Good afternoon and good morning, everyone, and thank you for dialing in today to the Gold Fields webcast, where we will be presenting our Q1 operating update, which we released this morning, and then our ESG results for the 2022 full year. Presenting today, we've got Martin Preece, Interim CEO, Paul Schmidt, our CFO, and Kelly Carter, who's Group Head of Legal and Compliance. With that, I'm gonna hand over to Martin to present. Thanks.
Thank you, Thomas. Good afternoon and good morning, wherever you're dialing in from. Thank you for taking the time to join us today with the Q1 update and then our update on our ESG performance for the previous year. We've got a lot to be proud of and have started off the year well. If I can just remind you of the forward-looking statements and caution you accordingly. If we can just move into key salient features. Unfortunately, we've had a challenging quarter one in terms of safety, suffering a fatality at our Tarkwa mine. At the Asanko joint venture run by Galiano Gold, they earlier in the quarter also had two fatalities in a vehicle-related incident.
We pass on our sincere condolences to the families, colleagues, and friends of our colleagues that we've lost. I think important that we recommit ourselves, I think, to eliminating serious injuries and fatalities across our business. In terms of ESG, our climate change report was and report to stakeholders has just recently been released, and there are copies on our website. In terms of our operational performance, we've had a solid quarter one with production flat year-on-year at 577,000 ounces. We've generated free cash flow of $83 million. In terms of the balance sheet, sitting at a net debt of $875 million, with our net debt to EBITDA rising incrementally to 0.36.
I think something we're really proud of after most probably, over a year's really hard work by many of the people, both in our business at AngloGold Ashanti and Osisko, we announced the proposed Tarkwa-Iduapriem JV during quarter one, and we've obviously got to conclude that with negotiating with the government of Ghana. Earlier this week, we announced and closed the joint venture agreement with Osisko in Canada for the Windfall project. That is something that's in the starting blocks and going with all conditions met. Just looking at our business across the globe, Australia still dominates in quarter one, making up 42% of our production, followed by West Africa at 30%. South Africa pleasingly up in third position at 15% now, and then the Americas at 13%.
That will obviously dramatically change next year when we bring the Salares Norte mine on. Importantly, you'll see in our North America graph after the announcements earlier this week, we now have a presence in Canada. Just, we touched on this in the introduction. I think production flat at 577,000 ounces. All-in costs and considering the effects of inflation being, I think, well managed at just marginally 2% up year-on-year for quarter one. As I said earlier, net free cash generated from operations sitting at $83 million. I think a key deliverable for us this year is bringing the Salares Norte project on stream.
As I said, it's gonna make a big dent in our production next year and change the split of our gold fairly dramatically next year. In terms of project, just over 90% complete now, so the team has made nice, steady progress. We're still forecasting first gold in quarter four this year. It's fully staffed both operationally, and we've brought in extra project resources. Our camp is at full capacity, requiring us to move our exploration teams out to a satellite camp so that we can give priority to getting the project done and constructed. During the quarter, we also managed to drill 7,000, just over 7,000 meters of exploration drilling.
You can see from the photos at the top right the progress of the process plant and mine offices there. In the sort of left-hand quadrant of that picture is the primary crusher. That is operational now. It's got power to it. They've run it, and they systematically will now go through the stockpile, the mill in the big building in the middle, and get those commissioned over the coming months. We're very pleased with the progress that the team has made. We've got close to 1 million tons of ore sitting on stockpile now, so as the plant comes on stream, we'll be able to start feeding that. As you can see at the bottom right picture there, that's the Brecha Principal pit.
Those of you who've been following the story will know that that was a mountain, about two years ago. It's now a hole in the ground and half the mountain gone, with them mining close to 60 million tons of waste, which has been done. The mine is set up to start producing. All of you just wanna touch on the guidance.
In terms of the outlook and the guidance for 2023, pleased to confirm that we're still on track, and the guidance that we gave in February is still confirmed. Just wanted to remind the numbers production, attributable production of between 2.25 million-2.3 million ounces. AIC, our All-In Sustaining Cost between $1,480 and $1,520. Remember when we did put out the guidance, we said there could potentially be $25 if we decide to go ahead with the St. Ives solar project. We haven't done that yet. We haven't made a decision yet. CapEx is also in line between $1.1 billion and $1.2 billion. Long-term guidance, obviously, nothing has changed in terms of the 2024 and 2025. I think pleasing to see inflation still, is still a problem.
We have based on year-to-date numbers up to April and forecast for the balance of the year, we're looking at 7.2%. That's in line. When I did give guidance at the beginning of the year, I said we had factored in circa 7% in our year-on-year numbers. I think the really pleasing performance came from Peru, where they seem to have been able to offset a lot of it, and their forecast for the year is around 1.6%, which is probably the outlier, but a good outlier in the group. Apologize for that. We're just clicking over from the Eskom to the transformer. Okay.
