| Fri 1 Aug 2003, 10:45 | | Quarter And Year End Results To 30 June 2003 |
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Gold Fields Limited -
GOLD FIELDS LIMITED
Incorporated in the Republic of South Africa
Registration number 1968/004880/06
ISIN: ZAE000018123
Share Code: GFI Issuer Code: GOGOF
QUARTER AND YEAR END RESULTS TO 30 JUNE 2003
REVIEWED PRELIMINARY RESULTS
ANOTHER RECORD PRODUCTION YEAR
YEAR ENDED 30 JUNE 2003
* Attributable gold production year on year increases
5 per cent to an all-time high of 4.33 million ounces.
* Net earnings of R2.95 billion (US$326 million) achieved.
* Capital expenditure increased 46 per cent to R2.3 billion (US$251 million).
* Exploration spend up 129 per cent to R212 million (US$23 million).
* Final dividend of SA 100 cents declared.
* Offshore debt reduced from US$182 million at the beginning of the year to
US$42 million at the end of the year.
QUARTER ENDED 30 JUNE 2003 * Attributable gold production of 1,041,000 ounces.
* Strong Rand reduced operating profit 36 per cent to R717 million
(US$100 million).
* Profit on the sale of investments R302 million (US$34 million).
* Foreign debt of US$95 million repaid during the quarter.
* Net earnings of R789 million.
* US Dollar earnings increase 5 per cent to US$98 million
STOCK DATA
Number of shares in issue
- at 30 June 2003 472,364,872
- average for the quarter 472,219,228
Free Float 100%
ADR Ratio 1:1
Bloomberg / Reuters GFISJ / GFLJ.J
JSE SECURITIES EXCHANGE SOUTH AFRICA - (GFI)
Range - Quarter ZAR71.40 ZAR100.70
Average Volume - Quarter 1,524,000 shares / day
NYSE - (GFI)
Range Quarter US$9.70 US$13.00
Average Volume - Quarter 1,520,000 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
Year ended Quarter
June June June March June
2002 2003 2002 2003 2003
kg Gold produced* oz(000) 127,812 134,813 36,046 33,340 32,380
R/kg Total cash costs $/oz 56,662 61,766 57,935 60,709 63,369
000 Tons milled 000 36,953 42,988 11,014 10,792 10,925
R/kg Revenue $/oz 95,730 97,060 105,024 95,068 86,751
R/ton Operating costs $/ton 213 213 207 201 204
Rm Operating profit $m 4,785 4,741 1,610 1,126 717
Rm Net earnings $m 3,073 2,953 1,180 805 789
SA c.p.s. US c.p.s. 662 626 251 171 167
Net earnings excluding
gains and losses on
financial instruments
and foreign debt net
of cash and exceptional
Rm items $m 2,590 2,011 845 476 226
SA c.p.s. US c.p.s. 558 426 180 101 48
SALIENT FEATURES
US DOLLARS
Year ended Quarter
June June June March June
2002 2003 2002 2003 2003
kg Gold produced* oz(000) 1,041 1,072 1,159 4,334 4,109
R/kg Total cash costs $/oz 255 225 171 212 173
000 Tons milled 000 10,925 10,792 11,014 42,988 36,953
R/kg Revenue $/oz 349 353 311 333 292
R/ton Operating costs $/ton 26 24 20 23 21
Rm Operating profit $m 100 135 157 523 470
Rm Net earnings $m 98 93 112 326 301
SA c.p.s. US c.p.s. 21 20 24 69 65
Net earnings excluding
gains and losses on
financial instruments
and foreign debt net
of cash and exceptional
Rm items $m 34 58 80 222 254
SA c.p.s. US c.p.s. 8 12 17 47 55
*Attributable
All companies wholly owned except for Ghana (71.1%).
DEAR SHAREHOLDERS
The Company has again been able to produce a solid set of results for the
financial year and quarter, both of which ended on 30 June 2003.
Despite the challenges posed by the strengthening Rand, an excessive number of
public holidays during the quarter and grade fluctuations at Kloof, we have
produced a consistent and credible set of results for both periods.
Particularly pleasing has been the safety performance the Group during the
past year, with Gold Fields recording the best safety achievements since its
inception in 1998. This is the result of a relentless focus on the full
compliance safety campaign by each one of our people, and reflects the growing
seriousness with which management and employees alike approach safety on our
mines.
For the year gold production increased by 5 per cent to 4.33 million ounces,
largely as a result of the inclusion for a full year of the St Ives, Agnew and
Damang Mines, acquired in financial 2002.
Production for the June quarter was marginally down, mainly because of lower
grades experienced at Kloof Mine. This is evidence of the continuing decline in
grades experienced across the South African gold mining industry. Since the
quarter end grades have improved at the Kloof mine. Year on year Gold Fields
saw a decline of 9 per cent in underground grades at its South African
operations, from 8.2 grams per ton to 7.5 grams per ton.
In the current strong Rand environment, cost control has become an even
higher priority, especially at our South African operations. This is borne out
by our operating teams" ability to limit increases in total costs to only two
per cent during the June quarter, with Rand per ton costs virtually in line with
the previous quarter. Year on year we saw a 3 per cent increase in underground
mining costs from R496 per ton to R509 per ton, significantly below inflation.
