Quarter Ended 30 September 2004
News Release Q1 F2005 Results - unaudited
South African operations continue to produce excellent results under difficult
conditions
Stock data
Number of shares in issue
- at end September 2004 491,714,615
- average for the quarter 491,604,675
Free Float 100%
ADR Ratio 1:1
Bloomberg / Reuters GFISJ / GFLJ.J
JSE Securities Exchange South Africa-(GFI
Range - Quarter ZAR87.50 -
ZAR55.09
Average Volume - Quarter 1,644,000 shares
/ day
NYSE - (GFI)
Range - Quarter US$13.65 - US$9.13
Average Volume - 1,100,000 shares / day
Quarter
JOHANNESBURG. 28 October 2004 - Gold Fields Limited (NYSE & JSE: GFI) today
announced September 2004 quarter net earnings of R102 million (21 cents per
share) compared with a net loss of R186 million (39 cents per share) in the
June 2004 quarter and R421 million (89 cents per share) for the September
quarter of 2003. In US dollar terms the September 2004 quarter net earnings are
US$16 million (US$0.03 per share) compared with a loss of US$25 million
(US$0.05 per share) in the June 2004 quarter and US$57 million (US$0.12 per
share) for the September quarter of 2003:
September 2004 quarter salient features:
* Attributable gold production on target at 1,007,000 ounces;
* Costs well controlled with total cash costs up less than 1 per cent to
R66,516 per kilogram (US$325 per ounce);
* Costs at South African operations quarter on quarter flat at approximately
R73,000 per kilogram, despite 7 per cent wage increase;
* Operating profit of R456 million (US$72 million) achieved despite a lower
rand gold price and a small planned reduction in gold produced;
* Growth projects on track with St Ives and Tarkwa expansion and optimisation
projects scheduled for completion before the end of 2004, and work on
Arctic Platinum Project in Finland and Cero Corona Project in Peru is
continuing;
* Proposed combination of Gold Fields' international assets with IAMGold to
create Gold Fields International scheduled to be completed before the end
of the year.
Ian Cockerill,
Chief Executive Officer of Gold Fields said:
"In line with guidance provided for the quarter, Gold Fields delivered another
solid operational performance.
The strategic repositioning of the South African operations through Project
500, to cope with the strong local currency, continues to deliver the expected
results, reflecting the inherent quality and flexibility of these assets.
Particularly pleasing has been our ability to control costs, offsetting the 7
per cent wage increase implemented at these operations during the quarter. Our
initial target remains to reduce costs at the South African operations to
R70,000 per kilogram, and we are striving to achieve this.
On October 18, 2004 Harmony Gold Mining Company Limited (`Harmony') announced
an unsolicited and hostile proposal to "merge" with Gold Fields. In accordance
with their obligations to act in your best interest, the Board is considering
Harmony's proposal and taking independent advice and the Board's formal
response is due to be published shortly. I am concerned that Harmony's proposal
may not be in the interests of Gold Fields shareholders as it appears to
undervalue Gold Fields' assets and your shares. Harmony is a company that has
recently reported its fifth consecutive quarterly headline loss and is offering
you its paper to acquire quality Gold Fields assets. In addition, I am
concerned that the two-stage offer structure, which would not be permitted in
other international jurisdictions, could allow Harmony (with the support of
Norlisk) to acquire effective control of Gold Fields before a full offer has
run its course."
Headline earningsNet earnings excluding gains and losses on financial
instruments and foreign debt net of cash and exceptional items*Attributable -
All companies wholly owned except for Ghana (71.1%).
September June September SALIENT September June September
2003 2004 2004 FEATURES 2004 2004 2003
32,299 32,419 31,317 kg Gold produced* oz 1,007 1,042 1,038
(000)
67,566 66,218 66,516 R/kg Total cash $/oz 325 312 282
costs
11,497 11,076 11,043 000 Tons milled 000 11,043 11,076 11,497
86,184 83,731 81,815 R/kg Revenue $/oz 400 395 360
204 213 212 R/ton Operating $/ton 33 32 27
costs
570 545 456 Rm Operating $m 72 83 77
profit
421 (186) 102 Rm Net earnings $m 16 (25) 57
89 (39) 21 SA US 3 (5) 12
c.p.s. c.p.s.
164 129 102 Rm $m 16 20 22
35 26 21 SA US 3 4 5
c.p.s. c.p.s.
136 102 (6) Rm $m (1) 16 18
29 21 (1) SA US - 4 4
c.p.s. c.p.s.
Commentary
Health and Safety
During the quarter the fatal injury frequency rate improved by 50 per cent from
0.26 to 0.13, while the lost day injury frequency rate regressed marginally
from 11.9 to 12.5 and the serious injury frequency rate from 5.9 to 6.7.
While the improvement in the fatal injury frequency rate is commendable, the
deterioration in the lost day and serious injury frequency rates are a source
of concern. Management attention is focused on these metrics. The Du Pont
Health and Safety Review was completed during the quarter and a report
submitted to management. The recommendations from this report are being
reviewed for implementation.
The annual safety awards for F2004 were presented during this quarter with
Beatrix walking off with the highest honours in the Group. Beatrix continued
its sterling performance into Q1 F2004 by achieving 2 million fatality free
shifts for the whole mine during June and again, for 1, 2 and 3 shafts, during
September. During the quarter Damang also achieved 2 million fatality-free
shifts and Driefontein achieved 1 million fatality free shifts.
FinancialReview
Quarter ended 30 September 2004 compared with quarter ended 30 June 2004
Revenue
As planned, attributable gold production decreased by 3 per cent to 1,007
million ounces for the September 2004 quarter, compared with 1,042 million
ounces in the June 2004 quarter. The contribution of the South African
operations was unchanged at 700,000 ounces while that of the international
operations was down by 10 per cent to 307,000 ounces. This was in line with the
expected lower production at Damang, St Ives and Agnew.
Combined with a 2 per cent decline in the gold price received, this resulted in
revenue reducing by 6 per cent to R2,705 million (US$425 million) from R2,869
million (US$434 million) the previous quarter.
The higher US dollar gold price achieved for the September quarter, (US$400 per
ounce, compared with US$395 per ounce in the June quarter) was offset by the
strengthening of the rand against the US dollar from an average of R6.60 to
R6.36 quarter on quarter. As a result the rand gold price decreased from
R83,731 per kilogram in the June quarter to R81,815 per kilogram in the
September quarter.
Operating costs
Operating costs for the September quarter, at R2,336 million (US$367 million)
were 1 per cent below the June quarter\'s R2,364 million (US$357 million). This
was achieved through the introduction of more rigorous cost reduction measures
inherent in Project 100, as well as benefits starting to flow through from the
new supply chain management initiative introduced across the Group as part of
the Shared Services initiative.
Costs at the South African operations increased by less than 1 per cent despite
the 7 per cent wage increase implemented on 1 July 2004, as well as normal
inflationary pressures such as increased steel and oil prices. Steel prices
have increased by 70 per cent in the last 6 months.
At the international operations costs of R672 million were 5 per cent lower
than the R711 million reported in the June quarter. In the domestic currencies
these costs were flat with Ghana reporting costs of US$50 million and Australia
A$80 million.
The gold inventory change resulted in a credit of R87 million (US$14 million)
to costs, which was more than double that of the previous quarter. This was due
to growth in gold in process on the Tarkwa leach pads and the build-up of
stockpiles at St. Ives and Tarkwa, aimed at providing feedstock for the
commissioning of the new mills at both of these operations during the December
quarter.
Operating profit margin
The net effect of the lower revenue and lower costs, after taking account of
gold in process movements, was an operating profit of R456 million (US$72
million). This is 16 per cent lower than the R545 million (US$83 million)
achieved in the June quarter. The Group margin decreased to 17 per cent from 19
per cent in the June quarter, while the South African margin decreased from 9
per cent to 7 per cent. This reduction in margin was virtually all due to the
lower rand gold price received. The margin at the international operations was
unchanged at 36 per cent.
Amortisation
Amortisation of R371 million (US$58 million) for the September quarter is 12
per cent higher than the June quarter's R332 million (US$50 million). This
increase was due to increased mining volumes at the international operations,
mainly at St. Ives to build up a stockpile for the new mill, together with
amortisation of the new mining fleet at Tarkwa. Amortisation at St Ives is
based on ounces mined not ounces produced.
Amortisation at the South African operations increased by R19 million (US$3
million) or 13 per cent mainly due to the impact of a reclassification of
reserves at Kloof. These reserves, previously planned to be mined through a
decline from 7 shaft, will now be mined from the 4 shaft current infrastructure
above 45 level. Differences in cost structure and timing of the mining of these
reserves, has increased the amortisation charge.
Other income
Net interest and investment income of R16 million (US$3 million) decreased from
R28 million (US$4 million) in the June quarter. This resulted from the lower
cash balances held, compounded by lower interest rates received.
Gains on foreign debt and cash amounted to R16 million (US$3 million). This
compares to R76 million (US$11 million) in the June quarter which included an
accounting exchange gain of R86 million (US$12 million) on the settlement of an
offshore inter-company loan with no attendant cash flow implications.
During the quarter under review the strengthening of the euro against the US
dollar, from 1.2175 to 1.2308, resulted in a gain of R16 million (US$3
million). We currently have euro 164 million in an offshore account, arising
from the capital raising undertaken in November 2003.
The gain on financial instruments of R152 million (US$24 million) included a
marked to market gain on an interest rate swap of R147 million (US$23 million);
a gain on the Tarkwa rand/US dollar financial instruments of R2 million; and a
R3 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 are significantly lower than
long-term rates and the resultant upward sloping yield curve is expected to
prevail for some time. This strategy is yielding positive results with a R14
million cash benefit for the September quarter and a cumulative R31 million
cash benefit to date. A further R22 million cash benefit has been locked in for
the three-month period to December 2004. More details on these financial
instruments are given on page 11 of this report.
Other expenses, which were R31 million (US$4 million) in the previous quarter
reduced to R5 million (US$1 million) in the September quarter. This change was
mainly due to optimising stores consumption and procurement practices in the
Group and restructuring costs at Shared Services incurred in the June quarter.
Exploration expenditure decreased from R62 million to R55 million in the
September quarter. This was due to the stronger rand, as in US dollar terms
expenditure was unchanged at US$9 million. This level of expenditure is set to
continue over the coming quarter.
For the September quarter there were no exceptional items. The exceptional loss
last quarter of R432 million (US$62 million) was primarily as a result of the
impairment at Beatrix 4 shaft (formerly Oryx) of R426 million (US$62 million).
Taxation
A taxation charge of R86 million (US$14 million) in the September quarter
compared with a credit of R124 million (US$18 million) realised in the June
quarter. This variance is mainly due to the deferred tax credit last quarter of
R111 million (US$17 million) on the impairment at Beatrix 4 shaft and a tax
credit of R26 million on the loss on financial instruments, compared with a
charge this quarter of R59 million. Damang provided for normal tax for the
first time of R8 million (US$1 million), having fully utilised its remaining
capital allowances during the quarter.