Okay. We go into our ESG performance. A picture from our Salares Norte mine. It's a beautiful part of the world. That picture very much reflects the operating environment. Thanks, Finn. Just to remind you, in terms of our ESG targets, the six big targets that we're focusing on is safety, health, well-being and environment. It's been the first priority area. We want to achieve zero fatalities, zero serious injuries, and important, zero serious environmental incidents. In terms of gender diversity, we've set our target to get to a representation of 30% of our total workforce being women. In terms of stakeholder value creation, 30% of the total value created must benefit host communities.
We've also started scoping and implementing in Peru, the first of our 6 legacy programs that will benefit host communities. In terms of decarbonization, net zero by 2050. We wanna see a 30% net reduction from our 2016 baseline by 2030, which equates with our production build up to a 50% absolute emission reduction, and that's based on 2.8 million tons, and that's Scope 1 and 2. Pleasingly, the team has started working on Scope 3 reductions, and we will report on that at the back end of this year. In terms of tailings management, conformance to the Global Industry Standard on Tailings Management. We are actively driving that. We've got 2 high-risk dams, the remainder have got a later finish date.
Reduce the number of active upstream raised TSFs from 5 to 3 over the coming years. Water stewardship, which I think is something that we've been focused on for many years and is gonna become more and more of a challenge in the world, is to get up to 80% of our water to be recycled or reused, and a 45% reduction in fresh water use from the 2018 baseline. Stretch targets, we're certainly pleased with the progress our teams are making. I've touched on the 2030 targets. Unfortunately, as I said in our introduction, we did suffer 1 fatality at our St Ives mine during the course of last year, and then at the beginning of this year, at our Tarkwa mine and 2 fatalities at the Asanko joint venture.
These are highly regrettable and this is something that we remain very focused on, learn from these incidents and make sure that they never happen again. I think just talking to that, and I'm not gonna go through all the points, but the 286% improvement in reporting transparency on near-miss incidents is a really important metric for us. We believe that if we can get people to report on near-miss incidents, what we do is we learn from potential incidents before they materialize into serious injuries or worst of all fatalities. There's a very big drive on getting people to report on near-miss incidents.
We, we've expanded our approach around safety to include mental well-being and psychological safety. We are busy developing approach and tools and risk assessments, how we better manage that. I think, innovation and technology space, specifically related to safety, is the development of vehicle inter-interaction and collision avoidance technologies. We are making progress across the group, with some of our operations a little ahead of others. We, we confident we will have a solution in South Africa by the back end of this year, where it will become a legislated requirement and the other operations are following fast behind that. Electric vehicle trials are going on both in Australia and later this year at South Deep, to reduce diesel particulate matter, risk, but also the greenhouse gas risk or decarbonization.
The team are of certainly moving in the right direction with many of the issues we need to tackle. In terms of gender diversity, we've got to a point of 23% woman representation in our workforce. Importantly, in leadership roles, that number is running ahead of the total workforce. We certainly believe that if we can drive the women in leadership positions, it will send the right message and provide the right leadership in our business to grow the demographics or match the demographics of our workforce with the countries in which we operate. Importantly, of the women we employ, 55% of them are employed in core roles. It's important for us that women are represented across the business.
We've had focused recruitment and retention, development programs, to make sure we achieve this. We've, we've got a diversity and inclusion dashboard. We've done well with the Bloomberg Gender-Equality Index and those results are on our website. We've, we've also conducted an independent group-wide review on harmful behaviors in our business, and, sadly, we've recognized that we've got more work to do in that space. But it's better that we know about it and that we can, put, I suppose, corrective actions in to fix it. Focus on recruitment and development of Indigenous Australians, youth, and people with disabilities remains front of mind.
We've started a lot of work, this year around how do we evolve our culture, with a focus on building care and respect within our business so that Gold Fields is a place where people want to work and where people are proud to work. I'm gonna ask Kelly to pick up on this.
Thanks, Martin. In terms of stakeholder value creation, whilst our efforts are obviously focused across all of our key stakeholder groups, we've got a very strong focus on our host communities. Being those communities that are most directly affected by and impacted by our mines. That particular stakeholder grouping received 27% of all of the value created last year, which is some U.S. $913 million. In terms of the focus areas that we undertake in order to achieve those results, we're really looking at three key areas, which is employment, being how we can employ more members of the host communities in which we operate, how we can procure goods and services from enterprises that reside within these communities, and particularly SMEs.
Then how we can invest in those local communities in terms of community infrastructure, health and education facilities, and other community projects with a very strong co-design principle underpinning that. Our second major 2030 target is to develop 6 legacy programs. These are transformational, enduring programs that are anticipated to have a material impact on those communities through economic diversification and job creation, infrastructure development, climate change mitigation and adaptation, and improving health and education outcomes for those communities. Martin mentioned earlier, a pipeline of those legacy programs have already been framed and conceptualized at all of our regions around the globe, and one of those programs at our Cerro Corona mine in Peru is ready to be launched later this year. Here we provide some more color on our host community value creation.
As I just mentioned, of the total value creation, 27% was dedicated to host communities, being $913 million, a number that's risen steadily over the last 3 years, as you can see from the chart here. Important to note that in 2021, that number was $872 million. The largest share of host community value creation is the $747 million that we spent with host community enterprises. Supporting that activity, it's important to note that we introduced favorable payment terms for SMEs across all of our regions in the group, being 14 days from i-invoice receipt. Our total procurement spend last year was $2.3 billion, 97% of which was spent within businesses in our countries of operation.
