| Thu 26 Jan 2006, 10:04 | | Gold Fields december quarter 2 |
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Construction of the Project is expected to commence in February 2006, leading
to first production towards the end of calendar 2007.
On site activities during the quarter were largely focused on infrastructure
development including water wells and the construction camp. Local, community
based contractors continue to provide a wide range of services to the project,
most significantly the construction of the project site perimeter wall.
Hatch, the EP contractor continues to advance the process plant and detailed
engineering work, while Knight PiACopyrightsold is finalizing the tailings/mine
overburden disposal facility design. Hatch has also placed orders for the
crushing and process plant equipment with long-lead times to assure timely
deliveries of critical path items, while parts of the mining fleet were shipped
from the United States in December.
Exploration and corporate development
Gold Fields continued its exploration programme with drilling on seven projects
during the quarter. In addition, one project was relinquished and an agreement
was reached with North American Palladium (TSE: "PDL") on an option agreement
on the Arctic Platinum Project in northern Finland.
At the Essakan project in Burkina Faso, Gold Fields together with joint venture
partner Orezone Resources Inc. (TSX: "ORZ"), continues to drill the Essakan
Main Zone("EMZ")and completed a pre-feasibility study during the quarter. While
the pre-feasibility work confirmed that developing a mine in this environment
was viable from an operational, infrastructural and social perspective,
reportable economic evaluations could not be finalised due to the delay in
completion of the final resource model. In September it was reported that
completion of the resource model had been delayed pending resolution of certain
geological and assay quality issues associated with coarse particulate gold. A
number of initiatives are underway to optimize the economics of the project
including continued drilling to add resources in the EMZ, development scenarios
to reduce capital costs, and alternative assaying techniques to more accurately
measure course particulate gold which may be underestimated by the current
methodology. At this stage it appears that resolution of the latter issue, the
most critical in producing a bankable resource model, may require re-assaying
of a large number of drillhole intersections which is only expected to be
completed in the first quarter of financial 2007. Gold Fields is managing the
ongoing feasibility study while Orezone will manage the exploration of a number
of regional targets around the EMZ.
Field work commenced at the 85 per cent Telikan in Guinea and the option on the
68 per cent Mansounia projects was relinquished to the vendor Afminex. The
agreement with Glencar Mining plc (AIM: "GCM") on their 85 per cent Sankarani
project in south-western Mali nears completion with field work scheduled to
begin shortly. At the 80 per cent owned Kisenge project in the southern DRC,
positive drilling results were received on the 50 hole, 3,000 meter RC drill
program. These include; 37m @ 2.2 grams per ton, 55m @ 2.31 grams per ton, 42m
@ 2.63 grams per ton, 14m @ 1.69 grams per ton, 10m @ 1.49 grams per ton and
20m @ 1.09 grams per ton. Considering that the programme comprised drilling on
wide spaced sections over 3 kilometres of strike, the results are considered to
be very encouraging and will be followed up with additional drilling.
At the Central Victoria project in Australia, drilling was completed on the 3.2
kilometre mineralized horizon on Gold Fields 100 per cent-owned Lockington
tenement. Aircore and follow-up diamond drilling was completed during the
quarter and continues into the March quarter. Our joint venture with
Geoinformatics Exploration Inc. (TSX-V: "GXL") in New South Wales continued
during the quarter with prospect ranking and the relinquishment of several
tenements. In China, field work continues on the Fujian JV with partners Zijin
Mining (HKSE: "2899") including geologic mapping and stream sediment sampling
of the Fujian epithermal belt and in the Heilongjiang province with local state
owned partners SMEI.
Comaplex Minerals Corp (TSX: "CMF"), a Canadian company that is developing the
Meliadine West project in the Nunavut Territory in which Gold Fields owns a
19.8 per cent interest, completed 15,800 metre drilling program.
Gold Fields provided technical assistance to Comaplex during this program.
GoldQuest Mining Corporation (TSX Venture: "GQC") in which Gold Fields has a
9.75 per cent interest has reported encouraging trench results from its Las
Tres Palmas prospect in Dominican Republic and completed and reported on a
drill program at its Cerro Dorado prospect. During the quarter, Committee Bay
Resources (TSX: "CBR") completed field work on the Committee Bay project. They
have expended approximately $9.0 million toward their $10 million spending
requirement before GFI makes its election to participate in this project or
sell its 55 per cent interest for 7.0 million shares in CBR.
