Denver Gold Forum KEEPING THE FOCUS DESPITE HIGHER GOLD PRICE Nick - - PowerPoint PPT Presentation
Denver Gold Forum KEEPING THE FOCUS DESPITE HIGHER GOLD PRICE Nick - - PowerPoint PPT Presentation
Denver Gold Forum KEEPING THE FOCUS DESPITE HIGHER GOLD PRICE Nick Holland 19 September 2016 Forward looking statements Certain statements in this document constitute forward looking statements within the meaning of Section 27A of the US
2
Forward looking statements
Certain statements in this document constitute “forward looking statements” within the meaning of Section 27A of the US Securities Act of 1933 and Section 21E of the US Securities Exchange Act of 1934. In particular, the forward looking statements in this document include among others those relating to the Damang Exploration Target Statement; the Far Southeast Exploration Target Statement; commodity prices; demand for gold and other metals and minerals; interest rate expectations; exploration and production costs; levels of expected production; Gold Fields’ growth pipeline; levels and expected benefits of current and planned capital expenditures; future reserve, resource and other mineralisation levels; and the extent of cost efficiencies and savings to be achieved. Such forward looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the company to be materially different from the future results, performance or achievements expressed or implied by such forward looking statements. Such risks, uncertainties and other important factors include among others: economic, business and political conditions in South Africa, Ghana, Australia, Peru and elsewhere; the ability to achieve anticipated efficiencies and other cost savings in connection with past and future acquisitions, exploration and development activities; decreases in the market price of gold and/or copper; hazards associated with underground and surface gold mining; labour disruptions; availability terms and deployment of capital or credit; changes in government regulations, particularly taxation and environmental regulations; and new legislation affecting mining and mineral rights; changes in exchange rates; currency devaluations; the availability and cost of raw and finished materials; the cost of energy and water; inflation and other macro-economic factors, industrial action, temporary stoppages of mines for safety and unplanned maintenance reasons; and the impact of the AIDS and other occupational health risks experienced by Gold Fields’ employees. These forward looking statements speak only as of the date of this document. Gold Fields undertakes no obligation to update publicly or release any revisions to these forward looking statements to reflect events or circumstances after the date of this document or to reflect the
- ccurrence of unanticipated events.
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
3
Gold Fields’ strategic objectives over the past 3 years
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
How much progress have we made? Focus on free cash flow
̵ Structural shift in cost base ̵ >15% free cash flow at a US$1,300/oz gold price ̵ No marginal mining, no high-grading, maintain cut-off grades ̵ Protect sustainability of ore bodies by investing in development and stripping
Reboot and deliver South Deep Drive brownfields exploration – organic growth Divest non-core assets; no greenfields exploration or projects Strengthen balance sheet Pay dividends
4
Objective: Focus on free cash flow
Net cash flow US$60m net cash flow generated in 1H16
- 274
42 119 117 1 122 60 1 499 1 290 1 279 1 222 1 186 1 098 1 220
- 2 000
- 1 500
- 1 000
- 500
500 1 000 1 500 2 000
- 350
- 250
- 150
- 50
50 150 250 H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016
US$/oz US$ million Net cash flow Gold price
Net cash flow from operating activities after taking account of net capital expenditure, environmental payments, debt service costs and non-recurring items.
