Gold Fields H1 2020 results Nick Holland: CEO 20 August 2020 - - PowerPoint PPT Presentation
Gold Fields H1 2020 results Nick Holland: CEO 20 August 2020 - - PowerPoint PPT Presentation
Gold Fields H1 2020 results Nick Holland: CEO 20 August 2020 Forward looking statement Certain statements in this document constitute forward looking statements within the meaning of Section 27A of the US Securities Act of 1933 and
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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 or joint ventures, 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 occurrence of unanticipated events. Further details of potential risks and uncertainties affecting Gold Fields are described in Gold Fields’ filings with the Johannesburg Securities Exchange and the US Securities and Exchange Commission, including in Gold Fields’ Annual Report on Form-20F for the year ended 31 December 2017, Gold Fields’ Integrated Annual Report 2017 and Gold Fields’ Annual Financial Report 2017
Forward looking statement
H1 2020 results | 20 August 2020
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H1 2020 highlights
- Covid-19 impact largely contained thus far
- Net cash flow of US$320m
- Mine net cash flow of US$405m
- Net debt (excluding lease liabilities) down to US$876m
- Normalised earnings more than doubled to US$323m
- Interim dividend of R1.60/share = FY 2019 dividend
- Salares Norte commenced – funding plan secured after US$250m equity raise
Delivering the higher gold price AIC down to US$1,065/oz in H1 2020 from US$1,106/oz in H1 2019
H1 2020 results | 20 August 2020
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Covid-19 update
- The relatively high number of positive cases reflects the high prevalence rate of the pandemic in
neighbouring communities at our operations in Peru, Ghana and South Africa
- Testing among our workforce is also more stringent than in public health facilities in these countries
Current status
Note: "Awaiting results", "Active cases" and "In hospital" refers to the current figures. South Africa includes the corporate office. West Africa includes Galiano/Asanko
H1 2020 results | 20 August 2020
Americas Australia South Africa West Africa Group Tested 11 801 11 3 952 4 327 20 091 Positive 857 - 330 256 1 443 Negative 10 400 11 3 503 4 021 17 935 Awaiting results 544 - 119 56 719 Active cases 464 - 148 46 658 In hospital 13 - - - 13 Recovered 393 - 181 210 784 Died 1 - 1 1 3
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Americas region
Mi Mine: Cerro Corona (Peru)
- Att. production: 108koz (Au eq)
AIC: US$984/eq oz Net cash flow*: US$49m inflow Pro roject: Salares Norte (Chile)
A globally diversified gold miner
South Africa region
Mi Mine: South Deep
- Att. production: 100koz
AIC: US$1,234/oz Net cash flow*: US$5m inflow
West Africa region
Mines es: Tarkwa, Damang and Asanko
- Att. production: 384koz
AIC: US$1,093/oz Net cash flow*: US$139m inflow
Gold Fields Group
Mines: 9 Projects: 1 Countries: 5
- Att. production: 1,087koz
AIC: US$1,065/oz Mine net cash flow: US$405m inflow Net cash flow**: US$320m inflow
Australia region
Mines es: St Ives, Granny Smith, Agnew and Gruyere
- Att. production: 494koz
AIC: US$960/oz Net cash flow*: US$208m inflow
H1 2020 results
H1 2020 results | 20 August 2020
*Net cash flow = Cash flow from operating activities less net capital expenditure and environmental payments and lease payments **Net cash flow = Cash flow from operating activities less net capital expenditure, environmental payments, lease payments and redemption of Asanko preference shares
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Delivered on reinvestment plan
- The Group has more or less achieved cost and production guidance over last 7 years
- Implemented the turnaround at South Deep which included a labour restructuring
- Reinvested in the future of the business
̵ Delivered Gruyere which was ramped up ahead of plan – low cost, long life mine ̵ Delivered the Damang Reinvestment Plan ahead of schedule (on most metrics) – getting into the main part of the orebody (Tarkwa phyllites) which is expected to result in significant production and cost improvements from H2 2020 ̵ Delivered a favourable feasibility study for Salares Norte which has progressed to construction phase
