| Thu 8 May 2003, 8:45 | | Financial Report |
|
Gold Fields Limited -
Gold Fields Limited
Incorporated in the Republic of South Africa
Registration number 1968/004880/06
Share code: GFI
ISIN: ZAE 000018123
* Steady attributable gold production at 1.07 million ounces
* Total cash costs down 2 per cent to R60,709 per kilogram
* Strong Rand results in a 15 per cent reduction in operating profit
to R1.13 billion
* Net earnings of R805 million
* US Dollar earnings up 12 per cent to US$93 million
* US$160 million approved for Tarkwa expansion
STOCK DATA
Number of shares in issue
- at 31 March 2003 472,043,555
- average for the quarter 472,000,578
Free Float 100%
ADR Ratio 1:1
Bloomberg / Reuters GFISJ / GFLJ.J
JSE SECURITIES EXCHANGE SOUTH AFRICA- GFIÙ
Range - Quarter ZAR77.25 - ZAR134.70
Average Volume - Quarter 1,271,000 shares / day
NYSE - (GFI)
Range - Quarter US$9.54 - US$15.43
Average Volume - Quarter 1,930,000 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.gold-fields.com
DEAR SHAREHOLDERS
Gold Fields did well to maintain its well-established track record of
consistent and predictable operational performance during the March 2003
quarter, with a good overall performance presented in the fields of safety,
production and cost management.
Production remained steady at about 1,1 million ounces, despite the sale of
St Helena during the previous quarter and the extended Christmas break. Costs
were again well controlled with total cash costs declining from
R61,853 per kilogram to R60,709 per kilogram and Rand per ton costs from
R222 per ton to R201 per ton. This is evidence of the ongoing and intense focus
on cost management, which remains a highest priority at all operations.
Particularly pleasing has been the ability of all of our operations to manage
down the impact of the extensive number of public holidays. Traditionally the
extended Christmas break, and the subsequent slow start-up, plays havoc with
operational results during the March quarter. For the second year in a row our
operational management teams have, through good planning and scheduling, been
able to keep this disruption to a minimum, which reflects in our consistent
operational results.
The surprising strength of the South African Rand has, however, had a marked
impact on operating profit, which declined by 15 per cent to R1.13 billion
during the quarter. Despite this, net earnings were virtually flat quarter on
quarter at R805 million, helped by the opportunistic sale of some of our non-
core holdings in Eldorado Gold Corporation and Glamis Gold Limited, as well as
net gains on financial instruments and foreign debt related to our Australian
operations.
The current strong Rand has resulted in a markedly lower received Rand gold
price. Management"s response to this new paradigm will be a focus on continued
cost savings, increased quality volume and possible capital project deferrals.
On 20 March 2003, the South African Government released for public comment
the draft Minerals and Petroleum Royalty Bill. The Bill proposes, inter alia,
the imposition of a three percent royalty charge on the revenues of all South
African gold mining operations, effective on conversion of mining rights as per
the Minerals and Petroleum Resources Development Act passed earlier in this
year.
We are of the opinion that, in its current form, the Bill will have
profoundly negative consequences for the gold mining industry in South Africa.
It will, amongst others, impact on Black Economic Empowerment; reduce the
viability of existing operations; increase pay-limits and, consequently, job
losses; substantially increase hurdle rates for new and organic growth projects
and potentially negate much of the goodwill that has been clawed back after the
damage to investor sentiment caused by the leaked Mining Charter.
Gold Fields has submitted its detailed comments on the Bill through the
Chamber of Mines as well as directly to the Department of Finance and the
Department of Minerals and Energy. We are hopeful for a positive conclusion to
this final chapter in the legislative transformation of the South African mining
industry.
Shareholders are reminded that we are approaching the end of our two-year
wage-agreement and negotiations in this regard are about to commence with the
Unions and Associations representing our employees.
On a more positive note, we today announced a US$160 million new capital
investment into our Tarkwa Mine in Ghana, West Africa, for the building of a new
4.2 million ton per annum mill and CIL facility, as well as conversion of the
entire mine from contractor to owner mining. This investment will increase
annual throughput to 19 million tons of ore per annum and gold production by
some 200,000 ounces per annum.
In addition, feasibility studies into brown fields expansion projects are
continuing at St Ives in Australia and Kloof and Driefontein Mines in South
Africa. All of these projects offer Gold Fields extensive potential for organic
growth.
In conclusion, while the operational outlook is positive for the remainder of
2003, Gold Fields, like the entire mining industry in South Africa, is faced by
a number of significant challenges over the next few months. Your management
team is committed to engage vigorously with each and every one of these
challenges and to seek outcomes that will be beneficial to all stakeholders.