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016 2014
Gold: US$1,249/oz Net cash: US$236m
2013
Gold: US$1,386/oz Net cash: (US$232m)
2015
Gold: US$1,140/oz Net cash: US$123m
5
Cost reduction while maintaining capex
Sticking to our promises
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
200 400 600 800 1000 1200 1400 500 1000 1500 2000 2500 2013 2014 2015 2016F US$/oz koz
Attributable production vs. AIC
Production AIC 0.0 0.5 1.0 1.5 2.0 2.5 3.0 2011 2012 2013 2014 2015 g/t
Head grade vs. reserve grade
Reserve grade Head grade
- c.35% reduction in costs since 2013
- Capex maintained at c.US$300/oz
̵ We have continued to spend on development and stripping to maintain the integrity of our
- rebodies
- We have not high-graded
0% 10% 20% 30% 40% 50% 50 100 150 200 250 300 350 2013 2014 2015 2016F US$/oz Capex per ounce vs. capex/opex Capex/oz Capex/Opex (rhs)
6
Business underpinned by a solid global portfolio
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
Production and AIC (ex South Deep project) Healthy cash generation
- Attributable production H1 2016: 904koz (Q2 2016: 453koz)
- AIC H1 2016: US$917/oz (Q2 2016: US$949/oz)
- Net cash flow from international operations H1 2016: US$166m (Q2 2016: US$97m)
200 400 600 800 1000 1200 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016
Equivalent production (koz)
200 400 600 800 1000 1200 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016
AIC (US$/oz)
7
Objective: Reboot and deliver South Deep
Increase in ZAR gold price accelerated cash breakeven
- FY16 guidance updated: Production of 9,000kg
(289koz) at AIC of ZAR595,000/kg (US$1,310/oz)
- Low profile destress mining completed in July
2016 – all future destress mining will employ the high profile method, which is proving successful
- Most of the key skills are now in place. Skills
development strategy implemented
- Fleet renewal: 17 category 1 units commissioned
during H1 2016, with an additional 11 units to be commissioned during the remainder of 2016
̵
58 new units out of 114 planned for year-end
- Cash breakeven achieved in Q2 2016, helped by
higher ZAR gold price
- Rebase plan – long-term sustainable value
delivery
̵
Update expected in early 2017
̵
Will be based on updated performance data and design optimisation
39 55 68 64 77 500 1 000 1 500 2 000 2 500 10 20 30 40 50 60 70 80 90 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Production (koz) and AIC (US$/oz)
Production AIC
- 330
- 266
- 57
- 113
63 100 000 200 000 300 000 400 000 500 000 600 000 700 000
- 350
- 300
- 250
- 200
- 150
- 100
- 50
50 100 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Net Cash Flow (R million) and Gold Price (R/kg)
Net cash flow Gold Price
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
8
South Deep: Encouraging trends
Key underground activities maintaining momentum
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
36% 36% 36% 37%
20 40 60 80 100 120 140 160 180
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Tonnes (‘000)/Q Long Hole Stoping Production & Contribution
23% 33% 42%
10 20 30 40 50 60 70 80 90 100
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Tonnes (‘000)/Q
Destress
Destress HP Destress LP 200 400 600 800 1000 1200 1400 1600 1800 2000 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 m/Q
Development
Current Mine New Mine
20 40 60 80 100 120
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Cubic Metres (‘000)/Q Backfill Production
9
Objective: Drive brownfields exploration
H1 2016 performance
FY 2016 Budget A$93m (4 sites) Expenditure: A$52m Drill metres: 347,456 metres on ground Extensive geophysics & modelling – all sites
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
Second year of c.A$90m/year exploration spend
Delivering growth
Resource extensions Granny Smith Wallaby Z100, 110, 120 Darlot CDA Oval Agnew FBH and Kim
- St. Ives
Invincible UG, Invincible South, Retribution Growth Granny Smith Wallaby Z125, 130, 135, 140, 150, Northern Fleet Agnew Waroonga North
- St. Ives
Paleochannels
10
Granny Smith (Wallaby): Growth resource extension Zone 100
