| Thu 28 Apr 2005, 8:27 | | Gold Fields reports Q3 2005 earnings |
|
Gold Fields Limited
Incorporated in the Republic of South Africa
Registration number 1968/004880/06
Share code: GFI
Issuer code: GOGOF
ISIN: ZAE 000018123
Quarter Ended 31 March 2005
News Release Q3 F2005 Results - unaudited
Attributable gold production up 4 per cent
and total cash costs maintained at below R65,000 per kilogram
JOHANNESBURG. 28 April 2005 - Gold Fields Limited (NYSE & JSE: GFI) today
announced March 2005 quarter net earnings excluding gains and losses on
financial instruments and foreign debt and exceptional items of R128 million up
28 per cent, compared with R100 million in the December 2004 quarter. In US
dollar terms the March 2005 quarter equivalent was US$21 million compared with
US$16 million in the December 2004 quarter.
March 2005 quarter salient features:
. Attributable gold production increased 4 per cent to 1.09 million ounces
quarter on quarter, in line with the previous guidance. The increase at the
international operations was 17 per cent;
Costs were again well controlled, with total cash costs flat at R64,957 per
kilogram (US$340 per ounce);
Operating profit of R537 million (US$90 million) was achieved for the March
quarter;
Normalised earnings up 28 per cent to R128 million;
Gold Fields continued its vigorous defence against Harmony's hostile and
ill conceived take-over attempt.
Ian Cockerill,
Chief Executive Officer of Gold Fields said:
"This is a challenging time for the South African gold mining industry and I am
delighted with the way all of our employees have responded magnificently to the
twin challenges of the difficult operating environment and the continuing saga
of the hostile Harmony offer. I am pleased to report that the Gold Fields team
around the world has once again delivered in line with its promises, with a
strong operational performance across the Group.
A creditable 4 per cent increase in total attributable gold production was
mostly offset by the lower rand gold price received during the quarter,
resulting in a marginal increase in revenue. Rand per kilogram costs were well
contained with Group costs flat at R64,957 per kilogram and net earnings,
excluding gains and losses on financial instruments and foreign debt and
exceptional items, increasing by 28 per cent quarter on quarter.
The Group's ongoing focus on inward investment has paid dividends, as
international production has increased by 17 per cent with the completion of
the growth projects at St Ives and Tarkwa. Further benefits are expected at
these operations as internal efficiencies are maximised and costs reduced.
The South African operations delivered a robust performance despite the
Christmas break and the traditional slow start up.
Planning and scheduling was optimised at these operations in order to minimize
production disruptions during this period. This optimised planning lead to gold
production at the South African operations for the quarter ended March 2005
being 2 per cent higher than the corresponding period in the previous year. For
the group as a whole, attributable gold produced was over 5 per cent higher
than the corresponding period in the prior year with unit costs 4 per cent
lower. The benefits of Project 100 and Project Beyond continue to be realized
as South African unit operating costs again decreased quarter on quarter, the
third in a row. Gold Fields is firmly on track to meet its stated rand cost per
kilogram target of R70,000 for the South African operations and this target was
in fact exceeded in the March month.
The results announced today are another clear demonstration of the true value
of Gold Fields and management's ability to deliver in difficult times. We will
continue to focus on operational excellence, which we believe will result in
another strong performance in the next quarter despite continuing tough
economic conditions."
Stock data
Number of shares in issue
- at end March 2005 492,294,226
- average for the quarter 492,144,121
Free Float 100%
ADR Ratio 1:1
Bloomberg / Reuters GFISJ / GFLJ.J
JSE Securities Exchange South Africa-(GFI)
Range - Quarter ZAR66.02 - ZAR81.41
Average Volume - Quarter 748,300 shares / day
NYSE - (GFI)
Range - Quarter US$10.75 - US$13.35
Average Volume - Quarter 904,600 shares / day
Salient features
SA Rand
Nine months to Quarter
March March March Dec March
2004 2005 2004 2004 2005
Gold produced* kg 96,910 97,761 32,131 32,599 33,845
Total cash costs R/kg 67,360 65,443 67,528 64,921 64,957
Tons milled 000 34,952 35,655 11,815 11,823 12,789
Revenue R/kg 86,630 82,885 88,887 84,872 81,952
Operating costs R/ton 202 197 199 198 184
Operating profit Rm 1,770 1,630 656 637 537
Operating margin % 20 19 22 22 18
Net earnings Rm 953 194 255 80 11
SA c.p.s. 197 39 51 16 2
Headline earnings Rm 634 157 221 45 9
Net earnings SA c.p.s. 131 32 45 9 2
excluding gains and Rm 485 222 238 100 128
losses on financial
instruments and
foreign debt net of
cash and
exceptional items SA c.p.s. 100 45 48 20 26
US Dollars
Quarter Nine months to
March Dec March March March
2005 2004 2004 2005 2004
Gold produced* (000) oz 1,088 1,048 1,033 3,143 3,116
Total cash costs $/oz 340 330 309 332 299
Tons milled 000 12,789 11,823 11,815 35,655 34,952
Revenue $/oz 428 431 407 420 385
Operating costs $/ton 31 32 29 32 29
Operating profit $m 90 104 96 266 253
Operating margin % 18 22 22 19 20
$m 2 13 38 32 136
Net earnings US c.p.s. - 3 7 6 28
$m 2 8 33 26 91
Headline earnings US c.p.s. - 2 7 5 19
Net earnings $m 21 16 34 36 69
excluding gains and
losses on financial
instruments and US c.p.s. 4 3 7 7 14
foreign debt net of
cash and exceptional
items
*Attributable - All companies wholly owned except for Ghana (71.1%).
Health and Safety
We regret the 5 fatalities which occurred during the March quarter, however,
the fatal injury frequency rate reduced from 0.16 to 0.14. The lost day injury
frequency rate improved from 13.2 to 12.2, and the serious injury frequency
rate improved from 6.1 to an all time low of 5.8.
Beatrix continued its sterling performance by achieving 3 million fatality free
shifts for the whole mine during the March quarter. Beatrix North excelled as
well, managing to achieve 1.5 million fatality free shifts during this quarter.
Financial Review
Quarter ended 31 March 2005 compared with quarter ended 31 December 2004
Revenue
Attributable gold production increased by 4 per cent to 1,088,000 ounces in the
March 2005 quarter as forecast in December, compared to 1,048,000 ounces
achieved in the December 2004 quarter. Production at the South African
operations was 711,000 ounces, which was 2 per cent lower than the previous
quarter. The international operations increased 17 per cent to 377,000 ounces.
Performance at the South African operations was similar to the forecast given
in the December quarterlies at Driefontein and Beatrix but at Kloof an
underground fire during the quarter at 2 sub-vertical shaft and the closure of
number 3 surface treatment plant, resulted in lower than forecast production.
The increase at the international operations was mainly due to a 45 per cent
increase at St Ives, as the old and new mill operated in parallel for the whole
quarter, and due to the full benefit being realised of the new Tarkwa mill in
the March quarter. The old mill at St Ives operated throughout the quarter to
utilise the available stockpile built up over the previous quarters and as a
back up for the new mill as production increased towards design capacity.
The slightly lower US dollar gold price achieved for the March quarter (US$428
per ounce, compared with US$431 per ounce in the December quarter) plus the
strengthening of the rand against the US dollar, from an average of R6.12 to
R5.95, resulted in the rand gold price decreasing 3 per cent, from R84,872 per
kilogram in the December quarter to R81,952 per kilogram in the March quarter.
The higher production was largely offset by the lower rand gold price achieved,
resulting in revenue increasing marginally, from R2,946 million
(US$480 million) to R2,950 million (US$495 million) this quarter.
Operating costs
Operating costs for the March quarter, at R2,351 million (US$395 million), were
virtually unchanged when compared with the December quarter's R2,341 million
(US$382 million). This was despite the increase in production.
Costs at the South African operations were R1,649 million (US$277 million),
which was 2 per cent lower than operating costs in the previous quarter of
R1,688 million (US$275 million). This is further evidence of the savings
achieved from various cost initiatives implemented over the last few quarters,
as costs at the South African operations do not vary significantly with
production levels as a high proportion of these costs are fixed.
At the international operations, costs were R702 million (US$118 million),
7 per cent higher than the R654 million (US$107 million) reported in the
December quarter. The increase in costs was mainly due to the 17 per cent
increase in production. The net gold inventory release for the March quarter
amounted to R62 million (US$10 million) compared with a credit of R33 million
(US$6 million) the previous quarter. The release of gold-in-process was mainly
at St Ives to feed both the new mill and the old mill. At Damang, there was
also a release from stockpile due to the reduction of mining from the Damang
pit as forecast last quarter, being replaced with low grade stockpile material.
Operating profit margin
The net effect of the movements in revenue and costs, after taking into account
the release of gold-in-process, was an operating profit of R537 million (US$90
million). This is 16 per cent lower than the R637 million (US$104 million)
achieved in the December quarter. The Group margin decreased from 22 per cent
last quarter to 18 per cent in the March quarter and the margin at the South
African operations decreased from 12 per cent to 9 per cent. The margin at the
international operations at 33 per cent compares to 40 per cent in the previous
quarter.
Amortisation
Amortisation of R371 million (US$62 million) for the March quarter is virtually
unchanged when compared with the December quarter's R379 million (US$62
million).
Amortisation at the South African operations decreased by R4 million, mainly
due to the decrease in production at Kloof.
Other income
Net interest and investment income after taking account of interest paid
increased from R16 million (US$3 million) in the December quarter to R34
million (US$6 million) for the March quarter. This increase in net interest is
due to gains on the interest rate swap previously deferred and credited to the
Mvela loan of R17 million now included in earnings following the half yearly
interest payment to Mvela.
Gains on foreign debt and cash which amounted to R5 million (US$1 million) in
the December quarter, are now nil. Previous gains were due to exchange gains on
approximately _164 million held offshore, arising from an international private
placement undertaken in November 2003. Now that these funds are held in US
dollar, in an offshore subsidiary whose reporting currency is also US dollar,
any exchange differences are accounted for in equity.
The loss on financial instruments of R55 million (US$8 million) compares to a
gain of R147 million (US$24 million) in the December quarter. Included for the
quarter is a marked to market loss on the Mvela interest rate swap of R73
million (US$12 million), partially offset by a gain on the Tarkwa rand/US
dollar forward cover of R12 million (US$2 million) and a R6 million
(US$1 million) gain on the Australian dollar/US dollar call options.
The interest rate swap was established in relation to the loan from Mvela Gold
and converted a fixed interest rate exposure to a floating rate. This
instrument was established as short-term rates were significantly lower than
long-term rates and the resultant upward sloping yield curve was expected to
prevail for some time. This strategy is yielding positive results as the marked
to market value of the swap at the end of March 2005 was a positive R164
million. Of this, R133 million was accounted for in the income statement and
the balance of R31 million has been hedge accounted and credited to that
portion of the loan that is regarded as debt for accounting purposes. The
positive marked to market value on the interest rate swap at March of R164
million, compares with a positive marked to market value at the end of December
2004 of R259 million. R73 million of this reduction was accounted for in
earnings as referred to above with the balance of the reduction of R22 million
debited to the Mvela loan as this element of the interest rate swap is hedge
accounted. This amount is included in earnings on a pro-rata basis as the loan
is repaid. In addition, the accrued benefit of the interest rate swap for the
March quarter was R22 million which will be realised in cash at the date of the
next half yearly interest payment to Mvela. Year to date benefit from the
interest rate swap amounts to R76 million. A further benefit of R21 million has
been locked in for the three-month period to June 2005. More details on these
financial instruments are given on page 15 of this report. Exploration
expenditure increased from R39 million (US$7 million) to R43 million (US$7
million) in the March quarter - please refer the Exploration and Corporate
Development section.
The exceptional loss this quarter of R86 million (US$14 million) was primarily
as a result of the cost of defending against the Harmony hostile bid. Costs for
the hostile bid include those billed to the end of March 2005 plus an estimate
of costs not yet billed.
Taxation
A taxation credit of R57 million (US$9 million) in the March quarter compares
with a charge of R135 million (US$22 million) in the December quarter. This
decrease is due to the lower operating profit and a deferred tax credit at
Tarkwa of R65 million (US$11 million) and a credit at Damang of R6 million
(US$1 million) as a result of a decrease in the tax rate in Ghana from 32.5
per cent to 28 per cent.
Earnings
After accounting for minority interests, earnings amounted to R11 million (US$2
million) or 2 SA cents per share (US$0.00 per share), compared with R80 million
(US$13 million) or 16 SA cents per share (US$0.03 per share) in the previous
quarter.
Headline earnings i.e. earnings less the after tax effect of asset sales,
impairments and the sale of investments, amounted to R9 million (US$2 million)
or 2 SA cents per share (US$0.00 per share) compared with R45 million (US$8
million) or 9 SA cents per share (US$0.02 per share) last quarter.
Earnings, excluding exceptional items as well as net gains and losses on
financial instruments and foreign debt net of cash amounted to R128 million
(US$21 million) or 26 SA cents per share (US$0.04 per share) compared with R100
million (US$16 million) or 20 SA cent per share (US$0.03 per share) reported
last quarter.
Cash flow
Cash flow from operating activities for the quarter was R653 million (US$106
million), compared with operating cash flow in the December quarter of R233
million (US$40 million). The increase in cash flow reflects a net positive
change in working capital of R428 million (US$69 million) due to account
payments (including salaries) paid early last quarter due to the Christmas
break.
Dividends paid during the quarter amounted to R148 million (US$25 million). No
dividends were paid last quarter.
Capital expenditure amounted to R440 million (US$75 million) compared with R528
million (US$87 million) in the December quarter. The decrease is mainly due to
a reduction in expenditure on the expansion projects at St Ives and Tarkwa as
they were commissioned in the December 2004 quarter. Expenditure at the South
African operations was marginally lower at R150 million (US$25 million). A
significant portion of this expenditure was directed at the major projects,
with R32 million at 1 tertiary and 5 shaft at Driefontein, R34 million at Kloof
4 shaft and R31 million at Beatrix 3 shaft. The Australian operations incurred
capital expenditure of R151 million (A$32 million). The mill project at St Ives
accounted for R7 million (A$2 million) of this expenditure as compared with R60
million (A$13 million) in the December quarter. Expenditure on the St Ives mill
project should be completed during the June quarter with similar levels of
expenditure as were incurred in the March quarter. Other major expenditure at
St Ives was for development at Argo underground and Mars open pit; A$3 million
at each project for the quarter. At Agnew R45 million (A$10 million) was spent
on the Songvang open pit project. At the Ghanaian operations, capital
expenditure amounted to R77 million (US$13 million). R12 million (US$2 million)
was spent on the new mill and on the project to convert from contract mining to
owner mining at Tarkwa. This compares with R78 million (US$13 million) in the
previous quarter. Expenditure on these projects has now been finalised. Major
projects are still forecast to be in line with approved votes.
Purchase of investments amounted to R130 million (US$21 million). All of this
was for the acquisition of a 19.8 per cent interest in Comaplex Minerals Corp.
A R133 million (US$22 million)Mvela loan repayment was made during the quarter.
Net cash outflow for the quarter was R214 million (US$40 million). After
accounting for a positive translation adjustment for the quarter of R168
million (negative US$8 million) the cash balance at the end of the March
quarter was R2,931 million (US$474 million), which has declined marginally
from R2,978 million (US$522 million) at the end of December.
