Good day, ladies and gentlemen. Welcome to Gold Fields' 2021 financial year results. With me during the presentation today is Paul Schmidt, our CFO, and Avishkar Nagaser, who's our head of investor relations. As always, we provide a forward-looking statement. This time the forward-looking statement includes comments around ESG. This is the agenda for today. I'm gonna be talking through a little bit about our purpose, vision, and strategy. Highlights for 2021. I'll talk you through some ESG components, then operations. I'll hand over to Paul, who'll take us through the financials, and then I'll do an update on Salares Norte, then provide a conclusion, also our guidance for 2021 and beyond.
I thought I'd share with you an update on the company's purpose, vision, and strategy that we concluded during the course of last year. It's the first opportunity I've had to be able to share some of that with you. Firstly, we got feedback from our staff, from our executive team and our board to land on the new purpose for Gold Fields. In essence, why we exist. What our purpose is is creating enduring value beyond mining. I think that talks to what Gold Fields is all about.
What society would expect of us is, yes, we expect it to make a profit, we expect it to run a profitable company, but we also expect it to make a difference, and to make a lasting difference beyond the lifetime of our mines in the areas in which we operate. What we've been able to do in our vision is build on the vision that was, the vision of Gold Fields before. Our vision is to be the preferred gold mining company, delivering sustainable, superior value. Not only for our shareholders, but very importantly for our shareholders, we wanna make sure that we are the leading company delivering superior value.
To be the preferred gold mining company is to be preferred by the governments and the communities in the domains in which we operate, but to be preferred from folk that are seeking employment, and we want them to want to work for Gold Fields. A very ambitious statement. Clearly there's work for us to do over the next period of time, we think it's a great way to think about the future of Gold Fields. We have built on also, like the vision, built on the strategy that was very successfully executed by Gold Fields. The three legs to the strategy, which are in the aqua color around the center of our purpose, those are the three legs of our strategy. First, focusing on maximizing the potential from our existing assets through our people and innovation.
The second leg of our strategy talks to building on our leading commitment to ESG, and the third leg of our strategy talks to growing the value and the quality of our portfolio of assets. We've got a very well-established, well-entrenched, and no need to change values set of values, and so we haven't changed the values much, and only tweaked a little bit here and there. This is a summary of the purpose of Gold Fields, our vision, our strategy, and our values. Turning to the highlights for financial year 2021. We think we've had a solid business performance, notwithstanding the very difficult COVID and inflationary environment the company's operated in. Firstly, we're making good progress on safety with a reduction in almost all of our injury rates.
In this particular case, this is the total recordable rate. The one blight that we had on our performance in 2021 was the one fatality we had with Vemilia McIane at South Deep in April. We continue to make good progress on ESG. You'll recall that we launched our 2030 priorities and targets at the end of last year. I'm gonna be giving updates on all of these components in the slides to come. On the operational front, we increased production attributable to Gold Fields by 5% year-on-year. We increased our earnings for the company up 6%. The balance sheet's in great shape. Even though we had a big capital year spending on Salares, we continued to pay healthy dividends.
Even with that very substantial cash outflow, we managed to decrease the debt on the balance sheet by $100 million. Salares Norte project in Chile remains on track. This is one of the best mining projects in the world at the moment. Finally, very pleasing for us to say, in a difficult environment, that we were able to meet all of our guidance, production, costs, and CapEx during the course of the year. This is quite a nice way of looking at a snapshot of the company. Turning to the box on the top left-hand side, if you don't know the company well, you'll see we operate nine mines, one project in five countries.
We delivered this year cash flow from the mines of $913 million and an adjusted free cash flow of $463 million. Looking at the world map on the very right-hand side, turning to our Australia region, Australia generated $466 million of cash, just over half of the cash generated by the company and about 43% of the company's production. Turning to West Africa, the second largest sector for us, the largest region for us, generated 34% of the group's production and just over 30% of the group's cash flow. South African region generated 12% of the group's production and roughly the same amount in percentage terms of cash flow of the company.
Americas generated 11% of the company's production volume and about 6% or 7% of the company's cash flow. Turning to our ESG slide, Safety and Sustainability. Firstly, just a brief comment on COVID. COVID, we again had a very difficult year when it comes to the impact on our people. We lost 17 of our colleagues in 2021, bringing the total amount of our colleagues that have passed away due to COVID to 20 for both 2020 and 2021. We managed 2 waves during the course of the year, had production losses of about 30,000 ounces in the Q1 of the year, just under 10 from South Deep and 20,000 ounces from Cerro Corona.