Earnings
After accounting for minority interests, earnings amounted to R102 million
(US$16 million) or 21 SA cents per share (US$0.03 per share), compared with a
loss of R186 million (US$25 million) or negative 39 SA cents per share (US$0.05
per share negative) 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 R102 million (US$16
million) or 21 SA cents per share (US$0.03 per share) compared with R129
million (US$20 million) or 26 SA cents per share (US$0.04 per share) last
quarter. The main reason for this decrease was the reduced net operating profit
partly offset by the gain on the Mvela interest rate swap.
Loss/earnings, excluding exceptional items as well as net gains on financial
instruments and foreign debt net of cash after taxation, amounted to a loss of
R6 million (US$1 million negative) or negative 1 SA cents per share (US$0.00
per share) compared with earnings of R102 million (US$16 million) or 21 SA
cents per share (US$0.04 per share) achieved last quarter.
Cash flow
Cash flow from operating activities for the quarter was R198 million (US$31
million), compared with operating cash flow in the June quarter of R436 million
(US$66 million). The decrease largely reflects the decline in revenue.
A dividend of R197 million (US$29 million) was paid to ordinary shareholders
and R64 million (US$10 million) to minority shareholders. No dividend was paid
in the June quarter.
Capital expenditure was R755 million (US$119 million) compared with R938
million (US$139 million) in the June quarter. The decrease is mainly due to the
completion of the owner mining project in Tarkwa, where capital expenditure
halved to R194 million (US$31 million). At the South African operations capital
reduced by R37 million (US$10 million) to R148 million (US$23 million) largely
due to timing. A significant portion of this expenditure was directed at the
major projects with R20 million at 1 tertiary and 5 shaft at Driefontein, R37
million at Kloof 4 shaft and R41 million at Beatrix 3 shaft. The Australian
operations incurred capital expenditure of R370 million (A$82 million). The
mill project at St. Ives accounted for R186 million (A$41 million) of this
expenditure as compared to R224 million (A$45 million) in the June quarter. The
balance on this project, the majority of which will be spent during the
December quarter, amounts to A$19 million. At the Ghanaian operations, capital
expenditure amounted to R204 million (US$32 million). R165 million (US$26
million) was spent on the new mill and on the project to convert from contract
mining to owner mining. This compares with R361 million (US$58 million) in the
previous quarter. The balance on these projects, which will be spent in the
December quarter, amounts to US$10 million. Major projects are still forecast
to be in line with approved votes except for US$4 million over expenditure on
the mill project at Tarkwa, and a further US$6 million depending on currency
moves over the next quarter.
Net cash outflow for the quarter was R795 million (US$124 million). The cash
balance at the end of the June quarter was R4,135 million (US$656 million)
which has declined to R3,409 million (US$524 million) at the end of September.
Detailed and Operational Review
Group overview
Attributable gold production for the September 2004 quarter decreased 3 per
cent to 1,007,000 ounces when compared with the June quarter. Attributable
production from the South African operations was unchanged at 700,000 ounces,
which is slightly more than two thirds of the Group's total attributable
production.
At the South African operations, the decrease at Driefontein of 6,800 ounces
was offset by increased production at Kloof. Production at Beatrix was flat
quarter on quarter. The decrease at Driefontein was due to lower underground
grades and lower surface tonnage. Operating profit at the South African
operations decreased from R163 million (US$25 million) to R120 million (US$19
million), mainly as a consequence of the lower rand gold price.
Production from the Australian operations decreased 14 per cent to 168,900
ounces this quarter because of the planned lower volumes at Agnew and the
scheduled termination of toll milling at St. Ives. Operating profit from the
Australian operations decreased quarter on quarter by 10 per cent in rand terms
to R143 million (A$32 million, US$22 million: both virtually unchanged from
last quarter), primarily as a result of the decreased production at Agnew and
the weaker US dollar. The Ghanaian operations showed a 6 per cent decrease in
attributable gold production to 137,800 ounces as there was a reduction of high
grade ore from Damang pit, as forecast. Tarkwa increased gold production
marginally but did not meet the increased forecast. This was due to the
increase in gold in process on the leach pads, although mining and stacking
operations performed well. Ghana contributed operating profit of R193 million
(US$30 million), a 14 per cent decrease on the previous quarter's operating
profit, in line with the decrease in gold production.
Group ore milled decreased from 11.08 million tons to 11.04 million tons as
surface tons reduced at all operations except Tarkwa during the quarter. The
overall yield decreased from 3.1 grams per ton in the June quarter to 3.0 grams
per ton in the current quarter. Total cash costs in rand terms were virtually
unchanged at R66,516 per kilogram. In US dollar terms, total cash costs
increased 4 per cent to US$325 per ounce, compared with US$312 per ounce last
quarter, mainly due to the stronger rand. Operating cost per ton at R212 was
virtually unchanged when compared to last quarter.
The international operations contributed R336 million (US$53 million) of the
total operating profit of R456 million (US$67 million) or 74 per cent. This
compares with R383 million (US$58 million) of the total operating profit of
R545 million (US$83 million) or 70 per cent last quarter.
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 higher grade).
To support this switch in strategy, management introduced an initiative called
Project 500, which, in turn, was split into two sub-projects called: Project
100 and Project 400.
Project 100, focused mainly on introducing improved standards and norms,
thereby improving control over the consumption of materials, together with
engineering benchmarking. The project targets annualised savings of R100
million. By the end of September, benefits of R52 million were achieved,
compared with R41 million planned.
Project Beyond was launched on the South African operations during May and aims
to reduce stores and service expenditure by between R200 and R300 million per
annum over the next three years. Savings are derived from the application of
best practice procurement techniques to Gold Fields' annual procurement spend
for the South African operations, of around R3 billion. Contract price
reductions of around R100 million are targeted for this year, of which over 50
per cent will flow as actual cost reductions in the period. A major, and highly
successful, component of the procurement strategy involves the use of
electronic auctions. Savings of over R30 million against the current cost base
have accrued, mainly from three auction events - for conveyer belting, grinding
media and roof support- together with negotiated reductions in the price of
cyanide. Similar events are planned for engineering repairs, foodstuffs,
explosives, fuels and lubricants and underground services in the months ahead.
These strategies produce significant cost savings without any sacrifice of
quality or increase in supply risk. Similar projects for the Australian and
Ghanaian operations are being planned. Indications are that cost savings of
between R200 to R300 million could be achieved in these regions.
Since adopting a shared services model early last year Gold Fields has reduced
stores inventory by around 30 per cent through the introduction of new
operating practices together with rationalisation of vendors and
standardisation of materials. This resulted in a Gold Logistics Achievement
Award for Gold Fields from the logistics industry.
Project 400 aims to optimise 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.
This strategy has started to deliver results. Underground grades have moved
closer to life of mine averages and surface tonnage at all South African
operations has been reduced, replaced by underground tonnage. Paylimits are
also in line with project parameters. Gold Fields continues to prudently manage
its ore reserves and is not high grading as the table below clearly shows.
Quarter ended Sep Dec Mar 2004 Jun Sep 2004
2003 2003 2004
Driefontein:
Life of mine head grade as 8.7 8.7 8.7 8.7 8.1
per the 2003 and 2004
annual report
Life of mine head grade 8.4 8.4 8.4 8.4 7.8
adjusted for estimated
metallurgical recoveries
Driefontein (underground 8.1 7.5 8.6 8.5 8.1
yields achieved)
Kloof:
Life of mine head grade as 9.8 9.8 9.8 9.8 10.5
per the 2003 and 2004
annual report
Life of mine head grade 9.5 9.5 9.5 9.5 10.2
adjusted for estimated
metallurgical recoveries
Kloof (underground yields 8.1 8.6 10.0 9.5 9.1
achieved)
Beatrix:
Life of mine head grade as 5.1 5.1 5.1 5.1 5.5
per the 2003 and 2004
annual report
Life of mine head grade 4.9 4.9 4.9 4.9 5.3
adjusted for estimated
metallurgical recoveries
Beatrix (underground 4.4 4.7 4.5 4.7 4.4
yields achieved)
Project 500 will reinstate more respectable margins at current prices and aims
to achieve the following at Driefontein, Kloof and Beatrix:
Driefontein
* Mine in a range of between 1,900 and 2,100 centimetre grams per ton ("cmg/
t"). This translates to an estimated underground recovered yield of above
8.0 grams per ton.
* Implement restructuring and cost saving measures of R2.0 million per month.
* Maintain the production profile at + 1 million ounces per annum.
Kloof
* Mine in a range of between 2,200 and 2,350 cmg/t. This translates to an
estimated underground recovered yield of above 9.0 grams per ton.
* Implement restructuring and cost saving measures of R2.0 million per month.
* Maintain the production profile at + 1 million ounces per annum.
Beatrix
* Mine in a range of between 1,000 and 1,100 cmg/t at number 1, 2 and 3
shafts and in a range of between 1,400 and 1,500 cmg/t at number 4 shaft.
This translates to an estimated combined underground recovered yield of 4.8
grams per ton.
* Implement restructuring and cost saving measures of R1.5 million per month.
* Maintain the production profile of +600 thousand ounces per annum.
Progress on Project 500
The cost savings targeted above have largely been achieved and have contributed
towards the offsetting of the 7 per cent wage increase during the quarter. Our
thrust remains on producing quality volume and, while significant progress has
been made since September 2003 when we switched to the SAKS 5th Avenue strategy
as shown in the table, there is still upside in improving the underground
grades to match the life of mine head grades at Kloof and Beatrix. Driefontein
is mining to its life of mine grade.
A full explanation of project 500 can also be found on the Gold Fields website
- www.goldfields.co.za
R78,000 per kilogram plan
As a result of the decrease in the rand gold price to below R80,000 per
kilogram during the quarter a new mining plan was drawn up at a gold price of
R78,000 per kilogram. Due to the gold price and exchange rate uncertainty which
exists, this plan, which includes capital reassessment, sourcing higher grade
material to replace surface material, contractor reduction and mine
restructuring amongst others, has been implemented in conjunction with project
500.
General
The South African operations have, over the past 4 years undergone extensive
restructuring and renewal to reposition for the future. On each of our
operations, we have invested significantly in the construction and development
of new long life shafts. At Driefontein, capital has been invested into 5 east
and 1 tertiary shafts; at Kloof the new 4 shaft; and Beatrix the new 3 shaft.
In addition, our metallurgical plants have been upgraded. Environmental
conditions at all shafts have and are being improved through the on going
lowering of temperatures, and infrastructure bottlenecks are being resolved.
Over this period Gold Fields has also invested significantly in the development
of its ore bodies, with all the key long life shafts now having an average of
20 months of mineable developed ore reserves in place.
During the quarter additional shifts were worked-in so that stockpiles could be
built up to ensure continuous milling over the Christmas period. This proved
successful, and over 50,000 tons were stockpiled at the South African
operations during the quarter.
Driefontein
September June 2004
2004
Gold produced - 283.5 290.3
000'ozs
Yield - - g/t 8.1 8.5
underground
- combined - g/t 5.7 5.6
Total cash - R/kg 67,419 67,372
costs
- US$/oz 330 317
Production at Driefontein decreased 2 per cent to 283,500 ounces from 290,300
ounces in the June quarter. This reduction was attributable to a lower
underground yield and a 15 per cent decline in surface tonnage treated. The
yield from underground reduced from 8.5 grams per ton last quarter to 8.1 grams
per ton in the September quarter. The lower yield resulted from a move towards
the project 400 call rate of 8.0 grams per ton and was also influenced by an
increase in seismicity at the higher grade 5 shaft and 6 shaft complexes. Total
tons milled decreased 5 per cent to 1.54 million tons in line with the lower
milling days this quarter. Tons milled from underground increased 2 per cent to
950,000 tons. The increased underground tons replaced surface tonnage and
together with less milling days resulted in a decrease in surface tonnage from
695,000 tons last quarter to 594,000 tons in the September quarter. The lower
surface tonnage to underground tonnage ratio led to an improved combined yield
from 5.6 grams per ton to 5.7 grams per ton for the quarter.
