I am not going to give the Gold Fields corporate - - PDF document

IamnotgoingtogivetheGoldFieldscorporatepresentationtoday.InfactI am only going to talk about elements of our growth strategy and exploration amonlygoingtotalkaboutelementsofourgrowthstrategyandexploration. IfthereisanyonewantingtoknowmoreabouttheGoldFieldsproduction machineIwillgladlyansweryourquestionsafterthepresentation,or,please visitourboothwherewehaveanumberofpeoplewhocanansweryour questions. OverthepastyearGoldFields,togetherwithRichardSchoddeofMinex Consulting,hascompiledaverycomprehensivedatabaseofgolddiscoveries. Itincludesgolddepositsover100Kozinsizeandwethinkthatitrepresents wellover70%oftheouncesdiscovered. Anumberoftrendswereobserved,someconfirmingourpreconceivedideas , g p butanumberwereacompletesurprise. Today,Iwilltalkabouttwoofthesetrendsandhowtheyhaveimpactedour GoldFieldsgrowthstrategy.Thefirsttrendquestionswhethertheindustryis replacingitsproductionandthesecondquestionstheeffectivenessof exploration investment for gold explorationinvestmentforgold. GiventhatthisisAustralia’spremierminingconferenceIwillfocusspecifically

• nouractivitieshereinAustraliaaswellastouchingonournewdiscoveryin

Peru.

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Althoughlimited,Iwillbemakingsomeforwardlookingstatements,that g g g mightnotturnoutexactlythewayIhavepredicted. Ihopeyoumanagetoreadandadsorbthesestatements?

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Thebarsinthisgraphtotalsthequotedresourceandproductionouncesof g p q p golddiscoveries,includingbyproductgold,forthelast60years.Wehave alsoaddedanestimateofnewdiscoveries,withoutdefinedresources,found inthelast6to7years. Weseeatrendofincreasingdiscoverytoapeakinthemid1980’sandthena steady decline to 2010 where less than half the number of ounces is being steadydeclineto2010,wherelessthanhalfthenumberofouncesisbeing found. Giventheindustryproducesabout75Mozannuallyarewediscovering enoughnewgoldtoreplacethisproduction?

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Toanswerthisquestionweneedtolookattheproportionofdiscovered q p p

• uncesthateventuallygetmined.

Historicallyweestimateabout60to80%ofalldiscoveredresourceounces willbemined. In this graph we have coloured the bars by increasing conversion to mined Inthisgraphwehavecolouredthebarsbyincreasingconversiontomined

• unces.Soouncesfromdiscoveriesthatwilleventuallygetminedliesinthe

midrangebluesi.e.betweenthedarkandthelightcolours. Whenwelookatworldgoldproduction,theredline,youcanclearlyseethat

• verthelastdecadewehavenotdiscoveredsufficientouncestoreplace

production. Infactthepeakindiscoveriesduringthemid80’sleadsthepeakinglobal productionin2001.Itislikelyalsothatthelackofdiscoveriesinthe naughties iscurrentlyleadingthedecreaseinproductionevidentsince2001.

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Thistrendisamplifiedwhenweexaminethisgraph. p g p Thebarsinthegrapharecodedbystageofdevelopmentfromproductionand constructioninthebluestofeasibilityandexplorationinthegreens.Thered colouring arediscoveriesthathavebeenstalledindefinitely. Here you can see some projects discovered 20 years ago are still in feasibility Hereyoucanseesomeprojects,discovered20yearsago,arestillinfeasibility

• radvancedexploration.Clearlytheindustryisbeingsustainedbythe

maturingminesintheblue. Theindustryisexperiencingsignificantlyincreasingbusinessandregulatory complexitywhichcausesdelay– but– alsoweareseeingadecreaseinthe qualityofouncebeingdiscoveredchallengingtheeconomicsofextraction.

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Thisgraphshowsthegoldprice,theredline,andexplorationinvestment g p g p p categorisedintograssroots,latestageandnearminefunding. Theindustryexperiencedaquantumshiftinfundingafterthe1980’s.This coincidedwiththeeraofcheapcreditandtheentranceofrisktolerant investorsthatspawnedthejuniorexplorer. Overthisperiodtheindustrymaintainedonaveragea$2.4billionexploration investment– but thiswashighlycyclical.Thecyclesaresomewhat unrelatedtothegoldpriceorthedemandforgoldandaremoreclosely correlatedtothingslikethe2000technologystocksselloffandthe2008 creditcrisisi.e.generalmarketcyclesandavailabilityofriskcapital.