While not that evident in some of the numbers that we'll share with you later, we had significant disruption to our Salares Norte project, and I'll share with you how we managed to still keep the project on track, notwithstanding these very significant disruptions due to COVID. We did spend about $30 million in various parts of the world making contributions to COVID. I think a very, very important and pleasing aspect of the way we've managed COVID is right across the globe, we have 83% of our workforce is fully vaccinated. Over 90% is first vaccinations, and the region that's playing catch up a bit is Ghana, and they catching up now. Over 70% of their workforce is fully vaccinated.
We think that we're well placed to be able to manage future waves. What we haven't planned for, like in 2021, we haven't planned any COVID-related disruptions because it's very difficult to know, you know, what to plan for. As we go along, we'll keep you updated on COVID-related production disruptions. On the safety, health, and COVID. We've already spoken about COVID. If we look at the graphs on the right-hand side, you can see, unfortunately, we did have a fatality, and you can see that through this entire period that's in front of you, we've been unable to manage our business without having a fatality. That's certainly one of the most important aspects for us that we wanna get right this year.
We have seen a slight increase in the amount of serious injuries, but very pleasing to say that the majority of those injuries are low-impact injuries, so things like slip and falls. And that's why you can see that aqua blue line coming down year-on-year. That's the severity rate of our injuries. So very pleasingly. Then at the bottom graph, you see that again, we've had a reduction of 10% on the total recordable rates or our TRIFR. Then on health, I've already mentioned the fact that we've got over 83% of our workforce fully vaccinated. We continue to drive other occupational health-related matters in the company. For example, improving on diesel particulate matter, reducing noise, reducing dust levels.
You know, many of the other components of making sure people are safe at work around health, we continue to focus on. Right across the well across the globe, we are seeing an increase in mental health challenges. Something that Gold Fields is taking on board, and we've got programs in all of our regions to be able to deal with mental health challenges. We're making great progress on ESG. I know you've seen some of this before, but you know, first of all, if you look at the slides on the right-hand side, that's just a visual example of some of the work that we've already done.
At Agnew, which is a hybrid power grid, which is a combination of wind, solar, gas, and some battery storage, is already producing 57% of the power from that mine is coming from renewables. Likewise, the slide underneath it, you see Granny Smith mine. That's the solar plant that's in place at Granny Smith. Also when we did the presentation of our ESG priorities to the market, we also shared with you some of the great work happening in Ghana, where we've converted our LPG gas to natural gas, reducing the amount of carbon emissions emitted into the atmosphere. Very pleasingly, we continue to make great progress, and for this year we'll see two big plants coming on stream. One is the solar plant at Gruyere, which will come on stream at the end of the Q1 this year.
Secondly, we've got a 50 MW solar plant at South Deep in South Africa coming on stream in the Q3 this year. On the environmental side, just a couple of comments to mention. We continue to increase the amount of water that we are reusing. We now increase from 71% last year to 75% of the water that we use is reused or recycled. We've also reduced the amount of fresh water that we're extracting. Now we're up to 35%. Or we've got a 35% reduction since we started this program on the fresh water that we extract. We've, again, for the third consecutive year in a row, have had no Level 3 environmental incidents.
On shared value, something very important to Gold Fields, we have created $3.6 billion of value for stakeholders in 2021, of which just under $900 million went to the host communities around our mines. In the last five years, we have created for host communities over $4 billion worth of value. It's not just what we're saying, we're being recognized externally for the great work that we're doing on the ESG front. I won't go through all of these, but I think it is important to just point out one or two of them. The Dow Jones Sustainability Index, which measures all the mining companies, you can see Gold Fields is for the second year in a row, has been ranked third out of 70 mining companies. You can see Gold Fields punching way above its weight.
MSCI upgraded us from triple B to an A rating. We've got, you know, a number of others that included, for example, in the Bloomberg Gender-Equality Index, being rated an A rating in the CDP, their water project, Gold Fields being A-rated also one of only a few mining companies to be included in that ranking. I did say to you when I launched our ESG targets, our 2030 ESG targets, in December, that I will keep you updated. Now, there's clearly not a lot of time has passed between December and now, but what we will do is always in our presentations, give you an update on how we're doing on the six elements that we committed 2030 targets to. In the gray boxes, you can start seeing now the progress that we're making.