H1 2020 results | 20 August 2020
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Strong organic growth within the portfolio
- Extended the life-of-mine of Cerro Corona to 2030
̵ Exploring potential upside
- St Ives: life extension driven by growth at the Invincible complex
- Exploration success at Agnew – best position the mine has been in for many years
- Have addressed concerns around the Reserve position
̵ Reserves outside of SA exceed 20Moz – c.10 year mine life ̵ Production outlook of 2.0-2.5Moz for the next 8-10 years ̵ Organic growth opportunities at all of our assets ̵ Replaced depletion and slightly added to Tarkwa’s Reserves in 2019 – first time in 10 years
- Starting to see some exploration success
̵ Continue to replace depletion and add Reserves in Australia
- Discovery cost per ounce is c.A$80/oz, compared to cost of acquiring ounces of >US$300/oz
H1 2020 results | 20 August 2020
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Tarkwa potential
Untapped Down Dip Potential along 22km Strike Length And Room For New Discoveries H1 2020 results | 20 August 2020
N
1 2 3
Kilometer
Down dip Extension Potential Inferred Resources Indicated Resources Measured Resources
Pepe – Atuabo – Mantraim –Tebberebie- Awonaben (PAMTA)
Kobada
Kottraverchy Pit
Ulap Nth Ext 1
West Hill
Akon Nth Ulap Nth Ext 2 Ulap-Pepe Dozer Build Yard
Pepe Central
Kottra-Ridge West Corridor
Pepe East 2 Pepe East 1 Continue testing Pepe East down-dip potential.
Potential multi million ounce ‘order of magnitude’ exploration target
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Damang complex
W-E Section (25896mN) H1 2020 results | 20 August 2020 771 RL
Huni Sandstone Tarkwa Phyllite Intrusive/Dolerite Banket Hangingwall Banket K1 Banket Footwall Banket K2
25896m N
As-mined (17th Aug) DRP LoM Aug FC 0.3 0.6 1.0 2.0 Assay (g/t)
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Greater Agnew Project
Gold Fields has made 2 strategic investments for the long term at Agnew
- A$112m sustainable power solution – hybrid Gas, Solar, Wind Power solution
- A$38m for new accommodation camp – investment for our people
Next Investment Phase (2021-2023): Reserves, Process plant upgrade, Increased gold production Underpinned by continued exploration success
H1 2020 results | 20 August 2020
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Resource Potential – Greater Waroonga
2013 2019
Main/FBH South Waroonga North Lower Saint Kath Lower Kim/South/FBH Link
Priority 1 Priority 2
North South Order of magnitude Resource Potential of 500koz to 1.0Moz (over 3-year window)
FBHOD486017 11.25m at 20.61g/t
Order of magnitude Resource Potential of 500koz to 1.0Moz (Over 5-year plus window) H1 2020 results | 20 August 2020
Stated boreholes are selected to indicate the potential grade range and mineralisation width
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2013 2017 2019
Priority 1 Priority 2 Hidden Secret Himitsu 200 Series Genesis Lower Sheba South & Spitfire Sheba Lower Sheba North
Order of magnitude Resource Potential of 600koz to 1.2Moz (over 3-year window) South North 300m
Resource Potential – New Holland
Greater New Holland Complex
EMSD1873W1 3m @ 32.64g/t EMSD1867 4.07m @ 7.45g/t EMSD1632 – 5.3m @ 26.85g/t EMSD1632 – 3.56m @ 3.52g/t
Order of magnitude Resource Potential of 600koz to 1.0Moz (over 5-year plus window) H1 2020 results | 20 August 2020
Stated boreholes are selected to indicate the potential grade range and mineralisation width
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Resource Potential – Redeemer Complex
H1 2020 results | 20 August 2020
Barren Lands Zone 2 North – southern infill
500m
Zone 2 South Zone 2 North Priority 1 Priority 2
Order of magnitude Resource Potential of 600koz to 1.2Moz (over 3-year window) North South
Greater Redeemer Complex
EMSD1934 17.08m @ 1.94g/t from 874m – (Basalt) EMSD1936 W1 12.85m @ 4.74g/t from 978m - (Basalt) 13.90m @ 3.93g/t from 1005m - (Basalt) EMSD1936 W2 2.00m @ 8.73g/t from 955m - (Basalt) 5.55m @ 3.01g/t from 959m - (Basalt) EMSD1929 0.68m @ 33.1g/t, FW lode 1.81m @ 33.34g/t, FW lode EMSD1929 1.81m @ 33.34g/t
