| Thu 30 Jan 2003, 9:50 | | GOLDFIELDS |
|
Unaudited
NET EARNINGS INCREASE OVER 50% QUARTER ON QUARTER
HIGHLIGHTS
* Strong improvement in safety performance
* Good cost control continues
* Net earnings up 51 per cent to R817 million (US$83 million)
* Attributable gold production of 1.09 million ounces.
* Operating profit of R1.32 billion achieved, down from the previous quarter
due to a stronger Rand and planned lower production at Tarkwa and St Ives.
STOCK DATA
Number of shares in issue
- at 31 December 2002 471,957,423
- average for the quarter 471,777,323
Free Float 100%
ADR Ratio 1:1
Bloomberg / Reuters GFISJ / GFLJ.J
JSE SECURITIES EXCHANGE SOUTH AFRICA- [GFI]
Range - Quarter SAR96.38 - SAR129.49
Average Volume - Quarter 1,760,000 shares / day
NYSE - (GFI)
Range - Quarter $9.95 - $14.84
Average Volume - Quarter 1,560,000 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
SALIENT FEATURES
SA Rand
Six months to Quarter
Dec Dec Dec Sept Dec
2001 2002 2001 2002 2002
58,147 69,093 30,592 35,163 33,930 kg Gold produced*
54,450 61,528 55,013 61,222 61,853 R/kg Total cash costs
16,029 21,271 8,354 10,711 10,560 000 Tons milled
83,077 102,808 91,627 104,542 100,969 R/kg Revenue
213 223 215 224 222 R/ton Operating costs
1,561 2,897 1,064 1,578 1,319 Rm Operating profit
843 1,359 640 542 817 Rm Net earnings
184 288 139 115 173 SA c.p.s.
826 1,309 622 735 574 Rm Net earnings excluding
gains and losses on
financial instruments and
foreign debt, net of cash
and exceptional items
180 278 135 156 122 SA c.p.s. Net earnings
excluding gains and losses
on financial instruments and
foreign debt, net of cash
and exceptional items
US Dollars
Quarter Six months to
Dec Dec Dec Sept Dec
1,091 1,130 984 2,221 1,870 oz (000) Gold produced*
197 183 169 190 183 $/oz Total cash costs
10,560 10,711 8,354 21,271 16,029 000 Tons milled
321 313 279 318 277 $/oz Revenue
23 22 21 22 23 $/ton Operating costs
136 152 110 288 169 $m Operating profit
83 52 67 135 91 $m Net earnings
18 11 15 29 20 US c.p.s.
59 71 65 130 89 $m Net earnings excluding
gains and losses on
financial instruments and
foreign debt, net of cash
and exceptional items
13 15 14 28 19 US c.p.s. Net earnings
excluding gains and losses
on financial instruments and
foreign debt, net of cash
and exceptional items
*Attributable - All companies wholly owned except for Ghana (71.1%).
DEAR SHAREHOLDERS
During the December quarter your Company continued the positive operational
trends established in the preceding eight quarters. Most notable during this
quarter has been the significant improvement in the overall safety performance
of all of our mines, resulting in a fatal injury frequency rate of 0.14 per
million man-hours worked, a 36 per cent improvement over the prior quarter.
This bears testimony to the exacting focus placed on safe working practices at
all levels of the organisation as well as the "stop, fix and continue"
programme, which has now been entrenched.
During the quarter all operations performed largely to plan with, in
particular, the three South African divisions maintaining a level of consistency
that has become a Gold Fields hallmark. Despite lower gold production at Tarkwa
due to movements in gold in process, both the Tarkwa and Damang mines performed
to expectation, likewise Agnew in Australia. St Ives did well to come to grips
with the seismicity issues at the key Junction operation, positioning it for a
recovery to previous levels over the next few quarters.
Gold production remained stable at 1.09 million ounces, the marginal decline
reflecting the sale of St Helena, which became unconditional during the quarter.
Operating profit declined to R1,319 million largely as a result of the
strengthening of the South African Rand, while net earnings increased by 51 per
cent to R817 million. This was largely as a result of the 3 per cent
appreciation of the Australian Dollar against the United States Dollar,
resulting in a net gain on financial instruments and foreign debt. This
contrasted with a weakening of the Australian Dollar in the previous quarter,
which resulted in a loss on financial instruments in that quarter.
At an operational level the containment of costs continued to be a major
focus. The success of these efforts is evident when comparing the year-on-year
increase in Rand per ton at the South African operations, which was contained to
only 6 per cent. This is a significant achievement during a period that saw
strong inflationary pressures brought about by wage increases and the effect of
the devaluation of the South African Rand early in 2002.
Your Company has made significant progress during the quarter in positioning
itself, both at a corporate and an operational level, to ensure a speedy and
seamless compliance with the requirements of the new Minerals and Petroleum
Development Bill, the accompanying Mining Charter and the long awaited
scorecard. Preparations include the groundwork to identify and prepare
opportunities for collaboration with potential Black Economic Empowerment
partners, the re-positioning of our procurement activities, various social
investment projects, as well as a range of employee-related schemes in fields
such as employment equity, training and education.