On the decarbonization, remember, because of our increasing production levels, actually just by the nature of what we're doing, we will emit more emissions. For us to have a net 30% reduction, we've got to have a 50% reduction in carbon emissions by 2030 in absolute terms. Already since we started this journey, we are at 18% absolute reductions. We were at slightly higher level of net emissions. We're at about 4 or 5%, but because of the production increases this year, we've eaten into some of those benefits that we had. When we put South Deep and Gruyere in this year, you're gonna see a massive improvement, and again, reductions in the net emissions from Gold Fields.
Our tailings management, we still continue to conform to the GISTM standards and all of our tailings dams are as we reported in December. I've already commented on water and safety. Just to comment on gender, we again had another increase in this past year because of the focus in the company of increasing gender representation, and we increased the company's gender representation from 21% to 22%. I've already talked to you about the value that we're creating for stakeholders. Once again, we have created 28% of the value that benefits host communities. Turning now to the operations review for the group. Firstly, overall, as a group level, our production attributable to Gold Fields increased by 5% year-on-year to 2.34 million ounces.
We generated from the group $913 million of cash at a 25% cash margin at an all-in sustaining cost of $1,297 an ounce. If you look at the year-on-year comparison, you'll see that's up by 20%. In Paul's section, he'll explain that actually the majority of that increase comes from the spending on Salares Norte, our big capital project, and also the strengthening of exchange rates. Paul will cover more on that a bit later. Turning to each of the regions in Australia, we maintained our production at over 1 million ounces, so great performance again from the Australian team. I mentioned right up front in that snapshot that we generated $466 million from our operations in Australia.
43% of the company's production, but over 50% of the company's cash generation. We generated that at a free cash flow margin of 26% at an all-in cost in U.S. dollar terms of $1,146. We did have a 9% strengthening of the Australian dollar, and so you can see we had year-on-year a much lower increase year-on-year in Australian dollar terms. In West Africa, in Ghana, we again increased production year-on-year, primarily driven by the increase in demand. This is the managed production, 100%. Attributable production to Gold Fields increased by 1% as well.
We generated just under $300 million of cash at a free cash flow margin of 28% at an all-in cost of $1,112 an ounce, a 5% increase year-on-year. In the Americas, we had a tough start to the year at Cerro Corona in Peru with the slope failure that we mentioned at the interim presentation, the slope failure on the east wall of the Cerro Corona pit. We were also very heavily impacted by COVID in the Q1. We managed to have a much better second half caught up, and in particular, the final quarter had a much better performance. If you look at the equivalent gold production, that includes the conversion of higher copper prices. You can see we had a 20% production increase year-on-year.
I think a fairer way to look at our actual performance was to look at our gold production. The second line on that chart on the left-hand side, you can see a slight reduction in gold production, but copper was up. We got the benefit from increased copper production and a much higher copper price translating into higher gold equivalent production up by 20%. We generated cash of $57 million at a 17% margin at an all-in cost of $1,040, a decrease year-on-year. In South Africa, a great performance from South Deep, exceeding the guidance that we had provided. Production increased 29%. The managed at a 100% level increased by 29% year-on-year.
Great performance in continuing the production increases that we've seen over the last 2 years. Very importantly, at South Deep, we generated cash for a third year in a row, but more than 3 times the cash we generated last year, generating just under $100 million at $97, with all-in cost in dollar terms of $1,379. We had a 10% strengthening of the rand here in South Africa, so better to look at the rand per kilogram, and the rand per kilogram was down year-on-year by 1%. The only region with Cerro Corona that we had a reduction in the unit cost year-on-year. I think I've missed out the fact that we're generating a 23% margin.
One of the things I did say, I'll continue to give you some indication of the improving productivities at South Deep. This is the same slide just that I shared with you at the interims. It's now updated for the full year. You can see, top left-hand side, these are just one or two productivity metrics that we're showing you some of the underlying productivity improvements that we've seen right across South Deep. There you can see the long-hole stoping rigs increasing by another 11% year-on-year. If you look at the development on the top right-hand side, you can see, you know, just a couple of years back, 4 years ago, we were delivering 33 meters per rig for the entire fleet. Now, we're seeing delivering 85 meters with another 18% increase year-on-year.
