Nico Muller Executive VP: South Africa Our sincere thanks for - - PDF document

Nico Muller – Executive VP: South Africa Our sincere thanks for actually making it on time. My name is Nico Muller. I was appointed by Gold Fields on 1st October responsible for Gold Fields South Africa. That sounds quite neat, but actually it means South Deep because we’re a single asset business. Anyway, I am the Executive Vice President and I will act as host for today. Without further ado, Mr Holland, if I could ask you to come and introduce our business. Thank you so much.

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Nick Holland – Chief Executive Officer What I really want to do is give you some of the history since Gold Fields has owned South Deep. I will then hand back to Nico, and he will tell you about his early observations and what he sees as the way forward together with the team. I think a lot of people haven’t been in the Gold Fields stock for that long and maybe they don’t know some of the history. We have only owned South Deep since April 2007. That is when we acquired 100% of the operation. That doesn’t sound that long ago, but it is around seven years essentially that we’ve had the mine.

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What have we actually got? Why did we buy this? I was a key part of this decision in Gold Fields seven years ago. Well, first of all it’s one of the largest ore bodies in the world, 38 million ounces of reserves and 76 million ounces of resources. We have had a hell of a lot of geologists crawl over this

• re body in terms of looking at plans etc. And generally I think everyone has said this is something

special, it’s something unique. And it is really the Elsburg reef package that excited us because of the thick reef packages we’ve got and the natural ability for us to deploy mechanised mining. If you look at the West Wits a lot of the conventional ore bodies are narrow. They are dipping at about 35 degrees. They don’t really lend themselves to mechanised mining, whereas this ore body is dipping very gently at around 8 degrees. The reef packages are anything from 5m to 10m in the more proximal area of the ore body, up to 100m in the more distal part of the ore body. So it lends itself to mechanised mining, and that’s one

• f the things that appealed to us. We saw the potential here to create a highly productive

underground bulk mechanised mine. Also we thought this could be low cost, particularly if you could deploy open stoping as the main basis of mining, where you can get anywhere between 5,000 and 10,000 tonnes in a break as opposed to 500 or 800 tonnes in a normal bench or drift. We had a fairly good confidence in the ore body, and we have certainly over the last seven years proved that up. I must say all of the work that we’ve done in terms of drilling it has only confirmed our understanding of the ore body. So nothing has changed in terms of our view of what we have ahead

• f us. The other thing is over the seven years that we’ve owned it we’ve largely built the infrastructure

that’s required. And I think you will see as you go underground that there is good infrastructure. In surface in particular you can see a lot of it as you came in this morning. When we bought this

• peration a lot of that didn’t exist.

And the other thing is it is a mechanised mine. Some people in the industry talk about mechanised

• mining. We’re doing mechanised mining. That’s the difference. I don’t think we’re doing it as well as

we would like to do it, and that’s the opportunity for us, but the point is we are doing mechanised mining.

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So what did we acquire? Let’s go back to 2007 because essentially we only completed the deal in April 2007. What did we have in hand when we bought it? Well, we didn’t have a very good understanding of the detail in the geological models. We had low resolution. We had limited surface

• drilling. So we didn’t really have much of a view beyond the first five to ten years because simply

there hadn’t been enough work that had been done. Essentially the deeper parts of the mine were based on what we call a Bayesian theory, in other words, if we are seeing good drill results in the shallow parts of the mine there is an assumption that that continues into the deeper parts of the mine. And we know with changes in structures and facies that that often isn’t valid. So we didn’t have the confidence in the ore body that we have today. We didn’t have a robust life of mine that underpinned the reserves. Normally when you declare a reserve you’ve got to have a detailed depletion profile year-on-year that actually talks to the reserve. We didn’t have that, so we had to do a lot of work to improve that. The shaft hoisting capacity - we only had 200,000 tonnes a month. Remember the original feasibility study envisaged a 330,000 ton a month ore capacity with 370,000 tonnes in total hoisting, which includes 40,000 tonnes of waste. We only had 202,000 tonnes of that 370,000. We had a metallurgical plant that could only do 220,000 tonnes. So we were short on the hoisting capacity and we were short on the processing capacity. We also had no access to the ore body below 95 level. Now, if you look at this mine, this mine is really made up of what we call current mine, which is everything down to 95 level. There are about 2 million ounces in there of reserves. That is all we had. We didn’t have any infrastructure that went below that when we bought it. Then you’ve got the new mine, north of the wrench fault. That is about 11 million ounces. And then the rest of the reserve is south of that. So we only had access to probably 5% to 7% of the reserve at the time we bought it. As you will see when we go through this we now have access to a substantially greater portion of the reserve today. One of the key things we’ve done over the last seven year is to push the development below 95 level into 100 level and 105 level. We had an old backfill system. We only had a CCT backfill system. We didn’t have the FBT. And

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that’s a problem because when you look at the big open stopes that need to be paste filled, they are more amendable to the FBT type paste, whereas the CCT is more amendable to the de-stress

• system. So we had a problem there as well, and we had to get a new backfill system in place.

We had no underground workshop facilities. We had very small, scattered satellite workshops. You might see some of them depending on where Adriaan and Nico take you today. But we didn’t have

• ne big workshop. One of the big plusses is that we’ve managed to essentially build the big

workshop on 93 Level over the last two or three years. Imagine two rugby fields underground. That is really what you’re seeing in terms of the new workshop, as opposed to these very confined spaces that existed in the satellite workshops. We had two old tails dams that were very close to full capacity. So we didn’t have a life of mine tails facility in place, so that was a major concern for us in 2006. And we didn’t have enough installed Eskom power supply. We only had 80 megawatts of installed capacity and we need 160 megawatts to underpin full production. That was something that we had to address as well. Cooling facilities were minimal, and we didn’t have enough cooling and ventilation to service the current mine and of course the new mine that we were going to be developing over time. At that point they were probably mining about 80,000 tonnes a month intermittently. And the other thing we were doing was, we were mining the VCR. We had conventional mining taking place on the VCR, which is

• n the other side of the sub-crop. And we had 2,000 people employed doing handheld mining on the
• VCR. Now, the VCR is still there. It is high grade. But we decided when we bought the mine that we

must focus on the Elsburg, the massive mining which is implicit with the Elsburg reef. Of course things like hostel facilities, housing facilities were just inadequate. So we had a lot of work to do from April 2007 to where we are today.

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From 2000 to 2005 it was thought that the reef package was really split into a number of different units with different grades. This is not like a VCR or a carbon leader where it is really one reef

• package. These are a number of different reef units. And the initial thinking was it was just a few
• units. In fact over time we’ve managed to delineate a number of different units. And today we’ve

actually worked out there are about 16 different reef units in the thick Elsburg reef package. That’s quite important for us because we’re not mining all of these 16 units. We are mining a sample

• f the higher grade portions within those units. You can imagine when it gets to the more distal part
• f the ore body - where it opens up like a wedge and it gets quite thick - there is no way that we can

mine 100m thick packages. We can only mine the best parts of that. When we come close to the shoreline where the wedge is a lot thinner and we’ve got the higher grade stuff, generally we’re mining most of that. So we had to redefine our understanding of this whole ore body. By 2007 we started getting a better understanding. By 2008 we decided that we had the 16 units based on our interpretation, and that gave us a much better resolution as to what to mine. That was also assisted by doing a lot of surface drilling. By 2009 that was also facilitated by underground LIB (long-inclined borehole) drilling where basically we drill across the ore body. That is not really to redefine grade or get better resolution on the grade itself. It is to get better resolution on the geometry of the ore body. The surface bore holes are giving us information on grade. The LIB holes are giving us information about structure and geometry largely. Allied to that we started an infill programme to get better definition, followed by grade control drilling to know exactly what we’re going to be mining into the future. So all of this geological information that we’ve captured from additional surface holes, additional LIB holes and grade control drilling has helped us to redefine where the ore body is, what the actual structure of the declines needs to be, and where they need to be.That has helped us to work out a life of mine plan that we can move towards with a lot more confidence.

