CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 - - PDF document

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 2 Nerina Bodasing Ian Cockerill Good morning everyone and welcome to Gold Fields 2007 year end results. Ian Cockerill will start today’s presentation with a brief introduction, followed by Nick Holland on the financials. Terrence Goodlace will go through the South African operational review. Glen Baldwin will then go through the international operational

• review. John Munroe will give you an update on the Cerro

Corona project and exploration, and this will be followed by Ian who will conclude. I now hand over to Ian. Thank you Nerina. Good morning everyone. Just to show that Gold Fields is a typical contrary gold company, I will not be announcing my retirement today. Also I think it is appropriate to congratulate Glen Baldwin, our head of international operations. He had actually pulled himself away from the maternity ward this morning where at 7.30 am his wife gave birth to a baby daughter and a baby son. Congratulations Glen. So this meeting is to talk about our fourth quarter as well as the year end. I think it’s actually nice to be able to stand up here and talk to you about a reasonable set of results. Certainly in line with the guidance that we gave last quarter. Our attributable production is back up over the million ounce mark. Unit cash costs are at R92 000 per kilogram, as well as $405 per ounce. Someone has a cell phone on. Net earnings are up 35%, which is a pleasing improvement. That’s on the back of the very flat gold price, but also on the basis of the improved production. And that is up to 81c per share. Operating profit was just shy of the R2 billion mark, and we have declared a dividend of 95c. And someone said to me earlier today, a fairly chunky dividend. Well, it is exactly in line with our policy of 50% of earnings. But it shows that Gold Fields as a company is able to pay a dividend and still withstand a fairly hefty capital programme. Perhaps it gives you a sense of the confidence in the company going

• forward. If you look at the highlights of 2007 overall,

despite the fact that the last quarter (and Terence will go into it in a little more detail) our last quarter safety performance was not good. But I have to say it is pleasing to see year on year some very good improvements in safety on all of our safety performance parameters that we

• measure. Having said that, it is still not where it needs to
• be. Gold Fields is still striving to achieve the international

benchmark of safety performance. I do believe that we’ll get there. It’s going to take us some time, but I do know

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 3 Nick Holland that everyone in the company is making sure that we do move towards that level of safety performance. Gold production was steady year on year. Unit cash costs were up in Rand terms. They were up 28%. And in dollar terms they’re up 14%. Which gives you a real sense of the currency fluctuations that a company such as ours is subjected to. Operating profit was up over 50% to over $1 billion, and net earnings were up 53% to R2.4 billion. I think just putting 2007 into context, probably the most significant event of the year was obviously the acquisition

• f South Deep. And with that came a very chunky increase

both in reserves as well as resources. Notwithstanding that, certainly the licence conversion that we were able to achieve at Driefontein, Kloof and Beatrix was very

• pleasing. And certainly I hope that South Deep will be

converted in the not too distant future. I think there was also very good progress on Cerro Corona, the project in Peru, and John will take you through that a little later on. When we saw what our balance sheet looked like post the South Deep acquisition, and when we realised that the Western Areas hedge was not a hedge – it was just an

• utright liability – the closeout of that and the recapitalising
• f the Gold Fields balance sheet were very significant

events in our year. Probably the most significant change in 2007 though was a big increase in capital investment for growth into the future. In 2006 we invested something like $416 million in inward capital investment. That has cranked up this year to $815 million. And in fact in 2008 it’s likely to go at or around $1 billion. Again, building for the future and certainly building towards what is our franchise, and that is the long-life quality assets. So all in all a very active year for Gold Fields. Some good bits, some less good bits, but

• verall

a reasonably satisfactory

• performance. Nick let’s hand over to you and go over the

finances. Thanks very much Ian and good morning ladies and

• gentlemen. First of all I’m going to deal with the quarter

and then I’m going to give you some highlights of the year just passed. If you look at out gold produced for the quarter you can see that we’re up 3% as Ian mentioned. And I think particularly pleasing is that all of that increase comes from the South African operations. All four of the mines have shown an improvement in their production against last quarter. That was slightly offset by a small

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 4 reduction at the international operations. At Damang we were plagued with problems with our crusher, and also Tarkwa produced slightly less ounces than the previous

• quarter. But over all 3% up. If we look at the Rand gold

price achieved you can see we are slightly up on the previous quarter at R1700 for the quarter. And remember, this is the average price achieved during the last quarter. And if you look at the components making that up you can see our dollar gold price has gone up to $670 an ounce. That’s a nice increase. But you can see the Rand has pulled back from R7.21 to R7.09. You will see Sterling has been fairly rampant having gone through ₤2 to the dollar. And we’re also seeing the Euro at around 1.38 Euro. So we may well see a further strengthening of the Rand in the short term over the next quarter or two. So whilst we may see gold going up further – and I think the fundamentals for gold are very good. We’re seeing primary amounts coming down and very good sentiment because of the dollar – it may well be that that is offset by the Rand strengthening over the same period. The combined effect of the higher price and the higher production meant that revenue went above R5 billion for the quarter to R5.1 billion. If you look at our operating costs, net of GIP changes are roughly flat quarter on quarter, despite the increase in production. The gross costs are up about 4%. I’m going to give you a brief analysis of that in a moment. If you look at our operating profit then you can see it’s almost R2 billion for the quarter compared to just over R1.8 billion in the previous quarter. And cash costs flat then at R92 000 a kilogram. What we’ve also done here is just show you if you exclude South Deep, which is really a developing operation (it’s really more of a project than an operating mine), if you look at what its currently producing compared to where we want to take it. You saw in the results it is producing at R135 000 per kilogram. Well that’s obviously not the long-term production cost. If we exclude that and just look at the base load operations, you can see that our cash costs are about R89 000 quarter on quarter. Ok, if we look at our