As in the March quarter, the strong Rand has again had a significant impact
on the Rand gold price received, resulting in a 36 per cent decline in operating
profit quarter on quarter, from R1,126 million to R717 million. However, we
have been able to maintain net earnings at R789 million, assisted largely by the
opportunistic realisation of non-core holdings in other mining companies, as
well as further gains on financial instruments and foreign debt related to our
Australian operations.
The June quarter also saw a further significant reduction in debt from US$136
million to US$42 million. The proceeds from the sale of the non-core holdings
referred to above were utilised for this purpose along with some accelerated
close outs of our Australian Dollar currency instruments and other offshore
cash. This is in line with management"s policy of maintaining a strong and
unencumbered balance sheet, as a prerequisite for a company that does not hedge
gold, and in order to maintain Gold Fields" competitive position on the
corporate front.
A highlight of the past quarter has been the announcement of the Black
Economic Empowerment transaction through which an empowerment consortium led by
Mvelaphanda Resources Limited aims to acquire a 15 per cent stake in the South
African assets of Gold Fields, on commercial terms. This transaction, coupled
with a wide range of other social and sustainable development initiatives,
positions your company at the forefront of the transformation of the South
African mining industry and will ensure that Gold Fields meets the requirements
of the Mining Charter well within the required timeframes.
The past year also saw a significant increase in capital and exploration
expenditure, which, together with our strong balance sheet, positions Gold
Fields well for the future.
In conclusion, while the operational outlook for the coming year remains
generally positive, Gold Fields, like the rest of the South African gold mining
industry, will be challenged by the impact of the volatile and strong Rand as
well as increased cost pressures brought about by the recent wage increases
negotiated with the National Union of Mineworkers. It is our intention to
manage these challenges decisively and in a manner that will safeguard the track
record of consistent results that we have developed over the past five years.
Yours Sincerely
ID COCKERILL
CHIEF EXECUTIVE OFFISER
1 August 2003
In order to provide you with the best and most transparent information, within
the framework of accounting and JSE requirements, it would be appreciated if you
could give us feedback (to Willie or Cheryl listed above) on the information
provided in this booklet and any additional information you deem relevant.
Thanking you in advance for your participation.
COMMENTARY
HEALTH AND SAFETY
The safety performance of the Group has once again shown improvement quarter on
quarter, with the fatal injury frequency rate improving by 28 per cent from 0.32
to 0.23, the serious injury frequency rate improving from 7.1 to 6.5 or 9 per
cent and the lost day injury frequency rate improving by 3 per cent from 14.3 to
13.9. During the quarter Beatrix achieved 2,000,000 fatal free shifts and
Driefontein 1,000,000.
A comparison of the year on year performance indicates a significant
improvement, with the best ever safety performance for the Group since
establishment in 1998. The fatal injury frequency rate improved year on year by
26 per cent from 0.31 to 0.23. The serious injury frequency rate improved from
8.0 to 6.5 or 19 per cent and the lost day injury frequency rate improved 50 per
cent from 28.0 to 13.9. The days lost frequency rate improved from 455 to 421
or 8 per cent.
FINANCIAL
Quarter ended 30 June 2003
NET EARNINGS
Net earnings for the quarter amounted to R789 million (US$98 million), compared
to R805 million (US$93 million) earned in the previous quarter. Included in
this quarter"s earnings are exceptional items of R272 million (US$31 million),
which includes a profit on sale of investments of R302 million (US$34 million)
and exceptional health care costs of R27 million (US$3 million). The profit on
the sale of investments results from the sale of the remaining 19.8 million
shares in Eldorado Gold Corporation yielding a profit of R222 million (US$25
million), the sale of 870,000 shares in Glamis Gold Limited (leaving a holding
of 88,000 shares), which yielded a profit of R64 million (US$7 million), the
sale of 73,000 shares in Chesapeake (7 per cent of our holding), which yielded a
profit of R1.4 million (US$0.2 million) and the sale of 400,000 ARMgold shares
(18 per cent of our holding), which yielded a profit of R14 million (US$1,5
million). The above is included in exceptional items and compares with the R178
million (US$19 million) profit on the sale of investments included last quarter.
Earnings, excluding exceptional items after taxation as well as the net gains on
financial instruments and foreign debt, amounted to R226 million (US$34
million) as compared to R476 million (US$58 million) achieved last quarter.
REVENUE
Revenue is significantly lower than the previous quarter due to an 8 per cent
strengthening of the average Rand/US Dollar exchange rate from 8.38 in the March
2003 quarter to 7.74 this quarter. This was exacerbated by the lower US Dollar
gold price at US$349 per ounce, compared to US$353 per ounce last quarter. The
resultant Rand gold price of R86,751 per kilogram is thus 9 per cent lower than
the R95,068 per kilogram achieved last quarter. This, together with the lower
gold sales at 34,244 kilograms (1,101,000 ounces) as compared to 35,257
kilograms (1,134,000 ounces) last quarter, resulted in revenue of R2,971 million
(US$383 million) compared to R3,352 million (US$397 million) last quarter. The
lower gold sales are mainly as a result of lower underground grades at Kloof.
OPERATING COSTS
Operating costs at R2,224 million (US$281 million) for the quarter were 2 per
cent higher than the previous quarter"s costs of R2,172 million (US$256 million)
mainly as a result of the impact of the higher production at St Ives in
Australia. South African operational costs increased 1 per cent compared to the
previous quarter. On a Group basis, total cash costs increased from R60,709 per
kilogram last quarter to R63,369 per kilogram this quarter. In US Dollar terms
total cash costs increased from US$225 per ounce to US$255 per ounce mainly due
to the stronger Rand quarter on quarter. The net effect of the decreased
revenue and marginally higher 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 R1,126 million (US$135 million) in the March quarter to
R717 million (US$100 million) this quarter.