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So all of that has been achieved over the last seven years. We haven’t fundamentally changed our view on the reserve. I think here is a good view as to what we’ve done. Before we bought this a 3D survey was done to basically work out the structure of the ore body, not to define the mineralisation - but more to define the structure and essentially where the mineralisation ends. That has been confirmed by surface drilling. If you superimpose all of the surface drilling we’ve done over the last seven years, about 50,000 metres, that surface drilling superimposed on the 3D seismic survey has actually confirmed the structure and geometry of the ore body. So that is very reassuring. There is a high correlation between that and the surface drilling, which has given us better information on the

• re body itself.

The LIB drilling, as I’ve said, is really to define the structure of the ore body. So that has helped. And then grade control drilling - which is not something which is generally practised in the West Wits because mines are a single ore type, - to assess the details of the 16 different reef packages. All of that has been embedded into the MRM practises on the operation.

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If you look at the actual mine grade over the last four or five years you can see that’s the blue bars. And then the red line across shows you the reserve grade. It has come down a little bit as we’ve got better resolution. One of the other reasons it has come down is that we have reassessed the mine call factor. We started off with a mine call factor that was a bit higher. As we’ve got a better understanding through empirical data we’ve adjusted the mine call factor. That is one of the reasons it has come down. But I would say we have a good understanding and a good confidence in the grade that exists there. So bottom line, the ore body is here. It just needs to be mined. So what have we done to set up the infrastructure over the last seven years to get that in place? Over that period regrettably we lost a

• year. In April 2008 we had a tragic accident here where nine people were killed. We stopped the
• peration in response and achieved very little in terms of mine development in 2008. We really only

got going in terms of installing the infrastructure that we needed in 2009. So over that period of time we’ve essentially built the mine. The one thing that I must give huge credit to is the projects team on this operation. They came to the board in 2009 with a capital vote, which was about R8.5 billion, designed to do most of the infrastructure including some of the new mine development. And if you look at where we’ve got to today, we have spent 85% of that approved vote and we’ve achieved what we wanted to achieve pretty much on schedule and on budget if you adjust for the time value of money. I don’t think most people off the mine understand what an achievement this is. The project work to actually build the mine and build the infrastructure has been world-class, as has the work we’ve done to redefine and confirm our understanding of the ore body. Both of those pieces of work have been absolutely world class. That is not just my view. I’ve had a number of people here both locally and overseas. We had Turgis here in 2012. I brought them in to do a detailed review. We had our Australian team - that came from

• ur operations - at the back end of 2013. And we had an engineering firm from Canada that also

came in about 15 months ago. And the one commonality between all of these reviews is that the understanding of the ore body is good, and the infrastructure that has been put in place here is world-class and should be able to support these workings for many decades to come into the future.

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Here is some of it that we have put in place. Over the period that we have owned it we have put in 17 km of development. Essentially all of that is in the new mine. One of the other things that has been hell of a frustrating for me is the current mine infrastructure, everything down to 95 level, was

• inherited. I guess, if we were building this mine from scratch today we would have done it differently.

They don’t have twin ramps. They have single ramps which can be a problem. If something breaks down in the ramp, that’s it. We can’t get access. Whereas the new mine is based largely on twin

• ramps. We didn’t have enough ore handling capacity close enough to all of the different mining

areas. But we inherited that. That’s what we bought in 2007. Unfortunately one of the things you learn with these kinds of operations is you can’t go and retrofit. So the new mine stuff I think is state-of-the-art. And hopefully Nico and his team will share some of that with you. But we can’t go back and retrofit current mine. Current mine, however, is only about 5% of the total reserve on this operation. And that is probably going to be mined out in another nine years. So we’ve put in the hoisting capacity. We now have 370,000 tonnes of hoisting capacity. That will accommodate 330,000 of reef and 40,000 tonnes of waste. We’ve done a lot of work on getting the fleet up to what we need, a fit for purpose fleet. But our maintenance is not yet where we want it to

• be. We’ve got the plant that has been expanded. I think that’s great. We’ve got the backfill plant built.

Remember I said to you we need FBT to fill the open stopes we’re going to mine. We can’t use the pre-existing CCT because of the density of the tails. So that’s in place. We’ve got a brand new tails storage facility which will last us for the life of mine, which is very

• comforting. We’ve done a lot of surface drilling. And we’ve put in five phases of underground

refrigeration and cooling, which will provide enough cooling and ventilation not only for the current mine but also for a substantial part of our new mine requirements.

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We’ve built a brand new workshop on 93 level. There is so much redundancy built into this that I think we can spread the machines out over a wide footprint. So hopefully we will have that fully

• perational in the months to follow.

We’ve upgraded our accommodation. We now have installed capacity for life of mine of the power that we need. Of course load shedding is another problem, but the important point is we have the installed capacity that is required for life of

• mine. We’ve built mechanised training facilities. In fact if you drove in here you may have seen on the

left there is a mechanised mining training centre. So the basic shell and the infrastructure is there, but we need to really review whether the training is appropriate at this point in time.

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So that is some of the stuff that we’ve done over the last number of years. So when we bought this in 2007 a lot of the de-stress mining, in fact all of it, was being done hand held. It was conventional de-

• stress. One of the first things we changed was to make that mechanised. And that took place in 2008

and 2009. We stopped the VCR. We retrenched 2,000 people and we said we’ve got to focus on the Elsburg package. That is really the magic of South Deep. We started doing a lot of the de-stress into the new mine. In fact over this period of time - if you look at where we’ve got to now - I think this is a very telling table over here. Of the current mine, which is 2.2 million ounces, we have actually de- stressed 96% of that already. That is done. When we bought it, it was two-thirds done. That was all handheld, conventional. Since we have owned it we’ve done all of the rest. Essentially the current mine is de-stressed. When we bought it in 2007 none of the new mine had been de-stressed. Over that period of time we have de-stressed 9% of the 11 million ounces that is north of the wrench fault. That is another million

• unces that have been de-stressed. This is really akin to underground development. Over that period
• f time we’ve got a reasonable inventory of de-stressed ground. Current mine we have enough to

mine 80,000 tonnes per year for around about ten years from that particular area. Safety has also improved. As we have mechanised the operations you can see our safety has

• improved. Let me tell you, safety is the absolute number one priority on this operation. We won’t

compromise safety for anything. I had to take a really tough decision last year to shut the mine for four months. I wasn’t happy with the state of the support in some of the haulages. A lot of these haulages related to the current mine that we had inherited when we bought the operation. Some of the mesh was buckling. There was a lot of loose rock that needed to be bled etc. And these were main arterial access ways to the development and the de-stress workings. So we had to stop and fix, and that has had a major knock-on effect, which has not only hurt 2014 but unfortunately it is also going to hurt into 2015.

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We have also right-sized the operation. We reduced our workforce by 15% last year. Depending on what Nico and Adriaan’s views are - and it is early days - we’ve probably got enough people. The question is do we have the right mix of skills? That is one of the key areas that the team is going to be working on. We’re going to have to train people. One of the things the Australian team told us is that we’ve not only got too many people but we’ve got too many machines. They thought that we weren’t really utilising machines the way you would internationally by deploying them to multiple ends. We were trying to work one end with one

• machine. So one of the things we have done is we’ve dropped the number of machines. I think that

strategy was probably correct. But unfortunately we haven’t really got any uptick in efficiencies and

• productivities. So decongesting the mine is a good concept, but we haven’t yet leveraged on the

smaller footprint of machines and the people that we have. That is something that Nico and Adriaan will be focussing on with the team.