Yours sincerely
ID Cockerill
CHIEF EXECUTIVE OFFICER
8 May 2003
SALIENT FEATURES
SA Rand
Nine months to Quarter
March March March Dec March
2002 2003 2002 2002 2003
kg Gold produced* oz (000) 91,767 102,433 33,620 33,930 33,340
R/kg Total cash costs $/oz 56,174 61,263 59,138 61,853 60,709
000 Tons milled 000 25,939 32,063 9,910 10,560 10,792
R/kg Revenue $/oz 92,146 100,302 107,732 100,969 95,068
R/ton Operating costs $/ton 216 216 221 222 201
Rm Operating profit $m 3,175 4,023 1,614 1,319 1,126
Rm Net earnings $m 1,893 2,164 1,049 817 805
SA c.p.s. earnings US c.p.s. 413 459 224 173 171
Net earnings excluding
gains and losses on
financial instruments
Rm and foreign debt $m 1,759 1,785 933 574 476
Net of cash and
exceptional items
SA c.p.s. US c.p.s. 380 378 199 122 101
US Dollars
Quarter Nine months to
March Dec March March March
2003 2002 2002 2003 2002
kg Gold produced* oz (000) 1,072 1,091 1,081 3,293 2,951
R/kg Total cash costs $/oz 225 197 160 200 175
000 Tons milled 000 10,792 10,560 9,910 32,063 25,939
R/kg Revenue $/oz 353 321 291 328 284
R/ton Operating costs $/ton 24 23 19 23 22
Rm Operating profit $m 135 136 149 423 318
Rm Net earnings $m 93 83 98 228 189
SA c.p.s. earnings US c.p.s. 20 18 21 48 41
Net earnings excluding
gains and losses on
financial instruments
Rm and foreign debt $m 58 59 81 188 176
Net of cash and
exceptional items
SA c.p.s. US c.p.s. 12 13 17 40 38
*Attributable - All companies wholly owned except for Ghana (71.1%).
COMMENTARY
HEALTH AND SAFETY
A fire incident at Driefontein 7 west shaft on 30 January 2003, forced employees
to vacate their working places. Emergency procedures were followed, evacuating
the entire underground workforce. Four employees were unfortunately engulfed in
smoke and later succumbed to smoke inhalation. At Arctic Platinum a dozer
driver lost his life due to drowning.
The fire at Driefontein was the main reason for the fatal injury frequency
rate increasing to 0,29 per million man hours worked, double that of the
previous quarter.
The lost day injury frequency rate improved by 8 per cent to 14 per million
man hours worked. The serious injury frequency rate regressed by 17 per cent
to 7 per million man hours worked.
Health and safety initiatives are showing excellent results in certain
sections of the mines, with Beatrix 1, 2 and 3 shafts and Driefontein
1 tertiary, 5 east and 6 west shafts achieving one million fatality free
underground shifts during the quarter. A behavioural change intervention
program has started at the Kloof Division and positive results are expected.
The Tripartite task team is continuing with implementation of the safety summit
recommendations.
The Ghana and Australian operations continue to deliver good safety
performances.
FINANCIAL
Quarter ended 31 March 2003
NET EARNINGS
Net earnings for the quarter amounted to R805 million (US$93 million), which is
marginally below the R817 million (US$83 million) earned in the previous
quarter. Included in this quarter"s earnings is an amount of R177 million
(US$19 million) resulting mainly from the sale of 10.7 million shares in
Eldorado Gold Corporation (a third of our holding) yielding a profit of
R123 million (US$13 million), together with the sale of 617,600 shares in Glamis
Gold Limited (40 per cent of our holding) which yielded a profit of R54 million
(US$6 million). The above is included in exceptional items and compares with
the R123 million (US$12 million) gain mainly from the disposal of St Helena,
which was included last quarter.
Earnings excluding these exceptional items after taxation and net gains on
financial instruments and foreign debt, amounted to R476 million (US$58 million)
as compared to R574 million (US$59 million) achieved last quarter.
REVENUE
The main reason for this reduction in earnings is the lower revenue,
resulting from the 14 per cent strengthening of the average Rand/US Dollar
exchange rate from 9.77 in the December 2002 quarter to 8.38 this quarter. This
was partly offset by the higher Dollar gold price at US$353 per ounce, compared
to US$321 per ounce last quarter. The resultant Rand price of R95,068 per
kilogram is thus 6 per cent lower than the R100,969 per kilogram achieved last
quarter. This, together with the lower gold sales of 35,257 kilograms
(1,134,000 ounces) as compared to 35,722 kilograms (1,148,000 ounces) last
quarter, resulted in revenue of R3,352 million (US$397 million) compared to
R3,607 million (US$370 million) last quarter. The lower gold sales are mainly
as a result of the sale of St Helena on 30 October 2002, which contributed
307 kilograms (9,900 ounces) in the December quarter.
OPERATING COSTS
Operating costs at R2,172 million (US$256 million) for the quarter were
7 per cent lower in Rand terms than previous quarter"s costs of R2,345 million
(US$240 million) as a result of cost reductions at the international operations,
principally in Australia, and the impact of translating these costs into South
African Rand at a stronger Rand than the previous quarter. South African
operations maintained their costs in line with the previous quarter. On a Group
basis, total cash costs reduced from R61,853 per kilogram last quarter to
R60,709 per kilogram this quarter. In US Dollar terms total cash costs
increased from US$197 per ounce to US$225 per ounce due to the stronger Rand
quarter on quarter.
The net effect of the decreased revenue, partly offset by the lower costs,
together with a gold in process charge due to a net release of inventory at the
international operations, was a decrease in operating profit from R1,320 million
(US$136 million) in the December quarter to R1,126 million (US$135 million) this
quarter.
Amortisation was similar to the previous quarter at R341 million
(US$40 million), the marginal reduction due to the stronger Rand and the lower
production at Driefontein.
FINANCIAL INSTRUMENTS AND DEBT
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$400 million was outstanding under these instruments.