• perating costs net of gold in process changes. As I said

earlier it’s essentially the same as last quarter but within that we have some variances. At the SA operations it’s pleasing to say that costs are only up 1%, a R15 million increase in costs. At St Ives we’ve changed the configuration of our mining there. Previously we were mining fairly low cost pits. Now we’re moving into the

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 5 Leviathan complex in particular, and that means that the strip ratios are a lot higher. We’re off the lake sediment

• pits. We’re now into some of the older operations. And as

a consequence of that the waste charges have increased. And I think you’ll see going forward at St Ives that will be a feature of their costs. These are not one-offs. These are changes you’re going to see in the cost structure. At Songvang at Agnew you can see we have a R50 million waste charge. That’s what we loosely refer to as non-cash

• items. We actually normalise the waste costs over the life
• f the pit. These are costs that were actually expended

some time ago but are now brought to account in order to equalise the impact of the waste over the period of the

• utfit as the ounces are mined. So that is coming into our
• costs. The Songvang pit is virtually finished. There are two

months to go and thereafter we’ll just be processing the lower-grade stockpiles over the next year. And then the GIP change that I mentioned, R126 million, was quite a big credit to our costs. There are two main areas behind that. We have revalued some of the Tarkwa low-grade stockpiles. There is about 6 million tonnes of low-grade stockpiles. We valued about half of those and that has resulted in a credit against our GIP of about $9

• million. The reason we did that is we started processing

those stockpiles and found that indeed the grades in there certainly justify putting that through the mill. And then at Songvang we’re mining more than we’re processing, and there is a further credit to costs as a consequence of that

• adjustment. So overall costs net of GIP changes are flat

against the 3% increase in production. If we work further down the income statement you remember that operating profit figure I mentioned earlier of R1.95 billion. Amortisation for the quarter is up significantly against the previous quarter. And that’s not just because of the increase in production. Again at Songvang because the mined ounces were double the previous quarter and because of the relatively high amortisation charge that those ounces carry, we have an increase in our amortisation at Agnew. And you’ll see that in the book. And then also Beatrix we’ve had a fairly substantial increase, about R60 million. And that relates to re-doing some of the ORD amortisation calculations. We had a re- look at some of that and we felt some of the allocations and classifications weren’t exactly right. We went back and recalculated some of those numbers. So what you’re

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 6 seeing the final quarter is a net adjustment for the year to date issues that came out of Beatrix. So going forward I wouldn’t see the same level of amortisation coming out of Beatrix. Those were the two main items. Interest paid, you can see

• ur financing costs are roughly half of the previous quarter.

The main reason behind that is that the equity raising that we undertook in the March quarter only took place at the end of January. So we carried essentially a much higher interest burden for the previous quarter, whereas this quarter we had a the full impact of the recapitalised balance sheet for the full quarter as opposed to only two months in the previous quarter. And that resulted in a reduction in our net interest paid. That’s the main reason behind that. Foreign exchange loss of R32 million. Not really a loss. It’s more forward cover costs on covering the loan that we established to retire the Western Areas hedge, and we account for those costs over the period of the contract. That is the main item you’re seeing in our

• costs. Gain on financial instruments is really a revaluation
• f our share warrant and option portfolio which is in a

range of investments. So after all of that and exploration costs you can see our profit before tax is up appreciably from R507 million to R927 million. Net profit after tax is also up nicely from R437 million to R596 million. If we strip

• ut the minorities you can see our bottom line earnings

were up from R370 million to R528 million. And I know the figure that the analysts here like to look at is if we strip out all of the funnies, the gains and losses on foreign exchange, financial instruments, the core earnings of the business if you like, they are R488 million or 75c per share, compared to R512 million or 83c per share last

• quarter. So pretty much in line. I think the additional

amortisation that I mentioned earlier, the catch-up at Beatrix and also the high charges at Songvang have resulted in the net figure reducing. Looking at the cash flow, cash flow is king, because irrespective of how you account for the earnings you can’t lie about the cash flow. I think the good news there is that cash flow from ops was about R2 billion for the quarter. And that really reflects the operating profit. It’s almost a proxy for the operating profit for the quarter. So we’re quite pleased with the strong operating cash flow. I think notable is the significant increase in capital up to R2.2 billion. I’m going to take you through a breakdown of that in a minute.

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 7 I think suffice to say, you’re going to see these kinds of levels of cap ex throughout 2008 and probably into certain parts of 2009. Other investing activities represent mainly purchase of additional investments that we undertook during the quarter and also the top-up of the rehab fund at the year end. Net loans received during the quarter were an additional draw-down under the Cerro Corona project finance facility. You’ll remember we established a $150 million project finance facility in Peru to finance that particular project. Since year end we’ve fully drawn down

• n that facility, but at this stage of the game we’ve drawn

down to about $128 million. Since then we’ve gone up to $150 million. Interesting to note that Euro money magazine rated our project financing in Peru as deal of the year during 2007. So we’re particularly proud of the

• achievement. Net cash at the end of the period then

roughly the same as the previous quarter. If we look at our balance sheet you can see that net debt at the end of the quarter, after deducting our cash, is $640

• million. Slightly up on the previous quarter. And just to

remind you what I said to you a year or 18 months ago. The target we have set for this company is that we want to target between $500 million and $750 million net debt

• levels. That’s the comfort level of debt that we have for this

company, which represents 50% or 75% of annual

• EDITDAR. That is the sort of level I can sleep at night with.