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I’ve talked about the safety-related stoppages. I think enough said on that. Obviously it is something we are going to have to be mindful of in the future, and make sure we never get in this position again where we have to pull back the operation. That means we’ve got to do all of our support right, and we’ve got to do it right the first time. We can’t come back. Towards the middle of last year I became more and more convinced that we needed strong local mechanised underground mining skills. And we managed to convince Nico to come and join us, to leave the greener pastures of the platinum industry and join the gold miners. We were very fortunate and maybe my negotiating skills were good, or maybe he didn’t understand what he was getting into. He is probably going to share that with you in a moment. Nico has brought in a team which we think gives us the best possible opportunity to realise the potential of South Deep. And that is probably where I want to end, because Nico is going to tell us about his views after 100 days and where we go to from there.

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Thank you, Nick. Nick managed to attract me because he only shared 70% of the truth. Maybe just a few words about myself to start off with, just to set some context. I started my career off in De Beers with the Finch mine for a number of years. Then I went to the Free State goldfields where I was part

• f the team that initiated Target, which is not dissimilar to South Deep in terms of its ore body and

mining methods. And I swore the day I walked out of there I would never do something as difficult as that again. Except now we are. Massive mining at 3km depth is a complex undertaking. It can be

• done. We’ve done it before. But it is a complex operation and a number of parts have to work

together for the net result to be positive. After setting up Target I joined African Rainbow Minerals and was part of the team that set up Two Rivers platinum. Everything is in mechanised operations, but the interesting challenge at Two Rivers was the fact that it was a greenfields project in the Eastern platinum limb where there even less skills available than what we have in the West Rand and in the West Wits Basin. That is one of the things we have mentioned quite often about South Deep - the availability of skills and so forth. But they have demonstrated in the Eastern Limb in recent years that skills can be developed. After that I joined RBPlats. I think the big learning lesson for me at RBPlats was the importance of continuity and sustainability under the leadership of Steve Phiri, who did particularly well with communities and social commitments. During all the platinum strikes in 2013, that’s the one thing that I’m probably most proud of, the way that we were able - through the support our employees, unions and communities - to sustain the operations during that difficult time. That’s a little bit about me. I’m going to start talking a little bit about the people, because when I look at the history of South Deep, which has had its challenges, for me it all begins with the leadership team and the organisation. They say even with a poor strategy, if you’ve got a strong team you can still make things work. If you’ve got the best strategy in the world and you’ve got a weak team, the chances are even your strategy won’t result in the desired outcome. Before I joined, Nick was very upfront about South Deep, the challenges and the history. One of the things he has shared with me is that we’ve had multiple changes in management. We’ve had seven managers over seven years. You can just imagine the trauma that creates at operational level when you’ve got frequent changes in management. In 2014 we dissolved the regional head office which was communicated to the operations. As soon as we had done that we appointed a new regional guy

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• again. There has been a bit of a turbulent period as far as leadership is concerned.

In addition to that, we also introduced the Australian team headed up by a very competent individual, Garry Mills, who headed the operation during 2014. Also they have returned to Australia. The principle behind the appointment was always noble. I think the one weakness in the whole system is that it happened at the same time as we rationalised the labour force at South Deep. So you can imagine the political pressure from the unions, the DMR, government when you are introducing foreign nationals into an operation when you are at the same time reducing numbers. I think those pressures resulted in tension between the employees and the very competent Australian team that we had put in place. My net take-out at the end is that the benefit that was sought through the introduction of the Australian team was not necessarily realised because of the misalignment between the employees and the management. It was always part of the Gold Fields strategy to have Australians come in and introduce mechanised principle and to train and mentor South African skills. Based on the experience that we had in 2014 it was decided by Nick to fast-track that process. Hence I and a number of other people have joined the process.

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I am the Executive Vice President responsible for South Africa, which is a single asset operation. Gold Fields is a de-centralised structure. So we’ve got four territories: West Africa, South Africa, Australia and America. And then a corporate head office with a number of discipline heads, sustainability, finance and so forth. So I represent the South African region. I’m responsible for South Deep essentially. Reporting to me I’ve got Adriaan de Beer, the newly-appointed Vice President or General Manager. And then he will have reporting to him a number of heads of disciplines. The organisational structure that we have designed is pretty standard. There is nothing unusual about it. It is pretty similar to what we have in the rest of the group. My guess is you can go to 95% of mining operations in South Africa

• r across the world and you will find something similar.

When I arrived here it was clear that there was uncertainty. Role clarity, accountability, are big

• issues. One of the first things that we did was a very detailed and thorough organisational design to

make sure that every member of the team knew exactly where they fit in and what their responsibilities and accountability areas are. Nick spoke about the right amount of people and that the skills mix was an issue. It was a big issue. If I said that my observation was that there was a lot of dysfunction in the way the team operated, that would not be a lie. I thought that we were really struggling, in particular the leadership in the organisation. The one thing that I enjoyed was that we had a very supportive union. And they have been consistent for a number

• f years. We are still a NUM based operation. But the leadership has been an issue. I think that

related to the number of changes that we had made so often. We had very talented people but they were often in the wrong position. For some reason or another we had taken talented people and we had put them in a position which was not necessarily part of their experience or skills set. That as far as I’m concerned led to a lot of dysfunction. So the starting point was to get the leadership addressed because the rest would follow from that. So I went on a recruitment exercise. And I think you will agree with me that not a single one of the

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people on the next two slides were appointed because of their looks. They were specifically hunted because they were good at what they were doing. It is not only that they had the experience, because a lot of people have the experience. We were looking for something different. We needed experience and a proven track record. For me there is a big difference between the two. We were not going out and hunting for students. We were hunting for people who had a proven track record. This can’t be the first rodeo, because South Deep is a complex challenge. So we wanted people who had been in the roles that we were identifying for them and had done that for a number of years.

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So I was very happy to be able to convince Adriaan, again by only sharing 70% of the truth with him, to join the operation. I’ve noted the appointment date of some of the people. It was also very important for us to have a blend of new members joining the team, but to retain some of the existing

• pool. As I said, it was not that everyone that was working at South Deep was necessarily
• incompetent. We’ve got fantastic talent. It has got to do with role clarity and making sure that people

are in the right seats. What we ended up with at the end of January was a balanced team with capacity being infused from a proven track record plus combined with a very competent staff representing the existing South Deep that understands where we have come from and what we have done. It is quite interesting for me that for every deficiency that I observed in the business, the team could show me three or four reports since 2007 where the same deficiencies had been highlighted. I actually made no novel discoveries in the business. So I don’t think the issue at South Deep is understanding where the weaknesses are. It has got to do with developing the capacity to remediate the known deficiencies. So I’m not going to go through all the new appointments. I will just highlight that South Deep will be led by Adriaan, who is our General Manager, and Francois van Heerden. Adriaan and Francois both come from Two Rivers, where they were managing the lowest-cost platinum producer in South Africa. And we recently appointed Errol Drake as Engineering manager, who has got substantial experience not only in South Africa but also in Africa. And he has been Gold Fields, so he was a known entity and came highly recommended. Between the three of them they are running the core mining and processing functions and the maintenance of all the assets. And they are very ably supported by the rest of the team here.

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As Nick said, I must talk a little bit about my observations. For me this is more a casual conversation than a formal presentation. I suppose the potential of the business is defined by the asset that you are dealing with. As Nick said, this is a world-class gold deposit. It must be one of the biggest deposits out there. It is a massive ore body that lends itself to mechanised mining, which if you get it right is safer and it supports a lower cost regime in spite of the 3km depth. And with a grade above 5g/ton I think if you are able to achieve operational excellence there are significant rewards for investors and shareholders in the ore body. It is not only the ore body itself but also the work that has been done on the ore body to develop our understanding and confidence. South Deep has got a fantastic handle on the ore body in terms of the structure and in terms of the grade that enables detailed planning, design and scheduling. From my view as far as the ore body and its modelling and understanding is concerned, that’s a definite strength of the operation.