During the quarter we withdrew our F1 filing through which we had proposed to
raise money in the United States capital markets. This was done principally
because the requirement for additional funds had diminished to such an extent
that all requirements can be met from internal sources. The significant
increase in the price of gold since the withdrawal has proven this to have been
the correct decision. In the event that we should require external capital in
the future, a shelf filing could be submitted at any time after May of this
year, the first anniversary of our initial listing on the NYSE.
In conclusion, it is the opinion of your management team that the gold market
holds significant promise to the upside, underpinned by the continued structural
weakness of the United States Dollar and global equity markets and, albeit to a
lesser extent, the threat of military conflict in Iraq and the Middle East. It
is also quite clear that gold appears to have retained its age old reputation as
a viable alternative investment during periods of economic uncertainty. This is
a trend we see continuing for some time.
Your Company is ideally positioned to benefit from the anticipated sustained
upward trend in the price of gold. It is expected that our operations will
maintain current levels of production for the remainder of the year. Being
totally unhedged to the gold price provides full exposure to the upside in the
price; our balance sheet is very strong; and we have an exciting pipeline of
advanced organic growth projects under consideration.
2003 Promises to be an exciting and rewarding year for all stakeholders!
Yours sincerely
ID Cockerill
CHIEF EXECUTIVE OFFICER
30 January 2003
Commentary
HEALTH AND SAFETY
Whilst we regret that five fatalities occurred during the quarter, the fatal
injury frequency rate again reduced and at 0.14 per million man-hours worked was
36 per cent lower than the previous quarter. The lost day injury frequency rate
improved by 9 per cent to 13 per million man-hours worked. The serious injury
frequency rate improved by 14 per cent on the previous quarter and is now at 6
per million man-hours worked.
The health and safety initiatives continue to have a positive impact on the
statistics and further improvements are expected. During the quarter Driefontein
achieved one million fatality free shifts.
The international operations, whose results are included above, continue to
deliver good safety performance.
FINANCIAL
Quarter ended 31 December 2002
Net earnings for the quarter amounted to R817 million (US$83 million),
compared to R542 million (US$52 million) in the previous quarter - an increase
of over 50 per cent. This increase was due to a net gain on financial
instruments and foreign debt as a result of a 3 per cent appreciation of the
Australian Dollar against the US Dollar, from a close of 54.6 US cents at the
end of the September quarter to 56.3 US cents at the end of the December
quarter. The strengthening of the Australian Dollar during the quarter
contrasted with a weakening of the currency in the previous quarter which
resulted in a loss on financial instruments in that quarter.
Also included in this quarter`s earnings is the net income from the disposal
of St Helena which amounted to R103 million (US$10 million) after tax.
Earnings excluding net gains on financial instruments and foreign debt as
well as the profit from the disposal of the St Helena mine amounted to R574
million (US$59 million), compared to R735 million (US$71 million) last quarter.
This was due to lower prices achieved and higher gold sold than produced in the
previous quarter due to timing of gold shipments at the beginning of the
previous quarter and a planned reduction in gold output at Tarkwa and St Ives.
Revenue for the quarter was R3,607 million (US$370 million), a decrease of
R357 million or 9 per cent (in Rand terms) from the September 2002 quarter of
R3,964 million (US$382 million). The Rand gold price received decreased from
R104,542 per kilogram to R100,969 per kilogram due to the strengthening of the
quarterly average Rand/US Dollar exchange rate from R10.38 in the September
quarter to R9.77 in the December quarter. The effects of the stronger Rand were
partially offset by the average US Dollar gold price increasing from $313 per
ounce to $321 per ounce quarter on quarter.
The decrease in gold sold to 1,148,000 ounces in the December quarter from
1,219,000 ounces in the previous quarter is mainly due to a reduction of 24,000
ounces resulting from the disposal of St Helena, effective 30 October, lower
planned volume from Tarkwa and as a result of gold sold being 25,000 ounces
higher than gold produced in the previous quarter due to the timing of gold
shipments as referred to earlier.
Operating costs decreased by 2 per cent to R2,345 million (US$240 million)
for the quarter from R2,402 million (US$231 million) in the September quarter.
Costs at the South African operations, excluding St Helena, rose by 2 per cent
for the quarter, due to higher underground tons milled. Costs at the
international operations in US Dollar terms approximated those reported in the
previous quarter but were 5 per cent lower in Rand terms due to the
strengthening of the Rand against the US Dollar.
The lower gold sold and reduced Rand gold price resulted in a 16 per cent
reduction in operating profit to R1,319 million (US$136 million) compared to
R1,578 million (US$152 million) achieved in the September quarter.
Amortisation and depreciation increased marginally from R342 million (US$33
million) in the September 2002 quarter to R351 million (US$36 million) in the
current quarter. The increase in the amortisation charge is mainly due to the
inclusion of R8 million from Kloof 4 shaft.
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$425 million was outstanding under these instruments.
Outstanding debt at the Australian operations at the end of the quarter
amounted to US$133 million.
The Australian Dollar strengthened against the US Dollar from 54.6 cents at
the end of the September quarter to 56.3 cents at the end of the current
quarter. This contrasted with a weakening of the Australian Dollar in the
previous quarter from 57.7 cents to 54.6 cents. The strengthening of the
Australian Dollar in the current quarter resulted in an unrealised gain on
foreign debt of R36 million (US$3 million) as compared to an unrealised loss of
R72 million (US$7 million) in the September 2002 quarter. The repayment of US$16
million of the loan in the current quarter resulted in a realised loss of R4
million (US$0.4 million).
