to
the higher production and an increase in the average US Dollar exchange rate
from R8.37/US Dollar to R10.38/US Dollar as well as an increase in the gold
price from US$274 per ounce (R73,646 per kilogram) in the September 2001 quarter
to US$313 per ounce (R104,542 per kilogram) in the September 2002 quarter. This
resulted in net earnings excluding gains and losses on financial instruments and
foreign debt increasing from R203 million (US$24 million) in the September 2001
quarter to R735 million (US$71 million) in the current quarter.
OPERATIONS
Overview
Attributable gold production for the September 2002 quarter decreased to
1,130,000 ounces from 1,159,000 ounces in the June 2002 quarter, of which 28 per
cent was produced from the international operations. Tarkwa had a particularly
good quarter with production increasing by 24 per cent. St Ives and Damang were
below last quarter`s performance as anticipated. At the South African
operations, production decreased by 14,000 ounces as a result of decreases at
Driefontein and Beatrix partially offset by additional volume at Kloof and St
Helena.
Ore milled decreased marginally to 10.8 million tons from 11.0 million tons
in the June 2002 quarter, with yields maintained at 3.4 grams per ton, the lower
yield at Beatrix being offset by that achieved at Kloof. Total cash costs for
the group increased 7 per cent from US$171 per ounce to US$183 per ounce as a
result of the increase in costs of 6 per cent, mainly due to the effect of the
negotiated wage increase, increased area mined at a slightly lower yield and
higher development.
South African Operations
Production at Driefontein decreased 7 per cent in line with expectations to
330,000 ounces, the decrease due to abnormally high yields encountered in the
previous quarter. This resulted in a slightly lower combined yield (6.4 grams
per ton against last quarter`s 6.5 grams per ton) despite the increase in
underground tons quarter on quarter, from 891,000 tons to 971,000 tons. Surface
tonnage decreased from 803,000 tons to 620,000 tons, at an average yield of 2.2
grams per ton. Total cash costs as a result of the lower production and
increased labour costs increased 11 per cent in Rand terms from R49,339 per
kilogram to R55,113 per kilogram and in US Dollar terms increased from US$147
per ounce to US$165 per ounce quarter on quarter. Capital expenditure at R124
million (US$12 million) is in line with plan.
Kloof once again achieved a 6 per cent increase in production quarter on
quarter, from 273,000 ounces to 290,000 ounces. This was again due to an
increase in underground tonnage (from 807,000 to 866,000 tons) while grade was
maintained. In line with the strategy at Kloof to displace low grade surface
sources with underground tonnage, the surface tonnage was decreased by a third
to 280,000 tons. Underground unit costs were reduced from R644 to R634 per ton,
this reduction being achieved after a 9 per cent reduction in the previous
quarter. The increase in gold output mostly offset the quarterly cost increases
and resulted in a marginal increase in the Rand per kilogram cost to R59,689 or
less than 1 per cent with total cash costs in US Dollar terms increasing
similarly from US$175 per ounce to US$179 per ounce. Capital expenditure
increased to just below R100 million (US$9 million) for the quarter.
In the Free State, production at Beatrix decreased 9 per cent to 157,000
ounces from the 172,000 ounces achieved in the previous quarter. This reduction
was despite an increase in tons milled from 1,135,000 tons to 1,164,000 tons
(resulting from an increase in underground tonnage) as this was offset by lower
yields in the current quarter at both underground and surface operations.
Yields are expected to improve in the near future. Total cash costs increased
to US$199 per ounce from US$165 per ounce and in Rand terms increased by 19 per
cent to R66,338 per kilogram.
St Helena`s production increased from 25,000 ounces to 34,000 ounces, as a
result of a much improved yield from 4.7 to 6.5 grams per ton for the quarter.
Tons milled remained virtually unchanged at 162,000. The increased production
resulted in a decrease in total cash costs from R92,318 per kilogram (US$273 per
ounce) to R76,499 per kilogram (US$229 per ounce). Net earnings of R30 million
were generated for the quarter.