Outstanding debt at the Australian operations at the end of the quarter
amounted to US$113 million.
The Australian Dollar once again strengthened against the US Dollar, from
56.3 cents at the end of the December quarter to 59.4 cents at the end of the
current quarter. The strengthening of the Australian Dollar in the current
quarter resulted in an unrealised gain on foreign debt of R55 million
(US$6 million) as compared to R36 million (US$3 million) in the December 2002
quarter.
Gains on financial instruments were R185 million (US$19 million) in the
current quarter compared to R166 million (US$16 million) in the previous
quarter. R23 million (US$2 million) of the gain in the previous quarter was
amortisation of a deferred hedging gain at Damang, which was fully amortised in
the December 2002 quarter. At the end of the March quarter, the marked to
market value of the financial instruments was a positive R388 million
(US$48 million). Details of the financial instruments are provided on page 9 of
this report.
Profit before taxation and exceptional items was R1,037 million
(US$122 million) compared to R1,178 million (US$120 million) posted in the
December 2002 quarter.
Taxation at R378 million is 16 per cent lower than the previous quarter as a
result of the lower profit before tax.
Net earnings after deducting minorities was thus R805 million (US$93 million)
or 171 cents per share (US20 cents) compared to R817 million (US$83 million) or
173 cents per share (US18 cents) in the previous quarter.
CASH FLOW
Operating cash flow for the quarter was R1,214 million (US$141 million), a
decrease of R126 million when compared to operating cash flow in the December
quarter of R1,340 million (US$137 million). The decrease is mainly due to the
lower operating profit.
Capital expenditure was R505 million (US$60 million) as compared to
R530 million (US$54 million) in the December 2002 quarter. Of this amount,
R301 million was expended at the South African operations with the significant
expenditure directed at the major projects, R69 million at the 1E and 5E shafts
and R46 million on the new mill installation at Driefontein, with further
development at Kloof 4 shaft of R42 million and Beatrix 3 shaft of R46 million.
The Australian operations incurred capital expenditure of R108 million, the
majority on development of existing projects and exploration aimed at increasing
the ore reserve base at those operations. At Ghana capital expenditure amounted
to R77 million (US$9 million) the majority being at Tarkwa for the expansion of
the leach pads. The sale of the investments, being Eldorado and Glamis referred
to earlier, netted R203 million, the majority of which was applied to a pre-
payment of US$20 million of offshore debt.
Net cash outflow for the quarter was R28 million (US$9 million) after taking
account of loan repayments of R196 million (US$20 million) and the interim
dividend of R708 million (US$88 million), as compared to an inflow of
R597 million (US$59 million) in the December quarter. The cash balance at the
end of the March 2003 quarter was R1,821 million (US$224 million) as compared to
R1,926 million (US$217 million) at the end of the December 2002 quarter. Debt
at the end of March was R1,110 million (US$136 million) as compared to
R1,422 million (US$161 million) at the end of December 2002. Cash net of both
long-term and short-term debt at the end of the quarter was a positive
R711 million (US$88 million) compared to a positive R504 million (US$57 million)
last quarter.
Quarter ended 31 March 2003 compared to quarter ended 31 March 2002
Attributable gold production decreased marginally from 1,081,000 ounces for the
March 2002 quarter to 1,072,000 ounces this quarter. The increase in production
due to the acquisition of Damang in Ghana was partly offset by the sale of St
Helena.
Revenue decreased 10 per cent in Rand terms (increased 19 per cent in US
Dollar terms) from R3,743 million (US$334 million) to R3,352 million
(US$397 million) due to a reduction in the Rand gold price achieved from
R107,732 per kilogram (US$291 per ounce) in the March 2002 quarter to
R95,068 per kilogram (US$353 per ounce) in the March 2003 quarter. Operating
costs were virtually static at R2,172 million (US$256 million) from
R2,173 million (US$190 million) due to the impact of translating costs at
international operations into South African Rand at a stronger Rand Dollar
exchange rate than the corresponding quarter in the previous year. Earnings
decreased from R1,049 million
(US$98 million) in the March 2002 quarter to R805 million (US$93 million) in the
current quarter.
Nine months ended 31 March 2003 compared to nine months ended 31 March 2002
Attributable gold production increased 12 per cent from 2,951,000 ounces
to 3,293,000 ounces mainly as a result of the acquisitions of the Australian and
Damang operations, which are included for the full nine months to March 2003, as
opposed to four and two months for the Australian and Damang operations
respectively in the nine months to March 2002.
Revenue increased by 25 per cent in Rand terms (32 per cent in US Dollar
terms) from R8,703 million (US$870 million) to R10,922 million
(US$1,149 million) due to increased production and an increase in the gold price
from R92,146 to R100,302 per kilogram in the nine months ended 31 March 2003.
Operating costs increased by R1,354 million (US$171 million) mainly as a result
of these acquisitions. This resulted in net earnings increasing from
R1,893 million (US$189 million) to R2,164 million (US$228 million).
OPERATIONS
Overview
Attributable gold production for the March 2003 quarter decreased to
1,072,000 ounces from 1,091,000 ounces in the December 2002 quarter, of which
29 per cent was produced from the international operations. Australia"s
production was steady with slightly improved yields, while Ghana showed
increased production at both operations. At the South African operations, the
increase at Kloof and Beatrix continued, due to increased underground tonnage,
offset by lower production at Driefontein and the sale of St Helena last
quarter.