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From the ore body I start moving into the mining methods. Generally I think the mining methods that we deploy, which consist of development, drifting, benching and long hole stoping - none of them are novel mining methods. They are applied in many parts of the world very successfully. The technology to support those mining methods is well developed and pervasive across the world. So there is nothing about the mining methods per se that concerned me, other than one thing. And that has got to do with our de-stress cut design, which I think was not good. The reason why I say this is that we are taking a 2m cut which requires support of up to 4m long. If you’ve got a 4m bolt or anchor that you have to install in a 2.5m cut it doesn’t support mechanised support installation. The consequence is that all of the support on our de-stress cut is being done by semi-handheld methods. As a result what has transpired is that our support has got two stages to it. It has got primary support, which really involves bolting and wire mesh. And then there is a secondary stage of support which involves long anchors and Oslo straps. But because of the installation method we have separated the primary and secondary support installations. So we do the primary support as part of the ongoing mining operations, and then the idea was to follow with the secondary support 30m behind the face. But as a consequence of the handheld methods of support installation we have found it very difficult to sustain the rate of support installation on secondary support, and that has fallen behind schedule. Gold Fields was incredibly brave in 2014 to stop the mine for four months to catch up with some of the support. And of course that has had an implication on the flexibility because the development and everything was stopped. From a mine design point of view that is probably the biggest weakness that we have. Nick and I have discussed it and Adriaan and the team are fully aware of it. What I am encouraged about is that my observation is not novel. It was recognised by the South Deep team. And it is not like they’ve been doing nothing about that. There are three interventions that are being pursued at the moment. The one is what we refer to as our one pass support installation method, which involves a bolt that contains an anchor, which enables the installation of primary and secondary support simultaneously. It will increase the duration of the support installation but at least

• nce it is done, it is done. You don’t have to come back and install secondary support installation.

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The reason why I’m mentioning this is that if the secondary support installation is not installed at the right time it promotes more rapid deformation of the hanging wall. We’ve got the regional layout which is based on the crush pillar layout. We have designed excavations to deform and to close over

• time. But in the absence of the secondary support that rate of deformation is accelerated. And that

creates challenges when we have to open up the de-stress horizon to accommodate the mechanised mining equipment. We are at an advanced stage of the investigation of the one pass support system. And my understanding is that within the next few months we will have an answer on if we can implement a successful support methodology that will mitigate this issue. Even if we find that solution, it is still a hand-held solution. I am more excited about the two other solutions that are being pursued. The way we are doing our de-stress is we are creating this 2.5m cut which then provides an open area which de-stresses the area above and below it. We are also using the de-stress horizon to accommodate the equipment that we use to do the long hole drilling for the long hole open stopes. But they don’t fit into a 2m excavation, so you have to open up the existing de-stress cut to fit these equipment units in. So one of the pilot projects that we are in the process of initiating at the moment is to increase the excavation height in the de-stress cut from 2.5m to 4.5m. So we will have 4.5m by 4.5m drives. That will enable us to do it once-of, install all the support and do that with a mechanised method. And then we will have the support up to date and there is no secondary support installation process subsequently. And then there is another very novel approach, which I haven’t actually myself seen anywhere in the world, but it is a very novel one. It is called the incline slot. I think Gold Fields has spoken about it

• before. It is something that I will definitely study in a lot more detail. But if that is proved to be

successful it would actually obviate the need for any support installation. But it will take us longer to prove that methodology up - in my opinion it is the more high-risk of the two alternatives being

• pursued. But if anything, that provides potential upside into the future.

The next few slides will talk a little bit about the mining methods. Manie Keyser is our Mineral Resource Manager. He is going to go through a presentation showing the mining methods. Before he does that I want to point out two things. If I look at our different mining methods, the drift and bench and the de-stress, the majority of the production from South Deep is going to come from long hole stoping, which is a far more efficient mining method than the benching and the drifting because the volume blasted is an order of magnitude more than for benching and drifting. At the moment, given the current setup of the mine,

• nly 35% of our production comes from long hole open stoping. Over the next number of years you

will see, as the maturity of the operation increases we will see that the long hole open stoping, which is highlighted in light blue, increase its contribution to the overall reef production at South Deep. That will do two things. It will reduce the cost because it is a more cost-efficient method. And also the regions in the mine are generally of a higher grade, which that will create a lot more stability in our

• peration, predictability and cost efficiency I’m going to hand over to Manie to run through a few

slides to show us the mining methods.

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Morning everyone. The next few slides really are an attempt to explain the mining method in simple terms from a few conceptual designs, where there are two different areas of the mine. The current mine basically is where the bulk of the de-stress has been done, almost 96%. We employ drift and bench mining in areas where the mining target is less than 15m. Typical mining will be either through drifting, where you are advancing the area like a normal development end. The second one is, if the thickness is higher than the 5m that this mining method extracts, you will do a bench as a second

• peration and extract the tonnage that way.

A bench will give you typically 670 tonnes per blast. So in the current mine, the bulk of the mining currently happens that way. In areas that are thicker than 15m we do a long hole stope mining

• approach. The red that you see there is the beginning of a stope, where we will mine retreat mining
• backwards. It is a no entry zone at that point in time after the first blast, and remote loading from a

cleaning point of view is employed to clean the stope out.

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These long hole stopes give you 4,500 tonnes per blast if you do five rings as per the design here. And the typical lens can go up to 60m. These long hole stoping areas are also the higher grade areas of the mine where you extract quite good grades out of the ore body.

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Then the second part of the mine - where we’re going into the new mine with the horizontal de-stress

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For simplicity we made the reef package of 16 units in this diagram - just one big, thick reef unit with the reef in the middle and waste on either side. And this is at a depth of 2.7km. So at first what we will do is we will mine as per a normal South African mine. There is the shaft. You will have your development going towards the ore body. At that point where you enter the ore body you reduce your mining excavation to the 2.5m de-stress cut as Nick has alluded to.

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As you continue your de-stress in the Christmas tree fashion in between your original dip stability pillars, you start opening up the area with the ripping to allow the bigger machines to come in.

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So if you put that design into the ore body you will enter the ore body at the base of the package.

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You will continue doing horizontal cut with the de-stress going down dip.

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The second cut comes into play 70m below that first cut to access this portion of the ground.

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The ripping has basically followed the process so that an area gets opened up and you can start doing long hole stoping at the back because the area has been opened up to allow for large machines.

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If we look at a typical mining sequence in the de-stress, as we said you go in 5m wide and 2.5m high

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.

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Once you start with the ripping to allow for the big machines you rip this excavation to 5.5m and redo all the support inclusive of the secondary support to allow that mining area to be conducive to long hole stope mining.

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That is just a typical continuation up to where the de-stress cut is complete. And important to note at this point in time is that all these SADs – stope access drives – are entry points for long hole stoping.

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The importance of de-stress is really to de-stress the ground at depth. And we reduce the stress from 80 MPa to between 35 - 40 MPa - that really mimics a shallow mine mining operation of about 1,200m below surface although we are 2,700m below surface. So the green that you see here is really just the angle that the de-stress de-stresses the ground above and below the de-stress cut. And typically that is the amount of long hole stoping that that green envelope has made available to us in any specific cut.

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In a de-stress mining cut every ton of de-stress that you mine makes 7 tonnes of targeted reserves

• pen. Also it gives you 155 kilo ounces of long hole stope reserves. We will go into the sequencing

just now.

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So as we progress through the down dip into the ore body with the horizontal de-stress cut, you can see that the various cuts have these various envelopes surrounding the cut. That enables the whole mining cut to be extracted with long hole stoping, and, if the target is a bit thinner, with drift and benching.

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So as the third cut team comes into play going deeper into the ore body, we start mining long hole stoping on the first cut. In the grey that long hole stope has been mined and the red is where we are currently mining a long hole stope, as an example. You will also see there is a gap between the two. We call these the first phase of mining. We are mining the primary long hole stoping from where a second portion will be subtracted once the open stopes are backfilled.