Gains on financial instruments were R166 million (US$16 million) in the
current quarter compared to a loss of R202 million (US$20 million) in the
previous quarter. R143 million of the gain in the current quarter was as a
result of the strengthening of the Australian Dollar with the balance being the
amortisation of deferred hedging gains at Damang of R23 million (US$2 million)
for the quarter in line with the previous quarter. At the end of the December
quarter, the marked to market value of the financial instruments was a positive
R253 million (US$29 million). Details of the financial instruments are provided
on page 9 of this report.
Profit before taxation and exceptional items was R1,178 million (US$120
million) compared to R961 million (US$93 million) posted in the September 2002
quarter. The exceptional items recorded in the December quarter relates mainly
to the book profits on the disposal of St Helena which resulted in a profit of
R103 million after providing for R19 million tax.
Taxation at R449 million is 16 per cent above the previous quarter as a
result of the increased deferred tax at the Australian operations due to the
significant increase in the value of the currency financial instruments and the
unrealised exchange gain on foreign debt. This is partially offset by the
decrease in the normal tax charge arising from lower operating profit.
Net earnings after deducting minorities was R817 million (US$83 million) or 173
cents per share (US18 cents) compared to R542 million (US$52 million) or 115
cents per share (US11 cents) in the previous quarter.
Operating cash flow for the quarter was R1,340 million (US$137 million), an
increase of R344 million when compared to operating cash flow in the September
quarter of R996 million (US$95 million). The increase is mainly due to a
decrease in taxes paid amounting to R444 million (US$43 million) which arose
from the payment of financial year end taxes in the previous quarter.
Capital expenditure was R530 million (US$54 million) as compared to R557
million (US$54 million) in the September 2002 quarter. At the South African
operations R343 million was spent on capital with the significant expenditure
directed at the major projects, R78 million at the 1E and 5E shafts and R33
million on the 2 plant new mill installation at Driefontein, with further
development at Kloof 4 shaft of R70 million and Beatrix 3 shaft of R57 million.
The Australian operations incurred capital expenditure of R130 million, the
majority on development of existing projects and exploration aimed at increasing
the ore reserve base at those operations.
Net cash inflow for the quarter was thus R597 million (US$59 million) after
taking account of loan repayments of R201 million (US$22 million), as compared
to an outflow of R594 million (US$54 million) in the September quarter resulting
from the year end dividend and tax payments. The cash balance at the end of
December 2002 was R1,926 million (US$217 million) as compared to R1,439 million
(US$136 million) at the end of the September 2002 quarter. Debt at the end of
December was R1,422 million (US$161 million) as compared to R1,933 million
(US$182 million) at the end of September 2002. Cash net of both long-term and
short-term debt at the end of the quarter was a positive R504 million (US$57
million) compared to negative R494 million (US$47 million) last quarter.
Quarter ended 30 December 2002 compared to quarter ended 30 December 2001.
Attributable gold production increased 11 per cent from 984,000 ounces to
1,091,000 ounces mainly due to the acquisition of St Ives and Agnew in Australia
and Damang in Ghana. Operating cost increased from R1,781 million (US$175
million) to R2,345 million (US$240 million) mainly as a result of these
acquisitions.
Revenue increased 26 per cent in Rand terms (29 per cent in US Dollar terms)
from R2,869 million (US$287 million) to R3,607 million (US$370 million) due to
the higher production and an increase in the average gold price from US$279 per
ounce (R91,627 per kilogram) to US$321 per ounce (R100,969 per kilogram) in the
December 2002 quarter. Earnings increased from R640 million (US$67 million) in
the December 2001 quarter to R817 million (US$83 million) in the current
quarter.
Six months ended 31 December 2002 compared to six months ended 31 December
2001
Attributable gold production increased 19 per cent from 1,870,000 ounces to
2,221,000 ounces as a result of the acquisitions of the Australian and Damang
operations included for the full six months to December 2002 as opposed to one
month of Australia and no Damang operations included in the six months to
December 2001. Operating costs similarly increased by R1,355 million (US$104
million) also as a result of the acquisitions.
Revenue increased by 53 per cent in Rand terms (40 per cent in US Dollar
terms) from R4,960 million (US$537 million) to R7,570 million (US$752 million)
due to increased production and an increase in the gold price from R83,077 to
R102,808 per kilogram in the six months ended 31 December 2002. This resulted in
net earnings increasing from R843 million (US$91 million) to R1,359 million
(US$135 million).
OPERATIONS
Overview
Attributable gold production for the December 2002 quarter decreased to
1,091,000 ounces from 1,130,000 ounces in the September 2002 quarter, of which
27 per cent was produced from the international operations. Damang and Agnew
had a steady quarter with slightly higher production than the previous quarter.