And the equity raising that we undertook, taking into account that we had to retire the hedge and finance the acquisition of South Deep, has left us within this range. So we can take a lot more debt than this, but certainly we’re comfortable with these sorts of levels. \Now I said earlier we’re going to analyse the cap ex for the quarter. If you look at this, we have split it into sustaining capital – that’s just to let the operations chug along as they are without investing in any growth – which is about R1 billion. And then during the quarter you can see even more was spent on what we call project cap ex, which is either life extension projects or growth projects. And you can see the Driefontein 9 shaft project we have started to step up expenditure. The deepening of the shaft will commence in November. South Deep as you all know has been significantly starved of capital prior to us acquiring the asset. And we’re now starting to step up expenditure, especially on the development which is starting now on the below 95 level. And the 94 level

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 8 refrigeration plant which is also critical to the short term

• needs. Cerro Corona is really starting to gather momentum

and we’re stepping up expenditure there. John is going to talk about that more, but it looks like we’re on track to get this project finished within the next six to eight months and into production. The Tarkwa heap leach expansion you have heard about earlier, and more importantly the CIL expansion which will double the output at Tarkwa is proceeding as planned and should be completed by the end of 2008 calendar year. So we’re into a high capital spend, and as you can see a lot of this is to improve the bottom line of the business going forward. Looking briefly at the year under review, given this is our financial year end; let’s highlight some of the key stats for

• you. Look at our gold produced. We’re slightly down on the

previous year, but it has to be said that the figure of 4,024 million ounces does have a lot of swings and roundabouts. For example South Deep wasn’t in last year. That has contributed about 163 000 ounces. Similarly, Choco 10 was only in for four months last year. It’s in for a full year this year, albeit it’s not had a great year. But it still contributed an additional 25 000 ounces. And then we also had a grade decline. A 4% reduction in grade overall, and more importantly, at each of the South African operations – Driefontein, Beatrix and Kloof – all of them suffered with a half a gram per ton reduction in the underground grade from the previous year. That’s going to have a significant impact on your ounces, no doubt about that. Our price achieved you can see is up substantially, about 40% compared to the previous year to R147 000 a kilogram. And operating profit is up nicely to R7.7 billion. Our margin has increased and a lot of you will say well it should have increased a lot more. I think if you superimpose the grade reductions we’ve mentioned compared to the previous year, the significant input cost pressures and also labour cost pressures, there is no doubt that this is a tough industry to be in. Whilst we have seen an expansion of our margins, there is no doubt that these have had an impact. And it’s not been the sort of increase we would have liked, but not all of these factors are within our control. Net earnings though are up 53% to R2.4 billion for the year

• verall. Cash costs are up to R87 000 per kilogram on a

like for like basis, and in US dollar terms up 14% to $370 per ounce from $330 last year. Let’s try and analyse some

• f these operating cost increases. You can see the

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 9

• perating costs here have gone from R9.5 billion to R12.2

billion, that’s a 28% increase. If you try and disaggregate what has actually happened in here. First of all the new acquisitions that we’ve made have contributed 10% of that 28% increase. In other words, South Deep wasn’t in there last year. Choco 10 wasn’t in for the full year. It’s a straight

• ff. So a third of that increase is due to those items. Then

if you look at South Africa, South Africa’s costs have gone up 10.7%, albeit off the back of volumes that are similar to the previous year but an increase in development. Published PPI over the same period is 10.4%. So I suppose what we can at least take some comfort from is that we’ve tracked PPI and haven’t gone above that. If we look at the international operations there is a much higher increase there. You can see that has gone up from R3.3 billion to R4.4 billion. And if you just aggregate the things that we really know about, let’s go through them. The exchange rate effect, if you look at this in Rand terms, has contributed R420 million. Because the Rand has gone from R6.40 last year to R7.21 over this year. We’ve told you on a number of previous quarters about the increased power costs in Ghana because of the on-site generation and the requirement to shed power from the grid. That has added almost R100 million. We’ve also mentioned to you that because of the nature of the maintenance contracts on the fleet at Tarkwa, that when you get into different hours of service the costs do go up. That’s added a further R72 million. The Songvang waste normalisation I’ve discussed with you, as well as the change from lower cost pits in Australia to some of the higher cost pits where you encounter higher waste. The price participation royalty in Australia has also contributed an additional R28 million with the Aussie dollar price at $800 for the year, well above the base level of $600 per

• unce. And there have been some power back charges

that we’ve had at St Ives. So if you add those all up, that already contributes for around about three quarters of the

• increase. And then the increase that is left is around about

10%, the R344 million that is left out of the R3.3 billion is around about 10%. I think you’ve got to see that in the context of the significant labour cost pressures that we see, particularly in places like Australia, and some of the input cost pressures. Now I’ve given some examples of what we’ve had to endure during the last year. Tyres are up 58%, cyanide is up 30%, cement is up 17%. And this makes it extremely difficult to keep your costs down lower

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 10 than what we’ve managed to do. So notwithstanding all of that, we’ve managed a 14% increase in costs year on year, up to $376 per ounce. Looking at the balance sheet, I’ve mentioned earlier about the need for us to have done the capital raising and what it has done to our debt levels and where it has left us in terms of our range. What we’ve done is re-financed very expensive bridging finance that we took out to fund the retirement of the Western Areas hedge. And you’ll see there has been a big reallocation on the balance sheet from short term to longer term debt. And also we’ve done that at reduced funding costs. And I mentioned earlier about the project finance facility that is now drawn down in Peru for Corona. Ian mentioned about the capital going forward and the potential impact of this. As you can see R7.3 billion of capital is planned for financial 2008. That is

• ver $1 billion, compared to $850 million in 2007. And

what you can see from this analysis is that around 40% of that capital is going to be spent on what I call life-extension

• r growth projects for the group. If you look at some of

those: South Deep expansion, R642 million. A lot of that is going to go into the below 95 level development which Terrence will talk you through later. The Uncle Harry’s ground deal, that’s to the east of South Deep. You’ve seen the announcement we’ve put out on that particular

• transaction. The Driefontein 9 shaft project has now really

started to gain momentum, as well as the KAA project which has started up. And the Cerro Corona project is going to be the bulk of the remaining capital to get this