Total cash costs were virtually unchanged in Rand terms at R67,419 per
kilogram. This was despite the lower gold production and the implementation of
the annual wage increase. In US dollar terms the total cash costs increased by
4 per cent from US$317 per ounce to US$330 per ounce quarter on quarter due to
differences in the rand/dollar exchange rate. Operating profit declined by 17
per cent to R99 million (US$16 million) in the current quarter. The two main
contributors were a 3 per cent drop in the rand gold price and a 2 per cent
decline in gold production. The lower rand gold price and reduced earnings
advocate the constant reassessment, as well as the re-scheduling, of
non-crucial capital items. Therefore, capital expenditure decreased to R31
million (US$5 million) for the quarter compared to R40 million (US$7 million)
in the previous quarter.
Gold output for the December quarter is expected to be similar to the September
quarter. Seismicity at number 5 shaft complex is still a concern. However, the
completion of the refrigeration plant, scheduled for the end of December 2004,
will improve the overall ventilation at number 5 shaft complex and will enable
face length to be increased with the accompanying enhanced flexibility.
Kloof
September June 2004
2004
Gold produced - 266.6 259.2
000'ozs
Yield - - g/t 9.1 9.5
underground
- combined - g/t 6.6 6.6
Total cash - R/kg 73,484 74,191
costs
- US$/oz 359 350
Gold production at Kloof increased 3 per cent to 266,600 ounces in the
September quarter. This was due to increased mining volumes from underground
sources in the September quarter compared to the previous quarter. Underground
tonnage increased 9 per cent to 890,000 tons this quarter from 818,000 tons,
while surface tons decreased from 407,000 tons to 369,000 tons as a result of
the increased underground volumes. The underground yield decreased from 9.5
grams per ton last quarter to 9.1 grams per ton this quarter, with the combined
yield constant at 6.6 grams per ton. The lower underground yield is in line
with the project 400 call rate.
Operating costs at R636 million (US$100 million) for the quarter increased by 2
per cent when compared to the previous quarter's costs of R621 million (US$94
million). This was mainly as a result of the increased underground production
and annual wage increases. Total cash costs at R73,484 per kilogram were 1 per
cent below the previous quarter's R74,191 per kilogram. In US dollar terms,
cash costs increased from US$350 per ounce to US$359 per ounce quarter on
quarter, due to the stronger rand. Operating profit decreased from R49 million
(US$7 million) the previous quarter to R42 million (US$7 million) this quarter.
Main factors were the lower gold price received and increased operating costs.
Capital expenditure decreased from R76 million (US$14 million) to R59 million
(US$9 million) this quarter, as capital expenditure in the current environment
is constantly re-assessed.
The outlook for the December quarter is a further increase in gold production
to above 270,000 ounces, while entrenching the R78,000 per kilogram plan.
Beatrix
September June 2004
2004
Gold produced - 150.1 150.2
000'ozs
Yield - - g/t 4.4 4.7
underground
- combined - g/t 4.0 3.8
Total cash - R/kg 83,912 81,978
costs
- US$/oz 410 386
Gold production at Beatrix was constant quarter on quarter at 150,100 ounces.
Underground ore volumes increased by 6 per cent from 968,000 tons in the June
quarter to 1,029,000 tons in the September quarter. The combined yield
increased by 5 per cent quarter on quarter from 3.8 grams per ton to 4.0 grams
per ton. This increase in yield was partially due to reduced surface tonnages,
which reduced from 254,000 tons in the June quarter to 147,000 tons in the
September quarter, as toll milling was terminated by Harmony at the Joel plant
at the end of July. Surface yields increased from 0.6 grams per ton to 0.8
grams per ton quarter on quarter. Underground yields decreased from 4.7 grams
per ton in the June quarter to 4.4 grams per ton in the September quarter. At
the Beatrix 1-3 shaft operation underground yields were maintained. At 4 shaft
the underground yield decreased from 6.2 grams per ton to 5.6 grams per ton.
The reduction in grade at the 4 shaft operation was primarily due to the
inability to clean and tram broken rock from a number of high-grade stopes
during the quarter. The restriction to tram from these stopes was due to
rehabilitation of a number of access tunnels due to poor ground conditions and
track upgrades being done on the main 4 shaft tramming levels, in preparation
for the zone 5 mining.
The overall Beatrix mine call factor (MCF) was below plan. Efforts to restore
the MCF to planned levels continue through improved fragmentation, sweepings
and water reduction. As part of ongoing rationalisation, the Beatrix 1-3 shaft
operation has been restructured into a North and South to improve logistics,
eliminate duplication, and improve focus and accountability, whist reducing
overheads. The North consists of the new 3 shaft complex and 3 sections (below
16 level) from 1 shaft, which are in close proximity to 3 shaft. The South
section consists of 2 shaft and the remaining sections from 1 shaft above 16
level. Number 4 shaft (formerly Oryx) has been included as the third operating
section. Management at Beatrix has now been centralised, eliminating
duplication of various structures and overheads which existed due to the duel
management structure at Beatrix and Oryx.
Operating costs increased 3 per cent to R406 million (US$64 million) due to
restructuring costs and the annual wage increase. Total cash costs increased
similarly to R83,912 per kilogram (US$410 per ounce) from R81,978 per kilogram
(US$386 per ounce) quarter on quarter. At the operating level, a loss of R20
million (US$3 million) resulted from the above factors and the previously
discussed lower gold price, as compared to a R7 million (US$1 million) loss in
the June quarter.
Capital expenditure decreased by 15 per cent to R59 million (US$9 million) from
R69 million (US$12 million) in the June quarter. The majority of this
expenditure was at 3 shaft. The stoping and development build-up at 3 shaft is
progressing well and in line with expectations.
Gold production is expected to increase slightly in the December quarter with a
similar improvement expected in the working cost.
South African Operations
In conclusion, production at the South African operations will be higher in the
December quarter when compared with the September quarter.
International operations
Ghana
Tarkwa
September June 2004
2004
Gold produced - 124.8 123.1
000'ozs
Total cash - US$/oz 248 251
costs
Gold production for the September quarter increased by 1,700 ounces to 124,800
ounces for the Tarkwa operation. This was not in line with the guidance
provided in the June quarter and was a disappointing result as mining and
crushing operations performed very well. Ore tons mined was stable at 4.26
million, while total tons mined increased to 20.8 million from 18.5 million in
the June quarter, reflecting a planned increase in stripping ratio to 3.87.
Tons treated through the crushing and leaching plant increased 5 per cent to
4.1 million tons and recoverable gold stacked increased by a similar margin to
137,000
ounces. This occurred despite a planned decrease in head grade to the heap
leach plant from 1.44 grams per ton to 1.33 grams per ton, which was offset by
an increase in the expected dissolution of the ores.
The decrease in head grade treated reflects a planned move to lower grades in
the open pits, which are now being planned at a US$350 per ounce gold price,
and also the stockpiling of high grades ores ahead of the new CIL plant.
Gold in process increased by some 13,000 ounces during the quarter - with
10,000 ounces of this occurring on the south leach pads. This increase is due
to:
* a move to higher lifts on both the north and south pads;
* the stacking of some high clay ores in the south, the presence of which
have previously been associated with significant GIP increases; and
* the configuration of the new leach pads in the south which are valley fill
style versus the traditional flat base bed design. The valley fill tends to
have fewer solution offtake points than the other design and can increase
solution hold-up volumes.
A very smooth transition from contract mining to owner mining took place during
the quarter, with the contractor withdrawing most of its mining equipment in
July and the remainder at the end of August. The performance of the owner
mining fleet is in line with expectations.
Operating costs at US$31 million including gold in process adjustments, were
the same as the previous quarter despite the 2.3 million ton increase in total
mining volumes. Operating costs per ton treated were US$8.36 per ton against
US$8.63 per ton in the June quarter. This reflects the reduction in mining
costs as a result of the conversion to owner mining. Total cash costs decreased
slightly to US$248 per ounce for the quarter reflecting the increase in gold
production and lower unit operating costs, but does not yet reflect the full
benefit from owner mining, as parts of the contract fleet operated for much of
this quarter and some transition costs were experienced. The net result was a
slight increase in operating profit from US$18 million in the previous quarter
to US$19 million in the current quarter.
Capital expenditure decreased from US$65 million in the previous quarter to
US$30 million in the September quarter as a result of the majority of the
mining fleet being paid for in previous quarters and the construction work on
the CIL plant nearing completion.
Gold production is expected to increase in the December quarter as a result of
the commissioning of the CIL plant. The gold produced from the heap leach
operation is expected to increase slightly from the September levels, subject
to gold in process movements, which remain difficult to predict. Total cash
costs are expected to decline in the December quarter as the full benefit of
owner mining are experienced but will be offset to a degree by the costs of the
commissioning of the CIL.
Damang
September June 2004
2004
Gold - 69.1 82.5
produced 000'ozs
Total cash - US$/oz 238 205
costs
Gold production for the quarter declined from 82,500 ounces to 69,100 ounces as
predicted. This reflects a decrease of 4 per cent in mill throughput to 1.34
million tons due to a mill shut down, as well as a 14 per cent decline in head
grade from 2.1 grams per ton to 1.8 grams per ton. The head grade decline
reflects the ongoing decline in the availability of high grade ores from the
mature Damang pit. Total tons mined decreased by 25 per cent to 2.7 million
tons, with the stripping ratio reducing from 1.71 to 1.18.
Operating costs decreased from US$17 million to US$15 million, reflecting the
lower production levels and as a result cost per ton milled decreased from
US$12.24 to US$11.33 per ton quarter on quarter. Total cash costs increased
from US$205 to US$238, a function of the reduced gold production and also
reflects a US$892,000 GIP charge (June US$473,000 credit) reflecting
consumption of high grade stockpiles. Operating profit reduced from US$16
million to US$11 million in the September quarter in line with the lower gold
production.
Capital expenditure incurred during the quarter was US$2 million, mainly on the
exploration project aimed at extending the life of the Damang pit.
Gold production is expected to be slightly lower again in the December quarter
with the expected reduction in high grade sources of ore from the Damang pit.
There will be a concomitant effect on unit costs.
Australia
St Ives
September June 2004
2004
Gold produced - 123.2 143.6
000'ozs
Total cash - A$/oz 420 422
costs
- US$/oz 297 304
Gold production for the quarter decreased 14 per cent to 123,200 ounces when
compared to 143,600 ounces produced in the June quarter. The reduction was
entirely due to the scheduled cessation of the toll treatment campaign, which
ended on 30 June, which had contributed some 28,000 ounces in that period.
Total mining operations produced some 1.76 million tons of ore and total
treatment was only 1.35 million tons, reflecting the planned stock piling of
ores ahead of the new CIP plant, which is due to be commissioned in the
December quarter.