This decision will be made during the March quarter. CMQ Resources Inc. (TSX
Venture: "CMQ") in which Gold Fields has a 9.7 per cent interest, has completed
an 8,092 metre drilling project on their Nevada properties without encountering
any meaningful gold grades.
In a joint venture with Peruvian miner Buenaventura (NYSE:
"BVN") surrounding the 80 per cent Cerro Corona prospect, drilling continued
during the quarter. Gold Fields is very positive on the exploration potential
of the greater Cerro Corona district and is looking forward to further
developments with BVN in this region.
Implications of adopting IFRS 2, share - based payments
IFRS 2, Share-based payments becomes effective for Gold Fields for the
financial year ending 30 June 2006. In terms of the IFRS, Gold Fields now
recognises the cost of share options (share-based payments) from 1 July 2005.
IFRS 2 requires that all options granted after 7 November 2002, but not vested
by 1 July 2005 be accounted for.
Gold Fields" has adopted an appropriate valuation model to fair value the
employee share options. The value of the share options has been determined as
of the grant date of the options and has been expensed on a straight line basis
over the vesting period. Based on this model, the following costs for the
financial years ending after 7 November 2002 have been accounted for as
follows:
F2003 R5.2 million (US$0.8 million)
(against opening retained earnings)
F2004 R32.6 million (US$5.2 million)
(against opening retained earnings)
F2005 R52.0 million (US$8.4 million)
(restatement of F2005 comparatives)
F2006 R31.2 million (US$4.8 million)
(current year - September 2005 and December quarters only)
The corresponding entry for the above adjustments was shareholders" equity
within the share-based payment reserve. The effect on opening shareholders"
equity is nil.
The financial 2005 annual net earnings of R180 million (US$29 million) have been
restated to R128 million (US$21 million), the difference being the share based
costs for that year. This cost of R52 million (US$8 million) has been spread
equally over the relevant quarters in financial 2005 (June 2005 quarter:
R13 million (US$2 million) and September 2004 quarter: R13 million
(US$2 million)). These costs are included in other expenses. Earnings per
share, headline earnings, headline earnings per share and diluted earnings
per share have also been restated.
Dividend
In line with the Company"s policy of paying out 50 per cent of its earnings,
subject to investment opportunities, an interim dividend has been declared
payable to shareholders as follows:
- Interim dividend number 64: 40 SA cents per share
- Last date to trade cum-dividend: Friday, 10 February 2006
- Sterling & US dollar conversion date: Monday, 13 February 2006
- Trading commences ex-dividend: Monday, 13 February 2006
- Record date: Friday, 17 February 2006
- Payment date: Monday, 20 February 2006
Share certificates may not be dematerialised or rematerialised between Monday,
13 February 2006 and Friday, 17 February 2006, both dates inclusive.
Adjusted total cash costs - Peer comparison
In order to compare total cash costs with our peer reporting gold companies, a
schedule is included below our normal Total cash cost calculation on page 16 to
show the effect of capitalising ore reserve development costs.
Off reef development direct costs and a portion of direct shaft overheads are
capitalised in this pro-forma calculation. Users of this calculation should
bear in mind that this methodology would, should it be adopted, result in
higher capital expenditure and amortisation.
Outlook
In the March quarter gold production at the South African operations will
decrease, mainly at Kloof due to lower volumes, but this should be offset by an
increase at the international operations. Gold production for the Group in the
March quarter is thus expected to be similar to the current quarter. Cash costs
should therefore also be similar.
Basis of accounting
The unaudited results for the quarter and six months have been prepared on the
International Financial Reporting Standards (IFRS) basis. The detailed
financial, operational and development results for the December 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 in the previous year-end, except
for the adoption of IFRS 2 - share based payments and the adoption of the
revised international accounting standards forthcoming from the IAS
improvements project and new IFRS issued by the International Accounting
Standards Board.