Left-hand side, bottom, you can see this is the gold produced. Four years ago, we were producing 5.2 tons of gold. This year, we produced 9.1 tons of gold. Now, you'll remember the initial guidance for South Deep was 9 tons of gold this year. We were impacted by COVID in the Q1 of this year, and so what we said is, after the Q1, that our revised guidance was 8.7. Since then, we had fantastic quarters of production in second, third, and Q4s, and we were able to not only beat the 8.7 revised guidance, but we were able to beat also the original 9 tons of gold for South Deep this year. Great performance.
The gold line is very interesting because, you know, if you look back in 2017, we delivered 8.8 tons of gold. We did that with 2,000 more people. With 2,000 less people, we have now exceeded those numbers, and that's coming from these increasing productivities. The bottom chart on the right-hand side, here you can see we generated after the past decade of losing almost ZAR 1 billion a year, we now generated almost ZAR 1.5 billion or $97 million of cash. A great performance from South Deep, and a bit later, when I give you the guidance, I'll show how we're planning to take that forward. With that, I'll hand over to Paul, who will take us through the finances.
If we can go to my first slide. Normalized earnings up 6% to $929 million. Free cash flow, $463 million. Net debt down to $969 million. Pleased to announce final dividend of ZAR 2.60. Total dividend for the year, ZAR 4.70. Down from ZAR 4.80 in the previous year. However, you need to remember that we are a dollar reporter, and in terms of dollar, we have increased from $0.29 to $0.32, a 9% increase in the dividend. If we look how the free cash flow was made up, $913 million from the operating mines. Of that, we invested $327 million into Salares Norte. That left us with $582 million from our ops after Salares.
After paying interest and other corporate charges, we ended up with $463 million free cash flow. As Chris said, our all-in costs are up 20% to $1,297 an ounce. That is below the guidance we gave at the beginning of the year from $1,310-$1,350 an ounce. The main reason for the increase is $109 per ounce due to the increased capital expenditure at Salares Norte and $53 because of the strengthening of the rand and the Australian dollar to the US dollar. My last slide, key highlights. As I said, net debt down $100 million to $969 million. Net debt to EBITDA down to 0.4 from 0.56.
In conclusion, what did we do with the cash flow that we made? We invested $730 million into capital at the eight mines that we operate. $369 million went to dividends to Gold Fields shareholders as well as to minority shareholders, mainly in Ghana. We spent $375 million at capital at Salares Norte, and we still managed to do $100 million debt reduction. With that, I'm gonna hand over to Chris to take us through Salares Norte.
Thanks, Paul. Yes, Paul said I'll take you through an update on the Salares Norte project in Chile. I already mentioned a bit earlier, this is one of the best gold projects anywhere in the world at the moment. I won't go through this entire slide, but I will say that a couple of highlights, we managed to increase from 27% at the start of the year to 63%, roughly, completion at the end of the year. We spent $375 million on the project itself. Now we've spent overall $472 million on Salares Norte in Chile. We did have very significant impact from COVID on the project.
For example, we had to de-densify all of our accommodation at the project so we could get at one particular time, only a third of the planned people on site. The government was paying actually very lucrative allowances for people that had COVID or to offset the impact of COVID. They'd actually pay people to stay at home. Seaborne logistics were impacted by COVID. Transporting of equipment from manufacturers to the sites was impacted by COVID. The manufacturers themselves were impacted by COVID. The team at the site were very, very deliberate about making sure that we focused all of our efforts on making sure we sustain the critical path. Non-critical path items were postponed into this year. We're still on track, even with these difficult scenarios and these difficult circumstances.
Unlike almost any of the other major projects who have not been able to maintain their targets, completion dates, we've been able to maintain our focus for delivering and our commitment still is to deliver first gold at the end of Q1 of next year. You can see the various other components, construction at 55%, the plant at 35%, mining well ahead of schedule at almost 23 million tons moved versus a plan of 17. Whilst the original exploration was focused on the specific project area, now what we're doing is starting to look more in the region as to potential life extensions beyond the 11 years that we have shared with the market, what the current life of mine for that particular project is.
Just some pictures to show you, and you can compare them with the pictures that we showed you in June, that there actually has been quite a lot of development. This is a bird's-eye view of the Salares Norte processing plant. On the left-hand side, those round discs, those are the bottom plates of the thickeners. The tanks that you can see in the middle, those are the tanks around for the leaching tanks. And then the buildings with the blue roofs, that's all the administration buildings, the plant assaying and where the staff accommodation is. Just a couple of other projects to show you. The photographs to show you. On the left-hand side, you can see the steelwork that's going into the grinding area.