During the quarter, open pit mining operations performed well, mining a total
of 7.7 million tons of ore and waste at an average strip ratio of 6.4 (June:
6.7). The underground operations also performed to expectation with the ramp-up
of the new Argo and East Repulse mines continuing such that ore production from
total underground sources increased 10 per cent to some 572,000 tons compared
to the June quarter.
Total cash costs, which include gold in process inventory adjustments,
decreased marginally from A$422 per ounce (US$304 per ounce) to A$420 per ounce
(US$297 per ounce). This was as a result of the cessation of the more expensive
toll treatment programme and improvement in the cost performance of the new
underground mines.
Operating profit at St. Ives of A$22 million (R98 million) increased marginally
when compared with the A$21 million (R99 million) of the June quarter,
reflecting the increase in the realised price of gold from A$556 in the June
quarter to A$563 in the September quarter, together with the slight reduction
in unit costs.
Capital expenditure for the September quarter amounted to A$73 million (R330
million) compared with A$75 million (R284 million) in the June quarter. The
majority of this expenditure was incurred on the mill optimisation project (see
St Ives Expansion Project for more detail), and continuing expenditure at Mars
open pit on stripping, together with development works at East Repulse and Argo
underground mines.
With commissioning of the new mill scheduled for late December, no significant
impact on production is forecast until the March quarter. Production for the
December quarter is therefore expected to equal or only slightly exceed that of
the current quarter, with cash costs continuing to improve slowly.
Agnew
September June 2004
2004
Gold - 45.7 52.7
produced 000'ozs
Total cash - A$/oz 338 306
costs
- US$/oz 239 221
Gold produced at Agnew decreased from 52,700 ounces in the June quarter to
45,700 ounces in the September quarter, in line with previous forecasts. The
decrease resulted from a 5 per cent drop in mill tonnage, together with an 8
per cent drop in average feed grade to the mill. The throughput decrease
resulted from a planned shutdown, together with the current programme to
rehabilitate the adsorption tanks. Grade from Crusader/Deliverer remnant mining
is reducing as the mine approaches completion and gold produced decreased to
some 7,000 ounces in the September quarter compared with 10,000 ounces in the
June quarter. While mined volumes from the Kim underground mine increased
slightly, gold production fell from 37,000 ounces in the June quarter to 35,000
ounces in the September quarter, recognising the extraordinary grades seen in
that period. The low grade stockpiles contributed a further 6,000 ounces to
mill feed.
Total cash costs, which includes gold in process inventory adjustments, rose
from A$306 per ounce (US$221 per ounce) in the June quarter to A$338 per ounce
(US$239 per ounce) in the September quarter, in line with the lower production.
Unit operating costs remained under good control.
Agnew's operating profit was A$10 million (R44 million), down from A$13 million
(R61 million) in the June quarter, in line with the reduction in gold volumes.
Capital expenditure increased to A$9 million (R40 million) from A$8 million
(R24 million) the previous quarter. The main areas of expenditure included
development at Kim underground (A$4 million), development of the new Main Lode
access (A$1 million), rehabilitation of the adsorption tanks at the mill (A$1
million) and prestrip of the new Songvang open pit (A$1 million).
Gold production is forecast to increase slightly for the December quarter as a
result of higher grades from the Kim underground mine, continued production
from Crusader underground to at least mid-November and the start of the ore
stream from the new Songvang open pit mine. Cash costs should remain stable.
Quarter ended 30 September 2004 compared with quarter ended
30 September 2003
Attributable gold production was 3 per cent lower at 1,007,000 ounces in the
September 2004 quarter compared with 1,038,000 ounces in the September 2003
quarter. Production at the South African operations at 700,000 ounces was 1 per
cent below the 711,000 ounces produced in the September 2003 quarter. At the
international operations, gold production decreased 6 per cent mainly due to
lower recoveries at Tarkwa.
Revenue decreased 8 per cent in rand terms (increased 7 per cent in US dollar
terms) from R2,952 million (US$397 million) to R2,705 million (US$425 million).
This was due to the lower gold production and a reduction in the rand gold
price achieved fromR86,184 per kilogram (US$360 per ounce) in the September
2003 quarter to R81,815 per kilogram (US$400 per ounce) in the September 2004
quarter. Group operating costs in rand terms decreased marginally to R2,336
million (US$367 million). At the South African operations operating costs were
over 1 per cent below the September 2003 quarter at R1,664 million (US$262
million), an excellent performance considering gold production was similar and
taking into account the above average wage increases, as well as normal
inflationary increases seen over the past year. The increase at the
international operations amounted to 2 per cent, from R656 million (US$88
million) to R672 million (US$106 million). However, if gold in process changes
are taken into account, as well as the stronger rand, costs in US dollars were
virtually unchanged at US$92 million. The average rand/dollar exchange rate
strengthened from R7.44 in the September 2003 quarter to R6.36 in the current
quarter, a 15 per cent change. The effect of translating costs at the
Australian operations was less at 8 per cent, with the average exchange rate
strengthening from R4.89 to R4.50 in the September quarter.
Operating profit at R456 million (US$72 million) for the September 2004 quarter
compares to R570 million (US$77 million) for the September 2003 quarter.
Profit before tax amounted to R210 million (US$33 million) compared with R491
million (US$66 million) in the September 2003 quarter. This decrease was due to
the lower operating profit described above as well as a R72 million increase in
amortisation. This was partly offset by an increase on gains in financial
instruments and an exceptional profit last year from the sale of mineral rights
and investments.
Earnings decreased from R421 million (US$57 million) in the September 2003
quarter to R102 million (US$16 million) in the September 2004 quarter.
Capital and development projects
St Ives expansion project
The overall construction schedule for the St Ives new mill project remained on
target. By the quarter end, all major mechanical packages (mainly equipment,
piping, and steelwork) had been installed and were being closely followed by
the HV switch room network, and associated cabling. The 36 ft. diameter single
stage SAG mill and the associated gearless drive motor (GMD) had reached 90 per
cent and 82 per cent completion respectively by the end of September. The
132KV. main power supply to the new mill 20MVA transformer was connected on
September 5, coinciding with a planned old mill shut down.
Commissioning procedures are well advanced, and initial commissioning of the
crusher and reclaim circuit will commence in late October followed by the
remainder of the plant through November-December.
Cumulative capital expenditure and commitments as at the end of the September
quarter totalled A$106 million and A$116 million respectively. The overall
project is expected to be completed within the approved budget of A$125 million
and on track for commissioning in the December quarter.
Tarkwa expansion project
CIL Process Plant
During the quarter, this project continued to track ahead of schedule. The
single stage semi-autogenous (SAG) mill was cold commissioned with ore being
introduced at the end of the quarter. The mill was successfully commissioned in
the first week of October, with the commissioning of the desorption facility
and gold room expected during the middle of the quarter - when the first gold
pour will occur.
Currently the CIL plant is forecasted to exceed its budgeted capital
expenditure of US$85 million by US$4 million, with an additional US$6 million
being required for currency variations.
Conversion to owner mining
All of the new mining fleet has been commissioned and is operational, with the
maintenance contractors on site. The remaining major item to be completed is
the construction of the new refuelling bay, which has commenced.
This project will be completed within its authorised budget of US$74 million
and the fleet is achieving all major planned performance criteria.
Arctic platinum project
Activity at APP continued to focus on completing the feasibility study for the
two large open pittable deposits at Suhanko, namely Kontijarvi and Ahmavaara.
The permitting process continued to advance following submission of the
application in the June quarter, and representative of the national permitting
authority undertook field visits during the September quarter and notified the
company that the permit application would be opened to public comment early in
October. Negotiations have commenced with owners of the freehold in the mining
lease area.
The resources for the Suhanko project were recalculated during July and August,
following the 2004 exploration season. Disappointingly, these results have
suggested no substantial gain in total tonnage available in the 2 Suhanko
deposits and average resource grades have declined slightly. This result did
not match expectations from the geological team. As part of the ongoing
feasibility study the project team is reassessing the resource models,
modelling new exploration information, to allow the resource estimates to be
updated again during the December quarter. In light of this, along with the
anticipated effect of global commodity prices on estimated capital and
operating costs for the project, we have initiated a mid feasibility study
review to reassess and confirm the scope, scale and timing of the project, in
particular the match with the ore resources, before committing to the final leg
of the feasibility study.
This review of geological resources and project scope is expected to add at
least 3 months to the original time line for completion of the feasibility
study by the end of December 2004.
Damang expansion project
Earlier this calendar year, a dedicated project team was mobilised to evaluate
existing data and to conduct further drilling and optimisation modelling on ten
potential options for extending the life of the Damang operation. This
evaluation has indicated that ore from Rex, Amoanda and Tomento project areas
will add an additional 6.2 million tons and 240,000 ounces to mill feed. The
project also investigated additional high grade ore in a possible cut back of
the Damang pit, which has the potential to add a further 300,000 to 400,000
ounces to mineable inventory at Damang. Detailed drilling of this option is
expected to be completed by the end of October, and the lab results, detailed
modelling and mine design are expected within the next two quarters.
The Environmental Impact Study for the Amonada project was submitted this
quarter and discussions with the Environmental Protection Agency in Ghana have
been positive. All crop compensation issues at Amoanda have been completed and
the resettlement process is progressing well. A scoping report for the Tomento
project has also been submitted to the EPA, and the field baseline
environmental and socio-economic work has been completed. While permitting of
the Amoanda and Tomento ore bodies has progressed well it is unlikely that
either of them will be brought into production before the second half of the
financial year.
Exploration drilling of the Abosso Deeps area commenced during the last quarter
of F2004. This is a longer-term underground target, comprising a narrow reef
conglomerate located in the southern end of the Damang lease area, which is on
strike from the old Abosso underground mine.
Exploration and corporate development
Cerro Corona in Peru
This quarter saw the continuation of additional environmental fieldwork coupled
with the compilation of the field data and the beginning of report development.
On the all-important social side, a number of community meetings were held in
the project area. All of the immediate communities were met with during this
period with very positive results, although progress has been very slow.
During the quarter the Cajamarca district, in which the project is located,
experienced significant unrest, including road blockades associated with
opposition to the expansion of one of the large mines in the area. While these
protests restricted access to the project site they also significantly
complicated community interactions and led to delays in moving forward various
community interactions.
These delays compounded restricted access to the Corona site associated with
community consultations, leading in total to the loss of some 6 weeks in
project site access. While the effect of these delays on overall project
schedule could probably have been remediated, the EIA submission date is now
likely to be delayed by some 3 months with the need to expand the scope of the
EIA and social engagement to deal with the social dynamic that the recent
unrest has created in the region. As a result, completion of permitting before
July 2005 is unlikely, and although this is substantially later than the May
completion date, we continue to target commencement of construction in the 2005
dry season.
While the delays are clearly cause for concern, the intensity of community
interactions around our project has heightened the intensity of our
interactions, which is likely to benefit the project in the future and we
remain confident that the project will be developed.
A total review of the process plant design and site infrastructure has been
completed and updated. This will be used for the detailed design/construction
bid process. During the quarter, introductory marketing of the project's
concentrate in Japan, Korea, China and Europe was undertaken. The approaches
were generally well received as this concentrate is high in gold and low in
impurities.