St Ives and Tarkwa, were below last quarter`s performance due to anticipated
lower yields at St Ives and an expected reduction of gold output at Tarkwa to
planned levels due largely to gold in process changes quarter on quarter. At
the South African operations, production remained fairly constant at Kloof,
Driefontein and Beatrix, while the disposal of St Helena on 30 October 2002,
resulted in the inclusion of only one month`s production at this operation in
the quarter. Ore milled decreased to 10.6 million tons from 10.7 million tons
in the September 2002 quarter, mainly due to lower throughput at Driefontein
surface operations due to the commissioning of the No. 2 plant`s new comminution
section. Yields were maintained at 3.4 grams per ton. Total cash costs for the
Group for the quarter in Rand terms were R61,853 per kilogram, very similar to
that achieved in the previous quarter of R61,222 per kilogram whilst in US
Dollar terms, total cash costs increased by 8 per cent, from US$183 per ounce to
US$197 per ounce mainly as a result of the strengthening of the Rand/US Dollar
exchange rate during the quarter from R10.38 to R9.77.
South African Operations
Production at Driefontein decreased marginally to 325,000 ounces, due to
slightly lower underground yields encountered in this quarter. However, due to
the increased proportion of underground ore milled, assisted by the higher
surface yields achieved this quarter (3.3 grams per ton compared to 2.2 grams
per ton last quarter), the combined yield increased from 6.4 grams per ton last
quarter to 7.0 grams per ton this quarter. Underground tonnage increased from
971,000 tons to 1,005,000 tons, while surface tonnage decreased from 620,000
tons to 442, 000 tons due to the previously mentioned No. 2 plant commissioning.
Total cash costs increased by 2 per cent in Rand terms from R55,113 per kilogram
to R56,396 per kilogram due to lower surface volumes and in US Dollar terms
increased from US$165 per ounce to US$180 per ounce quarter on quarter, as a
result of the strengthening Rand. Operating profit declined from R498 million
(US$48 million) in the September quarter to R412 million (US$42 million) in the
current quarter due to the lower gold price achieved and gold sold being higher
than gold produced in the previous quarter, resulting from the timing of gold
shipments as mentioned earlier. Capital expenditure at R131 million (US$13
million) is in line with the previous quarter.
Kloof once again achieved an increase in production quarter on quarter, from
290,000 ounces to 293,000 ounces. This was again due to an increase in
underground tonnage (from 866,000 tons to 913,000 tons) although at a slightly
lower yield. Surface tonnage was maintained at 285,000 tons at an improved
yield of 0.7 grams per ton compared to 0.5 grams per ton last quarter.
Underground unit costs reduced from R634 to R620 per ton, this reduction being
achieved on the back of improvements over the last two quarters. Total cash
costs increased by 3 per cent in Rand terms to R61,411 per kilogram and by 9 per
cent in US Dollar terms from US$179 per ounce to US$196 per ounce. The increase
in gold output was offset by the lower gold price and increased costs due to the
higher tons milled and operating profit accordingly decreased from R380 million
(US$37 million last quarter to R329 million (US$34 million) this quarter.
Capital expenditure was R109 million (US$11 million) for the quarter compared to
R97 million (US$9 million) in the previous quarter.
In the Free State, production at Beatrix increased 4 per cent to 163,000
ounces from 157,000 ounces achieved in the previous quarter. This increase was
due to marginally improved yields on underground (as anticipated last quarter)
and surface operations. Underground ore milled remained virtually unchanged at
1,009,000 tons while surface tons increased 9 per cent to 163,000 tons. Total
cash costs increased to US$211 per ounce from US$199 per ounce and in Rand terms
remained constant at R66,403 per kilogram.
St Helena was sold during the quarter to the Armgold/Harmony FreeGold Joint
Venture Company for R120 million (US$12 million) which generated net earnings of
R103 million (US$10 million) after tax. The sale became effective on 30
October. As a result only one month`s production from St Helena is included in
the December quarter`s results. This has resulted in gold produced for St
Helena decreasing to 10,000 ounces from 34,000 ounces. St Helena contributed R1
million (US$0.2 million) to the Group`s operating profit for the December 2002
quarter.
International Operations
Ghana (Tarkwa and Damang)
Production at Tarkwa decreased by 16 per cent from 149,000 ounces in the
September quarter to 126,000 ounces in the December quarter. The September
quarter production included a 9,000 ounce release of gold inventory from the
leach pads, while the December quarter reflects a 13,000 ounce increase in this
inventory. This move was related to interruptions to gold recovery operations
and the increasing height and changing configuration of leach pads. Unit
operating costs increased from US$6.7 to US$6.9 per ton largely as a result of
an increase in the stripping ratio quarter on quarter from 1.66 to 1.92. This,
combined with the decrease in effective yield, led to an increase in total cash
costs from US$180 per ounce in the September quarter to US$188 per ounce in the
December quarter. At Damang, production increased 5 per cent over the previous
quarter to 74,000 ounces as a result of marginally higher mill throughput and
head grades. Total cash costs decreased from US$263 per ounce to US$238 per
ounce quarter on quarter. The September quarter cost included a US$1 million
gold in process charge reflecting the consumption of stockpiles in that period,
which did not occur in the December quarter. This impact, along with higher
gold production, led to the unit cost decrease. The contribution from the
Ghanaion operations to the Group`s operating profit increased to 18 per cent and
was virtually unchanged at R231 million (US$24 million).
Australia (St Ives and Agnew)
Gold production at St Ives was 121,000 ounces, 8 per cent below the September
quarter`s production of 132,000 ounces. The biggest contributor to the decline
was a reduction in the throughput and head grade of the St Ives mill.