Over half of our employees, being 52%, come from within our host communities. Looking beyond our own operations, we're working with our communities, contractors, and suppliers to create jobs outside of the mining supply chain, particularly in agriculture. To date, we've created about 800 non-mining jobs, mostly in South Africa, Ghana, and Peru, and these types of projects feature very heavily in our legacy programs. Yesterday, we published our annual report to stakeholders in which we detail the value that we created in 2022 for all of our material stakeholders on a country-by-country basis. It also outlines our approach to engagement with all of those stakeholders. It also transparently shows some of the challenges that we're currently facing and how we're seeking to address those with our stakeholders. That report's available on our website for you to look at.
Just touch on decarbonization. I did touch on those targets. Where we ended up last year is 18% of our absolute emission reductions. We had a 1% net emission increase, so that's linked to our growth. I think importantly, if we look at the key developments in terms of renewables, 14% of our group electricity came from renewables. Of that came from 2021 at 4%, so we've made a 10% mark in the year. That's largely driven by the bringing online of the South Deep solar plant, the 50 megawatt solar plant that was done within budget. Our mine at Gruyere in Australia completed the 12 megawatt plant.
The Cerro Corona electricity is being certified as 100% renewable coming from hydroelectric. This year, we are working, as Paul said earlier, in terms of the capital we'll spend, very hard on finalizing a microgrid feasibility study for our St Ives mine in Australia, which will compile solar, wind, battery and gas, to look at how we move to 85% renewable power at that mine. That's a long life mine that we see value in investing in. As I said earlier, our sustainable development teams are working with our regions, I think, to properly scope our Scope 3 emissions and set reduction targets. That work is underway. Paul is playing quite a leadership role there as well with our teams.
Three of our mines are now ISO 50001 certified, and the remainder of the mines are going for the certification during the course of the year. Positive developments with decarbonization. As I said, the project rollout at our mine, the South Deep plant was commissioned late last year. And then below is the 12 megawatt plant at Gruyere. Great developments for the year. Cerro Corona, as I said, is now classified as renewable. I've touched on the St Ives microgrid that we're working on right now.
Our colleagues up at the top of the hill in the Andes, at Salares Norte have started doing the work around the solar project concept study to put in a sort of 10-12 megawatt plant up at Salares Norte. We are continuing in earnest to get our renewables sorted out. The climate change report was released at the end of March this year. I think it deals with the strategies, it deals with our performance, and it obviously deals with the specific targets that we've spoken about. It deals with the energy performance at our respective mines, something we measure.
I think, one, because we think it's important from the impact we make on the world, but it's also a significant cost driver in our business, so we wanna measure that. We've measured progress against our 2021 climate change risk and vulnerability assessment. We've got the key performance environmental areas that we cover in there. We're looking at our Scope 1 to 3 performance. As I said, that Scope 3 emissions will bed down during the course of this year. Lastly, this isn't our view of the world. We have independent auditors that come in, and there's an assurance statement in there just to make sure that we keep our feet very close to the fire with this very important aspect.
In terms of tailings management, I've touched on the targets a little bit earlier. Our GISTM conformance is on track. The Tarkwa TSFs in Ghana are currently being transitioned from upstream to downstream dams. The team is making good progress there. I was on those dams with them earlier in the year. Our sort of tailings team, Johan Boshoff and Luis, are working really hard collaboratively with industry colleagues so as to, I think, get us the best solution. You'll have seen earlier in the month, we're looking at solutions to mix the waste streams and monitoring technologies linking to how do we do this a whole lot better and collaboratively.
We're doing early stage planning around reducing moisture content, that will hopefully during the year start materializing. We've developed our new TSF management standard, the climate change baseline studies are done. I think importantly, a real positive step forward for Gold Fields is at Salares Norte, the mine we are building and will commission later this year, is that will be our first proper dry stack filter tailings dam. We believe we're gonna learn many valuable lessons up there. We finished the construction of the South [Flank] the past year and the Doornpoort at South Deep's TSF stage two construction. That construction at South Deep basically is for life of mine, that dam is now constructed for the next 80 years.
Just in terms of water stewardship, against the target of 80%, we're already up to 75% of our water recycled and reused. We've managed to get a 41% reduction in fresh water consumption. At Tarkwa, they've installed a microfilter infiltration unit to increase recycling. South Deep, pleasingly, has installed a RO plant where we're tapping fresh water underground to generate our own potable water, which allows us to obviously generate or take less fresh water from the grid and increase recycling and reuse. Water, well on track. I think the team's doing really well in terms of getting us to the targets we've promised. Kelly.