Redeemer North
Order of magnitude Resource Potential of 300koz to 400koz (over 5-year plus window)
Stated boreholes are selected to indicate the potential grade range and mineralisation width
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- St. Ives
Invincible Camp Exploration
0m RL
N
Larger points = 2020 Intercepts
S
200m
- 750m RL
Invincible Invincible South
Additional Extensional Underground Invincible Deeps Fenton Drake Invincible Footwall South Invincible Stage 6 Invincible Mids Invincible South Extensions Invincible Deeps ADEX Greater Invincible North
LD82957W6: 21.9m at 13.17g/t LD82955W1: 42m at 9.9g/t LD81611W18: 11.6m at 9.45g/t LD83046 42m at 1.99g/t LD830171: 22m at 6.66g/t IMD-0761: 9.8m at 11.78g/t
Potential multi million ounce ‘order of magnitude’ exploration target to be profiled over ~3 years
H1 2020 results | 20 August 2020
Stated boreholes are selected to indicate the potential grade range and mineralisation width
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Strong cash generation in H1 2020
- Strong cash generation
̵ Mine cash flow: US$414m in 2019, US$405m in H1 2020 ̵ Net cash flow: US$249m in 2019, US$320m in H1 2020
- De-geared faster than expected –
c.US$700m over 18 months (includes equity raise)
- Raised two new bonds in May 2019 –
both US$500m with maturities in 2024 and 2029
- Restructured the bank debt
- Successful equity raise completed in
February 2020 – US$250m at a 3% discount
*Net Cash Flow = Cash flow from operating activities less net capital expenditure and environmental payments and finance lease payments
H1 2020 results | 20 August 2020
- 300
- 200
- 100
100 200 300 400 2013 2014 2015 2016 2017 2018 2019 H1 2020
Net Cash Flow
100 200 300 400 500 600 700 800 900 2013 2014 2015 2016 2017 2018 2019 H1 2020
Capital expenditure
Sustaining capital Project capital
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Balance sheet
H1 2020 results | 20 August 2020
- Net debt (including lease liabilities) amounts to US$1,239m at end-June 2020 (leases relate to Genser,
Gruyere power plant and gas pipeline, Granny Smith power plant), compared to US$1,664m at 31 December 2019 ̵ Net debt (excl. lease liabilities) was US$876m, compared to US$1,331m at 31 December 2019
- Net debt (including lease liabilities) to EBITDA of 0.84x at end-June 2020
- Unutilised facilities (committed and uncommitted) of US$1,514m, R4,135m and A$300m
- US$940m in cash on the balance sheet
500 1000 1500 2000 2500 3000 3500 4000 US$ facilities Rand facilities A$ facilities Total facilities
Available facilities at 30 June 2020
Utilised Unutilised 0.0 0.5 1.0 1.5 2.0 200 400 600 800 1 000 1 200 1 400 1 600 1 800 2 000 FY 2013 H1 2014 FY 2014 H1 2015 FY 2015 H1 2016 FY 2016 H1 2017 FY 2017 H1 2018 FY 2018 H1 2019 FY 2019 H1 2020
US$m Net debt (US$m) and Net debt/EBITDA – excl. lease liabilities
Net debt Net debt/EBITDA
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Salares Norte update
- Engineering progress 74.7% at end-June (plan: 76.0%)
- Camp Phase 1 progress 80.8% at end-March (plan: 84.3%)
̵ Camp Phase 1 spend of US$11m, in line with plan
- H1 pre-development cost of US$11m vs plan of US$12m, all spent in Q1
- Mining contract awarded to ICV after a rigorous tender process
- Work on diversion channels has commenced
- Bulk earthworks contract awarded at end-May and preparation for bulk earthworks on site has
commenced
- Main procurement packages have been awarded
- 61% of total capex has been awarded and priced and only subject to escalation
- Currency hedges provide an additional cushion of c.US$70m
- District exploration spend of US$7m
- District drilling 8,458m during H1 2020
̵ Drilling activities stopped at end of Q1 2020 and the exploration team was moved offsite in response to COVID-19 pandemic
H1 2020 results | 20 August 2020
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Salares Norte update continued
Progress in pictures
H1 2020 results | 20 August 2020
Diversion channel assembly Channel trenching Camp phase II structural excavation Camp phase I
Regional overviews
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Australia