• peration into production. The Tarkwa heap leach and CIL

expansion also is a very good project. It will enable us to shut the south heaps earlier and also put more of that material through the mill. So a good project there. But what is does mean is that it’s going to require a reinvestment of all of our operating cash flow into the business next year, and probably still some more then from debt. I’m satisfied that most of this can be funded internally, but we have adequate funding facilities, should we need them, to fund the balance. Previously we mentioned that we re-looked at some of the long-term financing options. We are exploring an issue of a local bond in the market here, which will enable us to better match the funding profile and the long-term nature

• f the assets with longer-term debt. We’re considering
• that. I’ve been looking for a tender of around about twelve

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 11 years, which gives us a better asset liability matching. We’ll probably press the button on that over the next year. Lastly, I want to spend a couple of minutes on cost control and what we’re faced with. I don’t really mind repeating this. We have said this before; I think it needs to be said again. You’re seeing unprecedented levels of cost increases that have impacted this business over the last year or so. This graph shows you a basket of various commodities that Scotia Bank

• produces. Why we’ve shown this particular graph is that

it’s not our information, its external information. It shows you what’s happened over the last couple of years in terms

• f that commodity boom. We would like to think of that in

terms of most of the input costs, but I think we’ve reached a cap in certain areas. Hopefully we’re not going to see more increases, with the one exception of labour. We still see the labour supply/demand fundamentals are pretty tough out there, and it may well be that labour costs for skilled personnel in particular could well go up some more. This is what we have achieved in the various jurisdictions in terms of our cost control measures. If you look at South Africa I have mentioned that our PPI is 10.4%. If you look at our basket of spend in terms of our contractual increases, we’ve managed to outperform that by about 2- 3%. In Australia we have also outperformed on 1-2% on

• ur basket of spend versus the relevant index, and in

Ghana we have tracked the index more or less. So in effect what we’ve done over the last year is either

• utperformed or performed at inflation. Going forward that

will still be a good target for us to achieve. Obviously we want to beat that, but if we manage to at least track inflation that could be a good result for this corporation. Lastly, our focus going forward is to analyse in more detail the total spend on materials, site work and services, and various power costs in the group. We have identified a total spend of about $900 million, which is about 53% of

• ur total spend. What we’re going to do is increase the

visibility of that spend, understand what is driving that expenditure; look at benchmarks across our operations and across the industry, and try and put more of our contracts on a rise and fall basis. And what that does is, when you’ve got changes in the input costs you can make sure that when the cycle does turn, as it will do at some point, that you’re not locked in to those higher prices. You can get a claw back on those input costs. There is more

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 12 John Munroe work we can do on the total cost of ownership as well as enhancing productivity in the business, and we’re looking to increase the number of alliances we have with key

• suppliers. There is an opportunity in south Africa next year

to leverage our procurement and supply chain skills in South Deep, and we’ll be looking at opportunities there and to outperform inflation in South Africa. We’re also going to be doing that on a global scale. Our target is to

• utperform inflation in the relevant jurisdiction by 2-3%. So

I think more work needs to be done, but satisfied that over the last year we have made good progress and we hope to repeat that in the year going forward. Lastly, something that is close to all of your hearts is the whole question of the cost profile versus the revenue profile and the margin that this company generates. What you can see is over the last few years we have expanded

• ur margin from 26% to 39%. And you can see that the

revenue line has grown further than the cost line. This has been achieved despite the cost pressures I have mentioned and despite some of the grade declines that we had to endure. We would have liked to have done better, but certainly our task and objective is to expand this margin as far as we can. Thank you, and with that I’m going to hand you over to Terrence. [Terrence presentation] Good morning. I’ll just start by talking about Cerro Corona. Ian and Nick have spoken about it, and it really is an important project for Gold Fields, not least of which because it is our first significant greenfields project in the last couple of years post Tarkwa in the late 90’s. At the end of the slide I will talk to you a little about why it’s so important financially to Gold Fields. In terms of the quarter itself, it was a very pleasing quarter in terms of progress. Community relationships remain very stable on the site, and in fact that is true of the area of around Cerro Corona, the [unclear] district as well. And in fact throughout Peru. And looking at Peru more holistically we are becoming encouraged that it is emerging as a fine mining environment, and certainly a place that we would like to be doing business in the longer-term, certainly beyond just Cerro Corona. In terms of mining operations, mostly

• perations in the surface mine have moved to a point

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 13 where they’re butted up against sulphide ore. So the mining fleet has been switched to the construction of the tailings management facility, or TMF embankment, which is large civil construction which I’ll talk a bit more about further on. During the quarter the bulk of the activity was the construction of the concentrator and other bulk earthworks on the site. And during the quarter we reached some very important milestones which reflect the completion of those areas of work and open up new aspects moving forward to completion of the project. Probably the most important was completion of the very large ore road that goes down the large valley from the plant site down to the first tailings management facility

• embankment. We also completed clearing of that

embankment ands that opens it up for the placement of the large earthworks that come on top of that. Importantly in the plant area itself we’ve got the sag mill in place, which again open up that area for the final phase of construction through to the end of this year. So good progress made through the quarter. In terms of outlook through the next six months to the end of the year, we hope to maintain the momentum that we have now achieved, in the plant site area and in the tailings area. The most important first hurdle is to ensure that the tailings dam is of sufficient height by November to catch the rainy season that commences then, to create a pool of water of about 500 000 cubic metres, which is required for the start-

• up. And we’re on track to achieve that. We expect to

achieve plant completion by the calendar year end and into the January month, allowing us to start commissioning

• re in January 2008. That will then set us up for shipping

the first concentrate during the March quarter, and our current plan is to achieve full production in June of 2008. That is a six month ramp up, which we think is fairly