International Operations
Ghana (Tarkwa and Damang)
Total production at Tarkwa increased 24 per cent from 120,000 ounces in the
June quarter to 149,000 ounces in the September quarter, mainly as a result of a
higher yield associated with a release of gold in process. Total cash costs
remained unchanged at US$180 per ounce, while cost per ton decreased marginally
from US$6.7 per ton to US$6.4 per ton due to the higher throughput. At Damang
production decreased 18 per cent to 70,000 ounces as a result of an anticipated
5 per cent drop in mill throughput and a 13 per cent decrease in yield, compared
to the previous quarter. Both factors were anticipated as the mill treated
harder and lower grade ore sources from both the open pit and stockpiles.
Although actual operating expenditure increased 5 per cent, total cash costs
increased from US$190 per ounce to US$263 per ounce, quarter on quarter. Apart
from the effect of lower yields the cash cost increase included US$1 million
gold in process movement charge, equivalent to US$15 per ounce. Despite lower
grade ores now being encountered total cash costs are expected to stabilise at
around US$240 per ounce.
Australia (St Ives and Agnew)
Australia`s net operating profit was maintained at R122 million (US$12
million) for the quarter. However, the weaker Australian Dollar as compared to
last quarter resulted in a reduction in the marked to market valuation of R258
million and R72 million on currency financial instruments and foreign debt
respectively for the quarter, as compared to a gain last quarter of R294 million
and R134 million respectively. A realised gain on financial instruments of R32
million was generated for the quarter as compared to a R3 million gain last
quarter. Earnings excluding gains and losses on financial instruments and
foreign debt were thus R66 million (US$6 million) after tax as compared to R67
million (US$6 million) for the June quarter.
Gold production at St Ives at 132,000 ounces, was 16 per cent below the June
quarter`s production of 157,000 ounces. Both processed tonnage and overall
yield were below those achieved last quarter. The lower throughput is largely
due to the fact that 104,000 tons were toll treated in the June quarter and no
toll treatment was undertaken in September. The lower yield was largely caused
by lower grades being fed to the mill due to a reduction in grades recovered
from the Junction underground mine. This followed continuation of the seismic
disturbances reported previously, and the need to reduce mining in the higher
grade N25 zone while remedial action was undertaken. Tonnage from this zone was
replaced with ore from the lower grade N75 zone and by October, mining had
started to build up again in the higher grade zone. Despite the lower volume
total cash costs were US$161 per ounce, the same level as the previous quarter.
St Ives contributed R218 million to operating profit with a moderate reduction
in capital expenditure to R135 million for the quarter.
Operations at Agnew moved back to profitability and the mine reported total
cash costs of US$236 per ounce (R78,723 per kilogram) down from US$311 per ounce
(R105,120 per kilogram) in the last quarter. This reduction follows a 4 per
cent increase in gold production and a substantial improvement in unit open pit
mining costs. While cash expenditure was essentially flat, open pit ore
production nearly doubled. The increased ore volumes led to an increase in
stockpiles and a concomitant increase in gold in process credits. At Agnew the
contribution to operating profit was R47 million compared to break even last
quarter due largely to the improvement in net operating costs associated with
higher ore mined. Capital expenditure amounted to R70 million. During the
quarter agreement to acquire the Agnew royalty (which was payable to WMC as part
of the purchase transaction) was closed involving a payment of A$4 million.
This amount will be amortised over the life of the mine and is thus included in
Agnew`s mining assets.
Metallurgical Plants
South African Operations
The Driefontein 2 plant new mill installation is complete and currently being
commissioned. A comprehensive clean-up and demolition program has commenced to
allow the recovery of gold locked up in the infrastructure of the older
facility. This program is expected to continue for a period of at least 2 years.
The feasibility study for the installation of the new mills at Driefontein 1
plant has been completed, with construction having commenced in October 2002. It
is expected that this project will be completed by the end of the current
financial year which will allow for the closure of the existing crushing and
milling plant. A similar demolition and gold recovery project will commence once
the new mills are fully operational.