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So, as the de-stress continues, you will start backfilling the stopes that have been cleaned out, properly scanned - we know what we have taken out of those stopes. They will be backfilled and we will continue with this cut. Simultaneously we are already in the second cut at this point in time. The third cut is continuing deeper into the ore body.

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Just from a development point of view; to understand how you get to the various cuts as you go deeper, you will have a spiral ramp going down at 17m intervals into the ore body where you then start your various mining cuts or the de-stress cuts.

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So just to put it into the ore body from that point of view. That infrastructure really sits underneath these de-stress cuts. A spiral will sit there for this one; for this one a spiral will sit there just underneath the one on top.

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Here we can see quite an advanced stage of mining. It has been backfilled completely. We have allowed for the necessary curing time for the secondary mining to be able to be mined. And we can start extracting the secondary long hole stopes at that point in time as we are going deeper in the ore body with the primary mining in the various cuts.

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This is just a continuation. And at steady state such a project running with the de-stress, with the ripping, with the long hole stoping, will produce 46,000 tonnes per month.

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Thank you Manie. Nice and simple at 3km depth. There is probably a reason why I asked Manie to explain this. These are very nice pictures. When you have a look at these drawings it looks fantastic. It is all sharp and clear. When you are underground it looks a bit different. Underground it looks like a

• mine. In terms of my observations underground, I don’t think the conditions underground have

generally been that great. We’ve had issues with water management. The roadways, as a consequence, have been affected. Nick spoke about the backlog support. We stopped the mine for four months last year. There is still backlog support that we have to catch up on. The conditions in the workshops generally have not been fantastic. So these are management issues, leadership issues. I think if you want to run an efficient mechanised mining operation you need to have a working environment that supports that. So fortunately I think these issues can be addressed, and that will be one of the first tasks of the new combined management team to make sure that we set out working conditions that are supportive of a low-cost, efficient mining operation. If it is not like that the machines don’t last, they break down, you start moaning about availability, productivity reduces and you are unable to meet your ramp-up

• forecast. So we believe that we are in a very strong position having done these things before to

address those shortfalls at South Deep. So Nick spoke about the infrastructure. One of the things that I would look at when I join a new

• peration is if they have the infrastructure to support the production ramp-up. I’m not going to talk a

lot about it other than to say I think the infrastructure that has been installed by South Deep is generally of a high standard. And I am very confident that it will support the planned full production of 330,000 tonnes per month, other than one or two items. At the moment the horizontal ore handling capacity we have installed capacity of 220,000 tonnes a month. In order to elevate that to 330,000 tonnes per month there are two conveyer belt levels that we have to install and four crushers. That is well known. It is not required at the moment. We have therefore deferred the capital installation. We have reduced the planned capital expenditure at South Deep to match the progress that we have achieved with our ramp-up. So where installations are not required for the next year or two we have deferred the expenditure in order to drive towards a cash neutral or a positive cash position as quickly as possible. But we are not doing that to the

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detriment of our ramp-up ambitions. So we have provided in 2015 for capital expenditure of R165 million for new mine development - R150 million of that is associated with the actual development and R15 million with the associated capital infrastructure installation. And as infrastructure is required it will be scheduled - over the next number of years the remaining R1.2 billion in 2009 terms, or R1.7 billion in today’s terms, will be cash flowed to make sure it supports our continued growth. A lot of our shortfalls in meeting production forecasts have been attributed to the availability of

• equipment. When I look at what the Australian team implemented during 2014 I believe they were on

absolutely the right path. There was congestion. I think the fleet size and the units that have been selected are well suited to the current volume of operations at South Deep. And we have made a provision of R85 million for fleet replacement during the course of this year as well as the purchase of additional fleet. And our ambition is to continue matching our fleet selection – that is the type of units plus the number of them – to the planned production profile.

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When we decongested the mine in 2014 the idea was to reduce the fleet, but increase the

• productivity. From the graphs on the right-hand side it is clear that we have not entirely achieved that

ambition in all areas. If I look at the productivity of drill rigs for example, it has declined from 81m per rig per month in 2011 to 58m per rig in 2014. Now, just to give you an indication of what world-class standards is, in Australia they will typically get between 250m and 300m per rig per month. I’m not aware that that is achieved anywhere in South Africa, but targets between 100m and 130m are not uncommon in the South African industry. So I think there are possibly low hanging fruits if we can sort out our underground working environment and the operating and maintenance skills. I cannot see why we would have to stay at 58m per rig per month. So I think that is something we will be able to improve on. Just so that you understand, the guidance that we gave yesterday actually includes no efficiency improvements. We have just taken the efficiencies that we achieved in 2014, have extrapolated them into 2015 and wrapped that around the current mining configuration to come to the 7.1 tonnes of gold that we have guided for 2015. I’m saying that because it gives us a high confidence in our ability to match the guidance. As far as the fleet is concerned, it is not only the number of units and the fleet selection. There are

• ther critical factors that affect the ability of the equipment and the mining teams that use the

equipment to perform to standard. I think we’ve got a number of issues that we need to resolve. I don’t think we have set this mine up properly. I think the condition of the underground workshops is not great. Our compliance to planned maintenance requirements is at 40%. That is just not right. We need to have 100% compliance to planned maintenance. I touched on the fact that we reduced labour. So there was a voluntary separation process that was implemented in 2014. Through that process we also lost a number of core skills unfortunately. That has impacted on our ability to maintain equipment. So as far as the fleet management is concerned I think our systems at this stage are probably poorly developed. That is why Errol Drake is part of our

• business. His responsibility is to assist us to improve all these systems. And I do think it is possible to

make significant progress even during this year in those areas.

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I will touch on the next few slides very briefly. I started off earlier referring to the importance of continuity and the sustainability of operations. There are a number of key areas that I generally would look at to develop comfort with our ability to sustain operations. They generally revolve around your safety performance. You have seen in the industry, if you injure people you will stop, either through your own doing as we did in 2014 by stopping the mine for support, or the DMR will stop you with their Section 54 safety stoppages. The other two areas are social and environmental which I will touch on in a second. I have been very encouraged with the long-term safety performance trend at South Deep since 2008. In 2008 the mine abandoned all forms of conventional operations. The VCR was stopped and the de- stress, which used to be done conventionally, was changed to a mechanised method. That contributed to the significant increase from 2008 to 2009. But even since then there has been a continual improvement in safety performance, which bodes well for the continuity of operations at South Deep. So safety will remain our number one priority. We want to make sure that every employee returns every day safely to his home after his day’s work.

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Our social license to operate is critically important. This fosters support from employees, local communities and local authorities. I have been very impressed with the performance of Gold Fields, particularly in recent times. Here are some pictures of projects that were concluded in 2014. I am very happy to reaffirm Nick’s statement of yesterday that South Deep - at the end of 2014 - was in full compliance with the Mining Charter as well as all its social and labour plan projects. The only areas where we had issues has got to do with ABET and mentorship. Those are two areas

• n the human resource development side where we have fallen short. Those are industry-wide
• issues. One of the problems I think we do have is communicating this to government and the local
• communities. Their appreciation of what South Deep has done is perhaps not known. And I think

there is opportunity for us to generate their support via improved communication.

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On the environmental front - Ulrich and his team have done outstanding work particularly as far as the water management projects are concerned. We are in the process of constructing storm water drains to separate dirty mine water from fresh rain water. That project is well advanced. One of the most encouraging signs from that project is that during the heavy rains at present we’ve had not a single environmental spillage due to excess storm water control. So that is looking up. Also I am particularly pleased with the expansion in capacity to re-use water through our reverse

• smosis plant, which will increase water treatment from 3 mega litres per day to 5 mega litres per
• day. And that will reduce our reliance on the Rand Water supply and also reduce costs. I think that

will assist not only the mine but also general consumption of fresh water in the area. Similarly, the management of pollution mitigation from of mining, outstanding work has been done. When I look at South Deep and the ability to perform over the next number of years I think all three of the key areas that affect sustainability are very well managed and I don’t think that they represent a major risk as far as the mine is concerned.