Ore milled increased from 10.56 million tons to 10.79 million tons due to the
increase in surface tons mainly at Driefontein as a result of additional surface
milling over the Christmas/New Year break. This resulted in a decrease in
overall yield to 3.3 grams per ton as compared to 3.4 grams per ton achieved in
the December 2002 quarter. Total cash costs in Rand terms decreased to
R60,709 per kilogram from R61,853 per kilogram achieved last quarter and gives
an indication of our continued commitment to controlling costs. In US Dollar
terms, total cash costs increased from US$197 per ounce to US$225 per ounce due
solely to the strength of the South African Rand. Operating costs per ton
reduced at all operations and at R201 per ton was a 9 per cent reduction on last
quarter.
South African Operations
DRIEFONTEIN
Production at Driefontein decreased 8 per cent to 298,000 ounces, which is
more in line with future expectations. This was due to lower underground and
surface yields and lower underground tonnage as compared to the previous
quarter. Underground tonnage decreased to 958,000 tons from 1,005,000 tons,
while surface tonnage increased to 750,000 tons from 442,000 tons due to the
optimisation of the newly commissioned No.2 plant. However, due to the
increased proportion of surface ore treated, exacerbated by the lower surface
yields achieved this quarter (2.3 grams per ton compared to 3.3 grams per ton
last quarter), the combined yield decreased from 7.0 grams per ton last quarter
to 5.4 grams per ton this quarter.
Total cash costs increased by 8 per cent in Rand terms to R61,184 per
kilogram from R56,396 per kilogram due to lower yields and in US Dollar terms
increased from US$180 per ounce to US$227 per ounce quarter on quarter, as a
result of the strengthening Rand allied with the higher costs in Rand terms.
Operating profit declined from R412 million (US$42 million) in the December
quarter to R267 million (US$33 million) in the current quarter due to the lower
production and lower gold price achieved. Capital expenditure at R125 million
(US$15 million) is in line with the previous quarter.
KLOOF
Kloof once again achieved an increase in production quarter on quarter, from
293,000 ounces to 298,000 ounces. This was again due to an increase in
underground tonnage (from 913,000 tons to 975,000 tons) although at a slightly
lower yield. Surface tonnage was marginally lower at 262,000 tons at a yield of
0.7 grams per ton. Underground unit costs reduced from R620 to R580 per ton,
the third consecutive quarter that a reduction in underground costs have been
achieved. Total cash costs decreased by 2 per cent in Rand terms to R60,315 per
kilogram but increased by 14 per cent in US Dollar terms, from US$196 per ounce
to US$224 per ounce. The increase in gold output and lower costs was offset by
the lower gold price and operating profit accordingly decreased to R298 million
(US$35 million) this quarter from R329 million (US$34 million) last quarter.
Capital expenditure was R100 million (US$12 million) for the quarter compared to
R109 million (US$11 million) in the previous quarter.
BEATRIX
In the Free State, production at Beatrix increased 3 per cent to
168,000 ounces from 163,000 ounces achieved in the previous quarter. This
increase was due to increased tons milled as yields were virtually unchanged
quarter on quarter. Underground ore milled increased to 1,027,000 this quarter
from 1,009,000 tons, while surface tons increased 7 per cent to 175,000 tons.
Total cash costs remained unchanged in Rand terms at R66,405 per kilogram but
increased to US$246 per ounce from US$211 per ounce last quarter due to the
stronger Rand. Increased costs due to the higher mining volumes and the lower
gold price resulted in a decrease in operating profit from R153 million
to R131 million quarter on quarter. In US Dollars operating profit remained
constant at US$16 million. Capital expenditure was 25 per cent down at
R77 million (US$9 million) mainly due to lower expenditure at 3 shaft.
International Operations
Ghana
TARKWA
The Tarkwa mine again reported record throughput, with crusher feed rate
reaching 3,847,000 tons for the quarter. Gold production increased by 8 per
cent from 126,000 ounces in the December quarter to 136,000 ounces in the March
quarter. The March quarter production included an 11,000 ounce release of gold
inventory from the leach pads as opposed to the December quarter which reflects
a 13,000 ounce increase in this inventory. The inventory increase in December
was attributed to interruptions in gold recovery and the changing configuration
of leach pads. The draw down in this quarter follows the implementation of a
number of changes to, and upgrading of, the leach pad operating systems. Unit
operating costs at Tarkwa decreased from US$6.86 to US$6.68 per ton, largely as
a result of a decrease in stripping ratio quarter on quarter from 1.92 to 1.73.
Despite this drop in unit operating expenditure, total cash costs increased to
US$202 per ounce in the March quarter from US$188 per ounce in the December
quarter. This was caused by an anticipated decline in mined head grades and a
US$1.9 million charge for the gold inventory movement. Tarkwa contributed R174
million (US$20 million) to operating profit, an increase of 5 per cent quarter
on quarter.
DAMANG
At Damang, production increased 4 per cent over the previous quarter
to 77,000 ounces as a result of higher mill throughput and marginally higher
head grades. Total cash costs increased from US$238 per ounce to US$248 per
ounce quarter on quarter. The March quarter includes a US$1.6 million gold in
process charge reflecting the consumption of stockpiles, which did not occur in
the December quarter. Unit operating costs decreased to US$13.80 per ton from
US$14.70 per ton in the December quarter. The net result was an increase in
operating profit of 14 per cent to R73 million (US$8 million).