Amortisation was 10 per cent lower than the previous quarter at R306 million
(US$39 million), mainly due to a re-assessment of the allocation of the at
acquisition carrying values of the assets of the individual operations (St Ives
and Agnew), which affected amortisation tenement rates. Amortisation
calculations now provide a better matching of costs and revenues over the life
of these operations.
FINANCIAL INSTRUMENTS AND DEBT
The Australian Dollar once again strengthened against the US Dollar, from
59.4 cents at the end of the March quarter to 66.2 cents at the end of the
current quarter. US$84 million of the foreign debt used to finance the
acquisition of the Australian operations was repaid during the quarter. The
stronger Australian Dollar, resulted in a gain on foreign debt of R66 million
(US$7 million) as compared to a gain of R55 million (US$6 million) achieved in
the March 2003 quarter. Outstanding debt at the Australian operations thus
reduced significantly from US$113 million at the end of the March quarter to
US$29 million by the end of June.
As previously reported, the Australian operations established currency
financial instruments to protect the cash flows against a possible strengthening
of the Australian Dollar against the United States Dollar. At the quarter end,
US$300 million was outstanding under these instruments. The reduction from
US$400 million in the previous quarter is due to an acceleration of close outs
of our put/call collar structure in addition to the standard quarterly
maturities of US$25 million. This has generated US$24 million in cash, which
has been used to prepay offshore debt. Gains on these financial instruments
amounted to R320 million (US$36 million) in the current quarter compared to R185
million (US$19 million) in the previous quarter. At the end of the June
quarter, the marked to market value of these US Dollar/Australian Dollar
financial instruments was a positive R536 million (US$69 million).
The gain on financial instruments was partially offset by an unrealised loss
on SA Rand/US Dollar forward cover of US$36 million. This was purchased during
the quarter to hedge the Group"s commitment in respect of the Tarkwa mill and
owner mining projects approved last quarter for US$159 million, since this
project is to be funded from South African sources. The weighted average
forward rate in respect of the forward cover established was R8.73 maturing on 3
June 2004.
The marked to market value of this forward purchase at the end of the quarter
was a negative R9 million (US$1.1 million).
Details of the financial instruments are provided on page 9 of this report.
Exploration increased, from R31 million (US$4 million) in the March quarter
to R100 million (US$12 million) in the June quarter. For further commentary on
exploration, please refer to page three.
Profit before taxation and exceptional items was R697 million (US$93 million)
compared to R1,037 million (US$122 million) posted in the March 2003 quarter.
Taxation at R151 million is 60 per cent below the previous quarter as a
result of the impact the mining tax formula has on mining tax, given the reduced
operating profit.
Net earnings, after accounting for minority interests were thus R789 million
(US$98 million) or 167 cents per share (US21 cents), compared to R805 million
(US$93 million) or 171 cents per share (US20 cents) in the previous quarter.
CASH FLOW
Operating cash flow for the quarter was R577 million (US$95 million), which
was R637 million lower than operating cash flow in the March quarter of R1,214
million (US$141 million). The decrease is mainly due to the lower operating
profit.
Capital expenditure was R685 million (US$84 million) as compared to R505
million (US$60 million) in the March 2003 quarter. The increase is due to a
catch-up of forecast expenditure, mainly on major projects, which are still
forecast to be in line with approved votes.
Of this amount, R423 million (US$77 million) was expended at the South African
operations with the significant portion directed at the major projects, R119
million at the 1E and 5E shafts and R26 million on the new mill installation at
Driefontein, with further development at Kloof 4 shaft of R52 million and
Beatrix 3 shaft of R60 million.
The Australian operations incurred capital expenditure of R186 million (A$34
million), the majority on development of existing projects and exploration aimed
at increasing the ore reserve base at those operations. At the Ghanaian
operations, capital expenditure
Commentary
amounted to R60 million (US$7 million), the majority at Tarkwa for the expansion
of the leach pads.
The sale of investments, being Eldorado, Glamis, Chesapeake and ARMgold
referred to earlier, resulted in a cash inflow of R359 million (US$51 million).
The foreign portion of these proceeds was applied to the payment of offshore
debt.
Net cash outflow for the quarter was R754 million (US$67 million) after
taking account of external loan and minority shareholder loan repayments of R736
million (US$99 million), the final tax payment for the year of R124 million and
environmental and post-retirement healthcare payments of R242 million (US$27
million), which includes paymentfor the settlement of post-retirement health
care obligations of R207 million (US$27 million). The cash balance at the end
of the June 2003 quarter was R1,041 million (US$134 million) as compared to
R1,821 million (US$224 million) at the end of the March 2003 quarter.
Debt at the end of June was R324 million (US$42 million) as compared to R1,110
million (US$136 million) at the end of March 2003.
Cash net of both long-term and short-term debt at the end of the quarterwas a
positive R717 million (US$92 million) virtually unchangedfrom the R711 million
(US$88 million) last quarter.
Quarter ended 30 June 2003 compared to quarter ended 30 June 2002
Attributable gold production decreased from 1,159,000 ounces in the June 2002
quarter to 1,041,000 ounces this quarter. The decrease in production was partly
due to the sale of St Helena earlier in the year and due to the lower grades,
particularly at Kloof and Driefontein.