Detailed and Operational Review
Group overview
Attributable gold production for the March 2005 quarter increased 4 per cent to
1,088,000 ounces when compared with the December quarter. Production from the
South African operations at 711,000 ounces accounted for 65 per cent of the
Group's total attributable production, compared with 726,000 ounces or 69 per
cent last quarter.
At the South African operations, gold production decreased 2 per cent compared
with the previous quarter. At Kloof, the decrease of 16,200 ounces was partly
due to a fire at 2 sub-vertical shaft. At Beatrix, production decreased 4,100
ounces mainly due to the curtailment of loss making production, particularly at
Beatrix 2 shaft (Beatrix South), where grades experienced at sections of this
shaft are not economic at current rand gold prices. Affected crews are being
redeployed to other parts of the mine (particularly Beatrix 4 shaft) and will
help to replace the lost production over the next quarter at 2 shaft, as well
as the lost production due to the stoppage of surface dump treatment at Beatrix
number 2 plant. The declines at Kloof and Beatrix were partially offset by an
increase at Driefontein of 5,800 ounces due to higher underground yields
experienced at 5 shaft and on the west side of the mine. Operating profit at
the South African operations decreased from R224 million (US$36 million) to
R166 million (US$28 million), as a consequence of the lower rand gold price
and the marginally lower gold production.
Production from the Australian operations increased 33 per cent to 206,900
ounces due to operating both the old and new mills at St Ives for the duration
of the quarter, and increased production from the Songvang open pit at Agnew.
Operating profit from the Australian operations increased quarter on quarter in
rand terms from R108 million (A$23 million, US$18 million) to R120 million
(A$26 million, US$20 million), primarily as a result of increased production.
The Ghanaian operations showed a 2 per cent increase in attributable gold
production to 169,900 ounces. Tarkwa increased gold production by 10 per cent
due to the first full quarter of production from the new mill at Tarkwa.
Damang's production was 19 per cent lower due to a planned reduction in high
grade ore volumes from the Damang pit. Ghana contributed operating profit of
R251 million (US$42 million).
The international operations contributed R371 million (US$62 million) or 69 per
cent of the total operating profit of R537 million (US$90 million). This
compares with R413 million (US$67 million) or 65 per cent of the total
operating profit of R637 million (US$104 million) last quarter.
Group ore processed increased from 11.82 million tons to 12.79 million tons and
overall yields were maintained at 2.9 grams per ton. As forecast, total cash
costs in rand terms were virtually unchanged at R64,957 per kilogram, compared
with R64,921 per kilogram in the December quarter. In US dollar terms, total
cash costs increased 3 per cent to US$340 per ounce, compared with US$330 per
ounce last quarter. This was due to the stronger rand. Operating cost per ton
at R184 was 7 per cent below last quarter due to the increase in the surface
tons at a lower average cost.
South African operations
During the September 2003 quarter management took a view that the South African
currency would remain stronger for longer. As a result it was decided to
reposition the South African operations. As previously reported this was
presented as reverting from the "Wal-Mart"strategy (more volume at lower grade)
to the "SAKS 5th Avenue" strategy (less volume at grades more in line with Life
of Mine ore reserve values).
To support this switch in strategy in September 2003, management introduced an
initiative called Project 500, which, in turn, was split into two sub-projects
called: Project 100 and Project 400.
Project 100 targets reduced consumption of stoping, development and engineering
materials, via improved benchmarks and standards at the South African
operations. To December 2004, savings for the first half of the year amounted
to R70 million. In the March quarter additional savings of R29 million were
achieved at Driefontein, Kloof and Beatrix of R14 million, R10 million and R5
million respectively. Projected annual saving are estimated to be in the region
of R140 million for the year, which is well above the R100 million first
targeted. Savings were mainly achieved on explosives, underground support,
drill steel and logistics i.e. underground and surface engineering.
Project Beyond is a procurement initiative targeting savings of up to 10 per
cent on materials, services and capital expenditure in South Africa on which
around R3 billion per annum is expended. The first phase of the project
addresses spend of R1.1 billion in three distinct blocks. The first block,
completed in December 2004, achieved contractual savings of R41 million from a
spend of R345 million. These savings, on items such as grinding media,
lubricants and transport, will be realised over the next 12 months as the new
contract arrangements come into force. Work on the second block of commodities,
including explosives, electric cable, engineering repairs and underground
services, amounting to around R370 million, is almost complete. Savings are
expected to exceed target levels of R37 million. The third and final block of
phase one of the project, scheduled for the fourth quarter of F2005, will
address expenditure of around R440 million, and savings will come from areas
which include roof support, diesel engine and pump repairs, electric motors and
drilling services. It is noteworthy that, despite the achievement of major
contractual savings in procurement, expenditure with BEE companies has
increased to over 30 per cent during the quarter.
The scope of Project Beyond is being extended to include the Australian and
Ghanaian operations, as well as the Peruvian project. Indications are that
savings of more than US$20 million per annum may be achieved, some of which
will arise from the aggregation of spend across the four (S.A., Ghana,
Australia and Peru) geographies.
Project 400 aims to increase revenue such that an additional R400 million is
generated per annum. The aim is to improve the quality and quantity of our
outputs by replacing surface tonnage to the plant with increased tonnage from
underground and ensuring output of a better quality. With reference to the mine
commentaries below, this is being implemented across all operations and
together with the introduction of productivity initiatives reflects the
increase in production year on year by some 2 per cent at lower costs, despite
a significantly lower gold price.
In order to maintain and increase this production profile going forward it is
imperative that the operations continue to focus on development in order to
provide the mining flexibility required to continually improve stoping
availability. At Driefontein development continued above 6.7 kilometres for the
quarter, while on-reef development increased from 0.7 kilometres to 1.1
kilometres. VCR values have improved from 1,152 cm.g/t to 3,851 cm.g/t and the
Carbon Leader reef development, the main contributor of ore at Driefontein,
increased in value by 32 per cent to 2,179 cm.g/t - please refer to Development
results on page 22 for more detail. At Kloof, metres advanced were marginally
down due to the fire, but still at acceptable levels -close to 8 kilometres for
the quarter. On-reef metres at Kloof increased marginally to 1.6 kilometres.
Again an increase in values was seen as the VCR values increased from 1,921
cm.g/t to 3,259 cm.g/t; VCR being the primary ore zone at Kloof. At Beatrix,
development advanced and on-reef metres were maintained quarter on quarter at
9.5 kilometres and 1.9 kilometres respectively, while values improved at West
(previously 4 shaft) by some 20 per cent. Development levels being achieved at
the South African operations are such that flexibility is expected to improve
in the quarters to come.
Driefontein
March 2005 December 2004
Gold produced - 000'ozs 293.5 287.7
Yield - underground - g/t 8.9 8.1
- combined - g/t 5.2 5.4
Total cash costs - R/kg 64,520 67,114
- US$/oz 337 341
Gold production at Driefontein increased by 2 per cent from 287,700 ounces to
293,500 ounces in the March quarter. Underground tonnage decreased by 38,000
tons to 914,000 tons largely due to the Christmas break. This was replaced by
an increase in low grade surface tonnage from 695,000 tons to 846,000 tons.
Total tonnage increased by 113,000 or 7 per cent quarter on quarter. The
increased tonnage, being low grade, reduced the combined grade from 5.4 grams
per ton in the December quarter to 5.2 grams per ton in the March quarter. The
underground grade increased from 8.1 to 8.9 grams per ton for the quarter. This
was on the back of higher grades than expected from the West section of the
mine at 7 and 8 shafts, but should decline in the June quarter to around 8.5
grams per ton in line with the stoping areas and mix currently being mined.
Operating costs decreased 2 per cent from R625 million (US$102 million) to R614
million (US$103 million) as a result of the ongoing cost initiatives. Total
cash costs reduced by 4 per cent in rand terms to R64,520 per kilogram quarter
on quarter. In US dollar terms, total cash costs decreased by 1 percent from
US$341 per ounce to US$337 per ounce.
The abovementioned production and cost improvements were offset by the decrease
in the rand gold price, resulting in operating profit decreasing from R135
million (US$22 million) to R133 million (US$22 million) in the March quarter.
Capital expenditure was marginally lower at R37 million (US$6 million).
Gold output forecast for the June quarter will be slightly lower than the March
quarter against similar cost profiles. This is due to a slight reduction in
grade and the industrial action experienced at the start of the quarter which
had a negative influence on production. Seismic activity at number 5 shaft
complex remains a concern. However, mining sequencing and the on-time delivery
of the refrigeration plant at 5 shaft over the Christmas break are expected to
improve flexibility and future productivity levels at the complex.
Kloof
March 2005 December 2004
Gold produced - 000'ozs 264.4 280.6
Yield - underground - g/t 9.7 9.2
- combined - g/t 6.7 6.8
Total cash costs - R/kg 73,915 71,628
- US$/oz 386 364
Gold production at Kloof decreased 6 per cent to 264,400 ounces in the March
quarter. This was partly due to a fire reported to the market on 3 February at
2 sub-vertical shaft. It was necessary to seal off this area for two weeks,
resulting in a loss of production of over 6,000 ounces. Production has now
returned to normal. The Christmas break together with the closure of number 3
metallurgical plant during the quarter, resulted in a further loss of gold
production. This plant, which treats surface rock dump, has proven uneconomical
at the current gold price, and its closure will reduce fixed costs at Kloof.
Clean-up of number 3 plant will commence during the June quarter. Higher grades
were experienced at 4 and 7 shafts due to more terrace mining. The higher
grades will return to slightly lower levels in the June quarter as the mining
face advances.
Operating costs decreased by 2 per cent from R649 million (US$106 million) in
the December quarter to R634 million (US$107 million) in the March quarter.
Total cash costs increased by 3 per cent to R73,915 per kilogram as a result of
the lower gold production. In US dollar terms, total cash costs increased by 6
per cent from US$364 per ounce to US$386 per ounce as a consequence of the
lower production and the strengthening rand.
Operating profit decreased from R88 million (US$14 million) in the December
quarter to R41 million (US$7 million) in the March quarter. This was due to the
lower gold price received and the decrease in gold production.
Capital expenditure decreased from R63 million (US$10 million) to R61 million
(US$10 million) for the quarter. The majority of this expenditure was spent on
4 sub-vertical shaft.
A holistic productivity strategy is now in place and in addition initiatives
aimed at reducing footprints thereby reducing fixed costs will continue. An
example of this is the closure of 3 plant. During the June quarter preparation
for the mothballing of the 5, 6 and 9 sub-vertical shafts will commence. These
shafts are dedicated to pumping and are not gold producing shafts. The main
pumping operation will move from 5 and 9 shafts to number 10 shaft, a project
that will take twelve months to fully commission. This rationalisation will not
only improve pumping infrastructure but will also lower pumping costs.
The Easter break and the other public holidays in the June quarter, together
with the one day industrial action experienced at the start of this quarter,
will have a negative influence on production, particularly at 7 shaft where an
extra day of unprotected action was experienced. Not withstanding this, gold
production in the June quarter is expected to increase which should have a
positive impact on unit costs.
Beatrix
March 2005 December 2004
Gold produced - 000'ozs 153.5 157.6
Yield - underground - g/t 5.2 4.7
- combined - g/t 4.8 4.5
Total cash costs - R/kg 81,064 81,351
- US$/oz 424 413
Gold production at Beatrix decreased 3 per cent from 157,600 ounces in the
December quarter to 153,500 ounces in the March quarter.Underground ore volumes
decreased by 12 per cent from 1,016,000 tons to 897,000 tons in the March
quarter. This was mainly due to the elimination of loss making areas during the
quarter, mostly at 2 shaft as mentioned last quarter. As a consequence, the
combined yield increased by 7 per cent quarter on quarter, from 4.5 grams per
ton to 4.8 grams per ton. An increased drive on dry sweepings at all shafts
also contributed to the improved yield. Surface yields decreased from 1.3
grams per ton to 0.7 grams per ton and treatment of uneconomical low-grade
surface dumps across Beatrix at number 1 plant and number 2 plant has ceased.
Underground yields increased from 4.7 grams per ton in the December quarter to
5.2 grams per ton in the March quarter. At Beatrix North and South, underground
yields increased from 4.5 grams per ton to 4.7 grams per ton in the March
quarter due to the elimination of low grade, uneconomical volumes. At Beatrix
West (previously named 4 shaft), underground yield increased from 5.8 grams per
ton to 7.4 grams per ton, due to a shift in the mining mix into zone 5.
However, stoping volumes at West were 10 per cent lower quarter on quarter as
the ongoing logistical and remedial work programme was accelerated. The
majority of the ventilation system change-over and internal ore pass work to
assist mining from Zone 5 was completed during the quarter. It is anticipated
that the remaining work on the logistics will be completed during the June
quarter. The stoping and development build-up at 3 shaft in the North section
continues to be in line with expectations.
Operating costs decreased by 3 per cent from R413 million to R402 million due
to the various cost saving initiatives.Total cash costs decreased by 1 per cent
from R81,351 per kilogram (US$413 per ounce) to R81,064 per kilogram
(US$424 per ounce).
Despite the improvements during the quarter, which resulted in an operating
profit of R27 million for the month of March, the March quarter recorded an
operating loss of R8 million. The lower rand per kilogram price received was
the main contributor to this loss. This compares with a breakeven position in
the December quarter.
Capital expenditure decreased from R58 million (US$10 million) to R53 million
(US$9 million) in the March quarter due to the impact of cost saving
initiatives. The majority of this expenditure was spent on development and
hydropower at 3 shaft.
Gold production is forecast to increase marginally in the June quarter.
Improved production at West shaft and sustained cost control at all of the
shafts should result in lower unit costs in spite of the one day unprotected
strike action experienced at the start of the June quarter and the impact of
the Easter break.
International operations
Ghana
Tarkwa
March 2005 December 2004
Gold produced - 000'ozs 185.0 167.9
Yield - Heap Leach - g/t 0.9 1.1
Yield - CIL Plant - g/t 1.6 1.4
Total cash costs - US$/oz 226 224
Tarkwa's gold production increased by 10 per cent from 167,900 ounces in the
December quarter to 185,000 ounces in the March quarter as forecast. The heap
leach operation contributed 125,700 ounces, down 14,000 ounces from the
previous quarter. The CIL plant contributed 59,300 ounces, an increase of
31,400 ounces on the previous quarter, reflecting the first full quarter of
CIL plant production.
The CIL plant processed 1,163,000 tons at a yield of 1.6 grams per ton. The
plant is operating well and has consistently achieved or exceeded the designed
throughput of 350,000 tons per month, while exceeding the designed recovery of
96 per cent. The head grade continues to trend towards the target of 1.8 grams
per ton.
Ore stacked on the leach pads was stable at 4.1 million tons, at a head grade
of 1.16 grams per ton, compared with 1.21 grams per ton in the December
quarter. This slight decrease in grade was a result of lower grade areas being
mined and stacked at the South leach pads as planned. The planned increase in
grades at the North leach pads, to offset the South's decrease, were not
achieved during January and February due to mining constraints in higher grade
pits. The grade is expected to return to 1.21 grams per ton in the June
quarter. The reduction in heap leach gold production versus the previous
quarter reflects lower gold-in-process release during the period, 6,500 ounces
against 11,500 ounces in December, due to slightly lower head grades and
stacking on higher lifts as previously reported.
The ongoing enhanced performance of the owner mining fleet has resulted in
record tonnages being mined this quarter, with total tons mined increasing by
2.4 million tons to 21.1 million tons. The bulk of this increase was devoted to
increased waste mining and the stripping ratio increased from 2.84 to 3.30.
While increased stripping has a detrimental impact on unit costs, it is
essential to optimise the health of the overall mine and improve flexibility.