Throughput was affected by a one-week maintenance and relining shutdown
undertaken in October while head grade was affected by a number of mining
issues. The most significant effect arose from the continued seismicity at
Junction underground mine, throughout most of the quarter, limiting mining from
this high grade source, particularly on the N25 zone referred to in the last
quarter. This mine`s ability to offset volumes from the N25 zone with ores from
the lower-grade N75 zone was restricted by depletion of that source. By the end
of December the bulk of remedial and additional support-work on Junction had
been completed and during January planned volumes and grades were being achieved
from this mine.
Mill head grades were also affected by a decline in the average grade of open
pit ores mined, primarily with the completion of the high grade Argo stage 4.
During the quarter, a further campaign of toll milling was completed at a
neighbouring facility, contributing 6,000 ounces to St Ives` gold production.
The remedial work at Junction, together with the costs of the mill shutdown,
the tolling campaign and the decline in gold production, led to an increase in
total cash costs from US$161 per ounce (A$293 per ounce) in the September
quarter, to US$187 per ounce (A$336 per ounce) in the December quarter. St Ives
contributed R161 million (US$17 million) to operating profit compared to R218
million (US$21 million) in the previous quarter, with a moderate reduction in
capital expenditure to R108 million (US$11 million) for the quarter. The
reduction in operating profit is due to the lower production, increased costs
and a stronger Rand.
Gold production at Agnew increased 12 per cent to 37,000 ounces due largely
to a quarter on quarter move in gold inventories in the milling circuit. Mining
operations at Waroonga pit declined during the quarter due to continued wall
stability issues and anticipated reduced availability of economic ores in that
pit. During the quarter underground operations saw the build-up in stoping
volumes on the Kim and Deliverer mines, while operations at the Crusader mine
declined. The reduction in the gold in process credit at Agnew reflects the
reduction of open pit ore mining volumes and the concomitant reduction in the
volume of low grade ores being stockpiled, referred to previously. The mine
reported total cash costs of US$237 per ounce (A$426 per ounce), which is in
line with the previous quarter. The contribution to operating profit was R33
million (US$3 million), 31 per cent down when compared to last quarter due to
gold in process credits in the previous quarter. Capital expenditure amounted
to R22 million (US$2 million), down from R70 million (US$7 million) incurred in
the previous quarter, which included A$4 million for the buy-back of the Agnew
royalty.
The Australian operations contribution to Group operating profit reduced 27
per cent to R194 million (US$20 million) for the quarter. However, the stronger
Australian Dollar as compared to last quarter resulted in a gain on financial
instruments of R143 million and a net gain on foreign debt of R32 million for
the quarter. Earnings excluding gains and losses on financial instruments and
foreign debt were R29 million (US$3 million) after tax, as compared to R66
million (US$6 million) for the September quarter.
Metallurgical Plants
Throughput is steadily increasing at the newly commissioned Driefontein 2
plant milling installation. Initial problems experienced have largely been
resolved and the unit is expected to achieve design throughput in the March 2003
quarter. The clean-up and demolition program associated with the old milling
section is underway and is expected to continue for the next two years.
The installation of the new milling facility at Driefontein 1 plant is
progressing well, with the majority of the bulk civils complete. This project
remains on schedule for commissioning at the end of the current financial year.
A pre-feasibility study for the up-grade of the Kloof 1 plant milling
installation is scheduled to commence during the current quarter with
finalisation by the end of the financial year.
The conversion of the Kloof 3 plant to a carbon-in-pulp pump cell
installation and the expansion of the central elution facility is scheduled for
completion early in the new financial year. The completion of this project
would finalise the first phase of the metallurgical up-grade strategy.
INTERNATIONAL DEVELOPMENT PROJECTS
During the quarter, the Tarkwa mine completed the studies examining the long-
term exploitation strategy for that mine. The processing options examined
included the expansion of the current facilities with the construction of a 4.2
million tons per annum milling facility. The studies also examined various
mining strategies, including the conversion to owner mining, from the current
contract configuration. Consolidation and review of the studies is underway and
it is expected that investment decisions will be taken during the March quarter.
At Damang, exploration work continues to focus on defining and understanding
the extent and nature of conglomerate style mineralisation across that mine`s
entire property. Following infill drilling at Kwesie Lima and Tomento North,
resource modelling has been completed and various exploitation scenarios are
being examined. Metallurgical test work on ores from Kwesie Lima is also
underway. Framework drilling on Chida has broadly defined the extent and tenor
of gold mineralisation there and infill drilling will be undertaken over the
next two quarters. Framework exploration over the Chida to Abosso and Bonsa
areas also commenced in January. In total Damang is exploring some 27
kilometres of possible conglomerate strike length.
At St Ives, the optimisation study continued with particular focus on the
accelerated drilling of the Revenge and Intrepide complexes, in support of the
study which is examining a range of new and alternative mining and processing
configurations for that site. The processing options under examination range
from the refurbishment of the existing milling facility through to construction
of a new larger mill. It is expected that these studies will be completed during
the March quarter to allow the mine to advance to feasibility study shortly
thereafter.