Thanks, Martin. I think beyond the work that's been done across those 6 key streams, it's absolutely critical that everything that we do is underpinned by sound governance and compliance structures and practices. For us, we see this as being the absolute cornerstone of building trust with our stakeholders, and it's obviously something that we've always taken very seriously at Gold Fields. Whilst our alignment and upholding of King IV is absolutely central to this, I wanted to take the opportunity to discuss a couple of emerging trends and how that's shaping our approach to governance in the organization. I think what we're seeing is, with increasing expectations from both regulators and key stakeholders more broadly around transparency in reporting of ESG-related risks, strategies, and performance, what we're also then seeing is a corresponding increase in regulatory action and litigation, particularly focused on greenwashing.
Accordingly, our focus is then on ensuring that we've got robust controls in place that are firmly embedded within the business that give our stakeholders the confidence in the veracity and consistency of the information that's contained in not only our suite of annual reports, but also our continuous disclosures. Another area that we're also seeing regulatory and broader expectations shifting is with respect to the understanding and the influence that we have, not only on the impacts of our own operations, but also those of our partners across the value chain. In order to address that, we're really taking a multidisciplinary approach throughout the organization to conduct due diligence and manage issues such as human rights and modern slavery.
We've made some great progress in that across the group, and I'd particularly like to call out the work that's been done in our Australian region with respect to identifying and managing modern slavery risks in our supply chain. I think what's really interesting about this is that it's an area where we see the intersection between the S and G in ESG. It's particularly pronounced, and it demonstrates the need for a very integrated approach to these elements, and that really underpins Gold Fields' approach.
I think just in conclusion, I certainly don't plan to go through this all again, I think we've set ambitious targets for ourselves in these six priority areas. We believe we are making good progress in general, across the board, and our teams are committed to it. These metrics are included in our long-term incentives, so that this can't just be something we talk about. We're held accountable to it. We obviously very disappointed with our performance in the safety space, where we've lost a colleague this year at Tarkwa. We lost a colleague at St. Ives last year.
That is something that we have got right front and center of our minds and our focus to make sure that we eliminate serious injuries and fatalities across the business. So just I think lastly, from my side, to thank the women and men of Gold Fields that continue to buy into this, to believe in this, and to deliver these ambitious targets. Something that I'm proud of, and I'm sure all our people across the globe are proud of. If I can pause there, Thomas, then we can take some questions.
Thank you, Martin. We'll go to the call first for questions, please.
Of course. The first question we have is from Jared.
[inaudible] One of the operations, one of the strategy, and one of ESG. Just on the operations, it looks like you guys had a pretty good quarter from a cost perspective. The AISC coming in from $1,150, almost $200 below your full year guidance. I think a large amount of that is probably slightly lower CapEx spend, which will probably unwind for the rest of the year. It looks like you're also doing pretty well on your cash cost. I know you don't guide on this or you don't disclose it, but can you talk to some of the tailwinds that you're seeing maybe from bigger FX from, particularly the sort of lower inflation and the cost inflation that we're seeing? That's my first question.
On strategy, I think there was a call from your presentation a few days ago from your Windfall acquisition where you mentioned that M&A is pretty much done for the group now. There was a comment in your results booklet talking to still looking for inorganic opportunities. Should we be thinking of another acquisition in the $300 million-$500 million range in the near to medium term? Very lastly, on ESG, I think you previously quoted an amount of about $1.2 billion between now and the end of the decade. Is that your decarbonization CapEx? How much of that is baked into your recently revised SIB CapEx per ounce numbers of about $350-$400 an ounce? I'll leave it there. Thank you.
Okay, let me, Jared, it's Paul here. Let me just talk to the all-in cost. You're right. Quarter one historically is always a much lower quarter in terms of capital. You will see that the AIC will trend towards the guidance. There were no miracles this quarter in terms of cost reductions. I did say in my presentation we are seeing or forecasting inflation of around 7.2%. Obviously, we've seen a bit of positive on the lower, the oil price coming through, but we have seen some rise and fall claims coming through from our contractors, especially in Australia. All of the regions have got programs that they've implemented on site to try and take out costs or try and reduce costs.
In terms of the stay in business capital, a lot of the ESG capital depends on whether we're going to go self-build or we're gonna do PPAs. Now, the circa AUD 360 million that we said high level for the Australian microgrid, that is factored into our stay in business capital. The rest of the energy projects, at the moment, we are assuming PPAs. If we decide not to do PPAs, we would have to revise the stay in business capital. I hope that gives you more guidance on that. When we did announce, when Chris announced two years ago, we said about $1 billion-$1.3 billion of capital. That was assuming all of it would be built by us.
To date, we've obviously had the South Deep capital coming in for their solar, and we're saying circa AUD 360 million for the St Ives one. That's what we've got at the moment. It's probably just less than half most probably will materialize as capital. The rest will be picked up through the PPAs.
I think, Jared, your second question, around the book, most probably too much happening this week. The deal we announced with Osisko, we will keep on scanning the market, but our, you know, I think we've got enough to focus on in the short term with the JV up at AngloGold Ashanti and Tarkwa with Iduapriem. That's a lot of work for our teams to focus on to get that over the line this year. Obviously, our new partners in Canada, we've got that work to do.
I think we've said to our corporate development team, you know, go clean off the radar equipment, get your spreadsheets all up to date again, and maybe a bit more scanning this year. I think Paul has closed the wallet for a while until we can sort of get these things landed and get them back to steady state.