Mining costs were US$0.73 per ton for the quarter compared with US$0.69 per ton
last quarter, reflecting an increase in the cost of consumables and increased
maintenance requirements. The overall performance of the fleet continues to
exceed expectations, while unit costs remain within budget as equipment
efficiencies largely offset significant input cost changes, especially on
diesel. Additional opportunities to reduce costs and improve utilization are
being identified through a continuous improvement programme.
Operating costs at US$42 million (R249 million), including gold-in-process
adjustments, were US$5 million higher than the previous quarter, reflecting the
increased cost of operating the new mill for a full quarter (US$2.1 million),
and the increase in tonnages mined. Operating costs per ton treated were
US$7.90 per ton as against US$7.51 per ton in the December quarter, reflecting
the higher strip ratio. Total cash costs remained flat at US$226 per ounce
compared with the December quarter's US$224 per ounce. This level is marginally
higher than forecast reflecting the higher strip ratio, where the mine utilised
the opportunity of the additional capacity from the fleet, and the slightly
lower grades at the south leach pads.
Operating profit increased from US$35 million (R219 million) in the previous
quarter to US$37 million (R224 million) in the March quarter due to the
increased production, offset partially by the lower gold price, which averaged
US$430 per ounce for the quarter compared with US$437 per ounce in the December
quarter. Net earnings for the quarter increased from US$15 million to US$28
million as a result of the increased production and a US$11 million deferred
tax release. This was due to a welcome 4.5 percentage point reduction in the
Ghanaian company taxation rate, from 32.5 to 28 per cent.
Capital expenditure halved from US$20 million (R118 million) in the previous
quarter to US$10 million (R57 million) in the March quarter, as a result of
closing-out the mining fleet acquisition and the completion of the construction
of the CIL plant.
Gold production and unit costs for the June quarter are expected to be similar
to that of the March quarter.
Damang
March 2005 December 2004
Gold produced - 000'ozs 53.9 66.5
Yield - g/t 1.3 1.5
Total cash costs - US$/oz 346 226
Gold production decreased from 66,500 ounces during the December quarter to
53,900 ounces in the March quarter. This was directly attributable to the
planned cessation of mining operations in the Damang pit, which resulted in the
replacement of 340,000 tons of high grade ore with lower grade stockpile ore,
coupled with a loss in mill run time.
Mill throughput for the quarter reduced from 1.35 million tons to 1.26 million
tons at a head grade of 1.44 grams per ton, compared with a head grade of 1.67
grams per ton in the December quarter. The decrease of 97,000 tons milled was
due to mill downtime as a result of the failure of the SAG mill gearbox and the
planned change out of the SAG mill liners. The decrease in the head grade was
due to the replacement of the Damang pit ore with the low grade stockpile ores.
Mining commenced in the new Amoanda pit, and together with the Juno 2SE pit was
the main source of oxide feed to the plant for the quarter. Pleasingly total
tons mined increased to 3,120,000 tons from 1,913,000 tons in the previous
quarter, primarily due to the commencement of mining in the Amoanda pit, which
has a stripping ratio of 6.
Ore production reduced from 809,000 tons to 468,000 tons as a result of mining
operations having ceased in the Damang pit and due to mining in the new pits
focussing on waste removal. A slight increase in ore tonnages mined is expected
in the June quarter, and significant increases in ore production is only
expected in July 2005, when the Tomento pit comes into production, once the
permitting process is completed.
Operating costs, including gold-in-process adjustments, increased to US$18
million (R109 million) from US$15 million (R90 million) in the December
quarter. Operating costs increased as a result of higher tonnages mined,
additional grade control drilling required in the new pits and an increase in
the gold-in-process charge as a result of an increase in stockpile ores
treated. Cost per ton milled increased from US$10.99 to US$13.27. Total cash
costs increased significantly as forecast, from US$226 per ounce in the
December quarter to US$346 per ounce in the March quarter, as a result of the
above factors and the lower head grade.
With the average gold price decreasing from US$433 per ounce to US$425 per
ounce, together with the reduced gold output and increased unit costs,
operating profit decreased from US$14 million (R86 million) to US$5 million
(R27 million). Ghanaian corporate taxation reduced from 32.5 per cent to 28
per cent effective 1 January 2005.This had a small positive impact on earnings.
Capital expenditure incurred during the quarter amounted to US$3 million (R20
million). The majority of this expenditure was incurred in the raising of the
tailings dam, the Damang extension projects and reserve conversion drilling.
Mill throughput for the June quarter is projected at 1.3 million tons,
with gold production expected to be maintained at the level achieved in the
March quarter. Total cash costs are expected to rise slightly due to an
estimated 20 percent increase in tonnages mined. Operations at Damang are
likely to stabilise at this level for the next year at least. Damang has
outperformed expectations consistently over the last year and the next few
periods will be more modest as lower grade sources of ore are brought to
production, pending the re-establishment of mining of higher grade ores in the
Damang pit once the large cut back is brought to full ore production.
Australia
St Ives
March 2005 December 2004
Gold produced - 000'ozs 154.1 106.6
Yield - Heap Leach - g/t 0.6 0.7
Yield - Milling - g/t 3.4 4.4
Total cash costs - A$/oz 451 463
- US$/oz 350 348
Gold production for the quarter increased 45 per cent to 154,100 ounces,
compared with 106,600 ounces in the December quarter in line with expectation.
This increase reflects the ramp-up to full production of the new Lefroy mill,
coupled with ongoing production from the old mill during the quarter. The
contribution from the heap leach operations was slightly below the December
quarter at 10,000 ounces.
Total tons processed during the quarter amounted to 2,026,000, a significant
increase from the 1,255,000 tons processed in the December quarter, with
almost all the difference attributable to the new Lefroy mill. For the quarter
1,466,000 tons were processed through the mills,compared with 689,000 tons last
quarter. During this period the new mill achieved design tonnage of 550tph.
The large single stage SAG mill has performed exceptionally well, but overall
plant ramp-up was slow and complicated by persistent materials handling
problems as well as minor process control issues. By quarter end these were
well in hand and the plant now shows potential to operate considerably above
design level.The old mill was shut down at the end of March and
decommissioning is underway.
The average head grade processed of 2.7 grams per ton was marginally below the
December quarter's 2.8 grams per ton. The combined yield reduced from 2.6 grams
per ton to 2.4 grams per ton. Yield at the heap leach operation was 0.6 grams
per ton compared with 0.7 grams per ton last quarter and the yield at milling
operations was 3.4 grams per ton compared with 4.4 grams per ton in the
previous quarter, as more lower grade open pit ore was milled.
Mining operations produced 1.29 million tons of ore during the quarter as
planned, which was up slightly from the previous quarter's 1.18 million tons.
Open pit waste movement was down from last quarter and will reduce somewhat
again in the June quarter, as the target ore zones become exposed. During the
quarter 5.6 million tons of open pit ore and waste were mined at an average
strip ratio of 6.1 (December quarter: 8.2 million tons at a strip ratio of
11.5).
Overall the underground mining operations performed to expectation. A reduction
in ore volumes from Junction, at which mining is scheduled to be complete in
the June quarter, was mostly offset by increased output from the Leviathan
complex. Both of these mines continue to exceed expectation offsetting ongoing
challenges at the Argo mine.
Operating costs, including gold-in-process adjustments, increased from A$48
million (R222 million) to A$72 million (R331 million) a 50 per cent increase,
which is in line with the increased production and in line with forecast.
However, total cash costs decreased from A$463 per ounce (US$348 per ounce) to
A$451 per ounce (US$350 per ounce) as a result of lower unit processing costs
associated with the new Lefroy mill and improvements in underground mining
costs. Total cash costs in the quarter remained considerably beyond our target
of A$350 per ounce due the high costs of sustaining the old mill, planned lower
grades from the open pits and ongoing challenges in cost control and grade
recovery at the Argo underground mine. Further cost reductions are expected in
the June quarter as the new plant is optimised and the old more expensive plant
is taken off line and further benefits from cost optimisation at the
underground mines are realised.
Operating profit at A$13 million (R60 million) improved marginally in the March
quarter despite the significant increase in gold production when compared with
the previous quarter. This was caused by two factors, the first being a A$23
per ounce decline in gold price received, equivalent to some A$3.5 million in
operating profit. Secondly, a significant gold inventory charge in the March
2005 quarter of A$10.1 million was incurred compared with a A$8.5 million credit
in the December 2004 quarter. These charges largely reflect the stockpiles
consumed during the quarter with the concurrent operation of the two
mills, which stockpiles had been accumulated in previous quarters. As planned
the commissioning of the new mill was also undertaken using lower grade and
thus lower margin ores, further accounting for the disconnect between increased
volumes and static operating profits.
Capital expenditure for the March quarter amounted to A$15 million
(R72 million) compared with A$32 million (R148 million) in the December
quarter. This decrease was driven by a reduction in mill construction cost
(A$12 million), which is now complete, and a reduction in open pit waste
stripping (A$3 million).
Production for the June quarter is expected to be in line with the March
quarter, as increased production from the new Lefroy mill and clean-up and
recovery of gold from the decommissioned old mill will mostly offset the lost
production from the old mill. Timing and volumes of gold recovery from the old
mill are however unpredictable. Unit costs are expected to improve over the
next two quarters as the Lefroy mill is optimised and key ore zones are
accessed in the open pit operations.
Agnew
March 2005 December 2004
Gold produced - 000'ozs 52.8 49.0
Yield - g/t 5.6 5.4
Total cash costs - A$/oz 300 351
- US$/oz 233 264
Gold produced at Agnew increased from 49,000 ounces in the December quarter to
52,800 ounces in the March quarter, slightly ahead of the forecast. This was
primarily due to a 5 per cent increase in mill throughput and a 3 per cent
increase in feed grade. The increase in feed grade was due to an increase in
the grade from the Songvang pit and the Kim underground mine.
Gold production from the Waroonga underground complex (Kim and Main Lodes)
increased to 42,000 ounces from 35,000 ounces in the December quarter. This was
due to the ongoing enhanced performance of the Kim Lode, offsetting the
production previously sourced from the Crusader complex, which was shutdown in
the December 2004 quarter. The development of Main Lode and Kim South Lode
commenced during the quarter, and stope production from these sources will be
fully operational by the end of the September 2005 quarter. Kim South is a down
dip, but offset and upthrown extension of the Kim Lode, that was discovered in
the latter part of last year.
Open pit mining at Songvang ramped-up to capacity during the quarter. Although
this phase of mining is predominantly waste stripping, ore production accounted
for 11,000 ounces of the quarter's gold production.
Operating costs, including gold-in-process adjustments, decreased from A$17
million (R80 million) to A$16 million (R74 million) in the March quarter,
mainly as a result of the cessation of operations at the underground Crusader
complex. Total cash costs decreased from A$351 per ounce (US$264 per ounce) in
the December quarter to A$300 per ounce (US$233 per ounce) in the March
quarter. This decrease was a result of the increase in gold production and
grades, and the decrease in underground mining costs.
Agnew's operating profit increased from A$11 million (R49 million) to A$13
million (R60 million) in the March quarter. This is primarily due to lower
mining costs and the higher grades referred to above.
Capital expenditure increased from A$11 million (R50 million) to A$17 million
(R80 million) in the December quarter. This increase is predominantly a result
of increased waste stripping at the Songvang open pit and increased development
at the Waroonga underground complex.
Gold production for the June quarter is expected to be slightly higher than the
March quarter, reflecting higher mill throughput and increased ore production
from the Songvang pit. Cash costs should remain stable.
Quarter ended 31 March 2005 compared with quarter ended
31 March 2004
Attributable gold production increased 5 per cent from 1,033,000 ounces for the
March 2004 quarter to 1,088,000 ounces this quarter. At the South African
operations production increased 2 per cent due to an increase in yield from 7.4
to 7.9 grams per ton, in line with the strategy to reduce marginal mining. At
the international operations production increased 11 per cent. This was mainly
due to the increases achieved at St Ives and Tarkwa from the commissioning of
the new growth projects during the year.
Revenue decreased 3 per cent in rand terms (increased 11 per cent in US dollar
terms) from R3,028 million (US$444 million) to R2,950 million (US$495 million).
This was due to a reduction in the rand gold price achieved, from R88,887 per
kilogram (US$407 per ounce) in the March 2004 quarter to R81,952 per kilogram
(US$428 per ounce) in the March 2005 quarter, which offset the increase in
production.
Operating costs were unchanged at R2,351 million (in dollar terms increased from
US$345 million to US$395 million) due to cost saving initiatives and the impact
of translating costs at the international operations into South African rand at
a stronger rand dollar exchange rate than the corresponding quarter in the
previous year. The rate strengthened from US$1 = R6.79 to US$1 = R5.95, a 12
per cent increase. At the South African operations costs were
virtually unchanged at R1,649 million despite above inflation wage increases
and despite the 2 per cent increase in production referred to above. This was
due to the cost saving initiatives implemented over this period.
Operating profit declined from R656 million (US$95 million) to R537 million
(US$90 million) quarter on quarter.
Earnings excluding gains and losses on financial instruments and foreign debt
and exceptional items amounted to R128 million (US$21 million) this quarter
compared with R238 million (US$34 million) in the March 2004 quarter.
Capital and development projects
Damang pit cut back project
Initial pit designs have been completed on the ore resource model, developed
after the recent drilling campaign in and around the existing pit. The pit
design is indicating that a cutback is feasible on both the Eastern and Western
walls of the pit. Additional infill drilling was commissioned and completed
during the quarter. This was to confirm the extent of the mineralisation in
certain areas of the proposed cutback, as well as to convert inferred resources
within the designed pit into a higher category.
Currently a geotechnical study is being undertaken by SRK Perth to examine the
influence that the Eastern tailing storage facility will have on the proposed
Eastern wall cutback and the Damang fault on the Western wall cutback. Once the
geotechnical parameters have been established a final economic evaluation will
be completed during the June quarter.
Cerro Corona in Peru
All field work necessary for the completion of the Environmental Impact Study
(EIS) was completed during the March quarter. This includes all of the
necessary social base line studies which are an integral part of the EIS.
Submittal of this document is scheduled by the end of April, reflecting the
additional social work requested by the Peruvian Government.
Community relations are of significant importance and as such six workshops
presenting the project to the various nearby communities were completed during
the quarter with positive results.
Hatch has been selected as the prime contractor for the engineering and final
design work, and were well advanced in this effort by quarter's end. It is
still planned to have the project engineering completed to advanced feasibility
level by the end of the June quarter. A preferred mining contractor for the
project has been identified and finalisation of terms is underway.
Arctic platinum project
In October we reported that the feasibility study of this project had been
temporarily delayed pending the outcome of a review to assess the impacts of
lower grades in the most recent Suhanko resource models and the impacts of the
dramatic increases in input costs on the back of the global commodity and
resources boom, and the strong euro : US dollar exchange rate.
During the quarter the feasibility study was completed and it has been
determined that at this stage we will not be proceeding with the development of
the large scale Suhanko Project which was the basis of the feasibility study.
This project had envisaged the development of a 10mtpa open pit and on site
concentrator operation, exploiting the Konttijarvi and Ahmavaara deposits. A
number of factors have converged to reverse the economics of this project to
the point where it is not attractive to develop in the current economic
environment. The most significant factors include:
- A revision in the expected head grade to below 1.9 grams per ton 2PGE+Au
against previous estimates in excess of 2 grams per ton. This revision follows
extensive exploration and modelling over the last year.