China
Activity in China continued with several properties under review. In Shandong,
the Sino Gold - Gold Fields Shandong Joint Venture completed a ground
geophysical survey on the Heishan JV tenements (70 per cent Sino GFI JV and 30
per cent Shandong BGMR) and submitted the agreement to option an interest in
the Sandi JV (80 per cent Sino GFI JV and 20 per cent Shandong MMI) to the
Federal MOFTEC for final approval. In Fujian, the 60 per cent Gold Fields and
40 per cent Zijin Mining Corporation JV Agreement was submitted for approval.
Other projects
Gold Fields continued its very active exploration program with drilling on
seven projects during the quarter.
At the Essakane project in Burkina Faso, Gold Fields together with joint
venture partner Orezone Resources Inc. announced an Indicated and Inferred
resource of 34 million tonnes at 1.95 grams per ton for 2.1 million ounces. An
additional program of 31,000 metres reverse circulation and 2,100 metres
diamond drilling was approved. This drilling is planned to further define and
expand the Essakane resource and delineate discoveries at Falagountou and
Essakane North. A 24,000 metre reverse circulation drilling program was
completed at the Mampehia prospect in the wholly owned Bibiani project in
Ghana. Drilling has defined mineralisation to an average depth of 70 metres
over a 600 metre strike length. A 10,000 metre reverse circulation drilling
program is underway at the 80 per cent owned Kisenge prospect in the southern
DRC. This program is planned to test bedrock underlying four anomalies defined
by auger drilling during the last quarter. Drilling at the Tembo project in
Tanzania and at the Mansounia project in Guinea was suspended due to seasonal
rainfall.
Drill access permits were awarded and over 2,000 metres of drilling completed
at the Monte Ollestedu project in Sardinia. Gold Fields is earning a 60 per
cent project interest from Bolivar Gold.
Aircore drilling at the Central Victoria project in Australia has outlined a
3.2 kilometre gold in bedrock anomaly on Gold Fields 100 per cent owned
Lockington tenement. Work is ongoing on this and adjacent joint venture
projects with Range River Gold and Pacrim Energy.
The summer drilling and prospecting program at the Committee Bay project was
completed. Assay results at the Three Bluffs prospect continue to be
encouraging and once outstanding results are received, a resource estimate will
be undertaken. Prospecting has identified two significant mineralised areas and
a third area was staked in this joint venture with Committee Bay Resources
where Gold Fields has vested a 55 per cent interest.
In South America, a 2,000 metre diamond drill program at the 100 per cent Gold
Fields owned Tapajos project and a 2,100 metre reverse circulation drill
program at the Garrafao joint venture, both in Brazil, were started. At the
Angelina project in Chile, joint venture partner Meridian announced the
discovery of the high grade Fortuna vein in the south-east corner of the
property. Meridian is earning up to an 80 per cent interest in the joint
venture. At the El Callao project, a 50:50 joint venture with Bolivar Gold in
Venezuela, soil sampling has delineated a number of anomalism, which will be
drilled during the next quarter.
Signing of the definitive agreement between Gold Fields Limited and IAMGOLD
Corporation
Further to the cautionary announcement of August 11, 2004, Gold Fields and
IAMGold announced on September 30, 2004, that they have signed a definitive
agreement setting out the terms on which IAMGold will acquire the assets of
Gold Fields outside of the Southern African Development Community (the "SADC").
Under the definitive agreement, IAMGold will issue, subject to adjustment, to
Gold Fields 351,690,218 fully paid common shares in consideration for Gold
Fields' non-SADC mining, development and exploration assets. The transaction
will result in Gold Fields owning approximately 70 percent of the fully diluted
equity of the enlarged company. In addition, shortly before completion, IAMGold
shareholders (other than Gold Fields), registered as such on a record date
prior to closing of the transaction, will receive a special cash dividend of
C$0.50 per IAMGold share.
Through this transaction, Gold Fields will acquire control of an asset
portfolio we know and like, with a North American listing which will enhance
our access to International capital markets and provide a highly rated
acquisition currency to accelerate growth of our international portfolio. Upon
completion the see-through value uplift of our stake in Gold Fields
International (currently in excess of R9 billion) will be crystalised for our
shareholders.
Following closing of the transaction, the name of the newly created corporation
will be changed to Gold Fields International Limited ("Gold Fields
International").
Overview of Gold Fields International
Gold Fields International will have interests in six operating mines: four in
West Africa (Tarkwa and Damang in Ghana, Sadiola and Yatela in Mali) and two in
Australia (St. Ives and Agnew) with 2005 forecast production totalling 2.0
million ounces of gold. In addition, Gold Fields International will have two
near-term greenfield development projects, located in Finland (Arctic Platinum)
and, subject to completion of the acquisition thereof, Peru (Cerro Corona),
along with various royalty interests and an attractive portfolio of
advanced-stage exploration projects in Latin America, Canada, Australia, China
and Africa.
For further details, please see the Terms Announcement that has been issued by
Gold Fields via SENS and is available on Gold Fields web site:
www.goldfields.co.za; or IAMGold's website: www.iamgold.com
Legal
A lawsuit was filed by Zalumzi Singleton Mtwesi against Gold Fields Limited in
the State of New York on 6 May 2003. Mr. Mtwesi alleges, inter alia, that
during the apartheid era, he was subjected to human rights violations. Mr.
Mtwesi filed the lawsuit on behalf of himself and as representative of all
other victims and all other persons similarly situated. In summary, Mr. Mtwesi
and the plaintiffs' class demand an order certifying the plaintiffs' class and
compensatory damages from Gold Fields Limited. A complaint has not been served
on Gold Fields Limited. If and when service of the complaint takes place it
will be vigorously contested.
On July 9, 2004, a lawsuit was filed in a federal district court in New York by
six individuals against Gold Fields and a number of other defendants including
IBM Corporation, Anglo American PLC, UBS AG, Union Bank of Switzerland, Fluor
Corporation, Strategic Minerals Corporation, the Republic of South Africa and
President Thabo Mbeki. The lawsuit alleges, among other things, that one of the
plaintiffs was a victim of apartheid, including by virtue of acts committed at
facilities in Randfontein, South Africa, allegedly owned by one or more
predecessors of Gold Fields, and that Gold Fields is liable for various
wrongful acts and property expropriation, as well as violations of
international law, allegedly committed during the apartheid era in South
Africa. The plaintiffs are seeking, on each of two counts, unspecified
compensatory damages, punitive damages and interest and costs and seeks those
penalties against the various defendants jointly and severally. A complaint has
not been served on Gold Fields. If and when service of the complaint takes
place it will be vigorously contested.
Outlook for the quarter ended
31 December 2004
Shareholders are advised, that an increase in gold produced can be expected
from the South African and the international operations in the December 2004
quarter. For more detail refer the earlier commentary provided for each
operation separately.
Taking into account the expected increase in production, and provided current
gold prices hold at about R85,000 per kilogram, earnings will be higher if the
effect of the Mvela interest rate swap, which is subject to market valuation at
each quarter end, is excluded.
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 September 2004 quarter are submitted in this
report.
These consolidated quarterly statements are prepared in accordance with IAS 34,
Interim Financial Reporting. The accounting policies are consistent with those
applied at the previous year-end.
I.D. Cockerill
Chief Executive Officer
28 October 2004
Income Statement
International Financial Reporting Standards Basis
SA Rand Quarter
(Figures are in millions unless otherwise September June September
stated) 2004 2004 2003
Revenue 2,704.8 2,869.2 2,952.4
Operating costs 2,335.9 2,363.5 2,341.8
Gold inventory change (87.1) (39.5) 40.8
Operating profit 456.0 545.2 569.8
Amortisation and depreciation 370.7 332.2 298.8
Net operating profit 85.3 213.0 271.0
Finance income/(cost) 32.3 104.0 21.9
- Net interest and investment income 16.3 27.9 20.8
- Exchange gain on foreign debt, net of cash 16.0 76.1 1.1
Gain/(loss) on financial instruments 151.7 (71.1) 36.4
Other (expense)/income (4.5) (31.3) 12.4
Exploration (54.9) (61.7) (55.1)
Profit before tax and exceptional items 209.9 152.9 286.6
Exceptional gain/(loss) - (432.2) 204.5
Profit/(loss) before taxation 209.9 (279.3) 491.1
Mining and income taxation 85.9 (124.2) 37.3
- Normal taxation 63.3 48.3 47.8
- Deferred taxation 22.6 (172.5) (10.5)
Profit/(loss) after taxation 124.0 (155.1) 453.8
Minority interest 21.9 30.4 32.6
Net earnings 102.1 (185.5) 421.2
Exceptional items:
Profit on sale of investments - - 16.1
Write-off of mineral rights - (0.1) -
Profit on sale of mineral rights - - 187.2
Impairments of assets - (426.2) -
Other - (5.9) 1.2
Total exceptional items - (432.2) 204.5
Taxation - 112.8 52.3
Net exceptional items after tax and minority - (319.4) 256.8
interest
Net earnings/(loss) per share (cents) 21 (39) 89
Headline earnings 102.1 128.9 164.4
Headline earnings per share (cents) 21 26 35
Diluted earnings/(loss) per share (cents) 20 (40) 89
Net (loss)/earnings excluding gains and (5.5) 102.3 136.4
losses on financial instruments and foreign
debt, net of cash and exceptional items
Net (loss)/earnings per share excluding (1) 21 29
gains and losses on financial instruments
and foreign debt, net of cash and
exceptional items (cents)
Gold sold - managed kg 33,060 34,267 34,257
Gold price received R/kg 81,815 83,731 86,184
Total cash costs R/kg 66,516 66,218 67,566
Income Statement
International Financial Reporting Standards Basis
US Dollars Quarter
(Figures are in millions unless otherwise September June September
stated)
2004 2004 2003
Revenue 425.3 434.3 396.8
Operating costs 367.3 357.1 314.8
Gold inventory change (13.7) (5.5) 5.5
Operating profit 71.7 82.7 76.5
Amortisation and depreciation 58.3 50.0 40.2