Clear. Thank you.
Should I try and tackle Jared's questions?
Are there any more questions on the call?
The next question we have is from Tanya Jakusconek from Scotiabank. Please go ahead.
Good afternoon, everyone. Thank you so much for taking my questions. I just wanted to follow up on the inflationary pressures because the All-In Sustaining Cost did come in lower than I had expected, and some of it was capital, but some of it has to be the total cash cost, which the gentleman before me said you don't report. I'm just wondering, as I look at some of your input costs in your cost structure, where you've had maybe some tailwinds, I think you mentioned obviously the oil price. just a reminder of what you're using for oil and your sensitivity and your cost for that would be helpful. Also, you mentioned contractors. I'm wondering, on the labor side, what are you seeing in terms of reductions there?
Maybe any other consumable or other that I may be missing out on and what you're seeing there. That's my first question.
Tanya, I won't be able to answer all of them, but I'll give you the ones that are clear. I also said when we gave the guidance at the beginning of the year, we circa factored in 7% inflation increases for our employees as well as the contractors. Unfortunately, we've seen a lot more pressure coming from the contractors. In the rise and fall basket, remember, there are also salary increases that come in. Especially in Australia, we've seen much higher demands. When we gave guidance, if I'm correct, we used $95 oil price. Obviously, we're seeing positives in terms of that. Most of the other commodities are sort of tracking what we used in our guidance that we gave out at the beginning of the year, different things as to what we factored. I hope that answers it.
Is there anything I've missed? There was one-
Are you seeing anything on consumables? Are you seeing any lower cyanide prices, lime, steel, like, you know, grinding media, anything else, freight, anything else?
Freight, we've definitely seen. Remember, it's only really freight's really only applicable to Cerro Corona 'cause they ship the concentrate.
Yeah.
We have seen a big reduction there. That's one of the reasons when I showed in my presentation that it looks like Peru has got most probably the lowest inflationary forecast for the year. In terms of the commodity basket, there's been positives and negatives coming in the baskets, and also depending on the region. Some people are getting ups, some people are getting downs, but the consistent one is oil on the positive side, and on the negative side, it's increased salary pressures coming from contractors.
Just on the oil side, if I could ask. In general, most of the coverage group for a $10 barrel change, it's about $6, $7 an ounce to cost. Would you be in that similar range?
Tanya, we'll have to get...
Can you not maybe as much.
I'll be lying to you if I told you. We'll have to get back to you. That was what it was about 2 years ago. Let us check and between Evan and I, we'll get back to you.
My second question has to do with, you know, you've now done these two new, you know, acquisitions or, one's a joint venture, one, you've made a, you know, footprint now into Canada. I'm just wondering, as you look at your portfolio, we've got obviously demand still sitting there that, you know, has to be dealt with and probably Asanko. Just kinda want to have your thoughts on how you're thinking about those and sort of timing on your decisions there?
Tanya, I think.
I mean, you've seen as a lot of mines otherwise. Yeah.
Tanya, we certainly very focused on the portfolio. We go into our strategy session mid-year this year. Those mines are still making money for us, but we are looking at opportunities and options for those mines as well as in the longer term at Cerro Corona. Hopefully by, you know, year-end, we'll be a lot clearer on what the process is with the broader portfolio. You know, as we bring in a quality asset like Osisko, which is still some way off, it does give us those opportunities to look at the portfolio more holistically.
Would it be safe to assume that by year-end, we will have some sort of a decision what you're going to do with both?
That's what we're aiming at, and we're working at it, you know, really hard. The teams are working at it, both in the region and at the center to find the best pathway to value for us.
Okay, we'll look forward to more news on those. Thank you so much for taking my questions.
Okay.
Thank you.
Okay.
We have a.
Carry on.
We have a follow-up from Jared. Please go ahead.
Yeah, guys. Thanks for taking my follow-up. Just one. Production came in pretty good in the quarter, but I just wanted to touch on South Deep. They also had a pretty good quarter. In some of your commentary, you spoke to a fall of ground, some challenging ground conditions. I just wanted to check, is that indicative of maybe issues around the orientation of the mine as you ramp up production? Should we be thinking of that as just a localized event that isn't, that probably won't occur again? Just some commentary on that, please. Thanks.
What I'll do is I've got some questions from Adrian, which I'll try and answer at the same time. We've had 2 fall of ground events at South Deep in the quarter. One was in a main access drive in one of the higher grade corridors. You know, fortunately, nobody was injured and, you know, the great testament to moving to mechanization, that one, we had less people there, but the people in a drill rig that had proper ROPS and FOPS on. You know, we've damaged the drill rig, but we're able to walk away from it. The teams are working on opening that up.
That, to answer some of Adrian's questions, reduced volumes out of that corridor, been in the main access drive. Tonnages were down at South Deep related to that. That's where it's a prominent stoping area. Your question, Jared, I think it's got nothing to do with the orientation. I don't think it's something that we must factor into the mine. The reality is, at deep level mining, you will have falls of ground and continuities in the geology. You know, we've learned how to get through it, go rehabilitate those tunnels, and get on with it. The second incident occurred where one of the main ramps, which we're actually starting to mine out, the footwall hold into an old conventional stope below it.