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Giventhetrendofreducingdiscoveredouncesandincreasedinvestmentitis g notsurprisingthatdiscoverycostsarerising. Inthisgraphwecanseethatthecostofdiscoveryhasincreasedfrom $6.80/ozinthe1950’s,to$10/ozin1980to$52/ozin2008. This trend is underplaying the fact that the gold price over that time has Thistrendisunderplayingthefactthatthegoldpriceoverthattimehas doubled. Soitwouldseemthatthecostofdiscoveringanounceofgoldresourceis rapidlyincreasing.Wehavenotyetattemptedtoestimatethetruereserve costperounce– possiblythenextstageofthiswork.

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Welookedindetailatthe17yearsfrom1992to2008.Thisperiodcapturedtwofull i f di l i h h f l h $2 billi d k f h $ investmentfundingcycleswithtroughsoflessthan$2billionandpeaksofmorethan$4 billion. Whatwesawwasthatthejuniorexplorerreceivedabout56%oftheindustry’sinvestment butdiscoveredlessresourceouncesthanthemajorsandintermediates.Overthisperiod juniorsdiscoveredouncesatabout$42/ozcomparedtothemajorsandintermediates’ $25/oz. Thistrendwasasurprisetous.Butaswethoughtaboutit itmadesense.Clearlyjunior explorersarenotlesserexplorationgeologists– tothecontrary someofthebestand mostdrivengeologistshaveleftthemajorstoseektheirfortuneinthejuniorsector. Itisstructural:explorationrequiresconsistentinvestmentovertimetogenerateideas, followthemupandgothroughtheiterativeprocessofdiscovery.Thecyclicalnatureofthe funding, which most deeply affects the junior explorer, does not give sufficient time for funding,whichmostdeeplyaffectsthejuniorexplorer,doesnotgivesufficienttimefor productivegreenfieldsexploration.Facedwithlimitedtimethegeologistfocuseson brownfieldsrevitalisation,whichcanbequicker but oftenlowerquality.Youknowthe

• ldadage thebestdepositsinacamparediscoveredearly.Couplethiswiththe

imperativetogrowouncesquickly,becausethat’showthemarketvaluesjuniorexplorers, thequalityoftheresourceisoftennotthefocus. Goingforwardinvestors,company’sandgovernmentneedtoexaminehowwecanprovide anenvironmentwherethereisconsistentandpersistentfundingforqualitygreenfields exploration.Thejuniormarketfundingmodelworkswelluntilitstops.

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GoldFieldsspottedthistrendsometimeagoandstarteditscurrentgrowth p g g strategyabout3yearsago. Thecompetitionfornewqualityprojectsisintense.Also,duetothelackof newprojectslargercompaniesareacquiringmoreandmoremarginalprojects withtheexpectationofhigherpricesinthefuture.Withthelackofnew discoveries it is logical to believe that prices for both gold the commodity discoveriesitislogicaltobelievethatpricesforbothgold,thecommodity, andassetswillincrease. GoldFieldshasastrategyofnoM&Aheroics.Thisdoesnotmeanwewon’t looktoacquirequalityassets– but– ratherwewillbeveryselectiveensuring thatitwillprovideaccretivegrowthtoourshareholders. Ourgrowthwillbethroughexplorationanddiscovery.Thiswaywewill improvethequalityofourportfolioandprovideaccretivegrowthonaper sharebasis. In just three years we have doubled our greenfields exploration spend to $80 Injustthreeyearswehavedoubledourgreenfieldsexplorationspendto$80 millionandmaintainedournearminefundingatover$50million.

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Ourexplorationprogrammeisfocusedondeliveringourregionalgrowthtargetsof 1Mozproductionperyearfromeachregion. Ourcommitmenthasyieldedresults: AnewdiscoverywithourpartnersBuenaventurainsouthernPeru– called Chucapaca.Injust18monthsfromthediscoveryholeintheCanahuiredepositwe announcedaninitialresourceofsome5.6Mozeq. OurpartnerOrsuMetalsCorp.announcedaresourceonourTaldybulakdeposit whereGoldFieldsowns60%. Bothofthesediscoveries,ChucapacaandTaldybulak,havesignificantupside potential. Acoupleofmonthsagoweannouncedaninferredresourceofover1Mozatthe Hamletdeposit,whichispartofthedevelopingArgoAthenacampatStIves. And,inNovemberlastyearweacquiredGlencar MiningPlcandhavesubsequently consolidatedtheYanfolilabeltinsouthernMali.Sincethenwehavecompleted

• ver70kmofaircoredrillingand30kmofdiamonddrillinginthebelt.

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IamnotgoingtogothrougheachprojectherebutthoughtIwouldtalkbriefly g g g g p j g y aboutChucapaca. GoldFieldsholds51%andBuenaventuraholds49%ofa12,700Hajoint venture.It’sthegreentenements.InadditiontothisGoldFieldsowns

• utrightanumberofadditionaltenementsshowninred.

TheareaislocatedinsouthernPerumostlyintheMoqueguaRegion.