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So it is well documented that we have not matched our historic commitments and aspirations. This is the 2014 guidance that was given in February. If we look at the achievement in 2014 - and of course there are a number of once-off events that have given cause to the significant deviation from the guidance that was given in February. The fact is, however, it is not only those once-off events that are impacting our ability to perform. There are a number of issues that remain part of the business that make it difficult for South Deep to match the growth aspirations. It is on this basis that we have decided that we need to come back and fix the base. And we need to be clear with our shareholders and our investors that we are going to reduce cash flows by not pursuing growth before we have demonstrated to ourselves the ability that we can manage the mine

• confidently. So our focus will be aimed at fixing the base, fixing the way we are managing the current
• perations and that way develop confidence for further expansion.

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So when I look at South Deep my assessment is that its inherent value is in tact. We’ve got a quality

• re body. We have great infrastructure that has been installed, proven mining methods and a very

strong position on the social and environmental side. In addition to that, the constraints are not

• unknown. What we need to do is develop the capacity to execute and to remediate those things.

The areas that we are focusing on are to make sure we’ve got the right leadership team. We will then install the right management processes, the right management systems. I think a key issue is the design, particularly the de-stress cut and the support installation, which technically I think is a key

• constraint. And we have to develop excellence in many operating activities at South Deep. Because
• f this the long-term roll-out target that we’ve gave in 2014 may take longer to achieve. I think we are

going to take the best part of this year to develop most of these dimensions. We will then use the information gained during the year to re-base the long-term growth of the operation.

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So this may be a little bit of a repeat - the way forward is firstly not to pursue growth for the sake of pursuing growth, because that is a costly exercise. We are going to focus on creating the right working methodology at South Deep. During that time we are not going to over-invest for instance in infrastructure that is only required multiple years from now. We will contain our cash outflows to the minimum that is required, but in such a way that it does not compromise our long-term growth aspirations. We will start with the leadership and organisational design, which we have done plus appoint the senior team. What we will do next is start penetrating deeper into the organisation to make sure that the core strength is developed not only at senior level but throughout the organisation, particularly in the core areas of mining and engineering. Then there are a number of big project areas that we need to focus on. I have just listed some of

• them. I’ve mentioned the support installation and water management. For each of these items we

need a very systematic plan which we will draft, have agreed timelines and make sure that we address each of them in the shortest possible time. So in addition to the areas that we will develop strategies for, we will at the same time systematically work on general work practises, organisational discipline and performance management. There are consequences for good performance and poor

• performance. They are known. Let’s not be shy about them.

So we will have the projects and general operational excellence that we will pursue. And I believe this will set us on a course to correct the base. But it will set us on a course as well to start growing the business towards the 700,000 ounces or whatever targets will generate from our re-basing in

• 2015. I don’t think it is impossible. I think the value is inherently here. It may take a little bit longer,

but I think with the team we have selected and that we will appoint in future, and with the strategies I have outlined I think we will ultimately achieve our goals. On that note it is the end of our formal presentation and if there are any questions we are happy to take them.

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Patrick Mann – Deutsche Bank I just wanted to ask on the timelines. There is obviously a lot to do to re-base the operation, as you said. You are going through it systematically. But you said it is not going to take longer than the remainder of this calendar year to re-base the operation and set a timeline on growth? Is 2015 enough to re-base the operation given the kind of core things that you want to focus on? There are a fair number of activities to get through there. Nico Muller I think we are probably going to make improvements in terms of our production this year. I think we are probably going to be a bit cautious about taking those assumptions and automatically putting them into another ambitious forecast that we communicate with everyone. I think it is important for us going forward to develop credibility, just amongst ourselves to start off with, and with our shareholders and investors. I think by the end of this year we will probably have a better idea. But I think we will probably give ourselves into 2016 before we start making any new, elevated promises which we cannot achieve. Andrew Byrne – Barclays I think most of us were pretty surprised yesterday with the 2015 guidance. It is a lot lower than most of us had expected. Just really on the potential of how it may develop as we move through the year. You said you based 2015 on what you achieved in 2014. And that was

• bviously a lot of stop-start with the four months outage. If you were to achieve the 2013

productivity of 65m per rig rather than the 24m at the end of 2015, would that correlate to a 10% increase in that production? Nico Muller If we achieved the 2013 productivity levels of course the guidance would have been different. Andrew Byrne

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So we could have added a 10% move on that production guidance. Nico Muller The one thing I haven’t mentioned is, if it is business as usual in 2015, i.e the same conditions as 2014 with no stoppages - our guidance would have been a lot higher. It would have been closer to 8.5 tonnes of gold for 2015. But one of the things we introduced – not us but the geotechnical engineers as a consequence of the shortfall in the backlog – is a rule, which I fully support ,which prevents us from starting or initiating any long hole open stopes unless all primary and secondary support within a 25m radius has been completed. So the implication of that in 2015 is that the initiation of long hole stoping has actually been delayed. In 2014 we achieved 6 tonnes of gold. Given the fact that we stopped operations for four months in 2014, if you include another third of the year

• n top of the 6 tonnes, you should be able to generate more. But as a consequence of some of the

geotechnical constraints that have been imposed for safety reasons, and the historical shortfalls in support, we are only forecasting 7.1 tonnes. Kane Slutzkin – UBS You spoke about the rationalisation of labour. Where are you now on the number of employees, and what is the split between permanent and contractors? And is that done now? I mean, no more rationalisation in the near term, or where are you at? Nico Muller I don’t have the exact numbers. Our total labour force right now is just over 5,000 and I don’t think that we have major restructuring ambitions for 2015. I think we have stabilised on that front. Having said that, I think 5,000 is quite a large number for 100,000 tonnes a month and in view of the current inefficiencies in the business. And what we do know is we operate a lot of fixed infrastructure. If I look at the overall labour efficiency in terms of total tonnes delivered or ounces per employee, for a mechanised operation, we’re not in a happy space. If we start fixing the base and we start growing the organisation, obviously then you’re going to increase production without changing the labour

• base. I think that will assist us in improving the overall efficiency. No structural changes planned for

this year. Mandla Mapondera – PIC Labour relations at South Deep have been quite fraught. Perhaps if you could just tell us your

• wn observations on labour relations, and perhaps notwithstanding the fact that there is new

leadership, how you would want to see that improving. What are your plans for improving labour relations? Nico Muller My observation has been that I actually think we’ve got quite a supportive union. The tensions, or the perceptions of that, I have not necessarily observed. One frustration I have observed from a union point of view is continuity in management. As a consequence management have been at fault of not carrying through some of the undertakings that we have agreed with the union, and that has led to

• tension. The union understand the importance of South Deep and the importance of having to

improve South Deep. And my personal interaction with them, thus far, has been no less positive than what I have experienced in RBPlats. It is certainly not volatile and confrontational. I’ve actually been pleasantly surprised. I actually think that is a potential strength in the business. We have operated for some time without an HR manager. Towards the back end of 2014 we bought in a specialist HR leader. And with the GM as well it was very importance for us to choose people

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who come from a track record where they have had the support of the unions and the employees. There is going to be a three-day breakaway session with the unions. Our new leadership needs to align with the union. Leon Esterhuizen, CIBC Nico, I must be honest, I’m a little bit underwhelmed by the 46,000 tonnes that you are expecting from a mining unit. There is an awful lot of mining and an awful lot of supporting, ripping and supporting again, and another set of drilling and backfill, and then going back. There is a lot of stop-start to get 46,000 tonnes per month. I mean four good half levels on conventional mining gives you that. Adriaan de Beer [Inaudible segment]. Adrian Hammond – Standard Bank I have two questions for anyone. Firstly, can you comment on the bonus system that was in place and if there are any issues, and how are you going to incentivise your workforce going forward? And secondly, I don’t quite understanding why you can’t mine the 95% of de-stress reserves already in place. What is stopping you from mining that now? Thanks. Nico Muller So the issue is if you have a de-stressed area that typically refers to a 2.5m cut. As we have described, subsequently to that there is ripping of the footwall, that has to happen plus the installation

• f primary and secondary support.