• reasonable. It’s not a particularly complex plant, but it’s a

complex operating environment. At this stage we’re maintaining the capital outlook for the construction side of the project at $343 million. I would emphasise that we’ve got a huge amount of construction through the next six months. A lot of it in the tailings dam

• area. And so the costs do remain under pressure. We

have made some changes but we can still maintain the current outlook. Just before I take you through some of the photographs of the project, it’s worth emphasising how significant this project can be for Gold Fields. Some time

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 14 ago we gave you the KPI’s for this project which suggested that on average we would produce around 100 000 ounces a year of gold and about 26 000 tonnes a year

• f copper. In fact it is higher in the first few years because
• f some higher grades in the copper in the first two to

three years. On average we expect total cash costs of around $300 an ounce on a gold equivalent basis. Now if you do the sums on what that will do for Gold Fields on an

• perating profit level when it’s at full production, unless

you get a very significant number for that your calculator is not working properly. So it’s worth having a look at this project and seeing what it’s going to do for Gold Fields. That is why it’s so important to get it into production and why we like this region from a longer-term prospective. Just taking you through some of the activity on site, this is a photograph looking from the plant site to the Goudas valley, which is where the bulk of the tailings dam will sit. This is about a 280m vertical elevation drop from the plant site down to the footprint of the tailings dam. To show you what it will look like, this is a very steep valley side over here, and the tailings dam will be constructed from here across this little saddle through to this ridge over here. The tailings dam will ultimately reach 180m in vertical height, which makes it a huge civil engineering structure. It isn’t the biggest in Latin America. There are three bigger than this already in operation. But it does require a huge amount of engineering. If you see our previous quarter reports we have been through a very rigorous process to finally get to the design we are now executing. In particular it is complicated by the fact that this is a seismically active region, being in the Andes. Fortunately Cerro Corona is in a low risk area, but it still has required an enormous amount of engineering. And both during this construction and during the operations of this project the tailings dam will remain the most complex aspect this project. On the left hand side here you can see the ore road number one which comes down to the embankment position. The initial construction, which is in the initial capital, only takes this wall up to about 15m of vertical height. And in order to start filling it with water we needed to have it at that sort of level over there. Then we build up the pool back here, which is then used for the plant start up. So good progress being made there. This is a close up of the footprint of the embankment, and you can see here we have started the emplacement of the

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 15 crush material, which is the under-drains underneath the tailings dam embankment itself. This activity here is people cleaning the footwall of the tailings dam embankment by

• hand. That is the quality of engineering required before we

commence construction. As you can see it is very dry. We are in a dry season and should get some decent

• productivity. The key to getting this project into production

is to get this embankment built on time, and there are two aspects to that. The bulk fill, which occurs in the back here, and then some highly engineered materials in the front end of the tailings dam. We first have impermeable layers and then some other crushed materials that need to come into place. But so far we look like we can have it high enough to start collecting water in November. A very important development was getting the 20 ft sag mill in place just after the quarter end. That is now sitting

• n jacks which hold it in position on its pedestal. And here

is one of the ends that is now in place. So having that in place obviously allows the acceleration of construction around the sag mill itself. This photograph shows a better planned view of the construction area. The sag mill will sit

• ver here and the ball mill over here. We then have the

flotation building starting to progress nicely. The regrind mills and [unclear] floatation over here. The [unclear] facility is very there and in the back you can see the concentrate storage shed. So Cerro Corona is making good progress overall. It’s a huge amount of work to be done in the next six months, but we are feeling good in achieving the deadlines that we have set in terms of time and cost. And so far so good. Just moving across to activity elsewhere in the world in the development of our company, it really continues at the same pace that it has for quite some time. The most important project in the pipeline is the Essakane project in Burkina Faso. There we are earning 60% from Ore Zone, and that 60% will vest when we complete the feasibility study which is on track to occur in the September quarter. We will be talking more about the KPI’s of that project

• nce that comes out. But we have told you previously that

we see about 3 million ounces at least in the surface minable pit. The most important exploration project from my perspective is the one going on in the southern DRC. Recognising that is the country for the future, I think it is a very challenging environment to operate in today. But there we have a very large anomaly. Some 100 km in

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 16 Ian Cockerill east-west extent. And anything that produces an anomaly

• f that size has got to have a big thing under the ground.

We’re trying to sort that out – we really don’t’ know what we’re looking at. We’ve put in place our biggest programme this year, some $8 million being spent with the helicopter support and exploration programme to try and crack this exploration opportunity. It really is quite exciting, but I must emphasise it is a longer-term project. During the quarter we announced the completion of a deal on the Mt Carlton project in north-east Australia. And there we are earning at least initially 51%. We have the right to go to 75%. And what is a very exciting developing play in north- east Australia. At this stage, although this slide does say emerging copper/gold, it is probably better described as a pore-free epithermal style of mineralization. Typical examples of that would be [unclear] or some of the project like [unclear] and the other one they developed recently. So a very important but early stage exploration in play. It generally reflects our targeting of these styles of mineralization around the world. And this is an exciting one because it is a new play and we have first mover advantage with Conquest. I won’t go through the rest of that the most important activity elsewhere in the world, but you can see some very important projects for us that have been going on for some

• time. The only other one I would highlight is the Goldquest

project in the Dominican Republic. During the quarter Goldquest, our joint venture partners, announced an extraordinary intersection. Unfortunately it was outside of the exploration ground, or the joint venture ground. It was some 140 m of about 2.5 g per ton of gold and 2.5% of copper and a whole lot of zinc. I think it is significant as it demonstrates the potential of this belt that we have the joint venture with them in. Barrack’s project in the DR is also located in that similar trend. So the picture I’d like to leave you with is very significant activity around the world. Certainly as the concerns were that the South Deep deal had taken our attention away from international growth, that certainly has not happened. Thank you. Thanks very much John. I think just to bring everything to conclusion; it is pleasing to see that the company is now back on its guidance. Certainly the improvement in the production was very welcome. I think that improved production, along with a well-managed cost, has certainly

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 17 driven the profitability of the group this quarter. As you heard, if one looks at the amount of extra investment that is going into capital projects, that augers well I think for the

• future. Certainly, we’re definitely investing for the future.