Revenue decreased 22 per cent in Rand terms (increase of 3 per cent in US
Dollar terms) from R3,826 million (US$372 million) to R2,971 million (US$383
million) due to a reduction in the Rand gold price achieved from R105,024 per
kilogram (US$311 per ounce) in the June 2002 quarter to R86,751 per kilogram
(US$349 per ounce) in the June 2003 quarter. Operating costs were marginally
lower at R2,224 million (US$281 million) compared to R2,261 million (US$219
million) in the June 2002 quarter. Increases at the South African operations
were offset by the impact of translating costs at the international operations
into South African Rand at a stronger R/US Dollar exchange rate than the
corresponding quarter in the previous year. Earnings decreased from R1,180
million (US$112 million) in the June 2002 quarter to R789 million (US$98
million) in the current quarter.
Year ended 30 June 2003 compared to the year ended 30 June 2002 Attributable
gold production increased 5 per cent from 4,109,000 ounces to 4,334,000 ounces
mainly as a result of the acquisition of the Australian and Damang operations,
which are included for the full year to June 2003, as compared to seven and five
months for the Australian and Damang operations respectively in the year to June
2002. This was partly offset by the sale of St Helena, effective 30 October
2002.
Revenue increased by 11 per cent in Rand terms (25 per cent in US Dollar
terms) from R12,528 million (US$1,230 million) to R13,893 million (US$1,532
million) due to the increase in production and an increase in the gold price
from R95,730 to R97,060 per kilogram for the year ended 30 June 2003. The
acquisitions in Australia and Ghana referred to earlier, also contributed to the
increase in operating costs from R7,826 million (US$768 million) to R9,142
million (US$1,008 million). Costs were also impacted by normal inflationary
increases and the increase in mining volumes at the South African operations
required to counter the lower underground grades being achieved, where yields
have reduced 9 per cent year on year from 8.2 grams per ton last year to 7.5
grams per ton this year.
Earnings decreased 4 per cent to R2,953 million from R3,073 million the
previous year but increased in US Dollar terms from US$302 million to US$326
million for the year ended June 2003.
OPERATIONS
Overview
Attributable gold production for the June 2003 quarter decreased to 1,041,000
ounces from 1,072,000 ounces in the March 2003 quarter, of which 31 per cent was
produced from the international operations.
Production from our Australian operations increased 13 per cent.
This was due to an increase in tons throughput at St Ives, as yield was
maintained at 2.9 grams per ton. Ghana showed a decrease in production of 3 per
cent due to a significant release of gold in process in the previous quarter.
Ore milled increased from 10.79 million tons to 10.93 million tons due to an
increase in surface tons, mainly at St Ives. This resulted in a decrease in
overall yield to 3.1 grams per ton, as compared to 3.3 grams per ton achieved in
the March 2003 quarter. Total cash costs in Rand terms increased to R63,369 per
kilogram from R60,709 per kilogram achieved last quarter as a result of the
lower production. In US Dollar terms, total cash costs increased from US$225
per ounce to US$255 per ounce mainly due to the stronger South African Rand.
Operating costs per ton at R204 were virtually unchanged from last quarter.
South African Operations
DRIEFONTEIN
Production at Driefontein decreased 4 per cent to 286,000 ounces. This was due
to anticipated lower surface yields compared to the previous quarter as the high
grade surface rock dump has now been depleted. Underground tonnage increased to
964,000 tons from 958,000 tons, while surface tonnage decreased to 660,000 tons
from 750,000 tons due to a settling in period for the newly commissioned mill at
No.2 plant. The decreased proportion of surface to underground ore treated
resulted in the combined yield increasing from 5.4 grams per ton last quarter to
5.5 grams per ton this quarter. The lower surface yield (1.6 grams per ton
compared to 2.3 grams per ton last quarter) was offset by the increase in
underground yield from 7.8 grams per ton to 8.1 grams per ton this quarter.
Total cash costs increased by 4 per cent in Rand terms to R63,784 per kilogram
from R61,184 per kilogram last quarter. This was due to the lower surface
yields, as total operating costs decreased quarter on quarter by 2 per cent
despite an increase in stoping and development volumes. In US Dollar terms
total cash costs increased from US$227 per ounce to US$256 per ounce quarter on
quarter as a result of the stronger Rand, allied with the lower gold production.
Operating profit declined from R267 million (US$33 million) in the March quarter
to R174 million (US$25 million) in the current quarter also due to the lower
production and lower gold price received. Capital expenditure was higher at
R193 million (US$34 million) for the quarter compared to R125 million (US$15
million) in the previous quarter due to the funding of the 5E shaft
refrigeration plant and the No.1 metallurgical plant renewal programme.
KLOOF
As mentioned earlier, gold production at Kloof at 260,000 ounces was 38,000
ounces lower than the previous quarter due to lower grades and less shifts due
to the June quarter public holidays. The decline in the grade was exacerbated
by the short term mining mix variations. The combined yield decreased quarter on
quarter from 7.5 grams per ton to 6.4 grams per ton, all due to the drop in
underground grades. The mining mix issues have been addressed and grades are
improving. Underground tonnage was flat at 973,000 tons and surface tonnage was
marginally higher at 284,000 tons, at a higher yield of 1.0 gram per ton.
