| Thu 8 May 2003, 9:14 | | GOLD FIELDS REPORTS GOOD QUARTER DESPITE SOUTH AFR |
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Gold Fields Limited
Isin: ZAE000018123
Share code: GFI
GOLD FIELDS REPORTS GOOD QUARTER DESPITE SOUTH AFRICAN RAND STRENGTH
MEDIA RELEASE
Net earnings of R805 million
US Dollar earnings up 12% to US$93 million
Steady attributable gold production at 1.07 million ounces
Total cash costs down 2% to R60,709 per kilogram
Strong Rand results in a 15% reduction in operating profit
to R1.13 billion
US$160 million approved for Tarkwa expansion
Johannesburg, 8 May 2003 - Gold Fields Limited (JSE and NYSE - GFI) today
reported net earnings for the quarter of R805 million, compared to R817 million
for the previous quarter and R1,049 million for the March 2002 quarter, one year
ago. In U.S. Dollar terms, quarterly earnings rose by 12% from US$83 million to
US$93 million. Operating profit declined by 15% from R1.32 billion to R1.13
billion but remained flat in US dollar terms at $135 million.
Included in net earnings are gains aggregating R178 (US$19 million) from the
partial sale of the company"s holdings in Eldorado Gold Corporation and Glamis
Gold Limited. This compares to a profit on the disposal of St Helena Gold Mine
of R123 million (US$12 million) included last quarter. Gains on financial
instruments (currency hedges) for the quarter amounted to R185 million (US$19
million), and a gain on foreign debt of R55 million (US$ 6 million) was
generated for the quarter.
During the March quarter, the Rand/US$ exchange rate strengthened by 14% from
9.77 in December 2002 to 8.38 this quarter. This impact on earnings was partly
offset by the higher Dollar gold price received of US$353 per ounce, compared to
US$321 per ounce last quarter.
The March quarter is typically a difficult quarter to maintain production levels
and costs due to the extended Christmas break. However, for the second year in
a row, costs were well controlled during this period with total cash costs
declining from R61,853 per kilogram to R60,709 per kilogram. In US Dollar terms
cash costs increased from USD$197 per ounce to US$225 per ounce due to the
stronger Rand during the quarter. Operating costs per ton were reduced at most
operations; and, at R201 per ton, were 9% lower than last quarter. This is
evidence of the ongoing and intense focus on cost management, which remains a
key priority at all operations.
Attributable gold production for the March 2003 quarter, despite the sale of St.
Helena, was essentially flat at 1,072,000 ounces versus 1,091,000 ounces in the
December 2002 quarter. Twenty-nine per cent of these ounces produced came from
international operations. Australia"s production was steady, with slightly
improved yields, while Ghana reported record tons crushed at Tarkwa and
increased production at both operations. At the South African operations, the
production increase continued at both Kloof and Beatrix due to increased
underground tonnage. This was offset by lower production at Driefontein and the
sale of St. Helena last quarter.
Comparing this nine-month period ended 31 March 2003 to the nine months ended 31
March 2002, revenue has increased by 25% in Rand terms (32% 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. During this nine-month period, attributable gold
production increased 12% over the previous nine-month period from 2,951,000
ounces to 3,293,000 ounces mainly as a result of the acquisitions of the
Australian and Damang operations.
The balance sheet still remains strong with cash at this quarter"s end remaining
similar to the last quarter, despite the payment of a substantial bi-annual
dividend. Cash at the end of this period was R1,821 million (US$224 million)
compared to R1,926 million (US$217 million) at the end of December.
Ian Cockerill, Chief Executive Officer of Gold Fields, said: "Our operations did
well during the March quarter to produce an excellent set of operational results
despite the challenges posed by the extended number of public holidays over the
Christmas season and the strengthening of the Rand."
"The June quarter is posing even greater challenges as this quarter is
characterized by even more public holidays, unevenly spread throughout the
period. Combined with an ever-strengthening South African Rand that has
continued into the current quarter, shareholders are advised that this is
expected to have a much more pronounced impact on our next set of quarterly
results," said Cockerill.
A significant announcement this quarter is the completion of the feasibility
study for the determination of long-term operating strategy at Tarkwa. The
decision has been made to proceed with two significant investments at this mine.
The first involves the installation of a 4.2 million ton per annum (mtpa) mill
and CIL facility at a cost of US$85 million and the second, the acquisition of a
new fleet of mining and support equipment at a cost of US$74 million, relating
to a conversion from contractor to owner mining. The capital investment will be
undertaken between June 2003 and December 2004, with the goal of having the mill
commissioned by the end of 2004 and the conversion to owner mining commencing in
June 2004. This expansion will increase annual throughput to 19 mtpa, while
increasing annual gold production from the current 525,000 ounces to over
700,000 ounces.
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 3% 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
other things, impact Black Economic Empowerment; reduce the viability of
existing operations; increase pay-limits, and, consequently, cause 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. The initial response of the Minister of Finance, Mr. Trevor
Manuel, has been encouraging and we are hopeful for a positive conclusion to
this final chapter in the legislative transformation of the South African mining
industry.
As recently reported by the media, Mr Edward Fagan, a well known New York
lawyer, has sent Gold Fields a letter claiming he acts on behalf of a number of
ex-employees, alleging foced labour and exposure to unsafe working practices,
chemicals and other substances. He further claims that they will seek legal
recourse through the US courts, under the Alien Tort Claims Act. To date Gold
Fields Limited has been unable to establish the exact nature of these claims and
is not aware of any suit having been filed in the US. We will keep shareholders
appraised of any future development in this matter. If we establish that
shareholder or company interests are frivolously or inappropriately prejudiced,
we will not hesitate to take aggressive action either here or in the US.
Gold Fields is the world"s largest unhedged gold company, with annual
attributable gold production of over 4.4 million ounces and attributable Mineral
Resources of 187 million ounces and Mineral Reserves of 79 million ounces. It
has operations in South Africa, Australia and Ghana (West Africa) and gold and
platinum group metals exploration projects throughout the world. The principal
trading market for the Company"s ordinary shares is the Johannesburg Securities
Exchange in South Africa (GFI). The company"s American Depositary shares are
listed on the New York Stock Exchange, also under the symbol GFI, as well as
being listed on the London, Euronext, Paris, Brussels, and Swiss exchanges.
FULL RESULTS AVAILABLE AT
WWW.GOLDFIELDS.CO.ZA
SA Rand
Nine months Quarter
to
March March March Dec March
2002 2003 2002 2002 2003
91,767 102,43 33,620 33,930 33,340 kg Gold produced*
3
56,174 61,263 59,138 61,853 60,709 R/kg Total cash costs
25,939 32,063 9,910 10,560 10,792 000 Tons milled
92,146 100,30 107,73 100,969 95,068 R/kg Revenue
2 2
216 216 221 222 201 R/ton Operating costs
3,175 4,023 1,614 1,319 1,126 Rm Operating profit
1,893 2,164 1,049 817 805 Rm Net
earnings
413 459 224 173 171 SA
c.p.s.
1,759 1,785 933 574 476 Rm Net earnings
excluding gains
and losses on
financial
instruments and
foreign debt net
of cash and
exceptional items
380 378 199 122 101 SA
c.p.s.