Arctic Platinum continues to advance the study of a range of downstream
treatment options in line with the revised approach to the project reported in
the September report. Exploration work continues to focus on higher grade
targets, particularly the offset and SK styles of mineralisation within the
Narkaus Intrusion. Gold Fields and Outokumpu are continuing the joint funding
of this program at their respective interests of 51 per cent and 49 per cent.
DIVIDEND
In line with the Company`s policy of paying out 50 per cent of its earnings,
an interim dividend has been declared payable to all shareholders as follows:
- Interim dividend: 150 SA cents
- Last date to trade "CUM" dividend:
14 February 2003
- Sterling & US Dollar conversion date:
17 February 2003
- Commence trade "EX" dividend:
17 February 2003
- Record date: 21 February 2003
- Payment date: 24 February 2003
Share certificates may not be dematerialised or rematerialised between
Monday, 17 February 2003 and Friday, 21 February 2003, both dates inclusive.
OUTLOOK
Notwithstanding the Christmas break, March quarter gold production and costs
are expected to be in line with that achieved in this quarter.
BASIS OF ACCOUNTING
The unaudited results for the quarter and six months have been prepared on
the International Accounting Standards (IAS) basis. The detailed financial,
operational and development results for the December 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
30 January 2003
INCOME STATEMENT
International Accounting Standards Basis
SA RAND Quarter Six months to
(Figures are in millions December September December December December
unless otherwise stated) 2002 2002 2001 2002 2001
Revenue 3,606.8 3,963.5 2,869.4 7,570.3 4,960.2
Operating costs 2,344.7 2,402.2 1,780.5 4,746.9 3,391.5
Gold inventory change (57.4) (16.4) 24.9 (73.8) 7.2
Operating profit 1,319.5 1,577.7 1,064.0 2,897.2 1,561.5
Amortisation and depreciation 351.3 341.9 212.9 693.2 364.4
Net operating profit 968.2 1,235.8 851.1 2,204.0 1,197.1
Finance income/(cost) 86.7 (38.8) (36.4) 47.9 (32.1)
- Net Interest received/(paid)
and investment income 54.9 33.0 (0.5) 87.9 3.8
- Unrealised gain/(loss) on
foreign debt, net of cash 36.2 (71.8) (35.9) (35.6) (35.9)
- Realised gain/(loss) on
foreign debt, net of cash (4.4) - - (4.4) -
Gain/(loss) on
financial instruments 166.2 (201.9) 50.3 (35.7) 50.3
Other income/(cost) (8.0) 11.0 33.9 3.0 39.5
Exploration (34.8) (45.5) (24.4) (80.3) (50.4)
Profit before tax and
exceptional items 1,178.3 960.6 874.5 2,138.9 1,204.4
Exceptional gain/(loss) 123.0 - - 123.0 -
Profit before taxation 1,301.3 960.6 874.5 2,261.9 1,204.4
Mining and income taxation 449.1 385.7 211.7 834.8 316.5
- Normal taxation 254.6 288.7 170.2 543.3 204.2
- Deferred taxation 194.5 97.0 41.5 291.5 112.3
Profit after taxation 852.2 574.9 662.8 1,427.1 887.9
Minority interest 34.9 33.2 23.1 68.1 44.8
Net earnings 817.3 541.7 639.7 1,359.0 843.1
Exceptional items:
Disposal of St Helena 121.7 - - 121.7 -
Other 1.3 - - 1.3 -
Total exceptional items 123.0 - - 123.0 -
Taxation (19.2) - - (19.2) -
Net exceptional items after
tax and minorities 103.8 - - 103.8 -
Net earnings per share (cents) 173 115 139 288 184
Headline earnings 713.5 541.7 639.7 1,255.2 843.1
Headline earnings per share
(cents) 151 115 139 266 184
Diluted earnings per share
(cents) 172 114 138 286 183
Net earnings excluding gains
and losses on financial
instruments and foreign debt,
net of cash and
exceptional items 573.9 735.1 622.4 1,309.0 825.8
Net earnings per share
excluding gains and losses
on financial instruments
and foreign debt, net of
cash and exceptional items(cents) 122 156 135 278 180
Gold sold - managed less
capitalised kg 35,722 37,913 31,316 73,635 59,706
Gold price received R/kg 100,969 104,542 91,627 102,808 83,077
Total cash costs R/kg 61,853 61,222 55,013 61,528 54,450
Quarter Six months to
US DOLLARS Quarter Six months to
(Figures are in millions December September December December December
unless otherwise stated) 2002 2002 2001 2002 2001
Revenue 370.0 381.8 287.0 751.8 536.8
Operating costs 240.0 231.4 174.5 471.4 367.0
Gold inventory change (5.7) (1.6) 2.9 (7.3) 0.8