Increased tonnage generation at Kloof has resulted in the Kloof 3 plant being
utilised for reef treatment. This was previously dedicated to the treatment of
low-grade waste rock. Investigations are currently underway to assess cost
effective options to increase its efficiencies. The potential to convert the
existing mills at Kloof 1 plant from conventional crushing and multiple milling
to modern SAG milling is under investigation.
Australian Operations
The upgrade of the St Ives plant to allow for a reduction in operating costs
and increased throughput capability is under investigation. A preliminary
scoping study has been completed and a further pre-feasibility study is in
progress. This study is scheduled for completion by the end of the year.
ARCTIC PLATINUM
During the quarter Arctic Platinum Partnership (APP) continued its assessment
of the Suhanko Project. The development scenario under examination involves the
open pit mining of the Konttijrvi and Ahmavaara deposits and the production of
a flotation concentrate with on-site milling and flotation facilities. The study
considered conventional downstream options for smelting the concentrate and
refining the base and precious metals.
The analysis so far suggests that due to the nature of the concentrate
produced by the Suhanko Project, a number of conventional downstream processes
and tolling options are sub optimal, particularly considered against the
background of a volatile Palladium market. As a result, the study has been
broadened to include alternative downstream treatment options, leading to a
delay in completion of the study, which had been slated for September 2002. A
further phase of work is already underway to assess these options to a greater
degree of certainty.
Exploration work during the quarter focused on consolidation of all recent
drilling programs and in particular, the assessment of the SK Reef ore bodies
from an open pit and underground mining point of view and exploration for higher
grade offset style occurrences identified in the vicinity of the Narkaus
Intrusion. Work in these areas continues.
Gold Fields and Outokumpu are continuing the joint funding of this program at
their respective interests of 51% and 49%.
EXPLORATION
Gold Fields` exploration activities have increased in response to a rising
gold price, however, due to the worldwide decline in exploration spending on
gold over the last 5 years this consists essentially of early stage
opportunities. Drilling was conducted on five projects in Guatemala, Ghana,
Bulgaria, Brazil and Australia. In addition, the Exploration group has been
assisting operations to enhance value at St Ives, Agnew and Damang through
aggressive exploration programs. New opportunities are being examined in
Tanzania, Burkina Faso, Democratic Republic of Congo, China, Ecuador, Chile,
Canada and Eritrea.
The company continues to reduce the risk associated with initial entry into
new areas by effectively employing equity investments in junior companies
experienced in operating in these countries, with options to joint venture if
programs are successful.
Investment into China
During the quarter Gold Fields made a A$10 million investment into an
Australian gold company, Sino Mining, to secure a 10 per cent interest in that
company.
Whilst Sino has a small mine producing 100,000 ounces, the principal reason
for this investment is to actively participate in exploration activities with
Sino across several highly promising prospects and to leverage off existing Sino
management`s expertise in this region.
ST HELENA
The sale of the St Helena mine to the ARMgold/Harmony FreeGold Joint Venture
Company was finalised and became effective on 30 October 2002.
OUTLOOK
December quarter gold production is expected to be marginally below that
achieved in the September quarter due to the sale of St Helena and slightly
lower production from Tarkwa, as a result of a planned lower yield.
BASIS OF ACCOUNTING
The unaudited results for the quarter have been prepared on the International
Accounting Standards (IAS) basis. The detailed financial, operational and
development results for the September 2002 quarter are submitted in this report.
These consolidated quarterly statements are prepared in accordance with IAS
34, Interim Financial Reporting. The accounting policies are consistent with
those applied at the previous year-end.