- A significant increase in the capital expenditure required to bring this
project to production. Previous estimates had placed the development capital
slightly over Euro 300 million (and US$300 million) at a 1:1 euro : US dollar
exchange rate. The latest estimate has placed this figure at some Euro420
million
but more importantly in excess of US$500 million. This reflects the
appreciation of the euro, the currency in which the majority of the capital
would be incurred, while the revenue stream would be driven in US dollars.
Moreover the quantum of capital has been adversely affected by a dramatic
increase in input costs, driven by higher commodity prices such as fuel, steel
and copper, repricing of equipment and rapid escalation in the cost of services
required to execute such projects. The advanced permitting process had also led
to some growth in costs, largely associated with environmental protection.
- The global move in the base metal smelter markets further contributed to the
poor near term outlook for this project. As previously reported this project
was reliant on custom smelting. As the concentrate market has moved back in
favour of smelters over the last year, we have seen a reduction in the level of
commercial interest in the Arctic concentrates, reflected in poorer smelting
terms being offered, than seen in the initial stages of the study and up until
mid 2004.
- The short-term outlook for the palladium market, which metal would contribute
some 35 to 40 per cent of this project's revenue, remains poor. In particular
the lack of significant substitution from platinum back to palladium in petrol
autocatalysis despite the ongoing pressure on platinum supply is cause for
concern. The metal's inability to recover above US$200 per ounce reflects this
weakness. This poor price performance is particularly concerning in the light
of the persistent weakness of the US dollar not being reflected in the
palladium price, suggesting that the medium term price outlook is not robust.
At this time geological work is being completed that will finalise our
understanding of the higher grade potential in these deposits that has been
reported previously. While this work is not yet complete, it is not anticipated
that it will materially change the outlook for the development of these
deposits on a large scale.
Work is also ongoing to assess the viability of a smaller scale, and higher
margin starter project at Suhanko. Discussions are also being held with a small
number of companies that have expressed an interest in participating in the
development of this project. Permitting is planned to be completed by July
2005, along with outstanding land purchases within the mining lease application
area.
Unless a significant opportunity is identified in a smaller scale, high margin
project or a compelling deal is offered by a third party, Gold Fields is intent
on holding this project for development at some stage in the future, when a
number of the economic drivers referred to above have moved back in favour of
the project. APP represents a significant field of PGM discoveries and it
remains our strategy to secure and develop world class resources, albeit at
appropriate timing in the global metal and currency cycles. Gold Fields has
invested approximately US$90 million in this project to the end of March 2005
Exploration and corporate development
Gold Fields continued its exploration programme with drilling on five projects
during the quarter.
At the Essakan project in Burkina Faso, Gold Fields, together with joint
venture (JV) partner Orezone Resources Inc., continued to drill the Essakan
Main Zone as part of the planned pre-feasibility study forecast to be completed
during calendar 2005. An in-house team of specialists were organized during the
quarter and environmental, social, engineering and resource work has begun.
An in-house resource estimate was completed during the quarter at the Mampehia
prospect on the 100 per cent Gold Fields owned Bibiani project in Ghana.
Although very prospective and not fully tested, Gold Fields has determined that
the project does not represent a stand-alone opportunity and we have begun a
formal exercise to realise value from this project. Results have been received
at the 80 per cent owned Kisenge prospect in the southern DRC, resulting in the
recognition of a target requiring further work at Mpokoto. At the Tembo project
in Tanzania, Gold Fields has decided not to exercise its JV option on the
project.
Additional air core drilling at the Central Victoria project in Australia has
confirmed a 3.2 kilometre gold in bedrock anomaly on the Gold Fields 100 per
cent owned Lockington tenement. The first bedrock drill test of this target
will take place later this year. In China, work continued on the Fujian JV with
Zijin Mining and on the Shandong JV with Sino Gold.
Gold Fields completed a private placement for C$24 million in Comaplex Minerals
Corp. (TSX: "CMF") bringing its interest to 19.8 per cent. The full purchase
price of this investment is included in the cash flow. Comaplex is a Canadian
company developing the Meliadine project in the Nunavut province. Gold Fields
will provide technical assistance to Comaplex during the upcoming summer field
programme.
In early April, Gold Fields sold its interest in the Angelina project in Chile
to JV partner Meridian for US$7.5 million plus a 2 per cent NSR on the majority
of lands within the JV. This will be accounted for in the June quarter. At the
El Callao project, a 50:50 JV with Bolivar Gold in Venezuela, RC drilling
continued during the quarter.
Legal
A class action lawsuit was filed by Zalumzi Singleton Mtwesi against Gold
Fields Limited in the State of New York on 6 May 2003. A further lawsuit was
filed in a federal district court in New York by six individuals against Gold
Fields and a number of other defendants on 9 July 2004. These lawsuits allege
human rights violations arising from the apartheid era. In both cases, the
plaintiffs have failed to effect service of the complaint within the time
permitted under applicable law. In the event the complaints are re-filed and
process is timely effected, Gold Fields will seek their dismissal on numerous
grounds, including failure to state a claim in accordance with the holding of
the US Supreme Court in Sosa v. Alvarez-Machain.
Harmony's hostile offer
The Board believes that the Harmony offer does not represent a fair value for
Gold Fields; takes no account of the high quality of Gold Fields' asset base;
does not reflect the benefits that successful international diversification has
brought to Gold Fields' shareholders; and does not reflect the troubled
financial and operational condition of Harmony, nor the positive operating
trend that Gold Fields is experiencing.
Shareholders are advised that the Board of Gold Fields continues to oppose
Harmony's hostile offer vigorously, as the Board believes:
- The hostile offer grossly undervalues Gold Fields; consists solely of
Harmony's equity with no cash element; and offers no control premium to Gold
Fields' shareholders;
- Harmony appear to have had great difficulty in completing their competent
persons report (CPR), which has still not been published. The publication of
this report is needed to provide clarity on conflicting mineral reserves
announcements made by Harmony since the commencement of its hostile offer on 18
October 2004. Delivery of this document was promised by December 2004 in
Harmony's offer document to the Gold Fields shareholders. On 23 March 2004, the
Securities Regulation Panel urged Harmony to release the CPR as a matter of
urgency.
- Harmony's management model, the so-called "Harmony Way", is flawed and
unsuited for the challenges presented by Gold Fields' complex, long-life and
deep level South African mining operations;
- Harmony does not appear to have the vision, management depth, or skills and
capabilities to manage a global mining company, as they have effectively
demonstrated through their poor track record of international expansion over
the past decade;
- Harmony's financial position is increasingly troubled, as is evidenced by
further ongoing significant consumption of cash by the Harmony operations. The
Gold Fields Board believes that this is seriously impairing Harmony's balance
sheet and will threaten the viability of any combined entity. At the current
rand gold price over half of Harmony's production is making operating losses;
- Whilst a combination of the two companies would make the world's largest gold
mining group, the losses incurred by Harmony are of such a magnitude that the
Gold Fields profits would be eaten up, thus creating the world's largest loss
making gold company; and
- An independent Gold Fields offers shareholders a solid and transparent
investment vehicle with more exciting growth prospects than the combination
proposed by Harmony.
On 7 April 2005, Gold Fields issued an application out of the High Court citing
Harmony, as well as the Securities Regulation Panel. Gold Fields claims that
the Harmony offer to acquire all of the Gold Fields shares and to merge the two
entities lapsed on 18 December 2004 and is incapable of revival. The effect of
the lapsing of the offer is that any acceptances by shareholders subsequent to
18 December 2004 have simultaneously lapsed and the offer is now a nullity. It
is expected that this application will be heard within the next 3 weeks.
Harmony has refused, pending the hearing of the above application and should it
receive Competition Authority approval, to undertake not to implement the offer.
Gold Fields has, on 26 April 2005, brought a further application in which it
will ask the Court to interdict any implementation of the Harmony offer pending
final resolution of the above main application. The interdict application will
be heard on 3 May 2005.
The public hearings before the South African Competition Tribunal on Harmony's
hostile offer to acquire 100 per cent of the issued share capital of Gold
Fields ("the proposed merger") is set down for 3 to 6 May 2005. The Tribunal
will adjudicate whether or not the proposed merger should be approved in terms
of the South African Competition Act. Gold Fields is contending that the
proposed merger should be prohibited on the grounds that it will have a
materially adverse effect on competition particularly the supply side, and that
it will have extremely negative public interest consequences. The public
interest grounds include an adverse effect on employment, communities and the
mining sector.
The Board recommends that Gold Fields' shareholders and ADR holders should
continue to reject the Harmony offer, should not tender their shares or ADRs,
and should continue to reap the benefits of a well managed, performance
focused, internationally diversified South African champion - Gold Fields.
The directors of Gold Fields accept responsibility for the information
contained in the paragraphs above headed "Harmony's hostile offer" and state
that to the best of their knowledge and belief (having taken all reasonable
care to ensure that such is the case) the information contained therein is in
accordance with the facts and does not omit anything likely to affect the
import of such information.
Outlook
Gold production should increase marginally in the June quarter with a similar
improvement in unit costs.
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 March 2005 quarter are submitted in this
report.
These consolidated quarterly statements are prepared in accordance with IAS 34,
Interim Financial Reporting. The accounting policies used in the preparation
of this report are consistent with those applied at the previous year-end.
I.D. Cockerill
Chief Executive Officer
28 April 2005
Income Statement
International Financial Reporting Standards Basis
SA Rand Quarter
March December March
(Figures are in millions
unless otherwise stated)
2005 2004 2004
Revenue 2,949.7 2,945.5 3,028.3
Operating costs 2,350.7 2,341.2 2,350.8
Gold inventory change 62.1 (32.5) 22.0
Operating profit 536.9 636.8 655.5
Amortisation and depreciation 371.1 379.1 297.8
Net operating profit 165.8 257.7 357.7
Finance income/(cost) 33.6 20.4 (38.5)
- Net interest and investment
income/(cost) 33.7 15.5 (4.4)
- Exchange (loss)/gain on
foreign debt, net of cash (0.1) 4.9 (34.1)
(Loss)/gain on financial instruments (54.7) 146.7 44.2
Other (expense)/income (7.3) (23.9) 25.5
Exploration (42.8) (39.1) (44.4)
Profit before tax and exceptional items 94.6 361.8 344.5
Exceptional (loss)/gain (86.1) (109.4) 20.6
Profit before taxation 8.5 252.4 365.1
Mining and income taxation (57.2) 134.5 63.8
- Normal taxation 63.1 78.4 70.5
- Deferred taxation (120.3) 56.1 (6.7)
Profit after taxation 65.7 117.9 301.3
Minority interest 54.5 37.6 46.8
Net earnings 11.2 80.3 254.5
Exceptional items:
Profit on sale of investments 1.4 38.9 47.2
Harmony hostile bid (87.5) (82.9) -
Sale of mineral rights - - -
IAMGold transaction - (64.8) -
Write off of mineral rights - - (24.7)
Retirement of healthcare obligations (4.8) - (5.0)
Other 4.8 (0.6) 3.1
Total exceptional items (86.1) (109.4) 20.6
Taxation 0.8 (3.8) (3.4)
Net exceptional items after
tax and minority interest (85.3) (113.2) 17.2
Net earnings per share (cents) 2 16 51
Headline earnings 9.4 45.2 220.8
Headline earnings per share (cents) 2 9 45
Diluted earnings per share (cents) 2 16 51
Net earnings excluding gains and losses
on financial instruments and
foreign debt, net of cash and
exceptional items 127.5 100.3 237.8
Net earnings per share excluding gains
and losses on financial
instruments and foreign debt, net of
cash and exceptional items (cents) 26 20 48
Gold sold - managed kg 35,993 34,705 34,069
Gold price received R/kg 81,952 84,872 88,887
Total cash costs R/kg 64,957 64,921 67,528
SA Rand Nine months to
March March
(Figures are in millions
unless otherwise stated)
2005 2004
Revenue 8,600.0 8,903.6
Operating costs 7,027.8 7,047.3
Gold inventory change (57.5) 86.4
Operating profit 1,629.7 1,769.9
Amortisation and depreciation 1,120.9 904.1
Net operating profit 508.8 865.8
Finance income/(cost) 86.3 28.3
- Net interest and investment
income/(cost) 65.5 1.2
- Exchange (loss)/gain on
foreign debt, net of cash 20.8 27.1
(Loss)/gain on financial instruments 243.7 200.1
Other (expense)/income (35.7) 41.4
Exploration (136.8) (134.8)
Profit before tax and exceptional items 666.3 1,000.8
Exceptional (loss)/gain (195.5) 256.5
Profit before taxation 470.8 1,257.3
Mining and income taxation 163.2 184.7
- Normal taxation 204.8 158.3
- Deferred taxation (41.6) 26.4
Profit after taxation 307.6 1,072.6
Minority interest 114.0 119.5
Net earnings 193.6 953.1
Exceptional items:
Profit on sale of investments 40.3 95.6
Harmony hostile bid (170.4) -
Sale of mineral rights - 187.2
IAMGold transaction (64.8) -
Write off of mineral rights - (24.7)
Retirement of healthcare obligations (4.8) (5.0)
Other 4.2 3.4
Total exceptional items (195.5) 256.5
Taxation (3.0) 42.0
Net exceptional items after
tax and minority interest (198.5) 298.5
Net earnings per share (cents) 39 197
Headline earnings 156.7 634.2
Headline earnings per share (cents) 32 131
Diluted earnings per share (cents) 39 196
Net earnings excluding gains and losses
on financial instruments and
foreign debt, net of cash and
exceptional items 222.3 484.6
Net earnings per share excluding gains
and losses on financial
instruments and foreign debt, net of cash
and exceptional items (cents) 45 100
Gold sold - managed kg 103,758 102,777
Gold price received R/kg 82,885 86,630
Total cash costs R/kg 65,443 67,360