Operating profit 135.7 152.0 109.6 287.7 169.0
Amortisation and depreciation 35.9 32.9 21.3 68.8 39.4
Net operating profit 99.8 119.1 88.3 218.9 129.6
Finance income/(cost) 8.5 (3.7) (3.5) 4.8 (3.9)
- Net Interest received/(paid)
and investment income 5.5 3.2 - 8.7 -
- Unrealised gain/(loss)
on foreign debt, net of cash 3.4 (6.9) (3.5) (3.5) (3.9)
- Realised gain/(loss) on
foreign debt, net of cash (0.4) - - (0.4) -
Gain/(loss) on
financial instruments 16.0 (19.5) 5.4 (3.5) 5.4
Other income/(cost) (0.8) 1.1 3.1 0.3 4.7
Exploration (3.6) (4.4) (2.4) (8.0) (5.5)
Profit before tax and
exceptional items 119.9 92.6 90.9 212.5 130.3
Exceptional gain/(loss) 12.2 - - 12.2 -
Profit before taxation 132.1 92.6 90.9 224.7 130.3
Mining and income taxation 45.8 37.1 21.7 82.9 34.3
- Normal taxation 26.2 27.8 18.0 54.0 22.1
- Deferred taxation 19.6 9.3 3.7 28.9 12.2
Profit after taxation 86.3 55.5 69.2 141.8 96.0
Minority interest 3.6 3.2 2.2 6.8 4.8
Net earnings 82.7 52.3 67.0 135.0 91.2
Exceptional items:
Disposal of St Helena 12.1 - - 12.1 -
Other 0.1 - - 0.1 -
Total exceptional items 12.2 - - 12.2 -
Taxation (1.9) - - (1.9) -
Net exceptional items after
tax and minorities 10.3 - - 10.3 -
Net earnings per share (cents) 18 11 15 29 20
Headline earnings 72.4 52.3 67.0 124.7 91.2
Headline earnings per share
(cents) 15 11 15 26 20
Diluted earnings per share
(cents) 17 11 14 28 20
Net earnings excluding gains
and losses on financial
instruments and foreign debt,
net of cash and exceptional items 59.2 70.8 65.3 130.0 89.3
Net earnings per share
excluding gains and losses
on financial instruments
and foreign debt, net of
cash and exceptional items (cents) 13 15 14 28 19
Exchange rate - SA Rand/US Dollar 9.77 10.38 10.12 10.07 9.24
Gold sold - managed less
capitalised ozs (000) 1,148 1,219 1,007 2,367 1,920
Gold price received $/oz 321 313 279 318 277
Total cash costs $/oz 197 183 169 190 183
BALANCE SHEETS
International Accounting Standards Basis
SA Rand US Dollars
(Figures are in millions December June December June
unless otherwise stated) 2002 2002 2002 2002
Mining and mineral assets 14,739.9 15,064.6 1,663.6 1,454.1
Non-current assets 231.3 252.7 26.1 24.4
Investments 1,038.4 797.8 117.2 77.0
Current assets 3,696.0 4,256.2 417.2 410.9
- Cash and deposits 1,925.9 2,027.1 217.4 195.7
- Other current assets 1,770.1 2,229.1 199.8 215.2
Total assets 19,705.6 20,371.3 2,224.1 1,966.4
Shareholders` equity 11,005.5 11,095.8 1,242.2 1,071.0
Outside shareholders` interest 515.1 567.1 58.1 54.7
Deferred taxation 3,957.6 3,736.5 446.7 360.7
Long-term loans 1,093.9 1,502.2 123.5 145.0
Environmental rehabilitation
provisions 691.8 770.2 78.1 74.3
Post-retirement health
care provisions 265.3 260.2 29.9 25.1
Current liabilities 2,176.4 2,439.3 245.6 235.6
- Other current liabilities 1,848.8 2,055.9 208.6 198.6
- Current portion of
long term loans 327.6 383.4 37.0 37.0
Total equity and liabilities 19,705.6 20,371.3 2,224.1 1,966.4
S.A. Rand/U.S. Dollar conversion rate 8.86 10.36
CONDENSED STATEMENTS OF CHANGES IN EQUITY
SA Rand US Dollars
December December December December
(Figures are in millions) 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 (573.5) 804.5 116.6 (210.6)
Issue of share capital 0.8 565.3 0.1 47.1
Increase in share premium 15.0 - 1.5 -
Marked to market valuation
of listed investments 146.9 63.1 14.6 5.3
Dividends (1,038.5) (182.5) (96.6) (21.5)
Net earnings 1,359.0 843.1 135.0 67.0
Balance as at the end of December 11,005.5 9,169.1 1,242.2 764.1
CASH FLOW STATEMENT
International Accounting Standards Basis
SA RAND Quarter Six months to
December September December December December
(Figures are in millions) 2002 2002 2001 2002 2001
Cash flow from
operating activities 1,340.4 995.7 1,219.2 2,336.1 1,587.5
Profit before tax
and exceptional items 1,178.3 960.6 874.5 2,138.9 1,204.4
Exceptional items 123.0 - - 123.0 -
Amortisation and depreciation 351.3 341.9 212.9 693.2 364.4
Change in working capital 142.9 (162.3) 58.5 (19.4) (85.4)
Taxation paid (41.9) (486.2) (18.6) (528.1) (35.5)
Other non-cash items (413.2) 341.7 91.9 (71.5) 139.6
Dividends paid (29.1) (1,038.5) - (1,067.6) (182.5)
Ordinary shareholders - (1,038.5) - (1,038.5) (182.5)