The contribution from the Ghanaian operations to the Group"s operating profit
increased to 22 per cent and at R248 million (US$29 million) is 7 per cent
higher than last quarter.
Australia
ST IVES
Gold production at St Ives was 119,000 ounces, virtually unchanged from the
December quarter"s production of 121,000 ounces. The mine saw a small decline
in the total volume treated to 1,263,000 tons for the quarter from 1,369,000
tons in December, due primarily to the inclusion of a tolling campaign in the
earlier period. Underground mining operations contributed one third of total
gold processed. This represents a 100 per cent improvement on the December
quarter with the Junction mine running near capacity and the commencement of
deliveries from the new Sirius underground mine. Operating costs at
A$39.4 million (US$23.1 million) is 11 per cent below the previous quarter due
to the inclusion last quarter of costs associated with toll treatment, the mill
shut down and remedial work on the Junction mine after the seismic activity
experienced there. Total cash costs were 3 per cent lower than the December
quarter at A$326 per ounce (US$193 per ounce) with the inclusion of
A$3.2 million (US$2.3 million) gold in process (GIP) credit in the December
quarter negating the effects of the lower spend in this period. St Ives
contributed R163 million (US$20 million) to operating profit compared to
R161 million (US$17 million) in the previous quarter. Capital expenditure
reduced 30 per cent to A$18 million.
AGNEW
Gold production at Agnew was virtually unchanged at 37,000 ounces. Mining
operations at Waroonga pit were discontinued largely due to depletion of
economic ores in that pit, although ongoing wall stability contributed to the
closure of operations there. Production from the Crusader/Deliverer underground
operations increased during the quarter to offset the reduction in ounces
available from the Waroonga pit. The mine reported an increase in total cash
costs from A$426 per ounce (US$237 per ounce) last quarter, to this
quarter"s A$449 per ounce (US$272 per ounce), due mainly to the inclusion of a
A$3.5 million (US$1.8 million) GIP charge in this quarter, against
a A$1.6 million (US$0.9 million) credit in the previous quarter. Operating
costs declined from A$16.8 million (US$9.7 million) to A$13.8 million
(US$8.5 million) in the respective periods. The contribution to operating
profit from Agnew was R20 million (US$3 million), 39 per cent down when compared
to last quarter mainly due to movements in gold in process credits and the
stronger Australian Dollar. Capital expenditure in Australian Dollars was
little changed at just below A$5 million as development of the underground
operations continue.
The Australian operations contribution to Group operating profit reduced
6 per cent to R183 million (US$22 million) for the quarter. The increase in the
gain on financial instruments and foreign debt relative to the previous quarter
contributed to the increase in net earnings from R152 million (US$15 million)
to R194 million (US$21 million) this quarter. Net earnings excluding gains on
financial instruments and foreign debt remained unchanged when compared to last
quarter at R29 million (A$6 million, US$3 million).
Metallurgical Plants
The installation of the new milling facility at Driefontein 1 plant is well
advanced. This project is scheduled for commissioning around the end of the
current 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 progressing
well and is set for completion early in the new financial year
A feasibility study for the upgrade of the Kloof 1 plant milling section is
underway. Approval of this project will complete the upgrade strategy for the
South African metallurgical plants.
DEVELOPMENT PROJECTS
TARKWA
Following the completion of feasibility studies examining long-term operating
strategies for Tarkwa, a decision has been taken to proceed with two significant
investments at that mine.
The first involves the installation of a 4.2 million ton per annum (mtpa)
mill and CIL facility, which will operate in parallel with the existing 15 mtpa
heap leach plant. The total capital investment, to be undertaken between
June 2003 and December 2004, will be US$85 million. It is anticipated that the
mill will be commissioned by the end of December 2004. This expansion will
increase annual throughput to 19 mtpa, while gold production will increase by
some 200,000 ounces per annum. Total open pit mining rates will increase to
between 50 and 60 mtpa.
The second investment is centred on the conversion from contract mining to
owner mining at Tarkwa. All open pit mining operations at Tarkwa are currently
undertaken by a contractor. The new strategy envisages that Tarkwa will acquire
a new fleet of mining and support equipment with the capacity to mine the above
mentioned volumes. It is anticipated that the majority of the workforce
required for this undertaking will be employed from the current mining
contractor"s workforce. It is expected that the transition will commence in
June 2004 and that Tarkwa will build up its own fleet in anticipation of the
increase in annual mining volumes ahead of the mill commissioning expected in
December 2004. The initial cost of the fleet will be US$74 million.
ST IVES
At St Ives, the optimisation study, which had been exploring long term
processing and mining strategies for that mine was completed. As a consequence
of that study, St Ives immediately commissioned a definitive feasibility study.
This study is examining the viability of installing a new mill/CIP facility at
St Ives which will replace the existing 3.1 mtpa milling plant. At this stage
it is envisaged that the initial capacity of this new plant would be 4 mtpa
capable of being expanded to 5 mtpa or more. The feasibility study is due for
completion in September 2003. Exploration drilling is continuing at St Ives
with a particular focus on the Greater Revenge and Intrepide Complexes.
