Gold Fields Limited (JSE:GFI)
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Apr 24, 2026, 5:06 PM SAST
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Earnings Call: Q3 2018

Nov 9, 2018

Speaker 1

Good afternoon, ladies and gentlemen, and welcome to Goldfields Limited's Third Quarter of 2018 Operating Update. All participants will be in listen only mode. There will be an opportunity to ask questions at the end of today's presentation. Please note that this conference is being recorded. I'd now like to hand the conference over to Mr.

Nick Holland. Please go ahead, sir.

Speaker 2

Thank you. Good afternoon or good morning, ladies and gentlemen, wherever you might be. Thank you for joining us today to discuss Goldfields operating results for quarter 3 2018. With me today are our CFO, Paul Schipps our Investor Relations team, that's Avishka Nagasa, that's Thomas Mengele and also Sven Lungcha from Corporate Affairs. During the quarter, the international assets posted another strong operating performance, while South Deep was negatively impacted by the restructuring announced in August of 2018.

Group contributor store equivalent gold production increased by 6% quarter on quarter to 533,000 ounces with all in sustaining costs of $9.77 per ounce and all in costs of $11.40 per ounce. All in sustaining costs very similar to the previous quarter, all in costs slightly down. As previously reported on South Deep, the consultation period for the restructuring at South Deep ended on 30 October. That was the 60 day period. The retrenchment process is now underway with retrenchment letters having been issued to affected employees.

And we're talking here about 1100 people, of which around 170 people elected to take voluntary separation packages. As a consequence, the Natural Union of Mine Workers, the majority union on the mine with around 81% representation, has embarked on industrial action. While we understand it is a protected strike, no work, no pay principal will apply. As is always the case, the safety and security of our employees remains our main objective during the industrial action. We don't know when the strike is going to end, but what we've done is assume there'll be no further production from South Deep for the rest of the year.

So in essence, we've truncated almost a full quarter of production. And even before that, it was clear that there was a slowdown of production activities as people got to grips with the Section 189 Restructuring Announcement. Turning now to the projects. The reinvestment project at demand continues to track ahead of plan. During quarter 3, total tonnes mined were 20% ahead of plan.

First ore from the saddle area of the main pit remains on track for early 2019. Construction at Korea continued to make steady progress during quarter 3 2018, and the project remains on track for first production in quarter 2 of 2019. As of end September 2018, overall project engineering and construction were at 95% 69% complete. So engineering, 95%, that's virtually done, with overall construction just over twothree. EPC construction was 55% complete.

That's mainly on the process plant and ancillary equipment. Douna, which is the mining contractor, commenced mining operations in November. Feasibility study at Solaris Norte in Chile is on track for completion by the end of 2018. Results of the study are not expected to differ materially from the interim results, which we released in February. And just to remind you, that was talking about 3,500,000 ounces produced over 10 years with an average of about 350,000 ounces a year, all in sustaining costs of $5.75 an ounce and upfront capital build the project of $850,000,000 In terms of our debt, the group has successfully extended the maturity of the $380,000,000 term loan by a further year to 6 June 2020.

And that was previously going to be redeemed on 6 June 2019. That's been done on the same terms, which means that there's no material debt maturities during the course of 2019. Looking at the outlook. Taking into consideration the challenges we've been facing at South Deep, including as a result of the strike and the go slow post the announcement of restructuring and also assuming that the strike continues until the end of the year with the consequence of no further production from November onwards, and in fact, there was very little in October, gold production for the year is currently estimated to be around 155,000 ounces for South Deep. The international operations, including our 45% share of VASANCO, are expected to produce 1,800,000 1,850,000 attributable ounces.

And that compares to the original guidance of 1,750,000 attributable ounces. So even if one adjusts for the additional ounces at Korea, which are roundabout 45,000 ounces I beg your pardon for Asanko. Even if one adjusts for the additional ounces from Asanko of around 45,000 ounces, the rest of the operations have made up another 50 odd 1000 ounces on the original guidance. So that's certainly good to see against the backdrop of the disappointments at South Deep. So as a consequence of all of that, group attributable production is expected to be 2,000,000 ounces for the year.

We're still on track to make our guidance on all in sustaining costs, notwithstanding the South Deep production, which is assumed to be curtailed for the rest of the year, of between $9.90 per ounce and 10.10 dollars on all in sustaining costs. And on all in costs, given that we are building 2 new projects with substantial capital certainly through to the end of this year. We expect that to still be in the range of $11.90 per ounce and 12.10 dollars So in essence, still intact compared to what we started the year with. So with that, we will pause for questions. And either myself or my colleagues around the table will answer them.

Thank you very much.

Speaker 1

Thank you very much, sir. Sir, we don't seem to have any questions from the lines.

Speaker 2

Perfectly. Thanks. Okay. Well, thanks very much. If there are no questions, then we thank everyone for phoning in and getting the update on the quarter three results.

Thank you very much. Have a good day.

Speaker 1

Thank you. Ladies and gentlemen, that concludes today's presentation. Thank you for joining us. You may now disconnect your lines.

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