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Wehavecompletedover22,000mofdiamonddrillingontheCanahuire p g discoveryanddefinedaresourceof5.6Mozeq. Initialscopingstudieshaveshownthatthedepositisamenabletoopenpit miningandthatwecanextractthemetalseconomically.Thishasgivenus sufficientconfidencetostartinfillandextensionaldrillingwiththegoalof completing a pre feasibility study by Q3 2011 completingaprefeasibilitystudybyQ32011. WehavestarteddrillingagainwiththreerigsactiveatCanahuireandtwo moreduemidAugust.Furtherworkonothertargetswillalsobecompleted duringtheyear.

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Inthisgraphicweareshowingallblocksintheresourceabove1g/t.Theblue g p g g isthewhittlepitwefloatedandasyoucanseethemajorityofthe mineralisationoptimises. Thereisahighgradeshootplunginggentlytothewestwherewehadsomeof

• urbestdrillresults40m@7g/tand120m@8g/t.Itsopentothewestand

there is good potential to expand this resource further thereisgoodpotentialtoexpandthisresourcefurther. Goingbacktothediscoverytrends.

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Thisgraphshowsdiscoveredresourceouncesinthebarscolourcodedbyour g p y internalcountryranking. Theredishighrisk,goldmoderateandbluelowrisk. Lowriskareasalsotendtobethemorematureortraditionalminingareas e g Australia and Canada e.g.AustraliaandCanada. Fromthisdataitisclearthatthenewdiscoveriesinthelast20yearswere largelysourcedinmoderatetohighriskcountriesandthattraditionalgold districtsarebecomingprogressivelydepleted. SoletslookatAustralia.

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Asyoucanseeverylittletogetexcitedaboutsince1993whenbothCadiaand SunriseDamwerediscovered. Thereisadistinctlackofnewlydiscoveredouncesinthelast20years notwithstandingthevigorousexplorationinvestmentaveragingabout$650million peryear. Asdiscussedearlieralotofthisexplorationinvestmenthasgonetorevitaliseold miningdistrictswithlittlegenuinegreenfieldsexplorationbeingcompleted. Withoutgreenfieldsexplorationitisunlikelythatthistrendwillbereversed. Australiaisagreatplacetodogenuinegreenfieldsexploration.Leavingasidethe recenttaxdebatesthathavealreadyhadafairbitofairtimehere– Australiais politicallyandnormally fiscallystable givinginvestorstheconfidencetofundhigh riskexplorationoverlongtimeframes. Coupledwiththistherearespectaculargovernmentgenerateddatathatcanbe usedtogeneratenewideasandhopefullyspawnnewgolddistricts. Interestingly,ifyourecalltheglobalindustryfundingpatternthe3rd peakin2008 didn’thappeninhereAustralia. 15

Hereyoucanseetheriskcapitalhasbeendivertedtoothercommoditiesand y p investorsareclearlylosinginterestingoldexploration. Wecan’tkeepondoingthesamethingit’sclearlynotworking.

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GoldFieldshasmaintainedarobustandincreasingexplorationinvestmentin g p Australia.Wefocusonnewexplorationatbothournearmineandgreenfields progarmmes. Lastfinancialyearweinvestednearly$60million. With this commitment we have been able to justify the Lefroy Mill at St Ives WiththiscommitmentwehavebeenabletojustifytheLefroyMillatStIves andmorerecentlydiscoverthegrowingArgoAthenacamp. ThissortofinvestmentmustmakeGoldFieldsoneofthetopgoldexploration investorsinthecountry.

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StIves– southofKambaldajustdowntheroadfromhereisaworldclassgold j g camp.Therehasbeenover10MozproducedfromStIvesandwehaveover5 millionouncesinresource. Withthishistoryitisincrediblethatwecanstillmakesignificantnew discoveriessuchastheArgoAthenacampjustover5kmfromourmill– shown in the box showninthebox. ThisisatestamenttothecommitmentofGoldFieldsandtheexcellent discoveryscienceofourStIvesnearmineexplorationteam.

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TheArgoAthenacampcomprisesanumberofmineralised shearsina25km2 g p p areaandalreadyhasaknownanddefinedendowmentofover3.5Moz. ContrarytoourpreviousexplorationmodelthebestmineralisationatAthena andHamletishostedintheParinga basalt.Thishasopenedupsignificant

• pportunitytodiscovermorelodes.

ThisdiscoveryisfastdevelopingintothebestnewgolddiscoveryinAustralia. Lastyear,atDiggers,wefocusedonthenewAthenaresource.

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NowIcanreportthatthedeclineandorebodydevelopmentisontrackfora p y p Decemberstartup. Theundergrounddefinitiondrillingshownhereismostlycompleteandweare

• peninguptheorebodywhichisdeliveringrobustwidthsandgrades.