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
- Mineralisation extended East & Southeast
- Targeting further extensional drill programs for
H2 2016
- Resource modelling & upgrade pending end
2016
Significant 2016 intersections include:
- WB3539UD
1.45m @ 7.41g/t Au
- WB3539UD
4.08m @ 6.52g/t Au
- WB3595UD
1.55m @ 45.1g/t Au
Zone 110
Legend Outline – 2015 Model N Successful infill drilling Successful infill and extension drilling Successful extension drilling Q4 Target Area Q3 Target Area
Wallaby Z100 25x25m drill spacing Zone 90 Zone 100
11
Granny Smith (Wallaby): Growth resource extension Zones 110-120
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
Zone 110-120 Zone 100 Zone 90
- Mineralisation extensions west & Southwest
for Z100 & Z120
- New drill platform required for further drilling
- New resource modelling & reserve upgrades
end 2016
Zone 110 Zone 100
Legend Red - 2015b Model Blue - 2016 Model
Significant 2016 intersections include:
- WB3516UD
10.6m @ 10.96g/t Au
- WB3515UD
8.05m @ 3.81g/t Au
- WB3498BUD
3.48m @ 3.33g/t Au
- WB3563UD
12.73m @ 6.10g/t Au
- WB3598UD
8.72m @ 16.12g/t Au
- WB3562UD
16.55m @ 9.30g/t Au
12
Granny Smith (Wallaby): New growth Zones 125-150
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
Zone 110/120
Nor th View West
Zone 140 1.82m @ 10.19g/t 1.5m @ 7.23g/t 3.60m @ 3.89g/t Zone 150 8.96m @ 19.98g/t Zone 135/135HW 9.95m @ 4.04g/t 8.40m @ 7.07g/t Zone 130 Low grade within intrusive Zone 125 15.03m @ 12.22g/t
N
- Zone 135 mineralised footprint of 1,100m x 600m
similar to Zone 100 and Zone 110-120
- Further lateral growth expected
- Initial resource in 2017
Zone 100
WBD047UD 2.5m @ 6.78g/t WB3401UD 8.95m @ 7.42g/t WBD046UD 9.95m @ 4.04g/t 8.4m @ 7.06g/t WB3386UD 5.44m @ 3.69g/t WB3330UD 3.3m @ 3.6g/t
Zone 135 Domain Boundary Central Intrusive
WBD046UDW2 6.79m @ 6.44g/t
Zone 135
13
Granny Smith: New growth Northern Fleet
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
View south across Wallaby open pit and Lake Carey toward Northern Fleet
Wallaby mine
14
Agnew: New growth Waroonga North
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
Q2 2016 Advanced exploration
EMSD1374W3 780.66-785.36m 6.0m @ 30g/t including 4.7m @ 33.16 g/t Au
Drill spacing: 50m along strike, 100m – 150m vertical
15
Agnew: Barren Lands project area
Golden Swan
Strategy
- Identify favourable coarse sandstone host
- Along strike from New Holland trend to south
- Geophysics and diamond drilling to assist
targeting
- Initial RC drill program
Program
- 2 diamond holes for 300m
- 8 RC holes for 1,200m
Results
- Positive early results
- Interpretation & follow up drilling pending
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
16
Darlot: Resource extension & new growth
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
Burswood Moses Dacent CDA Oval Extensional & Resource conversion project CDRCD0023 0.3m @ 94.0 g/t Au
17
St Ives: Invincible South resource extension and growth
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
Initial Discovery History:
- Discovery hole 1994 (1m @ 0.8g/t Au)
- Re-discovered Q1 2012
- 4 of 5 DDH hit ore (14m @3.9 g/t, 12m @ 5.5g/t, 6m @ 2.3g/t, 4m @
3.0g/t)
- Maiden resource 2.3Mt @ 3.3g/t for 246koz
Current Status
- Modelling in progress
- Current Inferred Resource
Inventory 1.35Mt @ 8.4g/t for 364koz (3.5g/t COG).
- Total Greater Invincible Mining
Project Resource
- 1.8Moz since discovery
Significant Intercepts include: LD14522W1 4.35m @ 13.6g/t Au LD14522W1 5.6m @ 10.84g/t Au LD14593 9.6m @ 8.79g/t Au LD 14596 16m @ 7.92g/t Au LD14650 10.8m @ 8.85g/t Au LD14654 19.2m @ 11.42g/t Au LD14595 17.4m @ 10.40g/t Au
Invincible UG Invincible South Invincible Open Pit
Legend Blue = geological structures Green = current inferred resource model
18 EM Survey – 400m spaced lines Neptune EM Test Drilling 80X20 drilling All assays returned Modelling in progress Argo North Ext APN
EM Survey – 400m spaced lines Neptune
Argo North N
St Ives: Palaeo-channel project (additional)
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
APN
Argo