We stopped mining in that area. The ramps are generally fairly high-grade areas. We've stopped that mining. We had to go and rehabilitate that, fill the footwall, get it all concreted out again. That piece of work is finished now. The teams are back in there mining. To answer Adrian's question, those are the two reasons for the lower tonnes, and why the mining tonnes lag the mill tonnes. What we have had, part in thanks to a strategy to stockpile, and that comes in thanks to the electricity crisis in South Africa, is that we've got material that we've had stockpiled as we go along.
If we have load shedding, we typically keep our mining operation going and stop milling and hoisting and build up stockpiles, 'cause mining is our bottleneck, and we obviously wanna keep the most expensive part of the business running, where we've got the least flexibility in terms of capacity. The mining and mill tons sort of lagged as a result of that, Adrian, that talks to grade as well. We've drawn down on GIP and we've treated stockpiled material during quarter one. I think pleasingly, the start of quarter two, the volumes have picked up and we're still getting back into the grade in those areas. I think we've mined through it, Jared. We, falls of ground will happen from time to time, and we'll get through it.
Thanks, Martin.
Okay. Thanks, Martin.
Okay, we're gonna go across to the webcast now. First question comes from Sergio from Credit Suisse. He's just asking, why do you expect such a material increase in costs for the full year 2023?
It's capital. It's a simple reason. We're way behind in capital. Capital is unfortunately not spent equally over the quarters. We've still got a big chunk to be spending on Salares Norte, so the bulk of it is capital that's coming through disproportionate on a quarterly basis, and that's why we will end up being very close to guidance.
Thank you. Next question comes from Catherine from J.P. Morgan. She says, "There have been no changes to overall group guidance, production guidance, but can you please confirm whether there are any revisions to individual asset guidance, compared to the February results?
In terms of production, no. All the mines are tracking their individual guidance as well.
Thank you very much. Adrian had a couple more questions.
Okay.
On the South Deep solar project, he says it can be considered a benchmark study for other gold mines. How is the solar plant mitigating Eskom impact at South Deep currently? What is the plant's load factor, and how have electricity costs improved thus far?
Thanks, Adrian. Certainly, it is mitigating the Eskom power. Hence the study work we're doing currently around a wind farm, putting up turbines at South Deep. We've got a met mast erected, and we're collecting wind data. Contrary to my belief, living on the reef, I thought the wind didn't blow up here. The wind does blow, and we do see a opportunity for the smaller sort of 3-4 megawatt wind turbines. What it is giving us, it's allowing us to keep our mining operation going. And it's making a dent. You know, we've forecasted about 24% of our annual electricity consumption from the solar plant as it is, and we'll keep on investing in renewables.
In terms of the current load factor, we currently consuming about 72% of what's being generated in that solar plant. What we found as we commissioned the plant is that the electricity that's going to the South shaft, which is our old shaft, a lot of the equipment there, the pumps, the fans, are direct drive equipment and the compressors. What we found is that when we were starting those on load from the solar plant, that sudden spike in electricity was causing trips. We've bought soft starters to put on that equipment. That is busy being delivered in the next couple of weeks. It's got a fairly long lead time.
That will get put in over the next couple of months and we believe that by year-end we'll be in the 90% consumption of what we're generating. I think your third question is the impact it's had. When we initially motivated the solar project, we envisaged about ZAR 100 million per annum coming out of our budgets in terms of our electricity spend. This year when we put our budgets together, we'd sort of August last year had budgeted at about ZAR 124 million. With the subsequent price increases at Eskom going beyond what we had envisaged, we are forecasting about a saving of between ZAR 160 million and ZAR 170 million on our electricity bill at South Deep this year.
I hope that's answered your questions, Adrian.
Thanks, Martin. Bruce Jackson at UBS has a sort of follow on from that. He's just asking, "Has Eskom load shedding impacted production in South Africa at all?
Bruce, I think we blessed at South Deep, as I was talking earlier, is that we've got more shaft capacity than we require, and we've got more milling or processing plant capacity than we require. As I said earlier, what we do during load shedding at South Deep, and we're very unique, I think, to the rest of the mining industry here, because of that buffer we have, we're able to keep our mining operation going and then stockpile in silos underground and stockpile on surface at the mill. When load shedding is not prevalent, we catch up with our processing of ground and our hoisting of ground, but always a focus to keep the bottleneck activity, which is your mining and stoping, operating.
We, we track the number of days, and there's been a material increase in the number of days that we've been on load shedding. At this stage, between, the strategy I've now described to you, and we do have some diesel generators, which we run when the load shedding sort of goes to stage 6 for prolonged periods. I think last year we started the emergency generators, 3 or 4 times in anger. The rest of the times we've just started to, you know, make sure they're turning over for maintenance purposes. I think we are able to manage it well, but I think we're fortunate compared to a lot of other mining businesses.
Thanks, Martin. Another question from Bruce is, "When will the Scope 3 target reduction setting work be completed?