Income Statement
International Financial Reporting Standards Basis
US Dollar Quarter
March December March
(Figures are in millions unless
otherwise stated)
2005 2004 2004
Revenue 495.2 480.2 444.4
Operating costs 395.1 382.2 345.3
Gold inventory change 9.8 (5.5) 3.2
Operating profit 90.3 103.5 95.9
Amortisation and depreciation 62.4 61.9 43.8
Net operating profit 27.9 41.6 52.1
Finance income/(cost) 5.7 3.3 (5.3)
- Net interest and investment
income/(cost) 5.6 2.5 (0.6)
- Exchange (loss)/gain on foreign
debt, net of cash 0.1 0.8 (4.7)
(Loss)/gain on financial instruments (8.1) 23.9 6.6
Other (expense)/income (1.2) (3.9) 3.7
Exploration (7.2) (6.5) (6.6)
Profit before tax and exceptional items 17.1 58.4 50.5
Exceptional (loss)/gain (14.3) (17.5) 3.4
Profit before taxation 2.8 40.9 53.9
Mining and income taxation (8.7) 21.7 9.3
10.7 12.7 10.2
- Normal taxation
- Deferred taxation (19.4) 9.0 (0.9)
Profit after taxation 11.5 19.2 44.6
Minority interest 9.1 6.1 6.9
Net earnings 2.4 13.1 37.7
Exceptional items:
Profit on sale of investments 0.4 6.2 6.9
Harmony hostile bid (14.5) (13.3) -
Sale of mineral rights - - -
IAMGold transaction (0.2) (10.4) -
Write off of mineral rights - - (2.0)
Retirement of healthcare obligations (0.8) - (0.7)
Other 0.8 - (0.8)
Total exceptional items (14.3) (17.5) 3.4
Taxation 0.1 (0.6) (0.4)
Net exceptional items after tax and
minority interest (14.2) (18.1) 3.0
Net earnings per share (cents) - 3 7
Headline earnings 1.9 7.5 32.4
Headline earnings per share (cents) - 2 7
Diluted earnings per share (cents) - 3 7
Net earnings excluding gains and losses
on financial instruments and
foreign debt, net of cash and
exceptional items 21.0 16.1 34.4
Net earnings per share excluding gains
and losses on financial
instruments and foreign debt, net of
cash and exceptional items (cents) 4 3 7
SA rand/US dollar conversion rate 5.95 6.12 6.79
Gold sold - managed ozs (000) 1,157 1,116 1,095
Gold price received $/oz 428 431 407
Total cash costs $/oz 340 330 309
US Dollar Nine months to
March March
(Figures are in millions unless
otherwise stated)
2005 2004
Revenue 1,400.7 1,271.9
Operating costs 1,144.6 1,006.8
Gold inventory change (9.4) 12.3
Operating profit 265.5 252.8
Amortisation and depreciation 182.6 129.2
Net operating profit 82.9 123.6
Finance income/(cost) 14.1 4.1
- Net interest and investment
income/(cost) 10.7 0.2
- Exchange (loss)/gain on foreign
debt, net of cash 3.4 3.9
(Loss)/gain on financial instruments 39.7 28.6
Other (expense)/income (5.8) 5.9
Exploration (22.3) (19.3)
Profit before tax and exceptional items 108.6 142.9
Exceptional (loss)/gain (31.8) 36.6
Profit before taxation 76.8 179.5
Mining and income taxation 26.6 26.4
- Normal taxation 33.4 22.6
- Deferred taxation (6.8) 3.8
Profit after taxation 50.2 153.1
Minority interest 18.6 17.1
Net earnings 31.6 136.0
Exceptional items:
Profit on sale of investments 6.6 13.7
Harmony hostile bid (27.8) -
Sale of mineral rights - 25.2
IAMGold transaction (10.6) -
Write off of mineral rights - (2.0)
Retirement of healthcare obligations (0.8) (0.7)
Other 0.8 0.4
Total exceptional items (31.8) 36.6
Taxation (0.5) 6.0
Net exceptional items after tax and
minority interest (32.3) 42.6
Net earnings per share (cents) 6 28
Headline earnings 25.5 90.6
Headline earnings per share (cents) 5 19
Diluted earnings per share (cents) 6 28
Net earnings excluding gains and losses
on financial instruments and
foreign debt, net of cash and
exceptional items 36.2 69.2
Net earnings per share excluding gains
and losses on financial
instruments and foreign debt, net of
cash and exceptional items (cents) 7 14
SA rand/US dollar conversion rate 6.14 7.00
Gold sold - managed ozs (000) 3,336 3,304
Gold price received $/oz 420 385
Total cash costs $/oz 332 299
Balance Sheet
International Financial Reporting Standards Basis
SA Rand
March June
(Figures are in millions
unless otherwise stated)
2005 2004
Mining and mineral assets 16,627.2 15,828.6
Non-current assets 351.3 331.4
Investments 1,017.2 801.2
Current assets 5,280.0 6,241.9
- Other current assets 2,349.2 2,107.4
- Cash and deposits 2,930.8 4,134.5
Total assets 23,275.7 23,203.1
Shareholders' equity 15,114.5 14,949.3
Minority interest 815.1 662.9
3,316.4 3,336.1
Deferred taxation
Long-term loans 1,213.4 1,428.6
Environmental rehabilitation provisions 769.9 715.4
Post-retirement heathcare provisions 22.6 58.1
2,023.8 2,052.7
Current liabilities
- Other current liabilities 1,736.3 1,846.0
- Current portion of long-term loans 287.5 206.7
Total equity and liabilities 23,275.7 23,203.1
S.A. Rand/US dollar conversion rate
S.A. Rand/Australian dollar conversion rate
US Dollars
March June
(Figures are in millions
unless otherwise stated)
2005 2004
Mining and mineral assets 2,690.5 2,512.5
Non-current assets 56.8 52.6
Investments 164.6 127.2
Current assets 854.3 990.8
- Other current assets 380.1 334.5
- Cash and deposits 474.2 656.3
Total assets 3,766.2 3,683.1
Shareholders' equity 2,445.7 2,372.9
Minority interest 131.9 105.2
536.6 529.5
Deferred taxation
Long-term loans 196.3 226.8
Environmental rehabilitation provisions 124.6 113.6
Post-retirement heathcare provisions 3.7 9.2
327.4 325.9
Current liabilities
- Other current liabilities 280.9 293.1
- Current portion of long-term loans 46.5 32.8
Total equity and liabilities 3,766.2 3,683.1
S.A. Rand/US dollar conversion rate 6.18 6.30
S.A. Rand/Australian dollar conversion rate 4.78 4.41
Statement of changes in equity
International Financial Reporting Standards Basis
SA Rand US Dollars
March March March March
(Figures are in millions 2005 2004 2005 2004
unless otherwise stated)
Balance as at the
beginning of the financial
year 14,949.3 11,295.5 2,372.9 1,450.0
Currency translation
adjustment and other 182.9 (466.4) 74.0 231.4
Issue of share capital 0.4 9.5 0.1 1.4
Increase of share premium 21.7 1,562.9 3.5 223.3
Equity component of Mvela
loan - 3,130.2 - 447.2
Marked to market valuation
of listed investments 111.0 35.0 18.1 5.0
Dividends (344.4) (669.1) (54.5) (63.2)
Net earnings 193.6 953.1 31.6 136.0
Balance as at the end of
March 15,114.5 15,850.7 2,445.7 2,431.1
Reconciliation of headline earnings
with net earnings
SA Rand
March December March
(Figures are in millions
unless otherwise stated)
2005 2004 2004
Net earnings/(loss) 11.2 80.3 254.5
Profit on sale of investments (1.4) (38.9) (47.2)
Taxation effect of profit on
sale of investments 0.2 4.0 13.5
Profit on sundry asset sales (0.6) - -
Other after tax adjustments - (0.2) -
Headline earnings 9.4 45.2 220.8
Headline earnings per share (cents) 2 9 45
US Dollars
March December March
(Figures are in millions unless otherwise
stated)
2005 2004 2004
Net earnings/(loss) 2.4 13.1 37.7
Profit on sale of investments (0.4) (6.4) (9.1)
Taxation effect of profit on
sale of investments - 0.8 3.8
Profit on sundry asset sales (0.1) - -
Other after tax adjustments - - -
Headline earnings 1.9 7.5 32.4
Headline earnings per share (cents) - 2 7
Based on headline earnings as given above divided by 492,144,121
(December 2004 - 491,907,010 and March 2004 - 491,254,653) being the
weighted average number of ordinary shares in issue
Cash Flow Statements
International Financial Reporting Standards Basis
SA Rand
Quarter
March December March
(Figures are in millions unless
otherwise stated)
2005 2004 2004
Cash flow from operating activities 653.2 233.4 527.7
Profit before tax and exceptional items 94.6 361.8 344.5
Exceptional items (86.1) (109.4) 20.6
Amortisation and depreciation 371.1 379.1 297.8
Change in working capital 266.0 (162.4) 94.3
Taxation paid (40.9) (69.3) (119.2)
Other non-cash items 48.5 (166.4) (110.3)
Dividends paid (146.5) - (196.7)
Ordinary shareholders (147.7) - (196.7)
Minority shareholders in subsidiaries 1.2 - -
Cash utilised in investing activities (595.1) (425.4) (654.5)
Capital expenditure - additions (439.7) (527.6) (748.8)
Capital expenditure - proceeds on
disposal - 37.1 326.6
Purchase of investments (129.8) (20.7) (342.8)
Proceeds on the disposal of investments 5.6 88.4 130.1
Environmental and post-retirement
heathcare payments (31.2) (2.6) (19.6)
Cash flow from financing activities (125.9) 24.9 4,007.8
Equity portion of Mvela loan - - 2,453.6
Debt portion of Mvela loan - - 1,653.4
Loans received - 16.8 -
Loans repaid (132.7) - (100.1)
Minority shareholder's loan
received/(repaid) - - -
Shares issued 6.8 8.1 0.9
Net cash (outflow)/inflow (214.3) (167.1) 3,684.3
Translation adjustment 167.6 (264.1) (87.4)
Cash at beginning of period 2,977.5 3,408.7 1,104.0
Cash at end of period 2,930.8 2,977.5 4,700.9
SA Rand Nine months to
March March
(Figures are in millions unless
otherwise stated)
2005 2004
Cash flow from operating activities 1,084.2 1,236.0
Profit before tax and exceptional items 666.3 1,000.8
Exceptional items (195.5) 256.5
Amortisation and depreciation 1,120.9 904.1
Change in working capital (79.3) (31.4)
Taxation paid (161.6) (473.2)
Other non-cash items (266.6) (420.8)
Dividends paid (407.5) (669.1)
Ordinary shareholders (344.4) (669.1)
Minority shareholders in subsidiaries (63.1) -
Cash utilised in investing activities (1,796.4) (2,067.8)
Capital expenditure - additions (1,722.0) (1,963.5)
Capital expenditure - proceeds on disposal 40.1 412.6
Purchase of investments (171.3) (680.4)
Proceeds on the disposal of investments 96.2 201.9
Environmental and post-retirement
heathcare payments (39.4) (38.4)
Cash flow from financing activities (56.9) 5,353.2
Equity portion of Mvela loan - 2,453.6
Debt portion of Mvela loan - 1,653.4
Loans received 16.8 -
Loans repaid (206.7) (293.9)
Minority shareholder's loan received/(repaid) 110.9 28.1
Shares issued 22.1 1,512.0
Net cash (outflow)/inflow (1,176.6) 3,852.3
Translation adjustment (27.1) (192.2)
Cash at beginning of period 4,134.5 1,040.8
Cash at end of period 2,930.8 4,700.9
US Dollar Quarter
March December March
(Figures are in millions unless
otherwise stated) 2005 2004 2004
Cash flow from operating activities 106.2 40.4 76.8
Profit before tax and exceptional items 17.1 58.4 50.5
Exceptional items (14.3) (17.5) 3.4
Amortisation and depreciation 62.4 61.9 43.8
Change in working capital 42.4 (26.5) 13.2
Taxation paid (8.4) (8.9) (17.7)
Other non-cash items 7.0 (27.0) (16.4)
Dividends paid (25.1) - (29.4)
Ordinary shareholders (25.1) - (29.4)
Minority shareholders in subsidiaries - - -
Cash utilised in investing activities (100.0) (70.5) (96.5)
Capital expenditure - additions (75.0) (86.8) (109.4)
Capital expenditure - proceeds on disposal 0.1 5.9 46.8
Purchase of investments (21.2) (3.4) (49.7)
Proceeds on the disposal of investments 1.2 14.2 18.7
Environmental and post-retirement
heathcare payments (5.1) (0.4) (2.9)
Cash flow from financing activities (21.0) 4.1 576.3
Equity portion of Mvela loan - - 350.5
Debt portion of Mvela loan - - 236.2
Loans received - 2.7 -
Loans repaid (22.1) - (13.7)
Minority shareholder's loan
received/(repaid) - - 0.1
Shares issued 1.1 1.4 3.2
Net cash (outflow)/inflow (39.9) (26.0) 527.2
Translation adjustment (8.3) 24.0 33.1
Cash at beginning of period 522.4 524.4 160.7
Cash at end of period 474.2 522.4 721.0
US Dollar Nine months to
March March
(Figures are in millions unless
otherwise stated) 2005 2004
Cash flow from operating activities 177.2 176.5
Profit before tax and exceptional items 108.6 142.9
Exceptional items (31.8) 36.6
Amortisation and depreciation 182.6 129.2
Change in working capital (12.9) (4.5)
Taxation paid (25.9) (67.6)
Other non-cash items (43.4) (60.1)
Dividends paid (64.6) (92.6)
Ordinary shareholders (54.5) (92.6)
Minority shareholders in subsidiaries (10.1) -
Cash utilised in investing activities (292.6) (295.5)
Capital expenditure - additions (280.5) (280.5)
Capital expenditure - proceeds on disposal 6.5 58.9
Purchase of investments (27.9) (97.2)
Proceeds on the disposal of investments 15.7 28.8
Environmental and post-retirement
heathcare payments (6.4) (5.5)
Cash flow from financing activities (10.3) 766.0
Equity portion of Mvela loan - 350.5
Debt portion of Mvela loan - 236.2
Loans received 2.7 -
Loans repaid (33.7) (40.7)
Minority shareholder's loan
received/(repaid) 17.1 4.0
Shares issued 3.6 216.0
Net cash (outflow)/inflow (190.3) 554.4
Translation adjustment 8.2 33.0
Cash at beginning of period 656.3 133.6
Cash at end of period 474.2 721.0
Hedging / Derivatives
Policy
The Group's policy is to remain unhedged to the gold price. 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 and interest rate 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 IFRS 39,
except for the debt portion of the interest rate swap which has been hedge
accounted, and accordingly the positions have been marked to market.
On 7 January 2004, Gold Fields Australia closed out its Australian
dollar/United States dollar currency financial instruments. The existing
forward purchases of Australian dollars and the put and call options were
closed out by entering into equal and opposite transactions. The close out of
the outstanding open position of US$275 million was at an average spot rate of
0.7670 US$/A$. These transactions locked in gross profit amounting to US$115.7
million and the underlying cash receipts were deferred to match the maturity
dates of the original transactions. An amount of US$102.8 million had already
been accounted for up until the end of December 2003. In addition, in order
that the Group was able to participate in further Australian dollar
appreciation, a strip of quarterly maturing Australian dollar/US dollar call
options were purchased in respect of an amount of US$275 million of which the
value dates and amounts match those of the original structure.
The Australian dollar call options resulted in a premium of US$8.3 million. The
payment of the premium will be effected so as to match the maturity dates of
the original structure. The average strike price of the options is 0.7670
US$/A$.
Subsequent to this, on 7 May 2004, the future US dollar values were fixed in
Australian dollars to take advantage of the weakened Australian dollar against
the US dollar at that time. The original value of the future cash flows was
US$107.4 million or A$140.0 million at 0.7670 US$/A$, the rate at the time of
the original transaction. The value fixed in Australian dollars amounted to
A$147 million, based on the spot rate on 7 May 2004 of 0.7158 US$/A$. The
balance of A$93.0 million not yet realised in cash is detailed below:
Payment value dates Future cash flows - A$ million
30 June 2005 14.3
30 September 2005 14.0
30 December 2005 13.6
31 March 2006 13.3
30 June 2006 12.9
29 September 2006 12.6
29 December 2006 12.3
TOTAL 93.0
The call options purchased at a cost of US$8.3 million are detailed below:
US Dollars / Australian Dollars
Year ended 30 June 2005 2006 2007 TOTAL
Australian dollar call options:
Amount (US dollars) -000's 25,000 100,000 75,000 200,000
Average strike price -(US$/A$) 0.7670 0.7670 0.7670 0.7670
The marked to market value of all transactions making up the positions in the
above table was a positive US$6.2 million. This was based on an exchange rate
of A$/US$ 0.7735. The value was based on the prevailing interest rates and
volatilities at the time.
US Dollars / Rand
Year ended 30 June 2005 2006 2007 TOTAL
Forward purchases:
Amount (US Dollars) -000's 30,000 - - 30,000
Average rate -(ZAR/US$) 5.9611 - - 5.9611
The marked to market value of all transactions making up the positions in the
above table was a positive R8.3 million (US$1.3 million). The value was based
on an exchange rate of ZAR/US$6.18 and the prevailing interest rates and
volatilities at the time. Maturity date is 3 June 2005.