ID Cockerill
CHIEF EXECUTIVE OFFICER
7 November 2002
Income Statement
International Accounting Standards Basis
SA RAND Quarter
(Figures are in millions September June September
unless otherwise stated) 2002 2002 2001
Revenue 3,963.5 3,825.7 2,090.8
Operating costs 2,402.2 2,261.2 1,611.0
Gold inventory change (16.4) (45.3) (17.7)
Operating profit 1,577.7 1,609.8 497.5
Amortisation and depreciation 341.9 274.6 151.5
Net operating profit 1,235.8 1,335.2 346.0
Finance income/(cost) (38.8) 146.9 4.3
- Net Interest received/(paid) 33.0 23.0 4.3
- Unrealised gain/(loss) on foreign debt,
net of cash (71.8) 133.7 -
- Realised gain/(loss) on foreign debt,
net of cash - (9.8) -
Unrealised gain/(loss) on financial instruments (258.0) 297.2 -
Realised gain/(loss) on financial instruments 56.1 48.2 -
Other income 11.0 19.9 5.6
Exploration (45.5) (21.2) (26.0)
Profit before tax and exceptional items 960.6 1,826.2 329.9
Exceptional gain/(loss) - (44.6) -
Profit before taxation 960.6 1,781.6 329.9
Mining and income taxation 385.7 563.2 104.8
- Normal taxation 288.7 212.7 34.0
- Deferred taxation 97.0 350.5 70.8
Profit after taxation 574.9 1,218.4 225.1
Minority interest 33.2 38.4 21.7
Net earnings 541.7 1,180.0 203.4
Exceptional items:
New York listing and associated costs - (44.6) -
Total exceptional items - (44.6) -
Taxation - - -
Net exceptional items after tax and minorities - (44.6) -
Net earnings per share (cents) 115 251 45
Headline earnings 541.7 1,180.0 203.4
Headline earnings per share (cents) 115 251 45
Diluted earnings per share (cents) 114 248 44
Net earnings excluding gains and losses
on financial instruments and foreign debt,
net of cash 735.1 844.9 203.4
Net earnings per share excluding gains and
losses on financial instruments and
foreign debt, net of cash (cents) 156 180 45
Gold sold - managed less capitalised kg 37,913 36,427 28,390
Gold price received R/kg 104,542 105,024 73,646
Total cash costs R/kg 61,222 57,935 53,829
US DOLLARS Quarter
(Figures are in millions September June September
unless otherwise stated) 2002 2002 2001
Revenue 381.8 372.2 249.8
Operating costs 231.4 218.9 192.5
Gold inventory change (1.6) (4.0) (2.1)
Operating profit 152.0 157.3 59.4
Amortisation and depreciation 32.9 28.4 18.1
Net operating profit 119.1 128.9 41.3
Finance income/(cost) (3.7) 14.7 0.5
- Net Interest received/(paid) 3.2 2.7 0.5
- Unrealised gain/(loss) on foreign debt,
net of cash (6.9) 13.0 -
- Realised gain/(loss) on foreign debt,
net of cash - (1.0) -
Unrealised gain/(loss) on financial instruments (24.9) 30.4 -
Realised gain/(loss) on financial instruments 5.4 4.2 -
Other income 1.1 (1.2) 0.7
Exploration (4.4) (2.0) (3.1)
Profit before tax and exceptional items 92.6 175.0 39.4
Exceptional gain/(loss) - (4.4) -
Profit before taxation 92.6 170.6 39.4
Mining and income taxation 37.1 54.6 12.6
- Normal taxation 27.8 20.8 4.1
- Deferred taxation 9.3 33.8 8.5
Profit after taxation 55.5 116.0 26.8
Minority interest 3.2 3.8 2.6
Net earnings 52.3 112.2 24.2
Exceptional items:
New York listing and associated costs - (4.4) -
Total exceptional items - (4.4) -
Taxation - - -
Net exceptional items after tax and minorities - (4.4) -
Net earnings per share (cents) 11 24 5
Headline earnings 52.3 112.2 24.2
Headline earnings per share (cents) 11 24 5