Underground unit costs increased marginally from R580 per ton to R592 per ton
due to the 2 per cent increase in operating costs. Total cash costs increased
by 17 per cent in Rand terms to R70,516 per kilogram and by 26 per cent in US
Dollar terms, from US$224 to US$283 per ounce. The decrease in gold output and
the lower gold price, resulted in operating profit decreasing to R106 million
(US$17 million) this quarter from R298 million (US$35 million) last quarter.
Capital expenditure was R114 million (US$22 million) for the quarter compared to
R100 million (US$12 million) in the previous quarter due to an increase in
expenditure at 4 shaft.
BEATRIX
In the Free State, production at Beatrix increased by 2 per cent to 171,000
ounces from 168,000 ounces achieved in the previous quarter.
This increase was due to increased yields at both underground and surface
operations. Underground yields increased from 4.9 grams per ton to 5.1 grams
per ton, while surface yields increased from 0.9 grams per ton to 1.1 grams per
ton. Underground ore milled decreased to 1,002,000 tons this quarter from
1,027,000 tons, while surface tons increased 4 per cent from 175,000 tons to
182,000 tons this quarter. Total cash costs increased 3 per cent in Rand terms
to R68,401 per kilogram and increased to US$275 per ounce from US$246 per ounce
last quarter due to the stronger Rand. Operating profit declined from R131
million (US$16 million) to R81 million (US$11 million) quarter on quarter due to
the lower gold price and increased mining costs associated with higher mining
volumes, in both stoping and development. Capital expenditure increased from
R77 million (US$9 million) last quarter to R117 million (US$21 million) this
quarter due to increased expenditure at 3 shaft and the ventilation shaft at 2
shaft.
Metallurgical Plant Upgrades
Construction of Driefontein"s 1 plant mill installation is nearing
completion, with commissioning scheduled for the end of September 2003. The
Driefontein 2 plant mill installation is operating at design capacities and
optimisation of the circuit is in progress.
The installation of the carbon-in-pulp pump-cell facility at Kloof 3 plant is
slightly behind schedule due to adverse ground conditions experienced at the
proposed site and commissioning has been delayed to September 2003.
International Operations
Ghana
TARKWA
Gold production decreased by 5 per cent from 136,000 ounces in the March quarter
to 129,000 ounces in the June quarter. The March quarter production included an
11,000 ounce release of gold inventory from the leach pads as compared to 7,000
ounces in the June quarter. Tons crushed reduced marginally from 3,847,000
tons last quarter to 3,723,000 tons this quarter. The yield, at 1.1 grams per
ton, remained constant. For the June quarter total operating costs increased by
3 per cent to US$26 million (R205 million), due primarily to increased grade
control drilling, which combined with the 3 per cent decline in throughput
resulted in a 6 per cent increase in unit operating costs from US$6.68 to
US$7.06. As a result, total cash costs increased by a similar quantum to US$213
per ounce. Tarkwa contributed US$17 million (R131 million) to operating profit,
a decrease of 15 per cent quarter on quarter.
DAMANG
At Damang, production increased marginally to 78,000 ounces because of an
increase in mill throughput, from 1,228,000 tons to 1,309,000 tons. Yield
remained constant at 1.9 grams per tons. Total cash costs decreased from US$248
per ounce to US$223 per ounce quarter on quarter. This decrease was due to the
increased production, allied with a gold in process credit of US$1.4 million due
to the stockpiling of some high-grade ore that could not be treated during the
quarter. Unit operating costs increased to US$14.20 per ton from US$13.80 per
ton in the March quarter. The net result was an increase in operating profit of
18 per cent to US$10 million (R81 million).
The contribution from the Ghanaian operations to the Group"s operating profit
increased to 30 per cent from 22 per cent last quarter and at R212 million
(US$27 million) is 14 per cent lower than the contribution of R248 million
(US$29 million) achieved last quarter.
Australia
ST IVES
Gold production at St Ives was 141,000 ounces, an increase of 19 per cent when
compared to the March quarter"s production of 119,000 ounces. This was due to
an increase in the total ore treated from 1,263,000 tons for the March quarter
to 1,495,000 tons in June, resulting from the inclusion of a tolling campaign
during the quarter, which produced 5,000 ounces from 82,000 tons treated, and
improved mill and heap leach plant throughputs. Yields remained constant at 2.9
grams per ton. Underground mining operations contributed one third of total
gold production, similar to last quarter. Operating costs at A$47 million (R240
million, US$30 million) were 20 per cent above the previous quarter due to costs
associated with toll treatment, the increase in ore treated from 1.3 million
tons to 1.5 million tons and the inclusion of exploration drilling of A$1.6
million, written off during the quarter. Total cash costs were thus A$338 per
ounce (US$221 per ounce) for the June quarter compared to A$326 per ounce
(US$193 per ounce) in the March quarter. Operating costs per ton increased
marginally from A$31 to A$32 quarter on quarter. St Ives contributed A$30
million (R148 million, US$19 million) to operating profit compared to A$33
million (R163 million, US$20 million) in the previous quarter with the reduced
gold price more than offsetting the increase in gold sales.
Capital expenditure increased from A$18 million (R78 million, US$10 million) in
the March quarter to A$27 million (R144 million, US$26 million) this quarter as
a result of additional exploration costs of A$5 million and a A$3 million
increase in mine development costs.
AGNEW
Gold production at Agnew was virtually unchanged at 36,000 ounces.