Interest rate swap
In terms of the Mvela loan, GFI Mining SA pays Mvela Gold interest on R4,139
million at a fixed interest rate, semi-annually. The interest rate was fixed
with reference to the five-year ZAR swap rate, at 9.6179% plus a margin of
0.95%. GFI Mining SA simultaneously entered into an interest rate swap
agreement converting a fixed interest rate exposure to a floating rate. In
terms of the swap, GFI Mining SA is now exposed to the three- month Jibar rate
plus a margin of 1.025%. The Jibar rate for the current quarter was fixed at
7.55%.
For accounting purposes the Mvela loan was split into a debt component and an
equity component and accordingly the net present value of future interest
payments (R1,654 million) was classified as debt, while the balance (R2,454
million) was categorised as equity. The marked to market value of the swap at
the end of March 2005 was a positive R164 million. Of this, R133 million was
accounted for in the income statement and the balance of R31 million has been
hedge accounted and credited to the debt portion of the loan. As the marked to
market value at the end of June 2004 was a negative R104 million, this
translates into a positive movement of R268 million for the nine months to
date, of which R54 million has been credited to the debt portion of the loan
and the balance of R214 million has been taken to the income statement. Of the
R214 million, R287 million was accounted for in the first half of the year,
leaving a negative R73 million which was accounted for in the March quarter. In
addition, the settlement gain on the swap for the March quarter was R22 million
of which R15 million was taken to the income statement and R7 million credited
to the debt portion of the loan. A further settlement gain of R21 million has
been locked in for the three-month period to the end of June 2005. Including
this gain, the settlement gain up until the end of June amounts to R97 million.
Total Cash Costs
Gold Institute Industry Standard
SA Operations
(All
figures are
in Rand
millions
unless
otherwise Total Mine
stated) Operations Total Driefontein Kloof Beatrix
Operating
costs (1)
March 2005 2,350.7 1,649.1 613.9 633.7 401.5
December
2004 2,341.2 1,687.4 625.1 649.4 412.9
Financial
year to
date 7,027.8 5,000.2 1,860.9 1,919.1 1,220.2
Gold-in-process and
inventory
change*
March 2005 51.5 - - - -
December
2004 (23.0) - - - -
Financial
year to
date (39.1) - - - -
Less:
Rehabilitat-
ion costs
March 2005 10.9 9.8 2.8 5.4 1.6
December
2004 11.3 9.9 2.8 5.5 1.6
Financial
year to
date 33.2 29.4 8.4 16.2 4.8
Production
taxes
March 2005 7.7 7.7 3.1 3.3 1.3
December
2004 7.6 7.6 0.7 4.2 2.7
Financial
year to
date 23.7 23.7 6.3 12.2 5.2
General and
admin
March 2005 85.0 55.5 22.1 20.5 12.9
December
2004 82.7 53.1 21.7 18.8 12.6
Financial
year to
date 252.3 167.0 68.4 60.6 38.0
Cash
operating
costs
March 2005 2,298.6 1,576.1 585.9 604.5 385.7
December
2004 2,216.6 1,616.8 599.9 620.9 396.0
Financial
year to
date 6,679.5 4,780.1 1,777.8 1,830.1 1,172.2
Plus:
Production
taxes
March 2005 7.7 7.7 3.1 3.3 1.3
December
2004 7.6 7.6 0.7 4.2 2.7
Financial
year to
date 23.7 23.7 6.3 12.2 5.2
Royalties
March 2005 31.7 - - - -
December
2004 28.9 - - - -
Financial
year to
date 86.9 - - - -
TOTAL CASH
COSTS(2)
March 2005 2,338.0 1,583.8 589.0 607.8 387.0
December
2004 2,253.1 1,624.4 600.6 625.1 398.7
Financial
year to
date 6,790.1 4,803.8 1,784.1 1,842.3 1,177.4
Plus:
Amortisation*
March 2005 356.7 169.1 62.2 85.0 21.9
December
2004 343.8 173.3 58.4 92.3 22.6
Financial
year to
date 1,025.6 509.4 179.0 264.3 66.1
Rehabilitation
March 2005 10.9 9.8 2.8 5.4 1.6
December
2004 11.3 9.9 2.8 5.5 1.6
Financial
year to
date 33.2 29.4 8.4 16.2 4.8
TOTAL
PRODUCTION
COSTS(3)
March 2005 2,705.6 1,762.7 654.0 698.2 410.5
December
2004 2,608.2 1,807.6 661.8 722.9 422.9
Financial
year to
date 7,848.9 5,342.6 1,971.5 2,122.8 1,248.3
Gold sold -
thousand
ounces
March 2005 1,157.2 711.4 293.5 264.4 153.5
December
2004 1,115.8 725.9 287.7 280.6 157.6
Financial
year to
date 3,335.9 2,137.4 864.7 811.6 461.1
TOTAL CASH
COSTS
March 2005 340 374 337 386 424
- US$/oz
December
2004 330 366 341 364 413
Financial
year to
date 332 366 336 370 416
TOTAL
PRODUCTION
COSTS
March 2005 393 416 374 444 449
- US$/oz
December
2004 382 407 376 421 439
Financial
year to
date 383 407 371 426 441
International Operations
(All figures are in
Rand
millions unless
otherwise Ghana Australia#
stated) Total Tarkwa Damang St Ives Agnew
Operating costs (1)
March 2005 701.6 246.4 99.4 285.6 70.2
December 2004 653.8 226.4 91.0 261.0 75.4
Financial year to
date 2,027.6 690.2 287.3 836.7 213.4
Gold-in-process and
inventory change*
March 2005 51.5 3.1 9.8 36.0 2.6
December 2004 (23.0) 5.6 (1.2) (31.0) 3.6
Financial year to
date (39.1) (11.9) 14.3 (49.9) 8.4
Less:
Rehabilitation
costs
March 2005 1.1 0.2 - 0.5 0.4
December 2004 1.4 0.1 0.3 0.4 0.6
Financial year to
date 3.8 0.5 0.6 1.3 1.4
Production taxes
March 2005 - - - - -
December 2004 - - - - -
Financial year to
date - - - - -
General and admin
March 2005 29.5 14.3 2.4 10.3 2.5
December 2004 29.6 14.7 2.9 9.5 2.5
Financial year to
date 85.3 38.7 8.2 30.4 8.0
Cash operating costs
March 2005 722.5 235.0 106.8 310.8 69.9
December 2004 599.8 217.2 86.6 220.1 75.9
Financial year to
date 1,899.4 639.1 292.8 755.1 212.4
Plus: Production
taxes
March 2005 - - - - -
December 2004 - - - - -
Financial year to
date - - - - -
Royalties
March 2005 31.7 14.2 4.1 10.1 3.3
December 2004 28.9 13.4 5.3 7.0 3.2
Financial year to
date 86.9 37.2 14.7 25.6 9.4
TOTAL CASH COSTS(2)
March 2005 754.2 249.2 110.9 320.9 73.2
December 2004 628.7 230.6 91.9 227.1 79.1
Financial year to
date 1,986.3 676.3 307.5 780.7 221.8
Plus: Amortisation*
March 2005 187.6 67.4 6.5 113.7
December 2004 170.5 62.3 9.2 99.0
Financial year to
date 516.2 172.4 25.9 317.9
Rehabilitation
March 2005 1.1 0.2 - 0.9
December 2004 1.4 0.1 0.3 1.0
Financial year to
date 3.8 0.5 0.6 2.7
TOTAL PRODUCTION
COSTS(3)
March 2005 942.9 316.8 117.4 508.7
December 2004 800.6 293.0 101.4 406.2
Financial year to
date 2,506.3 849.2 334.0 1,323.1
Gold sold -
thousand ounces
March 2005 445.8 185.0 53.9 154.1 52.8
December 2004 389.9 167.9 66.5 106.6 49.0
Financial year to
date 1,198.5 477.7 189.4 383.9 147.4
TOTAL CASH COSTS
March 2005 284 226 346 350 233
- US$/oz
December 2004 263 224 226 348 264
Financial year to
date 270 231 264 331 245
TOTAL PRODUCTION
COSTS
March 2005 355 288 366 413
- US$/oz
December 2004 335 285 249 427
Financial year to
date 341 290 287 406
DEFINITIONS
Total cash costs and Total production costs are calculated in accordance with
the Gold Institute industry standard.
(1)Operating costs - All gold mining related costs before
amortisation/depreciation, changes in gold inventory, taxation and exceptional
items.
(2)Total cash costs - Operating costs less off-mine costs, including general
and administration costs, as detailed in the table above.
(3)Total production costs - Total cash costs plus amortisation/depreciation
and rehabilitation provisions, as detailed in the table above.
* Adjusted for amortisation/depreciation (non-cash item) excluded from
gold-in-process change.
Average exchange rates are US$1 = R5.95 and US$1 = R6.12 for the March 2005 and
December 2004 quarters respectively.
# As a significant portion of the acquisition price was allocated to tenements
of St Ives and Agnew on endowment ounces and also as these two Australian
operations are entitled to transfer and then off-set tax losses from one
company to another, it is not meaningful to split the income statement below
operating profit.
Operating and Financial Results
SA Operations
Total Mine
SA Rand
Operations Total Driefontein Kloof Beatrix
Operating
Results
Ore
milled/treat
ed (000
tons)
March 2005 12,789 3,983 1,760 1,219 1,004
December 2004 11,823 4,013 1,647 1,275 1,091
Financial
year to date 35,655 11,975 4,951 3,753 3,271
Yield (grams
per ton)
March 2005 2.8 5.6 5.2 6.7 4.8
December 2004 2.9 5.6 5.4 6.8 4.5
Financial
year to date 2.9 5.6 5.4 6.7 4.4
Gold
produced
(kilograms)
March 2005 35,993 22,126 9,129 8,223 4,774
December 2004 34,705 22,577 8,949 8,727 4,901
Financial
year to date 103,758 66,482 26,896 25,243 14,343
Gold sold
(kilograms)
March 2005 35,993 22,126 9,129 8,223 4,774
December 2004 34,705 22,577 8,949 8,727 4,901
Financial
year to date 103,758 66,482 26,896 25,243 14,343
Gold price
received
(Rand per
kilogram)
March 2005 81,952 82,026 81,816 81,990 82,488
December 2004 84,872 84,657 84,926 84,531 84,391
Financial
year to date 82,885 82,883 82,823 82,787 83,163
Total cash
costs
(Rand per
kilogram)
March 2005 64,957 71,581 64,520 73,915 81,064
December 2004 64,921 71,949 67,114 71,628 81,351
Financial
year to date 65,443 72,257 66,333 72,983 82,089
Total
production
costs
(Rand per
kilogram)
March 2005 75,170 79,666 71,640 84,908 85,987
December 2004 75,153 80,064 73,952 82,835 86,289
Financial
year to date 75,646 80,362 73,301 84,095 87,032
Operating
costs
(Rand per ton)
March 2005 184 414 349 520 400
December 2004 198 420 380 509 378
Financial
year to date 197 418 376 511 373
Financial
Results
(Rand
million)
Revenue
March 2005 2,949.7 1,814.9 746.9 674.2 393.8
December 2004 2,945.5 1,911.3 760.0 737.7 413.6
Financial
year to date 8,600.0 5,510.2 2,227.6 2,089.8 1,192.8
Operating
costs
March 2005 2,350.7 1,649.1 613.9 633.7 401.5
December 2004 2,341.2 1,687.4 625.1 649.4 412.9
Financial
year to date 7,027.8 5,000.2 1,860.9 1,919.1 1,220.2
Gold
inventory
change
March 2005 62.1 - - - -
December 2004 (32.5) - - - -
Financial
year to date (57.5) - - - -
Operating
profit
March 2005 536.9 165.8 133.0 40.5 (7.7)
December 2004 636.8 223.9 134.9 88.3 0.7
Financial
year to date 1,629.7 510.0 366.7 170.7 (27.4)
Amortisation
of mining
assets
March 2005 346.1 169.1 62.2 85.0 21.9
December 2004 353.3 173.3 58.4 92.3 22.6
Financial
year to date 1,044.0 509.4 179.0 264.3 66.1
Net
operating
profit
March 2005 190.8 (3.3) 70.8 (44.5) (29.6)
December 2004 283.5 50.6 76.5 (4.0) (21.9)
Financial
year to date 585.7 0.6 187.7 (93.6) (93.5)
Other income/
(expense)
March 2005 (111.1) (124.3) (33.1) (38.5) (52.7)
December 2004 105.4 72.4 24.4 28.4 19.6
Financial
year to date 82.9 29.3 17.7 19.2 (7.6)
Profit
before
taxation
March 2005 79.7 (127.6) 37.7 (83.0) (82.3)
December 2004 388.9 123.0 100.9 24.4 (2.3)
Financial
year to date 668.6 29.9 205.4 (74.4) (101.1)
Mining and
income
taxation
March 2005 (73.8) (82.9) (13.6) (37.8) (31.5)
December 2004 125.5 11.8 10.9 1.4 (0.5)
Financial
year to date 118.3 (76.1) 14.2 (52.1) (38.2)
- Normal
taxation
March 2005 34.1 - - - -
December 2004 60.3 - - - -
Financial
year to date 131.7 - - - -
- Deferred
taxation
March 2005 (107.9) (82.9) (13.6) (37.8) (31.5)
December 2004 65.2 11.8 10.9 1.4 (0.5)
Financial
year to date (13.4) (76.1) 14.2 (52.1) (38.2)
Net profit
March 2005 153.5 (44.7) 51.3 (45.2) (50.8)
December 2004 263.4 111.2 90.0 23.0 (1.8)
Financial
year to date 550.3 106.0 191.2 (22.3) (62.9)
Net profit
excluding
gains
and losses
on financial
instruments
and foreign
debt and
exceptional
items
March 2005 193.3 (0.9) 64.7 (30.2) (35.4)
December 2004 157.9 26.9 64.1 (5.8) (31.4)
Financial
year to date 394.7 (22.4) 151.7 (66.1) (108.0)
Capital
expenditure
(Rand
million)
March 2005 378.1 150.2 36.9 60.5 52.8
December 2004 499.0 163.1 41.7 63.2 58.2
Financial
year to date 1,599.2 461.1 109.3 182.2 169.6
Planned for
next six
months to
September
2005 773.4 323.6 126.1 96.8 100.7
Operating and Financial Results
International Operations
SA Rand Ghana Australia #
Total Tarkwa Damang St Ives Agnew
Operating Results
Ore milled/treated
(000 tons)
March 2005 8,806 5,228 1,257 2,026 295
December 2004 7,810 4,919 1,354 1,255 282
Financial year to date 23,680 14,238 3,953 4,635 854
Yield (grams per ton)
March 2005 1.6 1.1 1.3 2.4 5.6
December 2004 1.6 1.1 1.5 2.6 5.4
Financial year to date 1.6 1.0 1.5 2.6 5.4
Gold produced
(kilograms)
March 2005 13,867 5,755 1,677 4,794 1,641
December 2004 12,128 5,221 2,067 3,316 1,524
Financial year to date 37,276 14,858 5,892 11,941 4,585
Gold sold (kilograms)
March 2005 13,867 5,755 1,677 4,794 1,641
December 2004 12,128 5,221 2,067 3,316 1,524
Financial year to date 37,276 14,858 5,892 11,941 4,585
Gold price received
(Rand per kilogram)
March 2005 81,835 82,276 81,276 81,539 81,718
December 2004 85,274 85,980 85,148 84,620 84,449
Financial year to date 82,890 83,490 82,739 82,380 82,465
Total cash costs
(Rand per kilogram)
March 2005 54,388 43,301 66,130 66,938 44,607
December 2004 51,839 44,168 44,461 68,486 51,903
Financial year to date 53,286 45,518 52,189 65,380 48,375
Total production costs
(Rand per kilogram)
March 2005 67,996 55,048 70,006 79,052
December 2004 66,013 56,120 49,057 83,926
Financial year to date 67,236 57,154 56,687 80,062
Operating costs
(Rand per ton)
March 2005 80 47 79 141 238
December 2004 84 46 67 208 267
Financial year to date 86 48 73 181 250
Financial Results
(Rand million)
Revenue
March 2005 1,134.8 473.5 136.3 390.9 134.1
December 2004 1,034.2 448.9 176.0 280.6 128.7
Financial year to
date 3,089.8 1,240.5 487.5 983.7 378.1
Operating costs
March 2005 701.6 246.4 99.4 285.6 70.2
December 2004 653.8 226.4 91.0 261.0 75.4
Financial year to
date 2,027.6 690.2 287.3 836.7 213.4
Gold inventory change
March 2005 62.1 2.8 10.0 45.3 4.0
December 2004 (32.5) 3.7 (1.4) (39.4) 4.6
Financial year to date (57.5) (13.5) 14.3 (70.0) 11.7
Operating profit
March 2005 371.1 224.3 26.9 60.0 59.9
December 2004 412.9 218.8 86.4 59.0 48.7
Financial year to
date 1,119.7 563.8 185.9 217.0 153.0
Amortisation of mining
assets
March 2005 177.0 67.7 6.3 103.0
December 2004 180.0 64.2 9.4 106.4
Financial year to date 534.6 174.0 25.9 334.7
Net operating profit
March 2005 194.1 156.6 20.6 16.9
December 2004 232.9 154.6 77.0 1.3
Financial year to date 585.1 389.8 160.0 35.3
Other income/(expense)
March 2005 13.2 4.1 1.5 7.6
December 2004 33.0 2.5 0.3 30.2
Financial year to date 53.6 9.1 1.9 42.6
Profit before taxation
March 2005 207.3 160.7 22.1 24.5
December 2004 265.9 157.1 77.3 31.5
Financial year to date 638.7 398.9 161.9 77.9
Mining and income
taxation
March 2005 9.1 (10.5) 2.9 16.7
December 2004 113.7 64.0 33.0 16.7
Financial year to date 194.4 88.0 58.5 47.9
- Normal taxation
March 2005 34.1 15.9 4.8 13.4
December 2004 60.3 17.1 33.0 10.2
Financial year to date 131.7 44.3 52.4 35.0
- Deferred taxation
March 2005 (25.0) (26.4) (1.9) 3.3
December 2004 53.4 46.9 - 6.5
Financial year to date 62.7 43.7 6.1 12.9
Net profit
March 2005 198.2 171.2 19.2 7.8
December 2004 152.2 93.1 44.3 14.8
Financial year to date 444.3 310.9 103.4 30.0
Net profit excluding
gains and losses on
financial instruments
and foreign debt and
exceptional items
March 2005 194.2 171.2 19.2 3.8
December 2004 131.0 93.1 44.3 (6.4)
Financial year to date 417.1 310.9 103.4 2.8
Capital expenditure
(Rand million)
March 2005 227.9 56.9 19.6 71.6 79.8
December 2004 335.9 118.4 19.2 148.1 50.2
Financial year to date1,138.1 368.9 49.2 550.0 170.0
Planned for next six
months to September
2005 449.8 180.9 47.0 142.6 79.3
# As a significant portion of the acquisition price was allocated to tenements
of St Ives and Agnew on endowment ounces and also as these two Australian
operations are entitled to transfer and then off-set tax losses from one
company to another, it is not meaningful to split the income statement below
operating profit.