You heard Glen and Terrence talk about the respective

• utlooks for the gold production. You’re bringing it all

together in aggregate with the plusses and minuses that you heard; we’re probably looking at a similar level of gold production in the upcoming quarter. And that will probably spill over I would guess even into the December quarter as

• well. It is only going to be in the first half of calendar 2008

that we should start seeing build-up from there, particularly as we start seeing the production starting to flow through from Cerro Corona. As far as costs are concerned, it’s very difficult to give a projection on that, principally because we’re not sure where we’re going to come out here in South Africa on the wage negotiations. I would say at this stage that I think that the discussions have been robust. They have been professional, and they have been held in a very good spirit. I am hopefully that we can come to a sensible conclusion in the not too distant future. As far as near-term priorities are concerned for the group, clearly making sure that we do deliver on South Deep. And particularly the optimisation and the tie-in with Kloof. Obviously when we do the analyst day on the 14th of this month we will be able to go into a lot more detail as to where we are on that. I think also importantly making sure that we do start to crank up the performance coming out of the Driefontein 9 shaft. And if we are too to maintain, and hopefully improve, the production

• f
• ur

existing

• perations then clearly making sure that we maintain the

current high levels – and in some instances further improve the development rates on our South African mines – that is going to be important in enhancing the mining flexibility that we need at those operations. On the international side it is very pleasing to see good progress in Ghana, where the new mill is progressing nicely. And you heard from John what the progress is both at Cerro Corona and at Essakane. Clearly making sure that we can tame the tiger that is Choco is obviously going to be very important for us moving forward. Now we’ve always said that Gold Fields is a company which is geared to gold. And there has often been a lot of criticism of gold companies that the rise that we have seen

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 18 Nerina Bodasing Allan Cooke JP Morgan in the price of gold has not translated through to bottom line earnings. What I’m showing here is three key fundamentals for Gold Fields. This is the last three financial years of the company. And the [unclear] on the revenue, the operating profit and the earnings per share. What is very pleasing to see is that despite the fact that we

• nly had a 29% compound growth on revenue, our
• perating profit is up almost double that, and importantly,

earnings per share is up 94%. And you saw on that one slide that Nick showed you that yes, our costs have increased, but certainly the revenue has increased. That is being translated through into bottom line earnings. Now we may not have seen the same growth in earnings that the base metal companies are seeing, but I think you can see here that we are not squandering the additional revenue that is coming through to us. Why is that possible? I think it is possible if you’ve got a world-class asset base in terms of your resource as well as the people you’ve got working in your company. If you’re unhedged clearly you are also going to be geared to that increase in the gold price. Layer that onto what is a very diverse and a very high-quality asset base. And particularly when you start looking at the investment into the future when it comes to maintaining this quality long- life franchise, I think you can see why we in Gold Fields are very confident about the future. There is real growth in this company, and I think the company is on a very good

• track. There is no doubt that the next two quarters are

going to be tight. It’s going to be pretty boring and uninteresting, but I think certainly the beginning of 2008 you’re going to start seeing the benefit glow through of this major investment that we’re putting into the company. And with that I’ll hand you over to Nerina who will be taking the questions. Are there any questions Allan? Just actually three questions if I may, Its Allan Cooke from JP Morgan, just Nick you spoke about the increase in amortization which I must admit caught us by surprise and I know it is the year end adjustments did you say that the increase that came through the R60m at Beatrix for the amortization that’s once off it won’t continue. I’m just trying to get a feel for the amortization going forward.

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 19 Nick Holland Allan Cooke JP Morgan Nick Holland Allan Cooke JP Morgan Nick Holland Ja, some of that is catch up as I said from previous quarters so probably about half of that increase will disappear and the rest of it will continue so probably half way between what we were reporting and what we have shown this quarter is a good number to use. Ok and then at Agnew will that continue or is that also a

• nce off.

No that will continue for the moment because as we bring those ounces back into production and put them through the mill we have to carry a portion of the amortization though I think this quarter will also be quite high but then as we get through the September quarter it will start to tail

• ff and we expect to finish processing all of the Agnew
• unces within the next 12 – 15 months.

Ok so that will be with us for sometime and was interest … it was very good analysis of the accounting costs that you gave and you spoke about a third of the increase in the inflation in South Africa in any event being due to new acquisitions and then you looked at the local operations and you looked at sort of 10.7% that is after capitalization

• f ore reserve development costs back to the old basis if

you like taking into account what you spend on development that is capitalized that is not in that base would that number be higher and how much higher. Well I think if you restate the base you would have to restate the figures for this year so if you put the ORD back into the costs you would have to do it for both and we`re spending round about R900 m a year of what we call ORD Ore Reserve Development and so you could probably rebase the figures if fact Allan what I have done in the quarterly book for you is if I have actually given you a reconciliation again of the costs excluding ORD In other words if you expense all of the ORD you could work back but if you are going to adjust the costs you have to adjust the base as well it is going to be much over much ness even if you explain the increases on the basis of all the ore reserves to be expensed the answer I have given you is

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 20 Allan Cooke JP Morgan Nick Holland John Munro Ian Cockerill John Munro not going to change. Ok then last one if I may perhaps a bit of a trick question in the way that you work out the breakeven on the projects that you look at for example you gave us the revised break even with the additional capex at Driefontein, do you have a breakeven number for South Deep and what you understand with the revised capital requirements and the projects and the completion of the development at that

• peration

given where you are now and your understanding of the operation what is your breakeven cash costs there or breakeven gold price at that project All I think it a little bit too early probably be more advanced when we talk to yourselves in the future as we said we are going through all of the analysis we haven’t finished the capital review just yet we are doing complete remodeling

• f all of the geology we have got some external people full

time on it so I think it is a little bit premature what we have at this point is our original acquisition model and I don’t remember the number off hand so I’m asking for a little bit

• f time on this one. Unless John you know off hand.