Net operating profit 13.4 32.7 36.3
Finance income/(cost) 5.1 15.1 3.0
- Net interest and investment income 2.6 4.0 2.8
- Exchange gain on foreign debt, net of 2.5 11.1 0.2
cash
Gain/(loss) on financial instruments 23.9 (9.9) 4.9
Other (expense)/income (0.7) (4.4) 1.7
Exploration (8.6) (9.2) (7.4)
Profit before tax and exceptional items 33.1 24.3 38.5
Exceptional gain/(loss) - (62.1) 27.5
Profit/(loss) before taxation 33.1 (37.8) 66.0
Mining and income taxation 13.6 (17.7) 5.0
- Normal taxation 10.0 7.3 6.4
- Deferred taxation 3.6 (25.0) (1.4)
Profit/(loss) after taxation 19.5 (20.1) 61.0
Minority interest 3.4 4.6 4.4
Net earnings 16.1 (24.7) 56.6
Exceptional items:
Profit on sale of investments - 0.2 2.2
Write-off of mineral rights - (1.6) -
Profit on sale of mineral rights - 1.9 25.2
Impairments of assets - (61.8) -
Other - (0.8) 0.1
Total exceptional items - (62.1) 27.5
Taxation - 16.4 7.0
Net exceptional items after tax and - (45.7) 34.5
minority interest
Net earnings/(loss) per share (cents) 3 (5) 12
Headline earnings 16.1 20.0 22.1
Headline earnings per share (cents) 3 4 5
Diluted earnings/(loss) per share (cents) 3 (5) 12
Net (loss)/earnings excluding gains and (0.9) 15.9 18.3
losses on financial instruments and foreign
debt, net of cash and exceptional items
Net (loss)/earnings per share excluding - 4 4
gains and losses on financial instruments
and foreign debt, net of cash and
exceptional items (cents)
Exchange rate - SA Rand / US dollar 6.36 6.60 7.44
Gold sold - managed ozs (000) 1,063 1,102 1,101
Gold price received US$/oz 400 395 360
Total cash costs US$/oz 325 312 282
Balance Sheet
International Financial Reporting Standards Basis
SA Rand US Dollars
(Figures are in millions September June September June
unless otherwise stated) 2004 2004 2004 2004
Mining and mineral assets 16,413.8 15,828.6 2,525.2 2,512.5
Non-current assets 338.4 331.4 52.1 52.6
Investments 763.9 801.2 117.5 127.2
Current assets 5,777.8 6,241.9 888.9 990.8
- Other current assets 2,369.1 2,107.4 364.5 334.5
- Cash and deposits 3,408.7 4,134.5 524.4 656.3
Total assets 23,293.9 23,203.1 3,583.7 3,683.1
Shareholders' equity 15,043.9 14,949.3 2,314.4 2,372.9
Minority interest 739.0 662.9 113.7 105.2
Deferred taxation 3,384.8 3,336.1 520.7 529.5
Long-term loans 1,341.7 1,428.6 206.4 226.8
Environmental rehabilitation 736.8 715.4 113.4 113.6
provisions
Post-retirement health care 51.3 58.1 7.9 9.2
provisions
Current liabilities 1,996.4 2,052.7 307.2 325.9
- Other current liabilities 1,723.8 1,846.0 265.3 293.1
- Current portion of long-term 272.6 206.7 41.9 32.8
loans
Total equity and liabilities 23,293.9 23,203.1 3,583.7 3,683.1
S.A. Rand/US dollar conversion 6.50 6.30
rate
S.A. Rand/Australian dollar 4.58 4.41
conversion rate
Statement of changes in equity
International Financial Reporting Standards Basis
SA Rand US Dollars
(Figures are in millions September September September September
unless otherwise stated) 2004 2003 2004 2003
Balance as at the beginning of 14,949.3 11,295.5 2,372.9 1,450.0
the financial year
Currency translation 235.4 (258.2) (37.9) 83.6
adjustment and other
Issue of share capital 0.1 0.6 - 0.1
Increase in share premium 7.1 76.1 1.1 10.2
Marked to market valuation of (53.4) 174.8 (8.4) 23.5
listed investments
Dividends (196.7) (472.4) (29.4) (63.2)
Net earnings 102.1 421.2 16.1 56.6
Balance as at the end of 15,043.9 11,237.6 2,314.4 1,560.8
September
Reconciliation of headline earnings
with net earnings
SA Rand US Dollars
(Figures are in millions September June September September June September
unless otherwise stated) 2004 2004 2003 2004 2004 2003
Net earnings/(loss) 102.1 (185.5) 421.2 16.1 (24.7) 56.6
Profit on sale of investments - - (16.1) - 2.0 (2.2)
Taxation effect of profit on - - 0.4 - (1.7) 0.1
sale of investments
Profit on sale of mineral - - (187.2) - (1.9) (25.2)
rights
Taxation effect of profit on - - (53.0) - (0.6) (7.1)
sale of mineral rights
Impairment of assets - 426.2 - - 61.8 -
Taxation effect of impairment - (111.4) - - (16.1) -
of assets
Other after tax adjustments - (0.4) (0.9) - 1.2 (0.1)
Headline earnings 102.1 128.9 164.4 16.1 20.0 22.1
Headline earnings per share 21 26 35 3 4 5
(cents)
Based on headline earnings as
given above divided by
491,604,675 (June 2004 -
491,431,716 and September 2003
- 472,885,574) being the
weighted average number of
ordinary shares in issue
Cash Flow Statements
International Financial Reporting Standards Basis
SA Rand Quarter
(Figures are in millions) September June September
2004
2004 2003
Cash flow from operating activities 197.6 436.3 31.6
Profit before tax and exceptional items 209.9 152.9 286.6
Exceptional items - (432.2) 204.5
Amortisation and depreciation 370.7 332.2 298.8
Change in working capital (182.9) 211.0 (211.2)
Taxation paid (51.4) (49.4) (303.3)
Other non-cash items (148.7) 221.8 (243.8)
Dividends paid (261.0) - (472.4)
Ordinary shareholders (196.7) - (472.4)
Minority shareholders in subsidiaries (64.3) - -
Cash utilised in investing activities (775.9) (998.2) (766.0)
Capital expenditure - additions (754.7) (937.5) (552.7)
Capital expenditure - proceeds on disposal 3.0 - 56.5
Purchase of investments (20.8) (26.5) (280.3)
Proceeds on the disposal of investments 2.2 - 17.6
Environmental and post-retirement health (5.6) (34.2) (7.1)
care payments
Cash flow from financing activities 44.1 64.6 (61.9)
Loans repaid (74.0) (0.1) (90.6)
Minority shareholder's loan received 110.9 60.5 12.4
Shares issued 7.2 4.2 16.3
Net cash outflow (795.2) (497.3) (1,268.7)
Translation adjustment 69.4 (69.1) (51.4)
Cash at beginning of period 4,134.5 4,700.9 1,040.8
Cash/(debt) at end of period 3,408.7 4,134.5 (279.3)
US Dollars Quarter
(Figures are in millions) September June September
2004 2004 2003
Cash flow from operating activities 30.6 65.9 4.2
Profit before tax and exceptional items 33.1 24.3 38.5
Exceptional items - (62.1) 27.5
Amortisation and depreciation 58.3 50.0 40.2
Change in working capital (28.8) 30.5 (28.4)
Taxation paid (8.6) (8.1) (40.8)
Other non-cash items (23.4) 31.3 (32.8)
Dividends paid (39.5) - (63.2)
Ordinary shareholders (29.4) - (63.2)
Minority shareholders in subsidiaries (10.1) - -
Cash utilised in investing activities (122.1) (148.7) (103.0)
Capital expenditure - additions (118.7) (139.0) (74.3)
Capital expenditure - proceeds on disposal 0.5 - 7.6
Purchase of investments (3.3) (5.2) (37.7)
Proceeds on the disposal of investments 0.3 0.5 2.4
Environmental and post-retirement health (0.9) (5.0) (1.0)
care payments
Cash flow from financing activities 6.6 8.8 (8.5)
Loans repaid (11.6) - (12.4)
Minority shareholder's loan received 17.1 5.1 1.7
Shares issued 1.1 3.7 2.2
Net cash outflow (124.4) (74.0) (170.5)
Translation adjustment (7.5) 9.3 (1.9)
Cash at beginning of period 656.3 721.0 133.6
Cash/(debt) at end of period 524.4 656.3 (38.8)
Hedging / Derivatives
Policy
The Group's policy is to remain unhedged. However, hedges are sometimes
undertaken on a project specific basis as follows:
* to protect cash flows at times of significant expenditure,
* for specific debt servicing requirements, and
* to safeguard the viability of higher cost operations.
Gold Fields may from time to time establish currency financial instruments to
protect underlying cash flows.
Gold Fields has various currency 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 the 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 is
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$8.3 million. The payment of the premium will match
the maturity dates of the original structure. The average strike price of the
options is 0.7670 US$/A$. The future US dollar locked-in value and cost of the
new structure achieved at the time is depicted.
However, 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 dollar amounts to
A$147 million, based on a spot rate of 0.7158 US$/A$. The balance of A$138.2
million cash flow is detailed below:
Payment value dates Future cash flows - A$ `000
30 September 2004 15,519
31 December 2004 15,074
31 March 2005 14,694
30 June 2005 14,345
30 September 2005 13,954
30 December 2005 13,606
31 March 2006 13,292
30 June 2006 12,899
29 September 2006 12,561
29 December 2006 12,281
TOTAL 138,225
The call options purchased at a cost of US$8.3 million are detailed below:
US Dollars / Australian
Dollars
Year ended 30 June 2005 2006 2007 TOTAL
Australian dollar call
options:
Amount (US dollars) -000's 75,000 100,000 75,000 250,000
Average strike price -(US$/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$2.1 million. This was based on an exchange rate
of A$/US$ 0.7040. 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 30,098 - - 30,098
Average rate -(ZAR/US$) 6.6368 - - 6.6368
The marked to market value of all transactions making up the positions in the
above table was a negative R4.6 million (US$0.7 million negative). The value
was based on an exchange rate of ZAR/US$6.50 and the prevailing interest rates
and volatilities at the time. During the quarter, forward cover of US$20
million was utilised to pay for commitments.
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 5 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 3 month Jibar rate plus a margin of
1.025%. The Jibar rate for the current quarter was fixed at 8.106%.
For accounting purposes the Mvela loan is split into a debt component and an
equity component and accordingly the net present value of future interest
payments (R1,654 million) is classified as debt, while the balance (R2,454
million) is categorised as equity. The marked to market value of the interest
rate swap is a gain of R91 million. The fair value adjustment of the debt
portion of the loan is a loss of R25 million, to which hedge accounting is
applied. In terms of hedge accounting, the liability that exists on the balance
sheet (the loan of R1.6 billion) is decreased accordingly and the loss of R25
million is taken to the income statement, partly offsetting the R91 million
above. The settlement gain on the swap for the quarter was R14 million; R10
million of which was taken to the income statement and R4 million to the debt
portion of the loan. The net impact on earnings for the quarter is a R147
million pre-tax gain (as a R81 million loss was accounted for in the previous
quarter) and R88 million after tax. From a cash flow perspective the marked to
market loss is offset by the present value of the interest saving on the loan
over the life of the loan. The net impact on earnings for the quarter is a R147
million pre-tax gain (as a R81 million loss was accounted for in the previous
quarter) and R88 million after tax. The value was based on the prevailing
interest rates and volatilities at the time.