I.D. Cockerill
Chief Executive Officer
26 January 2006
Income statement
International Financial Reporting Standards Basis
Figures are in millions unless otherwise stated
South African Rand
Quarter Restated
December September December
2005 2005 2004
Revenue 3,478.8 3,022.5 2,945.5
Operating costs 2,541.7 2,457.3 2,341.2
Gold inventory change (20.6) 10.9 (32.5)
Operating profit 957.7 554.3 636.8
Amortisation and depreciation 375.6 353.4 379.1
Net operating profit 582.1 200.9 257.7
Finance income/(cost) 17.8 (0.1) 20.4
- Net interest received 16.8 0.8 15.5
- Gain/(loss) on foreign debt, net of
cash 1.0 (0.9) 4.9
(Loss)/gain on financial instruments (18.8) (8.8) 146.7
Other expenses (29.0) (18.8) (36.9)
Exploration (54.1) (66.2) (39.1)
Profit before tax and exceptional items 498.0 107.0 348.8
Exceptional gain/(loss) 1.8 2.7 (109.4)
Profit before taxation 499.8 109.7 239.4
Mining and income taxation 200.2 45.0 134.5
- Normal taxation 121.2 74.0 78.4
- Deferred taxation 79.0 (29.0) 56.1
Net profit 299.6 64.7 104.9
Attributable to:
- Ordinary shareholders 262.0 39.2 67.3
- Minority shareholders 37.6 25.5 37.6
Exceptional items:
Profit on sale of investments - 1.8 38.9
Harmony hostile bid costs - - (82.9)
IAMGold transaction costs - - (64.8)
Other 1.8 0.9 (0.6)
Total exceptional items 1.8 2.7 (109.4)
Taxation (0.6) (0.6) (3.8)
Net exceptional items after tax and
minorities 1.2 2.1 (113.2)
Net earnings 262.0 39.2 67.3
Net earnings per share (cents) 53 8 13
Diluted earnings per share (cents) 53 8 13
Headline earnings 260.7 36.2 32.2
Headline earnings per share (cents) 53 7 6
Net earnings excluding gains and losses
on financial instruments and 274.7 43.7 87.3
foreign debt, net of cash and exceptional
items
Net earnings per share excluding gains
and losses on financial instruments 56 9 17
and foreign debt, net of cash and
exceptional items (cents)
Gold sold - managed kg 34,381 32,972 34,705
Gold price received R/kg 101,184 91,669 84,872
Total cash costs R/kg 71,659 72,768 64,921
Six months to
Restated
December December
2005 2004
Revenue 6,501.3 5,650.3
Operating costs 4,999.0 4,677.1
Gold inventory change (9.7) (119.6)
Operating profit 1,512.0 1,092.8
Amortisation and depreciation 729.0 749.8
Net operating profit 783.0 343.0
Finance income/(cost) 17.7 52.7
- Net interest received 17.6 31.8
- Gain/(loss) on foreign debt, net of cash 0.1 20.9
(Loss)/gain on financial instruments (27.6) 298.4
Other expenses (47.8) (54.4)
Exploration (120.3) (94.0)
Profit before tax and exceptional items 605.0 545.7
Exceptional gain/(loss) 4.5 (109.4)
Profit before taxation 609.5 436.3
Mining and income taxation 245.2 220.4
- Normal taxation 195.2 141.7
- Deferred taxation 50.0 78.7
Net profit 364.3 215.9
Attributable to:
- Ordinary shareholders 301.2 156.4
- Minority shareholders 63.1 59.5
Exceptional items:
Profit on sale of investments 1.8 38.9
Harmony hostile bid costs - (82.9)
IAMGold transaction costs - (64.8)
Other 2.7 (0.6)
Total exceptional items 4.5 (109.4)
Taxation (1.2) (3.8)
Net exceptional items after tax and minorities 3.3 (113.2)
Net earnings 301.2 156.4
Net earnings per share (cents) 61 31
Diluted earnings per share (cents) 61 30
Headline earnings 296.9 121.3
Headline earnings per share (cents) 60 24
Net earnings excluding gains and losses
on financial instruments and 318.4 68.8
foreign debt, net of cash and exceptional items
Net earnings per share excluding gains
and losses on financial instruments 65 13
and foreign debt, net of cash and exceptional items
(cents)
Gold sold - managed kg 67,353 67,765
Gold price received R/kg 96,526 83,381
Total cash costs R/kg 72,202 65,700
Income statement
International Financial Reporting Standards Basis
Figures are in millions unless otherwise stated