You can do a magnitude calc on that because there is 900 tons of gold in there so divide that by incremental capital you are going to get barely a movement on that number so to answer you question which is basically you no longer make money you can move the capital to as much as you want and it won’t make any difference. I think if you tend to look at the South African mine projects, Allan they are to all intents and purposes capital insensitive they are much more sensitive to grade and cost. And other piece of information that we set out at the time

• f the acquisition and also subject to [unclear] the total

cash costs over the life of the mine R65 – R75 000/kg in last years terms so that plus whatever capital you are still not going to get over R120 000/kg so you are substantially below that. The question is, are we at risk absolutely not.

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 21 Muneer Ishmail Deutsche Bank Nick Holland Muneer Ishmail Deutsche Bank Just two questions Nick and Terrence. Nick, you first if I may on the Bond story you are talking about a 30 – 70 year bond that you are looking at potential refinancing

• consideration. Can you give us an idea if is that bond

trying to make your Balance Sheet more efficient or are you looking to create more capacity more fire power what looks like increase capex spend going forward, while I must say I’m happy about the [unclear]. I’m a little bit nervous about you capex profile going forward. Could you answer that and then I’ll go to Terence. Ok it’s a good question It is trying to achieve both what we have got in mind here is to put in a long full term bond of that sort of duration which would enable us over the period that we are build up South Deep to have a funding package that matches that so then effectively we can amortise if you like that funding over the period of the build up and once you put in a long term bond of that duration you have put it in place you can go sleep at night you don’t have to worry about it. What it also does it would enable us to refinance the $750 m revolver that I talked about earlier where we could retire that revolver in fact we wouldn’t retire that revolver we would just repay the debt and that $750 m will then become available fire power for us to use so we put the long term bond in place to make the funding profile of South Deep and in the event that this company wanted to engage in any further corporate activity it has the fire power available in the form of that revolver to do it. Doesn’t we have to spend it but the point is it is there it is a 3 year facility we could easily extend that further and I like the concept of putting in the long term bond and accessing the markets because it is definitely appetite in the market particularly the local markets then leaving that revolver as essentially fire power but you can either draw down, retire draw down the revolver so it gives us maximum capacity for this company to pursue growth targets that are going to [unclear] hope that answers your question. Very good can I just follow up another financial question, it is for Terence just on your PPI targeting when you talk about a 3% less than inflation target does that PPI number include wage of is that just the basket of commodities of inputs that you would use?

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 22 Terence Goodlace Muneer Ishmail Deutsche Bank Nick Holland Muneer Ishmael Nick Holland Ian Cockerill What I’m saying is on a net basis looking at the universe of spend that we control in the supply chain that is materials site work and services I want us to under or out perform PPI by 3%. The wages is a separate component of cost I’m not including that in that basket and that is probably why we do need to out perform on another in the event that end up on a slightly higher number of the wage than are comfortable with so that is on the other costs outside the wages. Good to hear that we can fight the wage increase or that there ability too. Terence on the capex side looking at South Deep that 4.3 bn or the increase to 4.3 bn could you talk us through that , about 2.9 being approved right now but I’m just trying to understand why the gap up what was the issue there and then what’s required to be approved between 2.9 and 4.3 if you could just talk us through that. First off the 4.3 is in our estimate based upon the capital review we’ve made to date which is the 2.9. The balance is all the rest of the project that make up the original capital

• bill. So we’re going through those stage by stage by stage,

but the material ones are the ones that we’ve looked at

• first. We’ve looked at the most important ones, but it’s just

a subset of all of the others. It’s the tailings facility, which is the other big one we’re looking at, and the rest are all the smaller auxiliary stuff. So the increase then, is that all inflation? Yeah it is inflation. But some of it is scope as well. As we’ve gone through it there have been some areas we haven’t been entirely happy with and we’ve made some

• adjustments. So it’s the two counts.

Muneer, again at the analysts day on the 14th we’ll be going through that in a little more detail, so we’ll show you the complete breakdown there.

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 23 Nerina Bodasing Brenton Saunders Ian Cockerill Brenton Saunders Ian Cockerill Brenton? Hi it’s Brenton Saunders from Craton Capitol. With regards to the capital programmes, firstly on South Deep. The acquisition cost was around $3 billion. You’ve tabled another $500 million or $600 million now. What will be your all in by the time you get up to production as we knew it in the previous scope without taking into account what may

• r may not eventuate from synergies with Kloof?

As we know it right now, we know it is R4.3 billion. If you look at what has got to happen with Kloof, it is absolutely premature to say. We’re still evaluating the six primary

• ptions that we’re looking at, which is combinations

between the two, and it’s upgrading. So it’s not just purely looking at current infrastructure and current throughput as they are currently. It’s also looking at different variations around that. It is premature. I wouldn’t like to say right now because we need to evaluate that. And it’s all at a pretty advanced stage. And then maybe just on Choco. We know you spend $330 million odd to acquire it. In addition to the acquisition cost what do you think will need to be spent on Choco when all is said and done to get it up to the projected production levels? I think at this stage Brenton the total input that we got there is just over $400 million. That was the acquisition cost plus some preliminary capital that was put into the plant to get it into a reasonable shape, as well as an extensive amount of resource drilling. I think certainly the number that we will be looking at to get it up to the projected 300 000 ounces, we can do that in several ways. One way is by having a massive open pit, which would require a much larger plant or certain alterations to the plant to take it from its capacity of 5400 tonnes a day to well over 10 000 tonnes a day. Interestingly enough, in the July month the plant has been doing over 7000 tonnes a