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ThenextcabofftherankisHamlet. Weannounceda1MozinferredresourceinMayandwearecurrentlyinfill drillinganddrillingdownplungebeneaththeresource. Theorebodyisclearlyopeninthatdirectionwith8m@10g/t,7m@7g/tand 12m @ 8g/t 12m@8g/t. Hopefullynextyearwewillbeabletoshowdevelopmentintothisorebody anddescribetheYorick depositasournextresource.AtYorick,whichis500m eastofHamlet,drillingisidentifyingdiscretezonesofmineralisation displayinggoodplungecontinuity. Thiscampcontinuestodeliverandweareveryexcitedaboutitspotential. MovingtoAgnew.

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Agnewisthesilentandconsistentperformer. g p Theminehasreservesandresourcesinexcessof3.5Moz.Thisyearwehave drilledtheextensionofKim,beneaththetheWaroongaopenpit,and extendedthemineralisationbyanother500mto1,200mbelowsurface. We are still in the process of completing the resource which will hopefully Wearestillintheprocessofcompletingtheresourcewhichwillhopefully extendAgnew’slifetoabout10years.

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HereyoucanseethenavidrillingcompletedtoextendKimtodepth. y g p p ThedrillshavenowmovedtotheMainNorthLodedrillout. GoldFieldsnearmineexplorationstrategyatbothStIvesandAgnew– has replacedandinfactgrownourreserves– soourstrategytogrowthrough exploration is working exploration isworking. MovingtoourAustraliangreenfields portfolio– wherewehaveassembleda portfolioofpromisingearlystageopportunities.

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GoldFieldsgrubstakedjuniorexplorerClancyexplorationLtdbackin2004so g j p y p thattheycouldfinishadataprocessingandmodellingexerciseovertheEast LachlanOrdovicianArcs.Thesearcsarehosttoanumberofsignificant depositsincludingCadiaRidgeway,NorthparkesandCowal. AfterthedataprocessingClancyandGoldFieldsgeneratedanumberof targets with the potential for porphyry mineralisation Clancy acquired the targetswiththepotentialforporphyrymineralisation.Clancyacquiredthe tenementsandlaterIPO’d. GoldFieldshasnowcompleted7JV’swithClancyandacquired2projectsin itsownright.Wearecurrentlyaggressivelyexploringthesetenements. Thisisagoodexampleofhowjuniorexplorersandmajorscandevelopa strongalliancethatbenefitsbothparties.ConsistentfundingfortheseJV’s hasallowedafocusonqualitygreenfieldsopportunitiesthatwillhopefully developintosignificantdeposits.

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OurtargetisahiddenCuAuporphyry. g p p y y Beingamatureregion,outcroppingmineralisationhasmostlybeenfollowed up,andwearechallengedbyhavingtoexplorebeneath20140mof transportedcover. W i h i d i i i Weareusingasmuchscienceaswecanandusingasystematicaggressive approach.Weareconstrainingtheprogrammetotheintersectionofsub croppingsystemswithadisciplinedfollowup.

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OneareaforfollowupisattheMyallJV.Herewehavedefineda3by3km p y y AuCuanomalywhichiscoincidentwithmagneticandgravityanomalies. Wehavealreadyidentifiedporphyryalterationandmineralisationandwewill nowdrilltesttheprioritytargets. This is high risk – high reward exploration which through persistence and Thisishighrisk– highrewardexplorationwhichthroughpersistenceand technicalexcellencewearenowdeliveringencouragingresults.

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TheDelemarian projectisanexampleofusingtheexcellentgovernment p j p g g datasetstogenerategenuinegreefieldstargets. HereGoldFieldshasstakeda12,000km2 tenementpackageinSouth Australia. The target is a world class sediment hosted orogenic deposit like Telfer under ThetargetisaworldclasssedimenthostedorogenicdepositlikeTelferunder relativelyshallowcover. Aircoreprogrammesdrillingthroughthiscoverhaveidentifiedlargeareasof lowlevelanomalism. Andwearecurrentlyinfillaircoredrillingoneofthesetargetswhichis45km by15kminsize.Youcanonlydothistypeofexplorationinastable(politically andfiscally– letmeremindyou)countrywhichprovidesexcellentincentives forthishighriskinvestment.

SowiththatIwouldliketothankyouforyourattentionandIwouldbehappy y y ppy totakeanyquestions. Iwanttoleaveyouwiththefollowing: Ifwearetostemorevenreversetheobserveddeclineingolddiscoveries; governments junior and major company’s as well as investors need to work governments,juniorandmajorcompany s,aswellas,investorsneedtowork togethertowardsanewparadigmthatwillprovideconsistentinvestment fundingtoqualitygreenfieldsinitiativesinordertosustainthegoldindustry’s future.

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