Hole ID From (m) Length (m) Grade Au g/t Comment
CD18999 63 5 15.0 Supergene WPD3897 61 10 5.5 Supergene CD19089 65 1 32.0 Palaeochannel TD13177 52 1 30.3 Palaeochannel CD19106 62 1 29.8 Palaeochannel TD13160 65 1 23.1 Palaeochannel CD19119 63 1 23.0 Palaeochannel WPD3893 61 1 22.4 Palaeochannel TD13163 61 1 22.3 Palaeochannel CD19149 62 2 9.9 Palaeochannel TD13125 58 5 4.8 Palaeochannel CD19092 61 3 6 Palaeochannel CD19023 63 5 3.3 Palaeochannel CD19089 64 4 8.5 Palaeochannel CD19119 61 3 11.1 Palaeochannel
19
Objective: Divest non-core assets
Active portfolio management Continue to Look at Value Adding Acquisitions
Sold Disposal Underway Retain Woodjam British Columbia “The wrong metal” Asosa Ethiopia “The wrong address” Yanfolila Mali “Not franchise asset” Talas Kyrgysztan “The wrong address” Chucapaca Peru “Franchise/hurdle rates” Salares Norte Chile “Great optionality” FSE Philippines “Great optionality” Arctic Platinum Project Finland “The wrong metal” Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
20
Objective: Strengthen balance sheet
- Net debt of US$1,155m at 30 June 2016
- Net debt to EBITDA of 1.05x from 1.38x at end-FY15
- US$148m of Notes bought back in February 2016 at
a 12% discount
- Equity raising of R2.3bn (US$150m) in March 2016
̵ Proceeds applied to existing US$ facilities
- Refinanced US$1,440m credit facilities in June. New
facilities amount to US$1,290m at similar rates
- First material debt maturity in June 2019 (previously
November 2017)
- Unutilised facilities of US$886m and R3.0bn
c.US$600m reduction in net debt since end-FY13
0.8 1.0 1.2 1.4 1.6 1.8 500 1 000 1 500 2 000 FY 2013 H1 2014 FY 2014 H1 2015 FY 2015 H1 2016
US$m Net debt (US$m) and Net debt/EBITDA
Net debt Net debt/EBITDA
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
500 1 000 1 500 2 000 2 500 3 000 US$ facilities Rand facilities Total facilities
US$m Debt facilities
Utilised Unutilised 100 200 300 400 500 600 700 800 900 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20
US$m Maturity schedule
21
Objective: Pay dividends
Maintaining Dividend Policy Of Paying Out 25% To 35% Of Normalised Earnings
0% 5% 10% 15% 20% 25% 30% 35% 40% 10 20 30 40 50 60 H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016
Dividend per share (Rc) and % payout
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7% 0.8% 0.9% 2013 2014 2015 H1 2016
Dividend yield
- We have consistently paid dividends on a semi-annually basis since H2 2013
- We maintain our dividend policy of paying 25% - 35% of normalised earnings
- After debt reduction, dividends take priority in terms of allocating cash flow
22
Have we delivered on our strategic objectives?
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
Making good progress
STRATEGIC OBJECTIVES Focus on free cash flow Reboot and deliver South Deep Drive brownfields exploration Divest non-core assets; no greenfields exploration or projects Strengthen balance sheet Pay dividends
23
The way forwards for Gold Fields
- Grow cash flow and margin with increase
in gold price
- Committed to delivering on our plans in
terms of both production and costs
- Continue to reduce net debt – Already
close to net debt/EBITDA target of 1x ̵ Balance sheet has flexibility with regards to capacity and maturity
- We are firmly focused on delivering a
sustainable South Deep – on track to meet 2016 targets
- Continue to evaluate value-accretive
- pportunities
Denver Gold Forum, Keeping the focus despite higher gold price, 19 September 2016
Strategic priorities Focus on cash
500 1000 1500 2000 2500 2013 2014 2015 2016F koz
Production: Actual vs. guidance
Guidance Actual 200 400 600 800 1000 1200 1400 2013 2014 2015 2016F US$/oz
AIC: Actual vs. guidance
Guidance Actual
Investor Relations Contacts Media Contact
Avishkar Nagaser Tel: +27 11 562 9775 Mobile: +27 82 312 8692 E-mail: Avishkar.Nagaser@goldfields.co.za Sven Lunsche Tel: +27 11 562 9763 Mobile: +27 83 260 9279 E-mail: Sven.Lunsche@goldfields.co.za Thomas Mengel Tel: +27 11 562 9849 Mobile: +27 82 315 2832 E-mail: Thomas.Mengel@goldfields.co.za