We aiming to complete that by year-end, Bruce.
Thanks. Next question is from Charmel Fleming from DRDGold. She says, "Congratulations on your gender diversity outcomes, and I look forward to following your journey to reach your target. Do you see the current war for talent, and in this instance, female talent or representation, as a risk to achieving the target for 2030?
Hi, Charmel. I hope you're well. We haven't chatted for a while. I think the sort of fight for talent is a global phenomenon. We see it playing out very differently in our different regions. I think it's driven by the demographics and the culture in the region. We certainly have very different challenges in each of our regions and different skills that are getting poached. What is pleasing for me is that we have the best demographics at our operations in South Africa in terms of female gender representation. That's a positive, something I'm proud of from where I come.
I think part of the solution, though, is how do we create an inclusive and caring culture that people want to work with us, that we don't have to, get them, you know, lure them with other attractions. We're doing a lot of work, to build a culture that I think everybody feels valued, everybody can reach their full potential. They see opportunity. There's a culture of caring, there's a culture of inclusivity, and that we stop the bullying and the harassment, I think that is so prevalent, in core industries like us.
That's what our focus is gonna be, is how do we create an environment where people can achieve their best, do their best, and feel that they're part of something a lot bigger than themselves, and that they can make a unique and valuable contribution.
Thanks, Martin. Next question is from Peter Cromberge, at Mergermarket. Can you outline what additional solar and wind capacity could be installed at South Deep and the approximate cost of this investment?
Peter, we working on that. This year alone, we're gonna put an extra 10,000 panels at South Deep, but we're then getting to the limit of what solar can do before we have to put batteries in. I have a view that, in an energy-starved country, spending money on batteries is most probably not the best way to invest right now, because there's a big battery called the grid and a lot of hungry consumers. We are working with Eskom, to take surplus energy back that we can get back at a later stage. In terms of wind, that's the next phase. We most probably looking at between 30 and 40 megawatts, sort of between now and 2030, 2035 of wind to put in at South Deep.
That would be our immediate focus. Then most probably looking at some sort of battery solution, and then we'd top up those batteries with a bit more solar, most probably another 10 megs of solar and most probably another 5 megs of wind after that. That should keep us going, sort of for life of mine. Cost, sort of a good wind turbine, you're looking at about... I saw something over the weekend that prices them, they're running away as well. A per wind turbine, you're looking at most probably between 80 and ZAR 100 million. So 10 of those is another ZAR 1 billion worth of turbines.
You're most probably looking at another sort of $100 million-$150 million of solar, but that would be at the back end. Batteries, the price of batteries, if we go to get enough battery capacity in, most probably somewhere between ZAR 500 million-ZAR 800 million worth of batteries. That's. Batteries are right at the back end of what we're considering.
Sorry, in terms of the question that Jared has asked earlier on, we haven't factored anything for the batteries. We factored in the solar.
Wind.
We factored in the wind in our capital guidance, but nothing for batteries at all.
Yeah.
That ZAR 100 million, sorry, for solar is actually in this year's number. We've taken into account this year that we'll add the extra 10 megs.
Yeah.
Thanks. Another question from Peter is, can you outline any progress with regards to refinancing of near-term debt?
We're in the final stages of refinancing our $1.2 billion. Hopefully we can make an announcement in the next week or two.
Thank you. Bruce Williamson from Integral Asset Management asks, if Eskom goes closer to level 10 during winter, what curtailment of underground ops and loss of monthly tons do you expect?
Bruce, let's pray that we don't get to stage 10. We have built scenarios from total blackout through those various stages down. Our focus would, as I said earlier, be on maintaining the mining operation. Firstly, safety of our people would be right at front and center of what we need to do. We would then, after that, make sure that we can keep on pumping, after that, keep mining operations going. We believe that on a sustained level six with our diesel generators, we can do that.
What will impact is that we would stockpile material, so the revenue might lag the cost a little bit, but we try to keep the mining operation going. As we go at levels above that, we would switch off corridors of the mine at a time. At stage 10, you're most probably looking at losing sort of 20%-30% of your capacity. The team is doing detailed study work on that to how we best mitigate that.
Yeah, I think during the day, we theoretically could use 22 from the diesel gensets and close to
Yeah
from the... During the day.
We keep going.
At peak time, we could almost continue going because we would have circa 70 MW of power coming between solar and the gensets.
Gensets.
It's just in the evening we would, we wouldn't be able to run it full.
Yeah. Our, our concern is obviously we need to keep the mine dry. We need to make sure we can keep the ventilation going and keep our people safe. You know, it's the evening impact, and we'll obviously focus on the core activity of mining.
Thank you. One more question from Bruce Jackson at UBS, he asks: how are you engineering the change from upstream to downstream dams?
Thanks, Bruce. What we're doing is we're reorganizing our waste stripping, and we are buttressing those dams, and making sure that they can't go down the valley. The waste dumps are effectively now forming my, I suppose, hills or mountains behind those tailings dams. We incur a bit of extra cost running our waste facilities or waste rock from the open pits to then buttress and build, I suppose small mountains or walls behind our tailings dams.