Operating and Financial Results
Total SA Operations
US Dollars Mine
Opera- Total Drief- Kloof Beatrix
tions ontein
Operating Results
Ore milled/treated
(000 tons)
March 2005 12,789 3,983 1,760 1,219 1,004
December 2004 11,823 4,013 1,647 1,275 1,091
Financial year to date 35,655 11,975 4,951 3,753 3,271
Yield (ounces per ton)
March 2005 0.090 0.179 0.167 0.217 0.153
December 2004 0.094 0.181 0.175 0.220 0.144
Financial year to date 0.094 0.178 0.175 0.216 0.141
Gold produced
(000 ounces)
March 2005 1,157.2 711.4 293.5 264.4 153.5
December 2004 1,115.8 725.9 287.7 280.6 157.6
Financial year to date 3,335.9 2,137.4 864.7 811.6 461.1
Gold sold (000 ounces)
March 2005 1,157.2 711.4 293.5 264.4 153.5
December 2004 1,115.8 725.9 287.7 280.6 157.6
Financial year to date 3,335.9 2,137.4 864.7 811.6 461.1
Gold price received
(dollars per ounce)
March 2005 428 429 428 429 431
December 2004 431 430 432 430 429
Financial year to date 420 420 420 419 421
Total cash costs
(dollars per ounce)
March 2005 340 374 337 386 424
December 2004 330 366 341 364 413
Financial year to date 332 366 336 370 416
Total production costs
(dollars per ounce)
March 2005 393 416 374 444 449
December 2004 382 407 376 421 439
Financial year to date 383 407 371 426 441
Operating costs
(dollars per ton)
March 2005 31 70 59 87 67
December 2004 32 69 62 83 62
Financial year to date 32 68 61 83 61
Financial Results
($ million)
Revenue
March 2005 495.2 305.2 125.5 113.5 66.2
December 2004 480.2 311.7 124.0 120.3 67.4
Financial year to date 1,400.7 897.4 362.8 340.4 194.3
Operating costs
March 2005 395.1 277.3 103.2 106.6 67.5
December 2004 382.2 275.4 102.1 106.0 67.4
Financial year to date 1,144.6 814.4 303.1 312.6 198.7
Gold inventory change
March 2005 9.8 - - - -
December 2004 (5.5) - - - -
Financial year to date (9.4) - - - -
Operating profit
March 2005 90.3 27.9 22.3 6.9 (1.3)
December 2004 103.5 36.2 21.9 14.3 0.1
Financial year to date 265.5 83.1 59.7 27.8 (4.5)
Amortisation of mining
assets
March 2005 58.2 28.4 10.4 14.3 3.7
December 2004 57.7 28.3 9.5 15.1 3.7
Financial year to date 170.0 83.0 29.2 43.0 10.8
Net operating profit
March 2005 32.1 (0.5) 11.8 (7.4) (5.0)
December 2004 45.8 8.0 12.4 (0.8) (3.6)
Financial year to date 95.4 0.1 30.6 (15.2) (15.2)
Other income/(expenses)
March 2005 (17.6) (19.8) (5.3) (6.1) (8.5)
December 2004 17.2 11.8 4.0 4.6 3.2
Financial year to date 13.5 4.8 2.9 3.1 (1.2)
Profit before taxation
March 2005 14.5 (20.4) 6.6 (13.5) (13.5)
December 2004 62.9 19.8 16.4 3.9 (0.4)
Financial year to date 108.9 4.9 33.5 (12.1) (16.5)
Mining and income
taxation
March 2005 (11.5) (13.5) (2.1) (6.2) (5.1)
December 2004 20.3 1.9 1.8 0.2 (0.1)
Financial year to date 19.3 (12.4) 2.3 (8.5) (6.2)
- Normal taxation
March 2005 5.8 - - - -
December 2004 9.8 - - - -
Financial year to date 21.4 - - - -
- Deferred taxation
March 2005 (17.3) (13.5) (2.1) (6.2) (5.1)
December 2004 10.5 1.9 1.8 0.2 (0.1)
Financial year to date (2.2) (12.4) 2.3 (8.5) (6.2)
Net profit
March 2005 26.0 (6.9) 8.7 (7.3) (8.3)
December 2004 42.6 17.9 14.6 3.7 (0.3)
Financial year to date 89.6 17.3 31.1 (3.6) (10.2)
Net profit excluding
gains and losses on
financial instruments
and foreign debt and
exceptional items
March 2005 32.1 (0.2) 10.8 (5.0) (6.0)
December 2004 25.4 4.2 10.3 (1.0) (5.2)
Financial year to date 64.3 (3.6) 24.7 (10.8) (17.6)
Capital expenditure
($ million)
March 2005 64.8 25.3 6.2 10.2 8.9
December 2004 82.2 26.6 6.8 10.3 9.5
Financial year to date 260.5 75.1 17.8 29.7 27.6
Planned for next six
months
to September 2005 125.1 52.4 20.4 15.7 16.3
Average exchange rates are US$1 = R5.95 and US$1 = R6.12 for the March 2005 and
December 2004 quarters respectively.
Figures may not add as they are rounded independently.
Operating and Financial Results
International Operations
US Dollars
Total
Operating Results
Ore milled/treated
(000 tons)
March 2005 8,806
December 2004 7,810
Financial year to date 23,680
Yield (ounces per ton)
March 2005 0.051
December 2004 0.050
Financial year to date 0.051
Gold produced
(000 ounces)
March 2005 445.8
December 2004 389.9
Financial year to date 1,198.5
Gold sold
(000 ounces)
March 2005 445.8
December 2004 389.9
Financial year to date 1,198.5
Gold price received
(dollars per ounce)
March 2005 428
December 2004 433
Financial year to date 420
Total cash costs
(dollars per ounce)
March 2005 284
December 2004 263
Financial year to date 270
Total production costs
(dollars per ounce)
March 2005 355
December 2004 335
Financial year to date 341
Operating costs
(dollars per ton)
March 2005 13
December 2004 14
Financial year to date 14
Financial Results
($ million)
Revenue
March 2005 189.9
December 2004 168.5
Financial year to date 503.2
Operating costs
March 2005 117.7
December 2004 106.8
Financial year to date 330.2
Gold inventory change
March 2005 9.8
December 2004 (5.5)
Financial year to date (9.4)
Operating profit
March 2005 62.4
December 2004 67.2
Financial year to date 182.4
Amortisation of mining assets
March 2005 29.8
December 2004 29.4
Financial year to date 87.1
Net operating profit
March 2005 32.6
December 2004 37.8
Financial year to date 95.3
Other income/(expenses)
March 2005 2.3
December 2004 5.3
Financial year to date 8.7
Profit before taxation
March 2005 34.9
December 2004 43.1
Financial year to date 104.0
Mining and income taxation
March 2005 2.0
December 2004 18.4
Financial year to date 31.7
- Normal taxation
March 2005 5.8
December 2004 9.8
Financial year to date 21.4
- Deferred taxation
March 2005 (3.8)
December 2004 8.7
Financial year to date 10.2
Net profit
March 2005 32.9
December 2004 24.7
Financial year to date 72.4
Net profit excluding gains
and losses on financial
instruments and foreign
debt, and exceptional
items
March 2005 32.3
December 2004 21.2
Financial year to date 67.9
Capital expenditure ($ million)
March 2005 39.5
December 2004 55.6
Financial year to date 185.4
Planned for next six months to September 2005 72.8
International Operations
Ghana Australia#
Tarkwa Damang St Ives Agnew
March 2005 5,228 1,257 2,026 295
December 2004 4,919 1,354 1,255 282
Financial year to date 14,238 3,953 4,635 854
Yield (ounces per ton)
March 2005 0.035 0.043 0.076 0.179
December 2004 0.034 0.049 0.085 0.174
Financial year to date 0.034 0.048 0.083 0.173
Gold produced
(000 ounces)
March 2005 185.0 53.9 154.1 52.8
December 2004 167.9 66.5 106.6 49.0
Financial year to date 477.7 189.4 383.9 147.4
Gold sold
(000 ounces)
March 2005 185.0 53.9 154.1 52.8
December 2004 167.9 66.5 106.6 49.0
Financial year to date 477.7 189.4 383.9 147.4
Gold price received
(dollars per ounce)
March 2005 430 425 426 427
December 2004 437 433 430 429
Financial year to date 423 419 417 418
Total cash costs
(dollars per ounce)
March 2005 226 346 350 233
December 2004 224 226 348 264
Financial year to date 231 264 331 245
Total production costs
(dollars per ounce)
March 2005 288 366 413
December 2004 285 249 427
Financial year to date 290 287 406
Operating costs
(dollars per ton)
March 2005 8 13 24 40
December 2004 8 11 34 44
Financial year to date 8 12 29 41
Financial Results
($ million)
Revenue
March 2005 79.1 23.1 65.2 22.5
December 2004 72.9 28.7 45.9 21.0
Financial year to date 202.0 79.4 160.2 61.6
Operating costs
March 2005 41.3 16.7 48.0 11.8
December 2004 36.9 14.9 42.7 12.3
Financial year to date 112.4 46.8 136.3 34.8
Gold inventory change
March 2005 0.4 1.6 7.1 0.7
December 2004 0.5 (0.2) (6.5) 0.7
Financial year to date (2.2) 2.3 (11.4) 1.9
Operating profit
March 2005 37.4 4.8 10.2 10.0
December 2004 35.4 14.1 9.8 7.9
Financial year to date 91.8 30.3 35.3 24.9
Amortisation of mining assets
March 2005 11.3 1.1 17.4
December 2004 10.4 1.5 17.4
Financial year to date 28.3 4.2 54.5
Net operating profit
March 2005 26.1 3.7 2.8
December 2004 25.0 12.5 0.3
Financial year to date 63.5 26.1 5.7
Other income/(expenses)
March 2005 0.7 0.2 1.3
December 2004 0.4 - 4.9
Financial year to date 1.5 0.3 6.9
Profit before taxation
March 2005 26.8 4.0 4.1
December 2004 25.4 12.6 5.1
Financial year to date 65.0 26.4 12.7
Mining and income taxation
March 2005 (1.5) 0.6 2.8
December 2004 10.4 5.4 2.7
Financial year to date 14.3 9.5 7.8
- Normal taxation
March 2005 2.7 0.9 2.2
December 2004 2.8 5.3 1.7
Financial year to date 7.2 8.5 5.7
- Deferred taxation
March 2005 (4.1) (0.3) 0.6
December 2004 7.6 - 1.1
Financial year to date 7.1 1.0 2.1
Net profit
March 2005 28.2 3.3 1.3
December 2004 15.1 7.2 2.4
Financial year to date 50.6 16.8 4.9
Net profit excluding gains
and losses on financial
instruments and foreign
debt, and exceptional
items
March 2005 28.2 3.3 0.7
December 2004 15.1 7.2 (1.1)
Financial year to date 50.6 16.8 0.5
Capital expenditure
($ million)
March 2005 10.1 3.3 12.9 13.2
December 2004 19.6 3.1 24.7 8.2
Financial year to date 60.1 8.0 89.6 27.7
Planned for next six months
to September 2005 29.3 7.6 23.1 12.8
Australian Dollars
Australia#
St Ives Agnew
March 2005 2,026 295
December 2004 1,255 282
Financial year to date 4,635 854
Yield (ounces per ton)
March 2005 0.076 0.179
December 2004 0.085 0.174
Financial year to date 0.083 0.173
Gold produced
(000 ounces)
March 2005 154.1 52.8
December 2004 106.6 49.0
Financial year to date 383.9 147.4
Gold sold
(000 ounces)
March 2005 154.1 52.8
December 2004 106.6 49.0
Financial year to date 383.9 147.4
Gold price received
(dollars per ounce)
March 2005 549 550
December 2004 572 571
Financial year to date 559 560
Total cash costs
(dollars per ounce)
March 2005 451 300
December 2004 463 351
Financial year to date 444 329
Total production costs
(dollars per ounce)
March 2005 532
December 2004 567
Financial year to date 544
Operating costs
(dollars per ton)
March 2005 31 52
December 2004 45 58
Financial year to date 39 55
Financial Results
($ million)
Revenue
March 2005 84.5 28.9
December 2004 60.9 28.0
Financial year to date 214.8 82.6
Operating costs
March 2005 61.6 15.1
December 2004 56.7 16.4
Financial year to date 182.7 46.6
Gold inventory change
March 2005 10.1 0.9
December 2004 (8.5) 1.0
Financial year to date (15.3) 2.6
Operating profit
March 2005 12.9 12.9
December 2004 12.7 10.6
Financial year to date 47.4 33.4
Amortisation of mining assets
March 2005 22.2
December 2004 23.1
Financial year to date 73.1
Net operating profit
March 2005 3.7
December 2004 0.2
Financial year to date 7.7
Other income/(expenses)
March 2005 1.6
December 2004 6.6
Financial year to date 9.3
Profit before taxation
March 2005 5.3
December 2004 6.9
Financial year to date 17.0
Mining and income taxation
March 2005 3.6
December 2004 3.6
Financial year to date 10.5
- Normal taxation
March 2005 2.9
December 2004 2.2
Financial year to date 7.6
- Deferred taxation
March 2005 0.7
December 2004 1.4
Financial year to date 2.8
Net profit
March 2005 1.7
December 2004 3.2
Financial year to date 6.6
Net profit excluding gains
and losses on financial
instruments and foreign
debt, and exceptional
items
March 2005 0.8
December 2004 (1.4)
Financial year to date 0.6
Capital expenditure ($ million)
March 2005 14.9 17.3
December 2004 31.7 10.9
Financial year to date 120.1 37.1
Planned for next six months to September 2005 29.8 16.6
Average exchange rates are US$1 = R5.95 and US$1 = R6.12 for the March 2005 and
December 2004 quarters respectively. The Australian exchange rates were A$1 =
R4.62 and A$1 = R4.60 for the March 2005 and December 2004 quarters
respectively.