Diluted earnings per share (cents) 11 24 5
Net earnings excluding gains and losses on
financial instruments and foreign debt,
net of cash 70.8 80.4 24.2
Net earnings per share excluding gains and
losses on financial instruments and
foreign debt, net of cash (cents) 15 17 5
Exchange rate - SA Rand/US Dollar 10.38 10.51 8.37
Gold sold - managed less capitalised ozs (000) 1,219 1,171 913
Gold price received $/oz 313 311 274
Total cash costs $/oz 183 171 200
Balance Sheets
International Accounting Standards Basis
SA Rand US Dollars
(Figures are in millions
unless otherwise stated)
September June September June
2002 2002 2002 2002
Mining and mineral assets 15,247.3 15,064.6 1,435.7 1,454.1
Non-current assets 260.3 252.7 24.5 24.4
Investments 899.1 797.8 84.7 77.0
Current assets 3,453.9 4,256.2 325.2 410.9
- Cash and deposits 1,439.1 2,027.1 135.5 195.7
- Other current assets 2,014.8 2,229.1 189.7 215.2
Total assets 19,860.6 20,371.3 1,870.1 1,966.4
Shareholders` equity 10,723.1 11,095.8 1,009.7 1,071.0
Outside shareholders` interest 611.0 567.1 57.5 54.7
Deferred taxation 3,829.2 3,736.5 360.6 360.7
Long-term loans 1,539.9 1,502.2 145.0 145.0
Environmental rehabilitation
provisions 776.1 770.2 73.1 74.3
Post-retirement health care
provisions 262.6 260.2 24.7 25.1
Current liabilities 2,118.7 2,439.3 199.5 235.6
- Other current liabilities 1,726.0 2,055.9 162.5 198.6
- Current portion of long term loans 392.7 383.4 37.0 37.0
Total equity and liabilities 19,860.6 20,371.3 1,870.1 1,966.4
S.A. Rand/U.S. Dollar conversion rate 10.62 10.36
Condensed Statements of Changes in Equity
SA Rand US Dollars
(Figures are in millions)
September September September September
2002 2001 2002 2001
Balance as at the beginning
of the financial year 11,095.8 7,075.6 1,071.0 876.8
Currency translation adjustment
and other 11.6 202.2 (27.6) (69.4)
Issue of share capital 0.6 19.1 0.1 2.1
Marked to market valuation of
listed investments 88.4 11.8 8.3 1.3
Increase in share premium 23.5 - 2.2 -
Dividends (1,038.5) (182.5) (96.6) (21.5)
Net earnings 541.7 203.4 52.3 24.2
Balance as at the end of September 10,723.1 7,329.6 1,009.7 813.5
Cash Flow Statement
International Accounting Standards Basis
SA RAND Quarter
September June September
(Figures are in millions) 2002 2002 2001
Cash flow from operating activities 995.7 1,446.2 390.0
Profit before tax and exceptional items 960.6 1,826.2 329.9
Exceptional items - (44.6) -
Amortisation and depreciation 341.9 274.6 151.5
Change in working capital (162.3) 15.7 (143.9)
Taxation paid (486.2) (178.3) (16.9)
Other non-cash items 341.7 (447.4) 69.4
Dividends paid (1,038.5) (29.1) (182.5)
Cash utilised in investing activities (575.4) (728.1) (331.0)
Capital expenditure - net (557.2) (542.5) (300.9)
Purchase of investments - net (12.8) (116.6) (25.5)
Investments in environmental trust funds
and post retirement health care payments (5.4) (69.0) (4.6)
Cash flow from financing activities 24.1 (326.9) 209.5
Loans raised/(repaid) - (325.9) 200.0
Outside shareholder`s loan repaid - (20.9) -
Shares issued 24.1 19.9 9.5
Net cash inflow/(outflow) (594.1) 362.1 86.0
Translation adjustment 6.1 (63.9) -
Cash at beginning of period 2,027.1 1,728.9 190.0
Cash at end of period 1,439.1 2,027.1 276.0
US DOLLARS Quarter
September June September
(Figures are in millions) 2002 2002 2001