DAMANG
At Damang, the exploration program targeting conglomerate and hydrothermal
styles of mineralisation has been expanded. Committed expenditure for the year
to June 2003 has increased to US$4 million.
EXPLORATION
Gold Fields continues to escalate its exploration worldwide with increasing
activities in Africa. During the quarter, drilling commenced on the Essakane
project in Burkina Faso where an option to earn up to 60 per cent interest from
Orezone Resources Incorporated is held. Promising results have been received
from a second round of drilling on the Mampehia target at the 100 per cent owned
Bibiani project in Ghana and this project will be advanced to a resource
definition stage. Promising RAB drill results were also received and released
by our partner African Eagle Resources plc on the Miyabi project in Tanzania.
Our partner, Sanu Resources (a private company) initiated a surface
exploration program on joint venture lands in Eritrea. During the quarter the
purchase of Cluminco from Cluff Mining was concluded. This company owns an 80
per cent interest in the Kisenge project in the southern DRC. Positive drill
results were received and released by our partner Radius Exploration Limited on
joint venture grounds in Guatemala. In China, joint venture activities began on
the Shangdong area with our partner Sino Gold Limited.
Aggressive exploration programs are continuing at the St Ives, Agnew and
Damang operations.
LEGAL
As previously reported Mr Ed Fagan, a well known New York lawyer, has sent us
a letter claiming he acts on behalf of a number of ex-employees, alleging
exposure to unsafe working practices, chemicals and other substances. He
further claimed they would seek legal recourse through the US courts, under the
Alien Tort Act. To date GFI have been unable to establish the exact nature of
his claims and are not aware of any suite having been filed in the US. We will
keep shareholders appraised of any future development in this matter.
OUTLOOK
PRODUCTION
Notwithstanding the Easter break and numerous holidays this quarter, June
quarter gold production and costs are expected to be in line with those achieved
this quarter at the South African and Ghanaian operations, while the anticipated
increase in production at St Ives in Australia will be somewhat offset by a
decrease in production at Agnew due to anticipated lower grades.
EARNINGS
Earnings, quarter on quarter, will be impacted should the lower Rand gold
price continue into the current quarter.
BASIS OF ACCOUNTING
The unaudited results for the quarter and nine months have been prepared on the
International Accounting Standards (IAS) basis. The detailed financial,
operational and development results for the March 2003 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
8May 2003
INCOME STATEMENT
International Accounting Standard Basis
SA RAND
(Figures are in millions unless otherwise stated)
Quarter Nine months to
March December March March March
2003 2002 2002 2003 2002
Revenue 3,351.8 3,606.8 3,742.5 10,922.1 8,702.7
Operating costs 2,171.6 2,344.7 2,173.2 6,918.5 5,564.7
Gold inventory change 54.1 (57.4) (44.6) (19.7) (37.4)
Operating profit 1,126.1 1,319.5 1,613.9 4,023.3 3,175.4
Amortisation and depreciation 341.3 351.3 339.9 1,034.5 704.3
Net operating profit 784.8 968.2 1,274.0 2,988.8 2,471.1
Finance income 97.1 86.7 54.6 145.0 22.5
- Net interest received and
investment income 41.9 54.9 3.3 129.8 7.1
- Unrealised gain on foreign
debt, net of cash 55.0 36.2 51.3 19.4 15.4
- Realised gain/ (loss) on
foreign debt, net of cash 0.2 (4.4) - (4.2) -
Gain on financial instruments 185.2 166.2 119.3 149.5 169.6
Other income/ (cost) 1.3 (8.0) 19.4 4.3 58.9
Exploration (31.1) (34.8) (20.8) (111.4) (71.2)
Profit before tax and
exceptional items 1,037.3 1,178.3 1,446.5 3,176.2 2,650.9
Exceptional gain/(loss) 177.1 123.0 (9.1) 300.1 (9.1)
Profit before taxation 1,214.4 1,301.3 1,437.4 3,476.3 2,641.8
Mining and income taxation 377.6 449.1 347.4 1,212.4 663.9
- Normal taxation 193.7 254.6 346.3 737.0 550.5
- Deferred taxation 183.9 194.5 1.1 475.4 113.4
Profit after taxation 836.8 852.2 1,090.0 2,263.9 1,977.9
Minority interest 32.2 34.9 40.6 100.3 85.4
Net earnings 804.6 817.3 1,049.4 2,163.6 1,892.5
Exceptional items:
Profit on disposal of St Helena - 121.7 - 121.7 -