• day. So although the main plate is 5400 tonnes it has

actually been doing significantly more. Now a lot of that is softer material, so when you get into the hard rock that would come down. But I think if you looked at a bigger plant or if you stayed with the plant where it is and went for

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 24 Nerina Bodasing Steve Sheppard Ian Cockerill a smaller, high-grade underground operation as opposed to a larger pit, you may not get as many ounces out but it might be a slightly better option. You know those are exercises that we still need to do. The guys are evaluating those out of our operations in Perth. But to be blunt we’d be more worried about getting it to produce at a much lower level at this stage. That is far more important. But longer term if we went for the more expensive option it probably would be an additional $100 million plus minus. In the interest of time can we just take one more question? Steve Sheppard. Thank you Nerina. Steve Sheppard, JP Morgan. You know I’d like to refer to your slide 53 here which shows the performance and the profits etc. We agree with you at JP

• Morgan. We’re in a pretty favourable gold [unlearn]. Could

you share with us your thoughts as to why the top five gold producers, including Gold Fields, have badly underperformed the bullion price over this period of earnings growth? What do you think can be done so try and reverse that underperformance? Steve I think it’s as much about perception as anything

• else. The perception is that the gold price has gone up

from a low of $250 an ounce up to $660 an ounce today. And people say well crikey, why have the earnings not risen to the same extent? But I think that’s rather than looking at an equation, we’re only looking at one side of the equation. The other side of the equation you have to look at is obviously the cost side. I mean you’ve heard Nick’s report. And there is no doubt that if you look at the cost increases for many of the gold companies, if you see the margin that they’ve made on every ounce they mine, and you look at the gold price, it’s almost as though they’ve been working on a fixed margin. That is particularly true of North American companies. As we attempt to show here what is important, reverting everything back on a per share basis, Gold Fields has seen a fairly significant improvement in the earnings per share – which again is what’s important to shareholders. But perhaps there has been a disappointment that that earnings performance has not been greater. People are saying if I invest directly in gold through the ETF’s, I have no management risk, no

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 25 Steve Sheppard country risk, no capital risk, and no grade risk. Gold price goes up; the value of my investment goes up linearly. Entirely understandable, and a lot of people have said the gold ETF’s have actually damaged the gold sector. I would disagree entirely, for the simple reason if you look at what is the fundamental issue for most gold companies; everyone is suffering from declining grade profiles. Very few people, possibly with the exception of ourselves, are showing new projects coming online to actually replenish some of the older stuff. If you look at that, you look at the cost pressures that we’re suffering, would the gold ETF if we didn’t have it, have changed any of those issues? The answer is no. What the gold ETF has done in my opinion is certainly added anywhere between $50 and $100 per

• unce to the gold price. If we hadn’t had the gold ETF this

industry would have been in a worse state than it currently

• is. So I think the gold ETF has been good for the industry.

It has broadened, deepened and widened the gold market. It’s now safe to talk about gold in front of the children. It’s made gold a much more socially acceptable investment, and it’s brought people into the gold sector who probably would not have been in there before. Yes, perhaps some people who would have gone into the gold equities at the margin and would have helped push up the gold equities, perhaps they’ve now put more into the ETF’s than they would into the equities. But on balance I think that the ETF’s have been good for us. My sense is that when people suddenly wake up to the fact that gold is getting increasingly scarce, that it isn’t the infinitesimal supply of gold that people think there is, the gold price is going to continue to move up. Then you’re going to see the gold companies at a point where you really will see some margin stretch. Because if you look at the base metals sector you’re looking at margins which have increased four

• r five times from the revenue to the cost. Absolutely

they’re going to show that in the bottom line. In comparison to them we haven’t done so well. Because we do buy the same trucks, the same tyres and our costs go up at the same rate. Our revenue has not gone up at the same rate. But that time will come. Could I perhaps just follow up? The share prices of all of these companies, not just you, have certainly not reflected any kind of margin expansion. Really what I wanted to try and ask you is do you think you would do anything differently going forward? You’ve basically said the gold

CLIENT: Gold Fields DATE: 01/08/2007 FILE NAME: Q4F2007 Presentation Speaker Narrative 26 Ian Cockerill Steve Sheppard Ian Cockerill Nerina Bodasing price will go up in the end and the performance will catch

• up. Is there anything that you foresee that you could do as

the management of the company to change the underperformance interventions-wise? Look I mean clearly… Strategic interventions, not tactical interventions.

• Yeah. I mean from a technical perspective obviously the

improvement to the quality of our mining, making sure that there are decent quality mining. And you heard Terrence talk specifically about the South African operations. That is something that we have to do. The other thing we have to do is make sure that the rising gold price, which in South African terms does have an impact on your average pay limits, that we don’t destroy that margin by just mining ever more low grade material. We have certainly tried to do that in South Africa. We have been partially successful. In some ways we’ve been less successful. That I think is

• important. If you look at what is happening at Cerro
• Corona. Cerro Corona is a different type of ore body to

what we’d normally mine. It is a hybrid if you like, as you saw the term used in Mining Weekly. And our analysis shows that if you’re looking at where the right sort of ore bodies are to improve your margin, there is no doubt that the gold [unclear] often give you better margins than the more traditional greenstone type of deposit. So you’ve seen our move into Cerro Corona. You’ve seen the strategic acquisition into the Mt Carlton project. I think that should give you a sense strategically where we are starting to think that we should be moving. Thank you for attending today’s presentation and we will be serving refreshments towards the back of the room.

• Thanks. Sorry could I request that the media just move to

the front of the room as well please. END OF TRANSCRIPT