Cash flow from operating activities 95.3 140.1 47.3
Profit before tax and exceptional items 92.6 175.0 39.4
Exceptional items - (4.4) -
Amortisation and depreciation 32.9 28.4 18.1
Change in working capital (15.6) 1.5 (16.0)
Taxation paid (47.5) (17.2) (1.9)
Other non-cash items 32.9 (43.2) 7.7
Dividends paid (96.6) (2.9) (21.5)
Cash utilised in investing activities (55.4) (70.4) (36.7)
Capital expenditure - net (53.7) (52.4) (33.4)
Purchase of investments - net (1.2) (11.3) (2.8)
Investments in environmental trust funds
and post retirement health care payments (0.5) (6.7) (0.5)
Cash flow from financing activities 2.3 (31.2) 23.3
Loans raised/(repaid) - (31.0) 22.2
Outside shareholder`s loan repaid - (2.1) -
Shares issued 2.3 1.9 1.1
Net cash inflow/(outflow) (54.4) 35.6 12.4
Translation adjustment (5.8) 8.2 (5.3)
Cash at beginning of period 195.7 151.9 23.5
Cash at end of period 135.5 195.7 30.6
Hedging
POLICY
The Group`s policy is to remain unhedged. However, hedges are sometimes
undertaken on a project specific basis as follows:
* to protect cash flows at times of significant expenditure,
* for specific debt servicing requirements, and
* to safeguard the viability of higher cost operations.
Gold Fields may from time to time establish currency financial instruments to
protect underlying cash flows.
Gold Fields has various currency financial instruments - those remaining are
described in the schedule. It has been decided not to account for these
instruments under the hedge accounting rules of IAS 39 and accordingly the
positions have been marked to market at the quarter end.
CURRENCY FINANCIAL INSTRUMENTS
Year ended 30 June 2003 2004 2005 2006 2007 TOTAL
US DOLLAR / AUSTRALIAN DOLLAR
Forward sales:
Amount (US Dollars) -000`s 37,500 50,000 50,000 50,000 37,500 225,000
Average Rate (USD/AUD) 0.4934 0.4934 0.4934 0.4934 0.4934
Zero cost collar:
Amount (US Dollars) -000`s 37,500 50,000 50,000 50,000 37,500 225,000
Average downside protection
level (USD/AUD) 0.5191 0.5191 0.5191 0.5191 0.5191
Average upside
benefit cap (USD/AUD) 0.4289 0.4289 0.4289 0.4289 0.4289
The marked to market value of all transactions making up the positions in the
above table was a positive R171.0 million (US$16.1 million). The value was based
on exchange rates of R/USD10.62 and USD/AUD 0.5466 and the prevailing interest
rates and volatilities at the time. This compares to a marked to market value
at the end of the previous quarter of a positive R447.2 million (US$43.2
million). The difference has been accounted for in the income statement.
Year ended 30 June 2003 2004 2005 2006 2007 TOTAL
RAND / US DOLLAR
Forward sales:
Amount (US Dollars) -000`s 13,000 13,000
Average Rate (R/USD) 13.3363
The marked to market value of the transaction making up the position in the
above table was a positive R33.5 million (US$3.2 million). The value was based
on the exchange rate of R/USD 10.62 and the prevailing interest rates and
volatilities at the time. This compares to a marked to market value at the end
of the previous quarter of a positive R32.9 million (US$3.2 million). The
difference has been accounted for in the income statement.
The Rand / US Dollar financial instrument of US$13 million was closed out
after quarter end, on 2 October 2002. A positive cash flow of R34.0 million was
achieved.