- 14% year-on-year increase in gold produced driven by the inclusion of Gruyere which
reached commercial levels of production at end-September 2019
- Stage 2 of the electricity supply project concluded at Agnew during H1 2020
̵ 13MW battery plant commissioned in March ̵ 18MW wind farm commissioned in May
- St Ives continued its transition to a predominantly underground operation, driven by the
ramp up in production at Hamlet North ̵ All open pit ore sourced from the Neptune pit in H1 2020
- Region generated net cash flow of US$208m (A$317M) in H1 2020
44% of Group managed production
H1 2020 H1 2019
- Att. Production
koz 494 435 AIC US$/oz 960 1,185 A$/oz 1,463 1,677 Net cash flow* US$m 208 92
H1 2020 results | 20 August 2020
* Net cash flow excludes Gruyere project capital for 2019
1Moz per year region
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Americas
- Cerro Corona was significantly impacted by the COVID-19 pandemic during H1 2020
- As announced in Q1 2020, we estimate the impact of COVID-19 on gold equivalent
production will be c.25koz for FY 2020
- In addition, rebasing the price ratio at the end of Q1 had a negative impact of c.30koz on
gold equivalent production guidance for FY 2020
- Despite the challenges presented by COVID-19, Cerro Corona generated net cash flow of
US$49m in H1 2020 (H1 2019: US$52m)
10% of Group managed production
H1 2020 H1 2019
Au Eq production koz 109 157 Au Eq AIC US$/oz 984 698 Au only production koz 64 81 Cu only production kt 13 16 Au only AIC US$/oz 709 290 Net cash flow US$m 49 52
H1 2020 results | 20 August 2020
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West Africa
- Mining in main Damang pit transitioned through the bulk of the Huni Sandstone during H1 2020,
with minimal volumes remaining ̵ 35% of ore mined from Tarkwa Phyllites in Q2 2020 vs. 20% in Q1 2020 ̵ Mining will occur predominantly in the higher-grade, more consistent Tarkwa Phyllites during H2 2020 ̵ Notable improvement expected at Damang in H2 2020
- At end-June, 42 months into the the Damang reinvestment Project:
̵ Tonnes mined were 14% ahead of plan ̵ Gold produced was 13% ahead of plan
- Region generated net cash flow of US$139m in H1 2020 (H1 2019: US$72m)
̵ Including US$38m received on redemption of preference shares from Asanko brings the regions cash flow to US$177m for H1 2020
H1 2020 H1 2019
Managed production koz 420 438 AISC US$/oz 1,060 892 AIC US$/oz 1,093 1,007 Net cash flow* US$m 139 72 37% of Group managed production
* Net cash flow includes Damang project capital
H1 2020 results | 20 August 2020
Numbers include 45% of Asanko Gold Mine
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South Africa
- 1 Fatality during H1 2020: Mr. Abel Magajane
- Q2 2020 severely impacted by COVID-19 related restrictions
̵ Was placed on care and maintenance for the first month of Q2 and operated well below its full labour complement for the remainder ̵ C.32koz lost during COVID-19 lockdown and ramp up
- Despite the COVID-19 interruptions, the mine managed to generate positive cash flow of R79m
(US$5m) during H1 2020
- c.30% year-on-year productivity improvement in destress and development
- Improved compliance on stoping, up to c.90%
- Migration to North of Wrench from Current mine continued during H1 2020
̵ Increased volumes from North of Wrench during Q2 2020 as extraction from 3W and 4W corridors increased
H1 2020 H1 2019
- Att. Production
koz 100 92 AISC US$/oz 1,227 1,529 AIC US$/oz 1,234 1,529 Net cash flow US$m 5
- 18
9% of Group managed production
H1 2020 results | 20 August 2020
Outlook
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2020 outlook and guidance
2020 revised Group guidance
- Attributable equivalent gold production: 2.20Moz – 2.25Moz
- AISC: US$960/oz – US$980/oz
- AIC: US$1,070/oz – US$1,090/oz
Focus areas for H2 2020
- Continue to navigate Covid-19
- Damang: deliver higher grade from main part of the orebody
- Salares Norte: commence construction in Q4
- Further embed productivity improvements at South Deep – restart new mine development
- Continue to reduce net debt – repay 2020 bond
- Commitment to maintain dividend policy
H1 2020 results | 20 August 2020