Adrian Hammond If you are saying de-stress, you haven’t actually done the primary and secondary support yet. Nico Muller Unfortunately that is spot on. So when we say 95% has been de-stressed there is another subsequent activity that has to conclude in order for us to initiate the long hole stopes. One of the things that I’ve discovered is the importance of understanding the inter-dependencies between all of these macro elements at South Deep. It’s a massive mine, but there is a three-dimensional spacial

• challenge. And if I had to be quite honest I think the vocabulary that we have developed to measure

and manage the inter-dependencies between them is probably not as accurate as it should be. So you would like to know what the buffer capacity is. So first of all, what are all these activities that do interact on one another, and what is the linked capacity is between all of them. So if I have a disruption in any one of those activities, what is the net impact going to be on the subsequent activities and ultimately on the bottom line? I think it is something that has to be developed with a lot greater clarity. That is why we’re not doing 100% of long hole open stopes on the de-stress. On the bonus issue. Blessed Mazibuko, (South Deep Finance Manager) Just to touch on the bonus - the current bonus system we have is mainly driven by rig metres. What we have seen from it is that the participation, as far as the whole mine is concerned, tends to be limited to the guys working underground because they get their metres. But on an overall basis the mine wasn’t achieving the plan as published. So we have now reviewed the current system to include

• everyone. Everyone must participate as far as the mine is concerned. The main driver of the new

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reward system is we want gold in the plant, i.e. the whole process must be complete in terms of metres, hoisting, plant processing, etc What that will encourage is that your plant people, your admin people will also be coming on board. We are also bringing in cost modifiers in terms of the new scheme, because in the current one, again we were getting some metres in certain sections but the cost consciousness wasn’t always there. So we say to the guys now, if you achieve your metres and the costs are not controlled properly we will penalise you. And we are also including safety as a 30% modifier in terms of the potential bonus. And the main key one on the current system is what we call design tonnes, from Manie’s point of

• view. He will be basically enforcing quality mining, whereby, if the guys are not sticking to everything

established by the survey, we will also be penalising them. So we see the new system as really more able to support what we want to achieve as a business. Stick to quality mining, get the costs right, and make sure that the whole process gets completed from drilling, hoisting, processing, etc. We are pretty much final in terms of the design. There are some final discussions with labour in the next month or two. And we will be rolling that out as soon as all those discussions are completed. Leon Esterhuizen – CIBC We all want to go underground, but I think it is far more important for these guys to get the questions in. You’re doing a fantastic job scratching all the places that stink. I can see that. And your team is definitely doing the right stuff. My question is - I don’t know whether Gold Fields has the luxury of waiting another two years for this asset to start making money. If the gold price goes down or if it stays where it is now, the pressure gets even more on you and your team. I appreciate you’ve just got here, and you’re doing a solid job, but I don’t know whether you have two years to turn the ship around. Nico Muller I’m going to ask Nick also to comment, but just before Nick does, maybe I can just explain to you some of my views on the issue. We all want the place to succeed. We all want to make 13 tonnes of

• gold. The pressure that the business is under creates the wrong dynamics, the wrong conversation at
• perational level. What happens is Nick talks to me and he expresses his disappointment in not

making the plan, not making the guidance or not making the forecast. And a lot of our tension is spent in that part of the discussion. Shock, horror, we’re disappointed, what are you going to do about it, and we want all the answers. And I do the same to Adriaan, and Adriaan does the same. So the whole conversation is at the back end, at the output side. As a consequence of that the inputs of success, the levers, are never addressed. That’s an early observation of mine. So we are not viewing 7.1 tonnes as a target. I mean part of what we have to do is we have to develop credibility amongst ourselves internally and amongst the investment community. Secondly, in order for South Deep to have the best chance of success we need to protect our operational people from this massive pressure that they’ve operated under with the targets. And this is one way

• f getting there.

Nick Holland Let me try and help a little bit here. Leon, you’re exactly right. We’re going to have a lot of unhappy investors on the back of the information that has been given. One of the things I’ve asked the team to do is… the thing that has been weighing us down on this operation for probably five years - is this build-up plan. Everyone on this mine can’t think about what they have to do today, tomorrow, next week and next month. They are all thinking about the build-up plan. Where have we got to be in five years’ time? We’ve got to be at 650,000 ounces in 2015. Then it moves to 2016, then it moves to

• 2017. The team can’t even think about the stuff that they’ve got to do today. And so I think in that

sense the best thing for us to do is say forget about the long-term plan.

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When Nico came in and we got into the planning cycle this year we started in the same mode of

• thinking. What have we got to do this year to join the dots for the long-term plan? So what I said to

the team is, forget about that. Let’s just park all of that. And rather what I want you to do is tell me what you think is the best for the business right now. What is the best thing for us to do right now rather than thinking about the long term? And what is the best way for us to shape the business? If we keep on chasing a pot of gold at the end of the rainbow we’re going to not focus on the basics that are not right today. So it is a major paradigm shift for us. But we have to think about what we have to do now. The question is, have we got two years? I think the point we have to make here is Gold Fields has put $4.2 billion into this asset. That is through the purchase and through the development we’ve

• done. We’ve proved up the ore body. In fact, we’ve got a mine plan over 70 years. We’ve built the

infrastructure here. We are struggling on this mine because the discipline, the culture and the basic mining practises for a mechanised mine are just not good enough. So I think for us to not give our level best to fixing that there would be an enormous value opportunity left on the table. And I think we’ve got to actually now accept that as opposed to doing this quick I would rather the team do it right. My brief and the brief of the board to Nico Muller and his team is, let’s do this right. It’s a 70 year mine life. Sure, we’ve got people who have got models out there. You’ve got models that show a build-up over this period. I don’t know whether that build-up is achievable. I don’t know if we can do 650,000 ounces by 2017. But I don’t want management to think about that now. What I want them to think about is how can we get the things that are basic to this mine right today, and just take all of that pressure off them, and stop giving long-term forecasts that we can’t meet. Put out a forecast for 2015 that you can achieve. My brief to them after that is, by the way, you had better come up with a gold production figure and a cost figure that you can meet, because that is the one area that we can’t do. We cannot keep underperforming month after month, year after year. So that’s the brief. Is that clearer to you? Leon Esterhuizen Thanks very much. I don’t want to harp on this, but when you look at the balance sheet and the rest of Gold Fields performing fantastically there does come a point in time when this asset subtracts from that. So there must be a point where the balance sheet and everything else says you have to by 2018 start making money otherwise the balance sheet becomes an

• issue. Or is it not like that?

Nick Holland No, it is. We lost a lot of money in 2014 that we can ill afford. So again one of the other briefs to the team is, while you’re trying to fix the short-term, have an eye on the fact that we cannot continue

• haemorrhaging. I cannot continue putting in millions of dollars every month into South Deep. We just

don’t have it. And if the gold price comes down further then we’re going to have a problem. Thank goodness we’ve got a fantastic suite of international assets that are making bucket loads of cash. Thank goodness. We can actually take some of that money and we can recapitalise South Deep, not in the sense of fixed infrastructure – that’s built – but in terms of giving the team the time so that they can get this to break even. And that is why we’ve said here, 2016 we’ve got to be able to get this operation doing well enough to get to break even. It is going to take years to actually get the right cultures in place here. But if they can increase some of the open stoping towards the end of this year and into next year, the leverage effect is enormous. You’ve seen. From 500 tonnes per blast for a bench or a drift to 5,000 tonnes with the same crew and the same costs, it’s enormous. And that’s one of the key focus areas. That doesn’t mean to say that we’re going to be doing everything perfectly. But if we can get ourselves to cash break-even as soon as we can – and I think towards the end of 2016 is something the team are

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prepared to shoot for as an opportunity, bear in mind he’s only been here for 100 days – that I think is a reasonable assumption. But you’re right. The company, the board, the balance sheet does not have the capacity to keep on taking the really good work that we’ve done internationally and keep pouring it into South Deep. These guys know that. They’ve got the message. But I want them to focus on the short term. Get the short term right, get all of the inputs into the business right, get the skills mix right, get the maintenance right etc. as opposed to focussing on you’ve got to get this production, you’ve got to get this cost. That will come. Let’s focus on the inputs into the business now, and that will drive the

• utputs later.