Thank you. Last question from the webcast is from Asief Mohamed from Aeon Investment Management. He asks: why do Gold Fields not disclose the pay ratio and the gender pay gap by major geographic segments?
In terms of our... I'm just gonna get the right numbers so that I don't tell you fibs. That has been a issue for our business. We've made a significant inroads in that over the past couple of years. Just in terms of the pay gaps, I'm just gonna get the nice number here. Over the last five years, the gender pay gap reduced from an average differential of 25% in 2018 to the 3% at the end of last year. We've achieved that by allocating additional funds on an annual basis into the various regions, on top of the normal salary increments that we award to address both the gender pay gap.
In a South African context, we were also doing it around the demographics to make sure that we close the pay gap both on gender but also on race.
Thank you, Martin. I think we might have 1 more question on the call.
We have a question from René Hochreiter from NOAH Capital Markets.
Hi, hi, Martin and Paul. Thanks very much for taking my question. Just to be clear, you said that 90% of the power for South Deep can be generated through solar and wind. Did I hear that correctly? During the day.
At, I think what Paul said, at the level stage 10 load shedding, we've got 22 megawatts of diesel emergency generators. That's not something we'd want to use as a first preference, 'cause, one, it's expensive and it's putting carbon into the environment. Then we've got the 50 megs of solar. We've got close to 70 megs.
Yeah.
available power during the day, which should keep us going, during the day. Obviously, as the night comes, we're limited to the 22 megs of diesel, and that was where we would have to switch off some of the mining corridors. We would over the years, as we invest in more solar and as we invest in those wind turbines, we are aiming to get off the grid. Eventually at the tail end, which is not in the CapEx yet, because we're not convinced on the batteries, we would look at putting batteries or some other storage solution in place. The ultimate game, Rene, is to get off the grid, because that's the way we can ensure business continuity and meet these commitments that we've made to get our business carbon neutral.
Yeah. Understood. What is the total requirement? It sounds like it's about 100 megawatts for South Deep.
No, we're most probably burning, average of about, we'll get up to just over 60 megawatts.
Okay. I was in your trip to Australia last year, and I see that most of your operations in Australia have about 50% gas generated electricity. The rest solar or wind or a combination.
Is it not possible in South Africa to put in gas pipe power station with, say, gas from Mozambique?
I think that's the challenge. It's how far it's gotta come from Mozambique, René. You know, the northern part of Australia. I'm told by my colleagues, and maybe Kelly, if I get it wrong, will help me right. Western Australia, because the gas is mined in the northern part of Western Australia, our mines get that gas at a discounted rate to even the rest of Australia. There's a line that runs, a gas line that runs down from north to south. We, you know, it's convenient for us. It's a bit cleaner. As Paul had mentioned earlier, St. Ives, we're looking at investing a lot of money there to even move away from gas. We wanna get away from gas eventually.
Ives is a long life asset that, you know, that's a horse we're backing as a tier one asset in Australia that we believe investing the right money into solar, wind, batteries is the place to go. It takes cost out of our bottom line, and it does the right thing for our business. Gas line from Mozambique, most probably quite expensive for us right now, and we see more value at South Deep in wind and solar.
Yeah. I mean, René, renewables, I mean, that's more so the target because even gas, and we've seen it in Australia in the last year or two, it's obviously subject to market pricing as well, where renewables, you basically do fall to a fixed cost once you've installed it of the maintenance. For South Deep, we want to go totally green, as Martin said, in terms of wind and in terms of solar, because then you've got a fixed cost going forward. You don't have market pricing that affects you, whether it's gas, diesel, or whatever you're using.
I mean, René, at South Deep, and Sure I've got the number right in my head, but I was close to it. Off the CapEx, if you take the CapEx out of the picture.
Sure.
we're generating per kilowatt hour at just under $0.10 a kilowatt hour. You're gonna struggle to beat that with a gas line all the way from Mozambique.
Yeah. No, definitely. Okay, no, good. Very interesting problem that you have.
Thanks. We've got one more question from Adrian before we wrap it up. He asks, "What is the CapEx required for the tailings compliance by 2025?
You know that number?
Adrian, we'll have to get back to you. It's not material. We'll get back to you.
Yeah. It's certainly, I think Adrian, it's been built into our business plans.
Yeah.
you know, be it, as I said earlier, the waste, that we're building the little mountains or walls behind the dams, that's factored into operating cost. There's obviously a lot of admin costs, there's a lot of monitoring costs, there's consultants costs. The bulk of that, I think it's all included in our, in our operating costs now. It's, that's business as usual for us now.
Yeah. It's the extra haulage cost basically of that stuff. Yeah, we'll get back to you, Adrian.
Thanks. That is it with the questions. Martin, if you wanna wrap it up.
Yeah. I think just, thank you to everybody, for joining us. Importantly, you know, thank you to my colleagues around the world. They make this happen. You know, Paul, Kelly, and myself sit here, and we talk about it, but, you know, the men and women around the world, they believe this, they live it, and they make it happen. We have the privilege of presenting it, and I wanna thank our colleagues from around the world who do this.