Gold Fields Limited (JSE:GFI)
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Sep 22, 2026, 5:09 PM SAST
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Earnings Call: Q3 2018

Nov 9, 2018

Operator

Good afternoon, ladies and gentlemen, and welcome to Gold Fields 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. If you should need assistance during the conference, please signal an operator by pressing star and then zero. 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.

Nick Holland
CEO, Gold Fields

Thank you. Good afternoon or good morning, ladies and gentlemen, wherever you might be. Thank you for joining us today to discuss Gold Fields' operating results for quarter three 2018. With me today are our CFO, Paul Schmidt, our investor relations team, that's Avishkar Nagaser, that's Thomas Mengel, and also Sven Lunsche 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 attributable equivalent gold production increased by 6% quarter on quarter to 533,000 ounces, with all-in sustaining costs of $977 per ounce and all-in costs of $1,140 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. We're talking here about 1,100 people, of which around 170 people elected to take voluntary separation packages. As a consequence, the National Union of Mineworkers, the majority union on the mine with around 81% representation, has embarked on industrial action. While we understand it is a protected strike, the no work, no pay principle 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, what we've done is assume there'll be no further production from South Deep for the rest of the year.

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 Damang continues to track ahead of plan. During quarter three, 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 Gruyere continued to make steady progress during quarter three 2018, and the project remains on track for first production in quarter two of 2019. As at end September 2018, overall project engineering construction were at 95% and 69% complete. Engineering 95%, that's virtually done, with overall construction just over two-thirds. EPC construction was 55% complete. That's mainly on the process plant and ancillary equipment.

Downer, which is the mining contractor, commenced mining operations in November. Feasibility study at Salares 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. Just to remind you, that was talking about three and a half million ounces produced over 10 years with an average of about 350,000 ounces a year. All-in sustaining costs of $575 an ounce and upfront capital to build the project at $850 million. In terms of our debt, the group has successfully extended the maturity of the $380 million term loan by a further year to 6th June 2020, and that was previously going to be redeemed on 6th June of 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 the restructuring, 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 Asanko, are expected to produce 1.85 million attributable ounces. That compares to the original guidance of 1.75 million attributable ounces. Even if one adjusts for the additional ounces at Gruyere, which are around about 45,000 ounces-

Speaker 3

You mean at Asanko.

Nick Holland
CEO, Gold Fields

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 thousand ounces on the original guidance. That's certainly good to see against the backdrop of the disappointments at South Deep. As a consequence of all of that, group attributable production is expected to be 2 million 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 $990 per ounce and $1,010 on all-in sustaining costs.

On all-in costs, given that we are building two new projects with substantial capital, certainly through to the end of this year, we expect that to still be in the range of $1,190-$1,210 per ounce. In essence, still intact compared to what we started the year with. With that, we will pause for questions, and either myself or my colleagues around the table will answer them. Thank you very much.

Operator

Thank you very much, sir. Ladies and gentlemen, at this time, if you'd like to ask a question, you're welcome to press star then one on your touchtone phone. That will place you in the question queue. If you ever decide to withdraw the question, you're welcome to press star then two on your touchtone phone to remove yourself from the question queue. Just a reminder, should you wish to ask a question, you're welcome to press star and then one. Ladies and gentlemen, just a reminder, should you wish to ask a question, you're welcome to press star and then one. Sir, we don't seem to have any questions on the lines.

Nick Holland
CEO, Gold Fields

Pretty quick then. Yeah. Thanks very much. If there are no questions, we thank everyone for phoning in and getting the update on the quarter three results. Thank you very much. Have a good day.

Operator

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