Total Cash Costs
Gold Institute Industry Standard
(All figures are in Rand millions unless Total Mine SA Operations
otherwise stated) Operations Total Driefontein Kloof Beatrix
Operating costs (1) September 2004 2,335.9 1,663.7 621.9 636.0 405.8
June 2004 2,363.5 1,652.8 636.8 620.7 395.3
Gold in process and September 2004 (67.6) - - - -
inventory change* June 2004 (34.4) - - - -
Less: Rehabilitation September 2004 11.0 9.7 2.8 5.3 1.6
June 2004 10.7 9.3 2.8 5.6 0.9
Production taxes September 2004 8.4 8.4 2.5 4.7 1.2
June 2004 9.8 9.8 3.2 4.9 1.7
General and admin September 84.6 58.4 24.6 21.3 12.5
June 2004 78.3 54.0 25.7 16.9 11.4
Cash operating costs September 2004 2,164.3 1,587.2 592.0 604.7 390.5
June 2004 2,230.3 1,579.7 605.1 593.3 381.3
Plus: Production taxes September 2004 8.4 8.4 2.5 4.7 1.2
June 2004 9.8 9.8 3.2 4.9 1.7
Royalties September 2004 26.3 - - - -
June 2004 29.0 - - - -
TOTAL CASH COSTS (2) September 2004 2,199.0 1,595.6 594.5 609.4 391.7
June 2004 2,269.1 1,589.5 608.3 598.2 383.0
Plus: Amortisation* September 2004 325.1 167.0 58.4 87.0 21.6
June 2004 299.1 147.6 62.2 63.6 21.8
Rehabilitation September 2004 11.0 9.7 2.8 5.3 1.6
June 2004 10.7 9.3 2.8 5.6 0.9
TOTAL PRODUCTION September 2004 2,535.1 1,772.3 655.7 701.7 414.9
COSTS(3) June 2004 2,578.9 1,746.4 673.3 667.4 405.7
Gold sold September 2004 1,062.9 700.2 283.5 266.6 150.1
- thousand ounces June 2004 1,101.7 699.7 290.3 259.2 150.2
TOTAL CASH COSTS September 2004 325 358 330 359 410
- US$/oz June 2004 312 344 317 350 386
TOTAL PRODUCTION COSTS September 2004 375 398 364 414 435
-US$/oz June 2004 355 378 351 390 409
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 = R6.36 and US$1 = R6.60 for the September 2004
and June 2004 quarters respectively.
Operating and Financial Results
SA Rand Total Mine SA Operations
Operations
Total Drief- Kloof Beatrix
ontein
Operating
Results
Ore September 11,043 3,979 1,544 1,259 1,176
milled/ 2004
treated June 2004 11,076 4,069 1,622 1,225 1,222
(000 tons)
Yield September 3.0 5.5 5.7 6.6 4.0
(grams 2004
per ton) June 2004 3.1 5.3 5.6 6.6 3.8
Gold September 33,060 21,779 8,818 8,293 4,668
produced 2004
(kilograms)
June 2004 34,267 21,764 9,029 8,063 4,672
Gold sold September 33,060 21,779 8,818 8,293 4,668
(kilograms) 2004
June 2004 34,267 21,764 9,029 8,063 4,672
Gold price September 81,815 81,914 81,731 81,744 82,562
received 2004
(Rand per
kilogram)
June 2004 83,731 83,413 83,907 83,034 83,112
Total cash September 66,516 73,263 67,419 73,484 83,912
costs (Rand 2004
per
kilogram)
June 2004 66,218 73,033 67,372 74,191 81,978
Total September 76,682 81,377 74,359 84,614 88,882
production 2004
costs (Rand
per
kilogram)
June 2004 75,259 80,243 74,571 82,773 86,836
Operating September 212 418 403 505 345
costs (Rand 2004
per ton)
June 2004 213 406 393 507 323
Financial
Results
(Rand
million)
Revenue September 2,704.8 1,784.0 720.7 677.9 385.4
2004
June 2004 2,869.2 1,815.4 757.6 669.5 388.3
Operating September 2,335.9 1,663.7 621.9 636.0 405.8
costs 2004
June 2004 2,363.5 1,652.8 636.8 620.7 395.3
Gold September (87.1) - - - -
inventory 2004
change
June 2004 (39.5) - - - -
Operating September 456.0 120.3 98.8 41.9 (20.4)
profit 2004
June 2004 545.2 162.6 120.8 48.8 (7.0)
Amortisation September 344.6 167.0 58.4 87.0 21.6
of mining 2004
assets
June 2004 304.2 147.6 62.2 63.6 21.8
Net September 111.4 (46.7) 40.4 (45.1) (42.0)
operating 2004
profit
June 2004 241.0 15.0 58.6 (14.8) (28.8)
Other income September 88.6 81.2 26.4 29.3 25.5
/(expenses) 2004
June 2004 (119.0) (121.7) (37.9) (40.8) (43.0)
Profit September 200.0 34.5 66.8 (15.8) (16.5)
before 2004
taxation
June 2004 122.0 (106.7) 20.7 (55.6) (71.8)
Mining and September 66.6 (5.0) 16.9 (15.7) (6.2)
income 2004
taxation
June 2004 (107.4) (183.8) (10.7) (32.1) (141.0)
- Normal September 37.3 - - - -
taxation 2004
June 2004 37.9 4.7 8.2 (1.7) (1.8)
- Deferred September 29.3 (5.0) 16.9 (15.7) (6.2)
taxation 2004
June 2004 (145.3) (188.5) (18.9) (30.4) (139.2)
Exceptional September - - - - -
items 2004
June 2004 (425.8) (426.2) - - (426.2)
Net profit September 133.4 39.5 49.9 (0.1) (10.3)
2004
June 2004 (196.4) (349.1) 31.4 (23.5) (357.0)
Capital September 722.1 147.8 30.7 58.5 58.6
expenditure 2004
(Rand
million)
June 2004 893.5 184.6 39.7 76.4 68.5
Planned for next six 999.4 323.3 108.4 108.1 106.8
months to March 2005
Operating and Financial Results
SA Rand International Operations
Total Ghana Australia
#
Tarkwa Damang St Ives Agnew
Operating
Results
Ore milled/ September 7,064 4,091 1,342 1,354 277
treated (000 2004
tons)
June 2004 7,007 3,837 1,391 1,488 291
Yield (grams September 1.6 0.9 1.6 2.8 5.1
per ton) 2004
June 2004 1.8 1.0 1.8 3.0 5.6
Gold September 11,281 3,882 2,148 3,831 1,420
produced 2004
(kilograms)
June 2004 12,503 3,829 2,567 4,468 1,639
Gold sold September 11,281 3,882 2,148 3,831 1,420
(kilograms) 2004
June 2004 12,503 3,829 2,567 4,468 1,639
Gold price September 81,624 81,942 81,564 81,493 81,197
received 2004
(Rand per
kilogram)
June 2004 84,284 83,233 84,262 84,960 84,930
Total cash September 53,488 50,618 48,743 60,741 48,944
costs (Rand 2004
per
kilogram)
June 2004 54,355 53,173 43,436 64,414 46,797
Total September 67,618 61,669 53,631 77,738
production 2004
costs (Rand
per
kilogram)
June 2004 66,584 59,546 49,591 78,140
Operating September 95 53 72 214 245
costs (Rand 2004
per ton)
June 2004 101 57 81 209 232
Financial
Results
(Rand
million)
Revenue September 920.8 318.1 175.2 312.2 115.3
2004
June 2004 1,053.8 318.7 216.3 379.6 139.2
Operating September 672.2 217.4 96.9 290.1 67.8
costs 2004
June 2004 710.7 219.1 112.5 311.6 67.5
Gold September (87.1) (20.0) 5.7 (75.9) 3.1
inventory 2004
change
June 2004 (39.5) (16.8) (3.4) (30.5) 11.2
Operating September 335.7 120.7 72.6 98.0 44.4
profit 2004
June 2004 382.6 116.4 107.2 98.5 60.5
Amortisation September 177.6 42.1 10.2 125.3
of mining 2004
assets
June 2004 156.6 25.7 15.1 115.8
Net September 158.1 78.6 62.4 17.1
operating 2004
profit
June 2004 226.0 90.7 92.1 43.2
Other income September 7.4 2.5 0.1 4.8
/(expenses) 2004
June 2004 2.7 (0.5) 0.4 2.8
Profit September 165.5 81.1 62.5 21.9
before 2004
taxation
June 2004 228.7 90.2 92.5 46.0
Mining and September 71.6 34.5 22.6 14.5
income 2004
taxation
June 2004 76.4 36.0 30.8 9.6
- Normal September 37.3 11.3 14.6 11.4
taxation 2004
June 2004 33.2 11.6 8.6 13.0
- Deferred September 34.3 23.2 8.0 3.1
taxation 2004
June 2004 43.2 24.4 22.2 (3.4)
Exceptional September - - - -
items 2004
June 2004 0.4 - - 0.4
Net profit September 93.9 46.6 39.9 7.4
2004
June 2004 152.7 54.2 61.7 36.8
Capital September 574.3 193.6 10.4 330.3 40.0
expenditure 2004
(Rand
million)
June 2004 708.9 392.0 8.8 284.2 23.9
Planned for next six 676.1 254.1 36.5 263.8 121.7
months to March 2005
# 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
US Dollars Total Mine SA Operations
Operations
Total Driefontein Kloof Beatrix
Operating
Results
Ore milled/ September 11,043 3,979 1,544 1,259 1,176
treated (000 2004
tons)
June 2004 11,076 4,069 1,622 1,225 1,222
Yield September 0.096 0.176 0.184 0.212 0.128
(ounces per 2004
ton)
June 2004 0.099 0.172 0.179 0.212 0.123
Gold September 1,062.9 700.2 283.5 266.6 150.1
produced 2004
(000 ounces)
June 2004 1,101.7 699.7 290.3 259.2 150.2
Gold sold September 1,062.9 700.2 283.5 266.6 150.1
(000 ounces) 2004
June 2004 1,101.7 699.7 290.3 259.2 150.2
Gold price September 400 401 400 400 403
received 2004
(dollars per
ounce)
June 2004 395 393 395 391 392
Total cash September 325 358 330 359 410
costs 2004
(dollars per
ounce)
June 2004 312 344 317 350 386
Total September 375 398 364 414 435
production 2004
costs
(dollars per
ounce)
June 2004 355 378 351 390 409
Operating September 33 66 63 79 54
costs 2004
(dollars per
ton)
June 2004 32 62 59 77 49
Financial
Results ($
million)
Revenue September 425.3 280.5 113.3 106.6 60.6
2004
June 2004 434.3 274.8 114.5 101.4 58.9
Operating September 367.3 261.6 97.8 100.0 63.8
costs 2004
June 2004 357.1 249.9 96.3 93.9 59.8
Gold September (13.7) - - - -
inventory 2004
change
June 2004 (5.5) - - - -
Operating September 71.7 18.9 15.5 6.6 (3.2)
profit 2004
June 2004 82.7 24.9 18.3 7.4 (0.8)
Amortisation September 54.2 26.3 9.2 13.7 3.4
of mining 2004
assets
June 2004 45.8 22.3 9.4 9.6 3.3
Net September 17.5 (7.3) 6.4 (7.1) (6.6)
operating 2004
profit
June 2004 36.9 2.6 8.9 (2.2) (4.1)
Other income September 13.9 12.8 4.2 4.6 4.0
/(expenses) 2004
June 2004 (16.8) (17.8) (5.6) (6.0) (6.3)
Profit September 31.4 5.4 10.5 (2.5) (2.6)
before 2004
taxation
June 2004 20.1 (15.2) 3.3 (8.1) (10.4)
Mining and September 10.5 (0.8) 2.7 (2.5) (1.0)
income 2004
taxation
June 2004 (15.1) (26.9) (1.7) (4.8) (20.4)
- Normal September 5.9 - - - -
taxation 2004
June 2004 5.7 0.7 1.2 (0.2) (0.2)
- Deferred September 4.6 (0.8) 2.7 (2.5) (1.0)
taxation 2004
June 2004 (20.8) (27.6) (2.9) (4.5) (20.2)
Exceptional September - - - - -
items 2004
June 2004 (61.3) (61.4) 0.4 - (61.8)
Net profit September 21.0 6.2 7.8 - (1.6)
2004
June 2004 (26.1) (49.7) 5.4 (3.3) (51.7)
Capital September 113.5 23.2 4.8 9.2 9.2
expenditure 2004
($ million)
June 2004 151.6 33.0 7.4 13.6 12.1
Planned for next six 157.1 50.8 17.0 17.0 16.8
months to March 2005
Average exchange rates are US$1 = R6.36 and US$1 = R6.60 for the September 2004
and June 2004 quarters respectively.