Minority shareholders
in subsidiaries (29.1) - - (29.1) -
Cash utilised in
investing activities (485.4) (575.4)(2,202.9) (1,060.8)(2,533.9)
Capital expenditure - net (530.0) (557.2) (328.3) (1,087.2) (629.2)
Purchase of investments - net (61.2) (12.8) (21.4) (74.0) (46.9)
Environmental and post
retirement health care payments (14.2) (5.4) (4.9) (19.6) (9.5)
Disposal/(acquisition) of
operations/subsidiaries 120.0 - (1,848.3) 120.0 (1,848.3)
Cash flow from
financing activities (229.1) 24.1 1,505.2 (205.0) 1,714.7
Loans raised - - 1,694.9 - 1,894.9
Loans repaid (200.5) - (200.0) (200.5) (200.0)
Outside shareholder`s
loan repaid (35.5) - - (35.5) -
Shares issued 6.9 24.1 10.3 31.0 19.8
Net cash inflow/(outflow) 596.8 (594.1) 521.5 2.7 585.8
Translation adjustment (110.0) 6.1 90.0 (103.9) 111.7
Cash at beginning of period 1,439.1 2,027.1 276.0 2,027.1 190.0
Cash at end of period 1,925.9 1,439.1 887.5 1,925.9 887.5
US DOLLARS Quarter Six months to
December September December December December
(Figures are in millions) 2002 2002 2001 2002 2001
Cash flow from
operating activities 136.7 95.3 126.3 232.0 171.2
Profit before tax
and exceptional items 119.9 92.6 90.9 212.5 130.3
Exceptional items 12.2 - - 12.2 -
Amortisation and depreciation 35.9 32.9 21.3 68.8 39.4
Change in working capital 13.7 (15.6) 8.9 (1.9) (7.1)
Taxation paid (4.9) (47.5) (1.1) (52.4) (3.0)
Other non-cash items (40.1) 32.9 6.3 (7.2) 11.6
Dividends paid (2.9) (96.6) - (99.5) (21.5)
Ordinary shareholders - (96.6) - (96.6) (21.5)
Minority shareholders
in subsidiaries (2.9) - - (2.9) -
Cash utilised in
investing activities (50.0) (55.4) (216.1) (105.4) (252.8)
Capital expenditure - net (54.3) (53.7) (34.7) (108.0) (68.1)
Purchase of investments - net (6.2) (1.2) (1.1) (7.4) (3.9)
Environmental and post
retirement health care payments (1.4) (0.5) (0.3) (1.9) (0.8)
Disposal/(acquisition) of
operations/subsidiaries 11.9 - (180.0) 11.9 (180.0)
Cash flow from
financing activities (24.5) 2.3 143.4 (22.2) 166.7
Loans raised - - 165.0 - 187.2
Loans repaid (21.5) - (22.2) (21.5) (22.2)
Outside shareholder`s loan repaid (3.8) - - (3.8) -
Shares issued 0.8 2.3 0.6 3.1 1.7
Net cash inflow/(outflow) 59.3 (54.4) 53.6 4.9 63.6
Translation adjustment 22.6 (5.8) (10.2) 16.8 (13.1)
Cash at beginning of period 135.5 195.7 30.6 195.7 23.5
Cash at end of period 217.4 135.5 74.0 217.4 74.0
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 25,000 50,000 50,000 50,000 37,500 212,500
Average Rate (USD/AUD) 0.4934 0.4934 0.4934 0.4934 0.4934
Zero cost collar:
Amount (US Dollars) -000`s 25,000 50,000 50,000 50,000 37,500 212,500
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 R253.0 million (US$28.6 million). The value was based
on exchange rates of R/USD 8.86 and USD/AUD 0.5625 and the prevailing interest
rates and volatilities at the time.
TOTAL CASH COSTS
(All figures are in Rand millions
unless otherwise stated) Driefontein Kloof Free State Division
Division Division Beatrix St Helena
Operating costs(1) December 2002 609.1 586.5 354.0 33.4
September 2002 611.2 565.6 340.7 82.2
Financial year to date 1,220.3 1,152.1 694.7 115.6
Gold in process December 2002 - - - -
and inventory change*
September 2002 34.0 3.6 - -
Financial year to date 34.0 3.6 - -
Less:
Rehabilitation costs
December 2002 2.8 2.3 1.9 -
September 2002 2.8 2.3 0.7 0.1
Financial year to date 5.6 4.6 2.6 0.1
Production taxes
December 2002 4.8 3.4 1.9 -
September 2002 0.4 4.2 1.5 (0.2)
Financial year to date 5.2 7.6 3.4 (0.2)
General and admin
December 2002 35.8 24.5 15.7 -
September 2002 37.7 26.0 16.6 1.7
Financial year to date 73.5 50.5 32.3 1.7
Cash operating costs
December 2002 565.7 556.3 334.5 33.4
September 2002 604.3 536.7 321.9 80.6
Financial year to date 1,170.0 1,093.0 656.4 114.0
Plus: Production taxes
December 2002 4.8 3.4 1.9 -
September 2002 0.4 4.2 1.5 (0.2)
Financial year to date 5.2 7.6 3.4 (0.2)
Royalties December 2002 - - - -
September 2002 - - - -
Financial year to date - - - -
TOTAL CASH COSTS(2)
December 2002 570.5 559.7 336.4 33.4
September 2002 604.7 540.9 323.4 80.4
Financial year to date 1,175.2 1,100.6 659.8 113.8
Plus: Amortisation*
December 2002