Profit on sale of investments 177.9 - - 177.9 -
Other (0.8) 1.3 (9.1) 0.5 (9.1)
Total exceptional items 177.1 123.0 (9.1) 300.1 (9.1)
Taxation (16.8) (19.2) 3.8 (36.0) 3.8
Net exceptional items after
tax and minorities 160.3 103.8 (5.3) 264.1 (5.3)
Net earnings per share (cents) 171 173 224 459 413
Headline earnings 643.8 713.5 1,049.4 1,899.0 1,892.5
Headline earnings per share(cents) 136 151 224 403 413
Diluted earnings per share (cents) 169 172 221 455 409
Net earnings excluding gains and
losses on financial instruments
and foreign debt, net of cash
and exceptional items 475.9 573.9 933.0 1,785.0 1,758.9
Net earnings per share excluding
gains and losses on financial
instruments and foreign debt,
net of cash and exceptional
items (cents) 101 122 199 378 380
Gold sold - managed less
capitalised kg 35,257 35,722 34,739 108,892 94,445
Gold price received R/kg 95,068 100,969 107,732 100,302 92,146
Total cash costs R/kg 60,709 61,853 59,138 61,263 56,174
INCOME STATEMENT
International Accounting Standard Basis
US DOLLARS
(Figures are in millions unless otherwise stated)
Quarter Nine months to
March December March March March
2003 2002 2002 2003 2002
Revenue 396.7 370.0 333.5 1,148.5 870.3
Operating costs 256.1 240.0 189.5 727.5 556.5
Gold inventory change 5.2 (5.7) (4.5) (2.1) (3.7)
Operating profit 135.4 135.7 148.5 423.1 317.5
Amortisation and depreciation 40.0 35.9 31.0 108.8 70.4
Net operating profit 95.4 99.8 117.5 314.3 247.1
Finance income 10.4 8.5 6.1 15.2 2.2
- Net interest received and
investment income 4.9 5.5 0.7 13.6 0.7
- Unrealised gain on foreign
debt, net of cash 5.5 3.4 5.4 2.0 1.5
- Realised loss on foreign debt,
net of cash - (0.4) - (0.4) -
Gain on financial instruments 19.2 16.0 11.6 15.7 17.0
Other income/(cost) 0.2 (0.8) 1.2 0.5 5.9
Exploration (3.7) (3.6) (1.6) (11.7) (7.1)
Profit before tax and
exceptional items 121.5 119.9 134.8 334.0 265.1
Exceptional gain/(loss) 19.4 12.2 (0.9) 31.6 (0.9)
Profit before taxation 140.9 132.1 133.9 365.6 264.2
Mining and income taxation 44.6 45.8 32.1 127.5 66.4
- Normal taxation 23.5 26.2 33.0 77.5 55.1
- Deferred taxation 21.1 19.6 (0.9) 50.0 11.3
Profit after taxation 96.3 86.3 101.8 238.1 197.8
Minority interest 3.7 3.6 3.7 10.5 8.5
Net earnings 92.6 82.7 98.1 227.6 189.3
Exceptional items:
Profit on disposal of St Helena 0.7 12.1 - 12.8 -
Profit on sale of investments 18.7 - - 18.7 -
Other - 0.1 (0.9) 0.1 (0.9)
Total exceptional items 19.4 12.2 (0.9) 31.6 (0.9)
Taxation (1.9) (1.9) 0.3 (3.8) 0.3
Net exceptional items after
tax and minorities 17.5 10.3 (0.6) 27.8 (0.6)
Net earnings per share (cents) 20 18 21 48 41
Headline earnings 74.8 72.4 98.1 199.7 189.3
Headline earnings per share(cents) 16 15 21 42 41
Diluted earnings per share (cents) 19 17 19 48 41
Net earnings excluding gains
and losses on financial
instruments and foreign debt,
net of cash and exceptional items 57.7 59.2 80.9 187.7 175.9
Net earnings per share excluding
gains and losses on financial
instruments and foreign debt,
net of cash and exceptional
items (cents) 12 13 17 40 38
Exchange rate - SA Rand/US Dollar 8.38 9.77 11.53 9.51 10.00
Gold sold - managed less
capitalised ozs (000) 1,134 1,148 1,117 3,501 3,036
Gold price received $/oz 353 321 291 328 284
Total cash costs $/oz 225 197 160 200 175
BALANCE SHEETS
International Accounting Standard Basis
SA Rand USDollars
(Figures are in millions unless otherwise stated)
March June March June
2003 2002 2003 2002
Mining and mineral assets 14,718.1 15,064.6 1,805.9 1,454.1
Non-current assets 238.3 252.7 29.2 24.4
Investments 758.9 797.8 93.1 77.0
Current assets 3,722.1 4,256.2 456.7 410.9
- Cash and deposits 1,821.4 2,027.1 223.5 195.7
- Other current assets 1,900.7 2,229.1 233.2 215.2
Total assets 19,437.4 20,371.3 2,384.9 1,966.4
Shareholders" equity 10,658.6 11,095.8 1,307.8 1,071.0
Outside shareholders" interest 481.2 567.1 59.0 54.7
Deferred taxation 4,109.2 3,736.5 504.2 360.7
Long-term loans 808.0 1,502.2 99.1 145.0
Environmental rehabilitation provisions 683.6 770.2 83.9 74.3
Post-retirement health care provisions 259.0 260.2 31.8 25.1
Current liabilities 2,437.8 2,439.3 299.1 235.6
- Other current liabilities 2,136.2 2,055.9 262.1 198.6
- Current portion of long-term loans 301.6 383.4 37.0 37.0
Total equity and liabilities 19,437.4 20,371.3 2,384.9 1,966.4