Figures may not add as they are rounded independently.
Operating and Financial Results
US Dollars International Operations Australian
Dollars
Total Ghana Australia # Australia #
Tarkwa Damang St Agnew St Agnew
Ives Ives
Operating
Results
Ore milled/ September 7,064 4,091 1,342 1,354 277 1,354 277
treated (000 2004
tons)
June 2004 7,007 3,837 1,391 1,488 291 1,488 291
Yield September 0.051 0.031 0.051 0.091 0.165 0.091 0.165
(ounces per 2004
ton)
June 2004 0.057 0.032 0.059 0.097 0.181 0.097 0.181
Gold September 362.7 124.8 69.1 123.2 45.7 123.2 45.7
produced 2004
(000 ounces)
June 2004 402.0 123.1 82.5 143.6 52.7 143.6 52.7
Gold sold September 362.7 124.8 69.1 123.2 45.7 123.2 45.7
(000 ounces) 2004
June 2004 402.0 123.1 82.5 143.6 52.7 143.6 52.7
Gold price September 399 401 399 399 397 563 561
received 2004
(dollars per
ounce)
June 2004 397 392 397 400 400 556 556
Total cash September 262 248 238 297 239 420 338
costs 2004
(dollars per
ounce)
June 2004 256 251 205 304 221 422 306
Total September 331 302 262 380 537
production 2004
costs
(dollars per
ounce)
June 2004 314 281 234 368 512
Operating September 15 8 11 34 38 48 54
costs 2004
(dollars per
ton)
June 2004 15 9 12 32 35 44 49
Financial
Results ($
million)
Revenue September 144.8 50.0 27.5 49.1 18.1 69.4 25.6
2004
June 2004 159.4 48.6 32.6 57.3 21.0 79.4 29.1
Operating September 105.7 34.2 15.2 45.6 10.7 64.5 15.1
costs 2004
June 2004 107.2 33.1 17.0 46.8 10.2 65.0 14.1
Gold September (13.7) (3.1) 0.9 (11.9) 0.5 (16.9) 0.7
inventory 2004
change
June 2004 (5.5) (2.4) (0.5) (4.4) 1.7 (6.1) 2.3
Operating September 52.8 19.0 11.4 15.4 7.0 21.8 9.9
profit 2004
June 2004 57.8 17.9 16.1 14.8 9.1 20.5 12.6
Amortisation September 27.9 6.6 1.6 19.7 27.8
of mining 2004
assets
June 2004 23.6 3.9 2.3 17.4 24.1
Net September 24.9 12.4 9.8 2.7 3.8
operating 2004
profit
June 2004 34.3 14.0 13.8 6.5 9.0
Other income September 1.2 0.4 - 0.8 1.1
/(expenses) 2004
June 2004 1.0 (0.1) 0.1 1.0 1.2
Profit September 26.0 12.8 9.8 3.4 4.9
before 2004
taxation
June 2004 35.3 13.9 13.9 7.5 10.2
Mining and September 11.3 5.4 3.6 2.3 3.2
income 2004
taxation
June 2004 11.8 5.6 4.5 1.7 2.2
- Normal September 5.9 1.8 2.3 1.8 2.5
taxation 2004
June 2004 5.0 1.8 1.3 2.0 2.7
- Deferred September 5.4 3.6 1.3 0.5 0.7
taxation 2004
June 2004 6.8 3.8 3.3 (0.3) (0.5)
Exceptional September - - - - -
items 2004
June 2004 0.1 - - 0.1 0.1
Net profit September 14.8 7.3 6.3 1.2 1.6
2004
June 2004 23.5 8.4 9.3 5.9 8.0
Capital September 90.3 30.4 1.6 51.9 6.3 73.4 8.9
expenditure 2004
($ million)
June 2004 118.6 65.2 1.5 47.6 4.3 75.1 7.6
Planned for next six 106.3 40.0 5.7 41.5 19.1 58.6 27.0
months to March 2005
Average exchange rates are US$1 = R6.36 and US$1 = R6.60 for the September 2004
and June 2004 quarters respectively. The Australian exchange rates were A$4.50
and A$4.75 for the September 2004 and June 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 SA Operations International
Operations
Total Driefontein Kloof Beatrix Total Ghana Australia
Tarkwa Damang St Ives Agnew
Ore milled / treated (000
ton)
- September 3,486 2,869 950 890 1,029 617 - - 484 133
underground 2004
June 2004 3,342 2,713 927 818 968 629 - - 528 101
- surface September 7,557 1,110 594 369 147 6,447 4,091 1,342 870 144
2004
June 2004 7,734 1,356 695 407 254 6,378 3,837 1,391 960 190
- total September 11,043 3,979 1,544 1,259 1,176 7,064 4,091 1,342 1,354 277
2004
June 2004 11,076 4,069 1,622 1,225 1,222 7,007 3,837 1,391 1,488 291
Yield (grams per ton)
- underground September 6.9 7.1 8.1 9.1 4.4 6.2 - - 5.4 9.4
2004
June 2004 7.3 7.4 8.5 9.5 4.7 6.5 - - 5.2 13.1
- surface September 1.2 1.3 1.8 0.6 0.8 1.2 0.9 1.6 1.4 1.2
2004
June 2004 1.3 1.2 1.7 0.7 0.6 1.3 1.0 1.8 1.8 1.6
- combined September 3.0 5.5 5.7 6.6 4.0 1.6 0.9 1.6 2.8 5.1
2004
June 2004 3.1 5.3 5.6 6.6 3.8 1.8 1.0 1.8 3.0 5.6
Gold produced (kilograms)
- underground September 24,212 20,371 7,741 8,076 4,554 3,841 - - 2,595 1,246
2004
June 2004 24,236 20,160 7,857 7,785 4,518 4,076 - - 2,749 1,327
- surface September 8,848 1,408 1,077 217 114 7,440 3,882 2,148 1,236 174
2004
June 2004 10,031 1,604 1,172 278 154 8,427 3,829 2,567 1,719 312
- total September 33,060 21,779 8,818 8,293 4,668 11,281 3,882 2,148 3,831 1,420
2004
June 2004 34,267 21,764 9,029 8,063 4,672 12,503 3,829 2,567 4,468 1,639
Operating costs (Rand per
ton)
- underground September 524 557 618 687 389 369 - - 361 397
2004
June 2004 536 577 629 731 398 359 - - 346 426
- surface September 67 58 58 66 39 69 53 72 132 104
2004
June 2004 74 64 78 55 39 76 57 81 134 129
- total September 212 418 403 505 345 95 53 72 214 245
2004
June 2004 213 406 393 507 323 101 57 81 209 232
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 September 2004 quarter June 2004 quarter
Reef Carbon Main VCR Carbon Main VCR
Leader Leader
Advanced (m) 5,310 554 1,647 4,573 655 1,707
Advanced on (m) 590 154 170 677 126 210
reef
Sampled (m) 549 99 132 816 168 180
Channel width (cm) 88 35 52 107 26 89
Average value - (g/t) 22.0 14.0 41.6 16.8 10.4 31.1
- (cm.g/ 1,936 484 2,160 1,808 272 2,772
t)
Kloof September 2004 quarter June 2004 quarter
Reef Kloof Main VCR Kloof Main VCR
Advanced (m) 56 2,302 6,969 110 1,824 8,434
Advanced on (m) 46 365 1,256 63 533 1,416
reef
Sampled (m) 44 363 1,125 65 664 1,468
Channel width (cm) 126 98 92 120 117 84
Average value - (g/t) 6.3 8.2 19.3 3.9 7.0 26.6
- (cm.g/ 790 801 1,777 469 826 2,232
t)
Beatrix September 2004 quarter June 2004 quarter
Reef Beatrix Kalkoenkrans Beatrix Kalkoenkrans
Advanced (m) 8,286 1,678 8,263 1,907
Advanced on (m) 2,028 426 1,599 417
reef
Sampled (m) 1,758 429 1,308 477
Channel width (cm) 80 109 59 131
Average value - (g/t) 11.2 13.5 15.5 18.0
- (cm.g/ 895 1,472 908 2,371
t)
Administrationand corporate information
Corporate Secretary Investor relations ForwardLookingStatements
Cain Farrel South Africa Certain statements in this
document constitute "forward
Telephone: (+27)(11) 644 2525 Willie Jacobsz looking statements" within
the meaning of Section 27A of
Facsimile: (+27)(11) 484 0626 Telephone: (+27)(11)644 2460 the US Securities Act of 1933
and Section 21E of the US
e-mail: Facsimile: (+27)(11)484 0639 Securities Exchange Act of
cain.farrel@goldfields.co.za 1934.
e-mail: williej@goldfields.co.za
Such forward looking
Nerina Bodasing statements involve known and
unknown risks, uncertainties
Telephone: (+27)(11) 644 2630 and other important factors
that could cause the actual
Facsimile: (+27)(11) 484 0639 results, performance or
achievements of the company
e-mail: to be materially different
nerina.bodasing@goldfields.co.za from the future results,
performance or achievements
North America expressed or implied by such
forward looking statements.
Cheryl A Martin Such risks, uncertainties and
other important factors
Telephone: (+1)(303) 796 8683 include among others:
economic, business and
Facsimile: (+1)(303) 796 8293 political conditions in South
Africa; decreases in the
e-mail: camartin@gfexpl.com market price of gold; hazards
associated with underground
Transfer Secretaries and surface gold mining;
labour disruptions; changes
South Africa in government regulations,
particularly environmental
Computershare Investor Services regulations; changes in
2004 (Proprietary) Limited exchange rates; currency
devaluations; inflation and
Ground Floor other macro-economic factors;
and the impact of the AIDS
70 Marshall Street crisis in South Africa. These
forward looking statements
Johannesburg, 2001 speak only as of the date of
this document.
P O Box 61051
The company undertakes no
Marshalltown, 2107 obligation to update publicly
or release any revisions to
Telephone: (+27)(11) 370 5000 these forward looking
statements to reflect events
Facsimile: (+27)(11) 370 5271 or circumstances after the
date of this document or to
United Kingdom reflect the occurrence of
unanticipated events.
Capital Registrars
Gold Fields Limited
Bourne House
Incorporated in the Republic
34 Beckenham Road of South Africa
Beckenham Registration number 1968/
004880/06
Kent BR3 4TU
Share code: GFI
England
Issuer code: GOGOF
Telephone: (+44)(20) 8639 2000
ISIN: ZAE 000018123
Facsimile: (+44)(20) 8658 3430
Registered offices
Website
Johannesburg
http://www.goldfields.co.za
Gold Fields Limited
http://www.gold-fields.com
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
Directors
C M T Thompson * G J Gerwel P J Ryan * Canadian
(Chairman)
J M McMahon * T M G Sexwale * British
A J Wright (Deputy
Chairman) G R Parker # B R van Rooyen # USA
I D Cockerill * (Chief R L Pennant-Rea * C I von Christierson
Executive Officer)
N J Holland * (Chief Financial Officer)
END
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