Total Cash Costs
(All figures are in Rand millions
unless otherwise stated) Driefontein Kloof Free State Division
Division Division Beatrix St Helena Ghana
Operating costs(1) Sept 2002 611.2 565.6 340.7 82.2
June 2002 583.7 489.9 316.1 72.4
Gold in process
and inventory change*
Sept 2002 34.0 3.6 - -
June 2002 (34.0) (3.6) - -
Less: Rehabilitation costs
Sept 2002 2.8 2.3 0.7 0.1
June 2002 2.8 1.6 0.7 0.2
Production taxes
Sept 2002 0.4 4.2 1.5 (0.2)
June 2002 4.5 4.4 1.6 0.2
General and admin
Sept 2002 37.7 26.0 16.6 1.7
June 2002 38.0 26.1 16.8 1.3
Cash operating costs
Sept 2002 604.3 536.7 321.9 80.6
June 2002 504.4 454.2 297.0 70.7
Plus: Production taxes
Sept 2002 0.4 4.2 1.5 (0.2)
June 2002 4.5 4.4 1.6 0.2
Royalties Sept 2002 - - - -
June 2002 - - - -
TOTAL CASH COSTS(2)Sept 2002 604.7 540.9 323.4 80.4
June 2002 508.9 458.6 298.6 70.9
Plus: Amortisation*
Sept 2002 58.1 49.3 21.6 -
June 2002 58.3 35.4 16.7 -
Rehabilitation
Sept 2002 2.8 2.3 0.7 0.1
June 2002 2.8 1.6 0.7 0.2
TOTAL PRODUCTION COSTS(3)
Sept 2002 665.6 592.5 345.7 80.5
June 2002 570.0 495.6 316.0 71.1
Gold sold - thousand ounces #
Sept 2002 352.8 291.4 156.7 33.8
June 2002 329.6 249.4 172.3 24.7
TOTAL CASH COSTS - US$/oz
Sept 2002 165 179 199 229
June 2002 147 175 165 273
TOTAL PRODUCTION COSTS - US$/oz
Sept 2002 182 196 212 230
June 2002 165 189 175 274
(All figures are in Rand millions
unless otherwise stated) Ghana Australia Total Mine
Tarkwa Damang St Ives Agnew Operations
Operating costs(1)Sept 2002 265.0 178.7 232.9 125.9 2,402.2
June 2002 259.2 174.3 235.3 130.3 2,261.2
Gold in process and
inventory change*
Sept 2002 13.2 11.0 (12.8) (43.7) 5.3
June 2002 (32.2) (7.6) 37.1 (19.9) (60.2)
Less: Rehabilitation costs
Sept 2002 0.2 0.4 0.9 0.3 7.7
June 2002 0.3 0.1 3.6 6.5 15.8
Production taxes
Sept 2002 - - - - 5.9
June 2002 - - - - 10.7
General and admin
Sept 2002 15.0 4.1 12.0 2.8 115.9
June 2002 12.0 3.8 8.9 1.6 108.5
Cash operating costs
Sept 2002 263.0 185.2 207.2 79.1 2,278.0
June 2002 214.7 162.8 259.9 102.3 2,066.0
Plus: Production taxes
Sept 2002 - - - - 5.9
June 2002 - - - - 10.7
Royalties Sept 2002 14.5 6.8 13.6 2.3 37.2
June 2002 11.9 8.5 10.9 2.4 33.7
TOTAL CASH COSTS(2)
Sept 2002 277.5 192.0 220.8 81.4 2,321.1
June 2002 226.6 171.3 270.8 104.7 2,110.4
Plus: Amortisation*
Sept 2002 39.0 17.4 116.4 310.8
June 2002 31.5 10.7 109.2 261.8
Rehabilitation
Sept 2002 0.2 0.4 1.2 7.7
June 2002 0.3 0.1 10.1 15.8
TOTAL PRODUCTION COSTS(3)
Sept 2002 316.7 209.8 419.8 2,630.6
June 2002 258.4 182.1 494.8 2,388.0
Gold sold - thousand ounces#
Sept 2002 148.8 70.2 132.0 33.2 1,218.9
June 2002 120.1 85.7 157.4 32.0 1,171.2
TOTAL CASH COSTS - US$/oz
Sept 2002 180 263 161 236 183
June 2002 180 190 164 311 171
TOTAL PRODUCTION COSTS - US$/oz
Sept 2002 205 288 245 208
June 2002 205 202 249 194
DEFINITIONS