S.A. Rand/U.S. Dollar conversion rate 8.15 10.36
Condensed Statements of Changes in Equity
CONDENSED STATEMENTS OF CHANGES IN EQUITY
SA Rand USDollars
(Figures are in millions)
March March March March
2003 2002 2003 2002
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 (758.6) 679.7 203.6 (211.0)
Issue of share capital 0.8 1.1 0.1 0.1
Increase in share premium 17.2 581.5 1.8 51.1
Marked to market valuation of
listed investments (113.8) 291.4 (12.0) 25.6
Dividends (1,746.4) (605.2) (184.3) (60.5)
Net earnings 2,163.6 1,892.5 227.6 189.3
Balance as at the end of March 10,658.6 9,916.6 1,307.8 871.4
CASH FLOW STATEMENT
International Accounting Standard Basis
SA RAND
(Figures are in millions)
Quarter Nine months to
March December March March March
2003 2002 2002 2003 2002
Cash flow from operating
activities 1,213.6 1,340.4 1,507.6 3,549.7 3,095.1
Profit before tax and
exceptional items 1,037.3 1,178.3 1,446.5 3,176.2 2,650.9
Exceptional items 177.1 123.0 (9.1) 300.1 (9.1)
Amortisation and depreciation 341.3 351.3 339.9 1,034.5 704.3
Change in working capital 251.9 142.9 (267.7) 232.5 (353.1)
Taxation paid (135.1) (41.9) (95.1) (663.2) (130.6)
Other non-cash items (458.9) (413.2) 93.1 (530.4) 232.7
Dividends paid (707.9) (29.1) (422.7) (1,775.5) (605.2)
Ordinary shareholders (707.9) - (422.7) (1,746.4) (605.2)
Minority shareholders in
subsidiaries - (29.1) - (29.1) -
Cash utilised in investing
activities (323.3) (485.4) (771.0) (1,384.1) (3,304.9)
Capital expenditure - net (505.3) (530.0) (353.8) (1,592.5) (983.0)
Purchase of investments (4.0) (61.2) (37.5) (78.0) (84.4)
Sale of investments 203.1 - - 203.1 -
Environmental and post
retirement health care payments (17.1) (14.2) (4.8) (36.7) (14.3)
Disposal/(acquisition)
of operations/subsidiaries - 120.0 (374.9) 120.0 (2,223.2)
Cash flow from financing
activities (209.9) (229.1) 558.9 (414.9) 2,273.6
Loans raised - - 545.3 - 2,440.2
Loans repaid (195.9) (200.5) - (396.4) (200.0)
Outside shareholder"s
loan repaid (16.2) (35.5) - (51.7) -
Shares issued 2.2 6.9 13.6 33.2 33.4
Net cash inflow/(outflow) (27.5) 596.8 872.8 (24.8) 1,458.6
Translation adjustment (77.0) (110.0) (31.4) (180.9) 80.3
Cash at beginning of period 1,925.9 1,439.1 887.5 2,027.1 190.0
Cash at end of period 1,821.4 1,925.9 1,728.9 1,821.4 1,728.9
US DOLLARS
International Accounting Standard Basis
(Figures are in millions)
Quarter Nine months to
March December March March March
2003 2002 2002 2003 2002
Cash flow from operating
activities 141.3 136.7 141.2 373.3 312.5
Profit before tax and
exceptional items 121.5 119.9 134.8 334.0 265.1
Exceptional items 19.4 12.2 (0.9) 31.6 (0.9)
Amortisation and depreciation 40.0 35.9 31.0 108.8 70.4
Change in working capital 26.3 13.7 (23.5) 24.4 (31.0)
Taxation paid (17.3) (4.9) (8.4) (69.7) (11.5)
Other non-cash items (48.6) (40.1) 8.2 (55.8) 20.4
Dividends paid (87.7) (2.9) (49.8) (187.2) (60.5)
Ordinary shareholders (87.7) - (49.8) (184.3) (60.5)
Minority shareholders
in subsidiaries - (2.9) - (2.9) -
Cash utilised in investing
activities (40.9) (50.0) (67.7) (146.3) (329.3)
Capital expenditure - net (59.5) (54.3) (31.1) (167.5) (98.3)
Purchase of investments (0.8) (6.2) (3.3) (8.2) (7.4)
Sale of investments 21.4 - - 21.4 -
Environmental and post
retirement health care payments (2.0) (1.4) (0.4) (3.9) (1.3)
Disposal/(acquisition) of
operations/subsidiaries - 11.9 (32.9) 11.9 (222.3)
Cash flow from financing
activities (21.3) (24.5) 49.2 (43.5) 216.3
Loans raised - - 48.0 - 235.2
Loans repaid (20.4) (21.5) - (41.9) (22.2)
Outside shareholder"s loan repaid (1.3) (3.8) - (5.1) -
Shares issued 0.4 0.8 1.2 3.5 3.3
Net cash inflow/(outflow) (8.6) 59.3 72.9 (3.7) 139.0
Translation adjustment 14.7 22.6 5.0 31.5 (10.6)
Cash at beginning of period 217.4 135.5 74.0 195.7 23.5
Cash at end of period 223.5 217.4 151.9 223.5 151.9
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
US DOLLAR / AUSTRALIAN DOLLAR
Year ended 30 June 2003 2004 2005 2006 2007 TOTAL
Forward sales:
Amount (US Dollars) -000"s 12,500 50,000 50,000 50,000 37,500 200,000
Average Rate (USD/AUD) 0.4934 0.4934 0.4934 0.4934 0.4934
Zero cost collar:
Amount (US Dollars) -000"s 12,500 50,000 50,000 50,000 37,500 200,000
Average downside protection
level (USD/AUD) 0.5191 0.5191 0.5191 0.5191 0.5191
Average upside benefit