Production from the Crusader/Deliverer underground operations was similar to
last quarter and a low grade stockpile was used to offset the reduction in
ounces previously available from the Waroonga pit, as operations at this pit
were discontinued last quarter. This was the main reason for the drop in
reported yield from 3.8 grams per ton last quarter to 3.3 grams per ton this
quarter. The mine reported a decrease in total cash costs in Australian Dollars
from A$449 per ounce (US$272 per ounce) last quarter, to this quarter"s A$440
per ounce (US$286 per ounce). This was due to a decline in operating costs from
A$14 million (R68 million, US$9 million) in the March quarter to A$13 million
(R63 million, US$8 million) in the current quarter with the termination of open
pit mining. The contribution to operating profit from Agnew was negative A$0.5
million (R4 million negative and US$nil) compared to last quarter"s contribution
of A$6 million (R20 million, US$3 million) due to the stronger Australian Dollar
and the lower gold price. The gold price achieved in the June quarter was A$544
per ounce compared to A$600 per ounce in the March quarter. Capital expenditure
was little changed at just below A$7 million (R42 million, US$8 million) as
development of the underground operations at Waroonga continued.
The contribution from the Australian operations to the Group"s operating
profit increased to 20 per cent from 16 per cent last quarter and at R144
million (A$29 million, US$19 million) is 21 per cent lower than the contribution
of R183 million (A$37, US$22 million) achieved last quarter. The increase in
the gain on financial instruments and foreign debt relative to the previous
quarter resulted in an increase in net earnings to A$74 million (R364 million,
US$41 million) this quarter from A$39 million (R194 million, US$21 million) in
the March 2003 quarter. Net earnings excluding gains on financial instruments
and foreign debt and exceptional items increased to R55 million (A$17 million,
US$7 million) compared to R29 million (A$6 million, US$3 million) last quarter.
DEVELOPMENT AND EXPLORATION
TARKWA
We reported in the March quarter that the decision to proceed with the mill
project had been taken. During the June quarter, the execution project team was
established, the EPCM contractor appointed, and final design and specification
of the project completed. Ordering of long lead-time items, such as the SAG
mill, have been completed and initial earth moving has commenced on the mine
site. With an execution decision also taken on the owner-mining project in the
March quarter, finalisation of fleet requirements and negotiation with equipment
and service suppliers continued during the quarter.
It is anticipated that procurement will commence in the September quarter, with
a view to the first phase of equipment arriving at Tarkwa during the final
quarter of this financial year.
DAMANG
During the quarter, the exploration program focused on testing the
conglomerate potential across the Damang license area. By quarter end, the
initial phases of exploration drilling at Chida, Chida South, Tomento and Bonsa
had been completed. Evaluation of the drilling results is underway and it is
expected that by the end of the September quarter initial resource potential in
these areas will be assessed, while indicative economics will be understood.
This will represent a significant milestone in assessing the longer-term
potential of Tarkwa style deposits at Damang.
ST IVES
The optimisation and expansion project feasibility study, examining the
viability of installing a new and expanded mill/CIP plant, is continuing and is
due for completion at the end of the first quarter of the 2004 financial year.
As previously reported, it is envisaged that the capacity of the new plant would
be some 4 million ton per annum (mtpa), compared to the current capacity of 3.1
mpta.
Exploration drilling to support the feasibility study has been completed.
During the 2003 financial year some 380,000 metres of exploration drilling
was undertaken at St Ives, of which one third was diamond drilling, at a total
cost just short of A$30 million. The exploration effort at St Ives has exceeded
expectations allowing the mine to replace reserves mined during the year, while
also adding a further year to the mine"s ore reserves. The exploration program
for the 2004 financial year will continue to focus on reserve expansion as well
as development of new resources and will be maintained at current activity
levels, with a commitment in excess of A$30 million for the year.
Exploration
Exploration has more than doubled to R100 million for the June quarter. This
amount includes R43 million (US$5 million) in respect of a write-off of all
expenditure incurred in previous quarters on exploration "farm-in" projects, in
which an ownership interest has not yet vested. Notwithstanding this, there has
been a deliberate effort to step up our exploration activities. The bulk of the
expenditure has been incurred on a diversified pipeline of early stage projects
in Africa, Australia, Bulgaria, China and South and Central America. Subject to
continued exploration success, and our ability to finance, expenditure is
expected to range between US$30 million and US$40 million per annum.
Arctic Platinum Project
On the 11th of July Outokumpu announced that it had concluded a transaction
with South Atlantic Resources, a Canadian junior mining company, to dispose of
its 49 per cent interest in the Arctic Platinum Project, for a total
consideration of US$31 million. In terms of the Arctic Platinum Partnership
Agreement, this disposal is subject to pre-emptive rights in favour of Gold
Fields. We are reviewing the opportunity presented under this arrangement and
will make an announcement once a decision has been made in respect of whether
the pre-emptive rights will be exercised.
BLACK ECONOMIC EMPOWERMENT TRANSACTION
On 10 June 2003 a joint cautionary announcement was issued to shareholders
stating that a R4.1 billion agreement had been reached, in terms of which a
broad based black empowerment consortium, led by Mvelaphanda Resources Limited
(Mvela), will acquire a beneficial interest of 15 per cent of the South African
gold mining assets of Gold Fields.
This transaction represents a significant milestone towards meeting the
requirements of the Mining Charter. The value of the assets is based on life
of mine valuations and represents fair market value. Funding will be by way of
a significant equity capital raising by Mvela, up to R300 million will be
financed by Gold Fields on commercial terms and the balance will be financed by
the raising of debt. Mvela is in the process of undergoing a debt raising
exercise. Once funding commitments are received, a detailed terms announcement
will be made.