# As a significant portion of the acquisition price was allocated to tenements
of St Ives and Agnew on endowment ounces and also as these two Australian
operations are entitled to transfer and then off-set tax losses from one
company to another, it is not meaningful to split the income statement below
operating profit.
Figures may not add as they are rounded independently.
Underground and Surface
SA Rand and Metric Units
Operating Results
Total Mine
Operating Results Operations
Ore milled / treated (000 ton)
- underground
March 2005 3,376
December 2004 3,569
Financial year to date 10,431
- surface
March 2005 9,413
December 2004 8,254
Financial year to date 25,224
- total
March 2005 12,789
December 2004 11,823
Financial year to date 35,655
Yield (grams per ton)
- underground
March 2005 7.4
December 2004 7.0
Financial year to date 7.1
- surface
March 2005 1.2
December 2004 1.2
Financial year to date 1.2
- combined
March 2005 2.8
December 2004 2.9
Financial year to date 2.9
Gold produced (kilograms)
- underground
March 2005 24,968
December 2004 24,910
Financial year to date 74,090
- surface
March 2005 11,025
December 2004 9,795
Financial year to date 29,668
- total
March 2005 35,993
December 2004 34,705
Financial year to date 103,758
Operating costs (Rand per ton)
- underground
March 2005 528
December 2004 517
Financial year to date 523
- surface
March 2005 60
December 2004 60
Financial year to date 62
- total
March 2005 184
December 2004 198
Financial year to date 197
SA Operations
Total Driefontein Kloof Beatrix
Ore milled / treated (000 ton)
- underground
March 2005 2,637 914 826 897
December 2004 2,891 952 923 1,016
Financial year to date 8,397 2,816 2,639 2,942
- surface
March 2005 1,346 846 393 107
December 2004 1,122 695 352 75
Financial year to date 3,578 2,135 1,114 329
- total
March 2005 3,983 1,760 1,219 1,004
December 2004 4,013 1,647 1,275 1,091
Financial year to date 11,975 4,951 3,753 3,271
Yield (grams per ton)
- underground
March 2005 7.9 8.9 9.7 5.2
December 2004 7.2 8.1 9.2 4.7
Financial year to date 7.4 8.4 9.3 4.8
- surface
March 2005 0.9 1.2 0.6 0.7
December 2004 1.5 1.8 0.7 1.3
Financial year to date 1.2 1.6 0.6 0.8
- combined
March 2005 5.6 5.2 6.7 4.8
December 2004 5.6 5.4 6.8 4.5
Financial year to date 5.6 5.4 6.7 4.4
Gold produced (kilograms)
- underground
March 2005 20,856 8,149 8,003 4,704
December 2004 20,946 7,665 8,475 4,806
Financial year to date 62,173 23,555 24,554 14,064
- surface
March 2005 1,270 980 220 70
December 2004 1,631 1,284 252 95
Financial year to date 4,309 3,341 689 279
- total
March 2005 22,126 9,129 8,223 4,774
December 2004 22,577 8,949 8,727 4,901
Financial year to date 66,482 26,896 25,243 14,343
Operating costs (Rand per ton)
- underground
March 2005 599 623 737 445
December 2004 557 602 678 404
Financial year to date 570 614 700 411
- surface
March 2005 53 52 63 20
December 2004 69 75 66 36
Financial year to date 60 61 65 32
- total
March 2005 414 349 520 400
December 2004 420 380 509 378
Financial year to date 418 376 511 373
International
Total Ghana Australia
Tarkwa Damang St Ives Agnew
Ore milled / treated (000
ton)
- underground
March 2005 739 - - 620 119
December 2004 678 - - 538 140
Financial year to date 2,034 - - 1,642 392
- surface
March 2005 8,067 5,228 1,257 1,406 176
December 2004 7,132 4,919 1,354 717 142
Financial year to date 21,646 14,238 3,953 2,993 462
- total
March 2005 8,806 5,228 1,257 2,026 295
December 2004 7,810 4,919 1,354 1,255 282
Financial year to date 23,680 14,238 3,953 4,635 854
Yield (grams per ton)
- underground
March 2005 5.6 - - 4.6 10.7
December 2004 5.8 - - 4.9 9.6
Financial year to date 5.9 - - 4.9 9.9
- surface
March 2005 1.2 1.1 1.3 1.4 2.1
December 2004 1.1 1.1 1.5 1.0 1.2
Financial year to date 1.2 1.0 1.5 1.3 1.6
- combined
March 2005 1.6 1.1 1.3 2.4 5.6
December 2004 1.6 1.1 1.5 2.6 5.4
Financial year to date 1.6 1.0 1.5 2.6 5.4
Gold produced (kilograms)
- underground
March 2005 4,112 - - 2,842 1,270
December 2004 3,964 - - 2,617 1,347
Financial year to date 11,917 - - 8,054 3,863
- surface
March 2005 9,755 5,755 1,677 1,952 371
December 2004 8,164 5,221 2,067 699 177
Financial year to date 25,359 14,858 5,892 3,887 722
- total
March 2005 13,867 5,755 1,677 4,794 1,641
December 2004 12,128 5,221 2,067 3,316 1,524
Financial year to date 37,276 14,858 5,892 11,941 4,585
Operating costs (Rand per
ton)
- underground
March 2005 277 - - 267 333
December 2004 349 - - 339 386
Financial year to date 329 - - 318 373
- surface
March 2005 62 47 79 85 174
December 2004 59 46 67 110 151
Financial year to date 63 48 73 105 145
- total
March 2005 80 47 79 141 238
December 2004 84 46 67 208 267
Financial year to date 86 48 73 181 250
Development results
Development values represent the actual results of sampling and no allowance
has been made for any adjustments which may be necessary when estimating ore
reserves. All figures below exclude shaft sinking metres
Driefontein March 2005
quarter
Reef Carbon Main VCR
Leader
Advanced (m) 4,674 532 1,536
Advanced on reef (m) 886 65 120
Sampled (m) 897 81 84
Channel width (cm) 114 48 118
Average value - (g/t) 19.2 9.0 32.7
- (cm.g/t) 2,179 434 3,851
December 2004
quarter
Reef Carbon Main VCR
Leader
Advanced (m) 4,938 413 1,357
Advanced on reef (m) 576 59 93
Sampled (m) 519 108 150
Channel width (cm) 108 42 31
Average value - (g/t) 15.2 13.8 37.0
- (cm.g/t) *1,645 580 **1,152
Year to date
F2005
Reef Carbon Main VCR
Leader
Advanced (m) 14,922 1,499 4,540
Advanced on reef (m) 2,052 278 383
Sampled (m) 1,965 288 366
Channel width (cm) 105 41 59
Average value - (g/t) 18.7 12.3 36.5
- (cm.g/t) 1,970 506 2,135
March 2005
Kloof quarter
Reef Kloof Main VCR
Advanced (m) 427 792 6,646
Advanced on reef (m) 171 113 1,331
Sampled (m) 171 106 1,159
Channel width (cm) 128 82 91
Average value - (g/t) 7.7 10.6 35.7
- (cm.g/t) 985 864 3,259
December 2004
quarter
Reef Kloof Main VCR
Advanced (m) 25 1,628 7,468
Advanced on reef (m) 5 190 1,344
Sampled (m) 5 194 1,191
Channel width (cm) 14 71 91
Average value - (g/t) 30.2 10.3 21.2
- (cm.g/t) 423 730 1,921
Year to date
F2005
Reef Kloof Main VCR
Advanced (m) 508 4,722 21,083
Advanced on reef (m) 222 668 3,931
Sampled (m) 220 663 3,475
Channel width (cm) 125 88 91
Average value - (g/t) 7.5 9.0 25.4
- (cm.g/t) 933 790 2,321
March 2005
Beatrix quarter
Reef Beatrix Kalkoenkrans
Advanced (m) 7,706 1,849
Advanced on reef (m) 1,802 171
Sampled (m) 1,644 153
Channel width (cm) 70 124
Average value - (g/t) 15.5 10.7
- (cm.g/t) 1,084 1,325
December 2004
quarter
Reef Beatrix Kalkoenkrans
Advanced (m) 7,703 1,747
Advanced on reef (m) 1,542 417
Sampled (m) 1,332 432
Channel width (cm) 87 118
Average value - (g/t) 13.7 9.3
- (cm.g/t) 1,200 1,103
Year to date
F2005
Reef Beatrix Kalkoenkrans
Advanced (m) 23,695 5,274
Advanced on reef (m) 5,372 1,014
Sampled (m) 4,734 1,014
Channel width (cm) 78 115
Average value - (g/t) 13.3 11.2
- (cm.g/t) 1,047 1,293
*Carbon Leader: The lower value experienced is due to the development of lower
grade carbon leader reef at 5 shaft on the 48-19 raise and on the east side of
the `O' line, and at 1 shaft with lower values on the 40-19 line and in 36-24
line where the reef is not fully exposed because of the width of reef band.
**VCR: The lower value experienced is the combined effect of anticipated lower
grade VCR exposed and sampled in the synclinal axis area of 5 shaft, and
minimal high grade development in the 4 shaft pillar where focus switched to
waste cutting to overcome geological disturbances.
Administration and corporate information
Corporate Secretary
Cain Farrel
Telephone: (+27)(11) 644 2525
Facsimile: (+27)(11) 484 0626
e-mail: cain.farrel@goldfields.co.za
Registered offices
Johannesburg
Gold Fields Limited
24 St Andrews Road
Parktown
Johannesburg
2193
Postnet Suite 252
Private Bag x 30500
Houghton 2041
Tel: (+27)(11) 644-2400
Fax: (+27)(11) 484-0626
London
St James 's Corporate Services Limited
6 St James 's Place
London SW1A 1NP
United Kingdom
Telephone:(+44)(20) 7499 3916
Facsimile:(+44)(20) 7491 1989
American Depository Receipts
Transfer Agent
Bank of New York
Shareholder Relations
P O Box 11258
New York, NY20286 -1258
US toll-free telephone: (1)(888) 269 2377
e-mail: shareowner-svcs@mail.bony.com
Gold Fields Limited
Incorporated in the Republic of South Africa
Registration number 1968/004880/06
Share code: GFI
Issuer code: GOGOF
ISIN - ZAE 000028123
Investor relations
South Africa
Willie Jacobsz
Telephone: (+27)(11)644 2460
Facsimile: (+27)(11)484 0639
e-mail: williej@goldfields.co.za
Nerina Bodasing
Telephone: (+27)(11) 644 2630
Facsimile: (+27)(11) 484 0639
e-mail: nerina.bodasing@goldfields.co.za
North America
Cheryl A Martin
Telephone: (+1)(303) 796 8683
Facsimile: (+1)(303) 796 8293
e-mail: camartin@gfexpl.com
Transfer Secretaries
South Africa
Computershare Investor Services 2004 (Proprietary) Limited
Ground Floor
70 Marshall Street
Johannesburg, 2001
P O Box 61051
Marshalltown, 2107
Telephone: (+27)(11) 370 5000
Facsimile: (+27)(11) 370 5271
United Kingdom
Capital Registrars
Bourne House
34 Beckenham Road
Beckenham
Kent BR3 4TU
England
Telephone: (+44)(20) 8639 2000
Facsimile: (+44)(20) 8658 3430
Website
http://www.goldfields.co.za
http://www.gold-fields.com
Corporate Sponsor
JPMorgan
Disclaimer
In the United States, Gold Fields Limited ("Gold Fields") has filed a
Solicitation/Recommendation Statement with the Securities and Exchange
Commission (the "SEC") on Schedule 14D-9 and holders of the Gold Fields
Ordinary Shares and American Depositary Shares are advised to read it as it
contains important information. Copies of the Schedule 14D-9 and other related
documents filed by Gold Fields are available free of charge on the SEC's
website at http://www.sec.gov. Any documents filed by Harmony Gold Mining
Company Limited, including any registration statement on Form F-4 (including
any prospectus contained therein) and related exchange offer materials as well
as its Tender Offer Statement on Schedule TO, will also be available free of
charge on the SEC's website.
Forward Looking Statements
Certain statements in this document constitute "forward looking statements"
within the meaning of Section 27A of the US Securities Act of 1933 and Section
21E of the US Securities Exchange Act of 1934.
Such forward looking statements involve known and unknown risks, uncertainties
and other important factors that could cause the actual results, performance or
achievements of the company to be materially different from the future results,
performance or achievements expressed or implied by such forward looking
statements. Such risks, uncertainties and other important factors include among
others: market price of gold; hazards associated with underground and surface
gold mining; labour disruptions; changes in government regulations,
particularly environmental regulations; changes in exchange rates; currency
devaluations; inflation and other macro-economic factors; and the impact of the
AIDS crisis in South Africa. These forward looking statements speak only as of
the date of this document.
The company undertakes no obligation to update publicly or release any
revisions to these forward looking statements to reflect events or
circumstances after the date of this document or to reflect the occurrence of
unanticipated events.
Gold Fields Limited
Incorporated in the Republic of South Africa
Registration number 1968/004880/06
Share code: GFI
Issuer code: GOGOF
ISIN: ZAE 000018123
Directors
C M T Thompson= (Chairman)
A J Wright (Deputy Chairman)
I D Cockerill* (Chief Executive Officer)
N J Holland* (Chief Financial Officer)
K Ansah#
G J Gerwel
J M McMahon*
G R Parker**
R L Pennant-Rea*
P J Ryan
T M G Sexwale
B R van Rooyen
C I von Christierson
* British
= Canadian
# Ghanaian
** USA
Date: 28/04/2005 08:05:33 AM Produced by the JSE SENS Department