Unidentified speaker Just following on with that, the key seems to be around skills here and trying to get the capacity of skills at the rate that you need. So what is exactly the plan for the next two years to leverage that up so that you can get to the rates that you want for longer term? Adriaan de Beer I think the first thing that’s important is that the process to develop skills is a journey that takes you approximately three years, especially given where you’re starting from. When you start developing the skills it is going to take us two to three years to get the skills and give them proper training. So there should be a short-term strategy as well. We should go out in the market. There are certainly some of these skills available in the market. Right now we must go and get some of the skills that we so urgently require and bring them to South Deep to enhance some of the shortages that we do have whilst we are upgrading the skills shortage that we’ve got. Nico Muller Can I maybe add two things to that? The one is we don’t have a very strong position at the moment to attract or retain core skills in the trackless areas. We have agreed with Nick and he has given us a full mandate to improve our employment terms for the core team of 500 odd people on the mechanised area. So that is one thing. The other thing is if you want to attract skilled people you need to have decent working conditions, cool working places that must be clean. It must be pleasant to work and must be an employer of choice. So we will be working on that as well. That will enable us to develop a stronger retention base for skills going forward. And then in the short term Adriaan is correct. In the short term to add to the skills that we have we’ve got no doubt that we will go out and recruit from outside. In the long run there are certain training and skills development areas that I think we need to strengthen. Currently we do have a curriculum. But, I think the curriculum is in some areas based on a generic fleet approach. So the training for a drill rig

• perator will be based on the generic drill rig. What we need to do is refresh our curriculum for each

training course to make it unit-specific. And in addition to that there has to be some measure of performance that we expect and manage. So if I look at training and development, you can train someone to get a driver’s license, a code 08. Then they can safely operate the car. Our training programmes are generally aimed at developing skills to that level. Beyond that point there is the proficiency of the utilisation of the equipment. So to go from a 2 ton per hour to a 10 ton per hour LHD operator you need to develop certain skills to prevent spinning of wheels, to load the entire face and clean right up to the face. That is the area where I think our skills development programme is lacking at the moment. When we terminated the participation of the 27 Australians we actually retained four of them, because that is where we believe they are skilled. They can assist us in developing programmes to improve the efficiency of equipment utilisation. And we need to add that to our current training regime.

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Errol Drake I wanted to add to what Adriaan has mentioned. If you look at the West African operations, if you go back to 2010 and have a look at the availability of machinery at the operations there, and you go and have a look at the work that has been done by this company into Tarkwa specifically, and look at the availability of machinery and how we’ve built up the capability of the local population in that country, we are going to follow the same model here. We’ve inherently got the same problems here as what we had in West Africa, and we will adopt the same approach. As he said, it doesn’t take five minutes. In West Africa we landed with that hot potato in 2010. You can have a look at the results as of 2014 and you can see where we stand at this moment in time. Nico Muller

• Okay. So just to deal with the inclined slot, again if Manie or someone wants to say something they

are more than welcome to add. It’s a foreign concept to me. The inclined slot method is not proven. I’m not aware that it has been done anywhere in the world. It requires very accurate drilling. So if you want to do an inclined slot and you want to blast it cleanly so that it also becomes an initiation front for the subsequent blasting along an open stope. And it is at an angle. So given our current position,

• ur skills set, our level of competence, are we in a position to do that in a reliable fashion? If you

don’t do it properly then it complicates the propagation of the remaining long hole stope after that. So I’m absolutely so excited that someone has thought about that as a possibility. And we will definitely have a pilot project that will start investigating the potential application of that method. Nick Holland Just to add, we are doing that at Agnew, inclined slot. So one of the reasons I think it has got a lot of airtime here is that Garry used to run Agnew, and he was quite keen for us to explore it. So we have done it there. But of course their reef is vertical. Here the reef is gently dipping. So there is a whole lot of extra work we have to do. That’s the key issue. Sorry to interrupt. Nico Muller So now on my 101st day I know we are doing it at Agnew. So I know of some operation that at least is doing it. I’m learning. So there is a programme in place. It is going ahead. We will definitely test it out. As far as the 4x4 impact on de-stressing, I think it will be a game-changer. Either of those two

• methods. If you do the 4x4 there is no de-stress and then coming in later and doing ripping. It is a
• nce-off process and everything is mechanised. That will be aligned with mining practise across the
• globe. So you have got anchor bolters and drilling machine that assists with the installation of
• support. The question that was raised earlier, so you’ve got 96% de-stress, why are you not just

mining? There is another process that comes with it. It will alleviate all of that. And I reckon that will be an absolute game-changer for South Deep. Nico Muller Absolutely, ja. I am not sure where the confidence is coming from. It is not something that I have studied in detail with our international board of geotechnicians and Dr Brian Watson and our mining

• teams. At this stage… Tim, I’m not sure if you can add to the discussion. For me the constraint on

the 2.5m just makes for a very complicated mining process. So I am aware that the increase in excavation dimensions has an implication into the stress profile and also the vertical extension of the increased stresses that are so induced around the excavation. So I’m not sure if this is necessarily a guaranteed success. I don’t know. What I’m very excited about is the fact that South Deep has recognised that there is an issue, that there is an ambition to change the methodology. I think we must be careful to assume that it is going to be successful, either of the methods that we are testing

• ut.

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Nick Holland We have been over-breaking anyway so we have not been fully complying with the 2.2m. In fact the average in some cases has been 3m or maybe a bit more. So there is some inadvertent empirical data to give us some support to it. Last year before Nico’s time there were new views brought in, international guys. We brought guys from Australia. One of our top geotechnical guys has spent a hell of a lot of time here. And he looked at it. We’ve got a much better understanding of the rock

• conditions. We’ve been mining here for six or seven years. That 2.2m cut was largely based on

theoretical information seven years ago. Because we’ve been mining for seven years, Leon, we’ve got a lot of empirical data that has told us more information. So it is informed all the time by new stuff that we get and by international views. Unidentified speaker I just wanted to touch on leadership. Adriaan brought it up just now. What is your take after your 100 days on the quality of the supervisors, and if found lacking what plans are in place? Obviously it is the heart of your mine. Nico Muller I’m not sure that I want to answer that question. It is not a positive comment. I think that we’ve got an issue as far as our front-line supervisors are concerned. That is why Adriaan has actually mentioned

• that. So there are processes that one goes through in this event. And I actually feel I’ve got a lot of

empathy for our front-line supervisors because I think they’ve been exposed to a different strategy and requirement on an annual basis. So some of it may be inherent capacity issues, and some of it may be just giving some direction and being consistent with it. So it could be a combination of root causes behind that. What I do know is at the moment it is an issue. We’ve got strength issues at our supervisory arm from management supervisory levels. We are acutely concerned about that. But again these things are not insurmountable. There are ways to address them. There are different

• avenues. And we will apply all of them to strengthen our skills base.

Are there any last questions before we do the induction video? Okay, on that note then it looks like we have set aside at least the immediate concerns. Adriaan, I’m going to hand over to you at this

• point. Adriaan will run us through the induction video and guide us in terms of what the underground

visit is going to be.