LEGAL
Further to our earlier report a lawsuit was filed by Zalumzi Singleton Mtwesi
("Mtwesi") against Gold Fields Limited in the Supreme Court of the State of New
York County of New York on May 6, 2003. Mtwesi alleges, inter alia, that during
the apartheid era, he was subjected to human rights violations. Mtwesi has
filed the suit on behalf of himself and as representative of all other victims
and all other persons similarly situated ("the plaintiffs class"). In summary,
Mtwesi and the plaintiffs class demand an order certifying the plaintiffs class
and compensatory damages from Gold Fields Limited. The suit has not been served
on Gold Fields Limited. If and when service of the suit takes place it will be
vigorously contested. Gold Fields Limited will keep shareholders appraised of
any future developments in this matter.
COMMUNITY DEVELOPMENT PROJECTS
On 10 April 2003 a R70 million community development project, set to produce
25 million rose stems per year for the overseas market, was launched by Gold
Fields. The project, known as Living Gold, is a joint venture with the
Industrial Development Corporation. Located on the West Rand this project,
together with several other proposals in the pipeline, will assist in the battle
against unemployment and poverty in the area. Sustainable development is a core
strategy of Gold Fields and it is hoped that the benefits of this project will
long outlive mining in that area.
OUTLOOK
Gold production is not expected to be materially different in the September
2003 quarter. However, should the R/US Dollar exchange rate continue at current
levels, this, together with the higher than inflation wage increases, is
expected to further erode margins. In addition, the profit generated on sales
of investments this quarter will not be repeated in the September quarter and at
the current Australian Dollar exchange rate gains will not be generated on the
currency forward instruments. As a consequence of the above factors, earnings
are expected to be sharply lower in the September 2003 quarter.
DIVIDEND
A final dividend has been declared payable to all shareholders as
follows:
- Final dividend: 100 SA cents
- Last date to trade "CUM" dividend: 15 August 2003
- Sterling & US Dollar conversion date: 18 August 2003
- Commence trade "EX" dividend: 18 August 2003
- Record date: 22 August 2003
- Payment date: 25 August 2003
Share certificates may not be dematerialised or rematerialised
between Monday, 18 August 2003 and Friday, 22 August 2003, both dates
inclusive.
The dividend results in a payout of 59 per cent for the year based on net
earnings excluding gains and losses on financial instruments and foreign debt as
well as exceptional items. Most of the gains on the instruments are unrealised
and the realised gains, together with the exceptional gains, being mainly
profits on sales of investments, have been applied to debt reduction.
The dividend was also influenced by the significant capital expenditure,
which was R2.3 billion for the year.
BASIS OF ACCOUNTING
The unaudited results for the quarter have been prepared on the International
Financial Reporting Standards (IFRS) basis. The detailed financial, operational
and development results for the year and the June 2003 quarter are submitted in
this report.
These consolidated quarterly statements are prepared in accordance with IFRS
34, Interim Financial Reporting. The accounting policies are consistent with
those applied at the previous year-end.
AUDIT REVIEW
The year-end results have been reviewed in terms of Rule 3.23 of the listing
requirements of the JSE Securities Exchange SA by the Company"s auditors,
PricewaterhouseCoopers Inc. This unqualified review opinion is available on
request from the Company Secretary and on the web site.
ID Cockerill
CHIEF EXECUTIVE OFFICER
1 August 2003
INCOME STATEMENT
International Financial Reporting Standard Basis
SA RAND
(Figures are in millions unless otherwise stated)
Quarter Year ended
June March June June June
2003 2003 2002 2003 2002
Revenue 2,970.7 3,351.8 3,825.7 13,892.8 12,528.4
Operating costs 2,223.8 2,171.6 2,261.2 9,142.3 7,825.9
Gold inventory change 29.7 54.1 (45.3) 10.0 (82.7)
Operating profit 717.2 1,126.1 1,609.8 4,740.5 4,785.2
Amortisation and
depreciation 306.4 341.3 274.6 1,340.9 978.9
Net operating profit 410.8 784.8 1,335.2 3,399.6 3,806.3
Finance income 94.8 97.1 146.9 239.8 177.3
- Net interest received
and investment income 28.6 41.9 23.0 158.4 38.0
- Gain on foreign debt,
net of cash 66.2 55.2 123.9 81.4 139.3
Gain on financial
instruments 311.4 185.2 345.4 460.9 513.8
Other income/(cost) (20.1) 1.3 19.9 (15.8) 72.9
Exploration (100.4) (31.1) (21.2) (211.8) (92.4)
Profit before tax and
exceptional items 696.5 1,037.3 1,826.2 3,872.7 4,477.9
Exceptional gain/(loss) 271.7 177.1 (44.6) 571.8 (54.5)
Profit before taxation 968.2 1,214.4 1,781.6 4,444.5 4,423.4
Mining and income taxation 151.1 377.6 563.2 1,363.5 1,227.1
- Normal taxation (8.4) 193.7 212.7 728.6 763.2
- Deferred taxation 159.5 183.9 350.5 634.9 463.9
Profit after taxation 817.1 836.8 1,218.4 3,081.0 3,196.3
Minority interest 27.7 32.2 38.4 128.0 123.8
Net earnings 789.4 804.6 1,180.0 2,953.0 3,072.5
Exceptional items:
Profit on disposal
of St Helena - - - 121.7 -
Profit on sale of
investments 301.8 177.9 - 479.7 -
Retirement of health
care obligations (26.7) - - (26.7) -
Other (3.4) (0.8) (44.6) (2.9) (54.5)
Total exceptional items 271.7 177.1 (44.6) 571.8 (54.5)
Taxation (1.7) (16.8) - (37.7) 3.8
Net exceptional items
after tax and minorities 270.0 160.3 (44.6) 534.1 (50.7)
Net earnings per
share (cents) 167 171 251 626 662
Headline earnings 494.4 643.8 1,180.0 2,393.4 3,072.5
Headline earnings
per share (cents) 104 136 251 507 662
Diluted earnings
per share (cents) 166 169 248 621 656
Net earnings excluding
gains and losses on
financial instruments
and foreign debt, net
of cash and exceptional
items 225.9 475.9 844.9 2,010.9 2,590.1
Net earnings per share
excluding gains and losses
on financial instruments
and foreign debt, net of
cash and exceptional
items (cents) 48 101 180 426 558
Gold sold - managed
less capitalised kg 34,244 35,257 36,427 143,136 130,872
Gold price received R/kg 86,751 95,068 105,024 97,060 95,730
Total cash costs R/kg 63,369 60,709 57,935 61,766 56,662
INCOME STATEMENT
International Financial Reporting Standard Basis
US DOLLARS
(Figures are in millions unless otherwise stated)
Quarter Year ended
Quarter Year ended
June March June June June
2003 2003 2002 2003 2002
Revenue 383.2 396.7 372.2 1,531.7 1,229.5
Operating costs 280.5 256.1 218.9 1,008.0 768.0
Gold inventory change 3.2 5.2 (4.0) 1.1 (8.1)
Operating profit 99.5 135.4 157.3 522.6 469.6
Amortisation and depreciation 39.0 40.0 28.4 147.8 96.1
Net operating profit 60.5 95.4 128.9 374.8 373.5
Finance income 11.3 10.4 14.7 26.5 17.3
- Net interest received
and investment income 3.9 4.9 2.7 17.5 3.7
- Gain on foreign debt,
net of cash 7.4 5.5 12.0 9.0 13.6
Gain on financial
instruments 35.1 19.2 34.6 50.8 50.4
Other income/(cost) (2.3) 0.2 (1.2) (1.8) 7.2
Exploration (11.6) (3.7) (2.0) (23.3) (9.1)
Profit before tax and
exceptional items 93.0 121.5 175.0 427.0 439.3
Exceptional gain/(loss) 31.4 19.4 (4.4) 63.0 (5.3)
Profit before taxation 124.4 140.9 170.6 490.0 434.0
Mining and income taxation 22.8 44.6 54.6 150.3 120.4
- Normal taxation 2.8 23.5 20.8 80.3 74.9
- Deferred taxation 20.0 21.1 33.8 70.0 45.5
Profit after taxation 101.6 96.3 116.0 339.7 313.6
Minority interest 3.6 3.7 3.8 14.1 12.1
Net earnings 98.0 92.6 112.2 325.6 301.5
Exceptional items:
Profit on disposal of
St Helena 0.6 0.7 - 13.4 -
Profit on sale of
investments 34.2 18.7 - 52.9 -
Retirement of health
care obligations (3.0) - - (3.0) -
Other (0.4) - (4.4) (0.3) (5.3)
Total exceptional items 31.4 19.4 (4.4) 63.0 (5.3)
Taxation (0.4) (1.9) - (4.2) 0.4
Net exceptional items after
tax and minorities 31.0 17.5 (4.4) 58.8 (4.9)
Net earnings per
share (cents) 21 20 24 69 65
Headline earnings 64.2 74.8 112.2 263.9 301.1
Headline earnings
per share (cents) 14 16 24 56 65
Diluted earnings
per share (cents) 21 19 24 69 64
Net earnings excluding
gains and losses on
financial instruments
and foreign debt, net
of cash and exceptional
items 34.0 57.7 80.4 221.7 254.2
Net earnings per share
excluding gains and
losses on financial
instruments and foreign
debt, net of cash and
exceptional items (cents) 8 12 17 47 55
Exchange rate - SA
Rand/US Dollar 7.74 8.38 10.51 9.07 10.19
Gold sold - managed
less capitalised ozs (000) 1,101 1,134 1,171 4,602 4,208
Gold price received $/oz 349 353 311 333 292
Total cash costs $/oz 255 225 171 212 173
BALANCE SHEETS
International Financial Reporting Standard Basis
(Figures are in millions unless otherwise stated)
SA Rand US Dollars
June June June June
2003 2002 2003 2002
Mining and mineral assets 15,371.3 15,064.6 1,973.2 1,454.1
Non-current assets 275.0 252.7 35.3 24.4
Investments 512.1 797.8 65.7 77.0
Current assets 3,059.5 4,256.2 392.7 410.9
- Cash and deposits 1,040.8 2,027.1 133.6 195.7
- Other current assets 2,018.7 2,229.1 259.1 215.2
Total assets 19,217.9 20,371.3 2,466.9 1,966.4
Shareholders" equity 11,295.5 11,095.8 1,450.0 1,071.0
Minority interest 668.2 567.1 85.8 54.7
Deferred taxation 4,279.6 3,736.5 549.4 360.7
Long-term loans 164.2 1,502.2 21.1 14