That yellow in the middle, that's the barrier in front of the mills that are in the process of being installed. Again, just another view in the top right-hand side of the installation of the thickeners. This particular photograph, you can see the walls of the first thickener going up. Behind those, the CIP and leaching tanks. Bottom left-hand side, you can see that's the truck shop, the HME workshop. If you wanna get a size of that, you can look very small yellow little yellow things in the front. Those are some of the normal light duty vehicles. Just giving you a sense of the scale of the HME workshop. Bottom right-hand side, now we're starting the construction of the coarse ore stockpile facility. Just another...
Here's another slide showing different pictures of the different mining areas. You can see a bird's-eye view, top left of Brecha Principal, and then the different zones, of the mining that is taking place at the moment. You can see very neat mining that's well ahead of schedule. To give a sense of what the next couple of years look like and to help understand the buildup of Solaris, we've introduced this slide. This year, 2022, clearly, that's the year of project construction. Now on the left-hand side chart. 2023, we start production at the end of quarter one.
If we turn to the chart on the right-hand side, to give you an indication of what the ramp-up looks like, because on the other one, I suppose one is tempted to just divide the production by 3. Of course, there's a ramp-up period that takes place. We are forecasting as per a McNulty Curve one. Really, that's project speak for the easiest, most uncomplicated project ramp-up of 12 months. You do a McNulty Curve one plan with mature technology, with standard equipment. What we're saying, this should be a fairly uncomplicated ramp-up of about a year. 9 months in this year and a little bit of impact back into 2024.
What you can see, though, is in the Q1 that we are managing or producing in the Q2 of the year, there'll be very little production coming around 'cause of the start of the curve. Also what you're doing is you're starting to put, you know, a lot of your material that you're putting into the plant is going into the pipeline. That one day you'll get out when the project stops one day. You can see very low production in Q2, increasing in Q3, bigger quarter in Q4, producing just about 200,000 ounces in 2023. In 2024, the Damang Reinvestment Project has delivered ahead of schedule, so we delivered more production than was expected.
What we are starting to see now is lower grades, though, and coming to the end of that life of mine. You can see this will be the last year of over 200,000 ounces. It was anticipated previously that we would have the last year of above 200,000 ounces would also include 2023. You can see now both as a result of faster mining up to now, we're gonna have in 2023 lower ounces of 150, and then pretty much the last two years, we mine the stockpiles that we have created, we haven't been able to treat over the last few years. At the moment, though, that's the end of the life of mine.
The project teams that are on the mine are looking at what the next expansion could look like or the next investment at Damang could look like, either a cutback of that mine or going underground at that mine. It's a bit early to say yet as to whether or not we're gonna be successful. That project team is underway, and as we get news of the potential further investment in Damang, we'll keep you updated. The next one that is not straightforward is South Deep. Here you can see this year we produced 293 or 9.1 tons.
When we gave guidance, we said the way to think about South Deep over the next few years is to think about South Deep as 9 tons of gold plus 20%-30% over the next four years. That's what this shows. You can see us increasing 290 to a range of between 350 and 380 by 2025. As we get a bit more confidence in the numbers, as we keep our ramp-up curve going, we expect to be able to tighten that range. I was asked a few times today, "Well, can you already see beyond that, and what could the future number look like?" Well, I'm really pleased to be starting to have to answer that question as opposed to, you know, are you ever gonna make your guidance?
Are we ever gonna make money out of South Deep? The decision to retain South Deep, I think, has been justified, and the South Deep team are on that ramp-up curve. Here's a bit more guidance as to what that could look like over the next four years. Group outlook and guidance for 2022. What we have done is provided some further guidance a bit further out on production. Let's first start with 2022 guidance. See, we are guiding. What we have done is we've stripped out Asanko. Asanko. Galiano, our partners at Asanko, have been unable to provide us yet with full year guidance.
They are gonna be coming out to the market at the end of Q1, and Galiano will give us guidance for what the production outlook is for Asanko. In the absence of that, what we've done is the two left-hand side gold bars, we have removed Asanko. You can see on a like for like basis, our increase. You know, anything that comes from Asanko will then be on top of that. What you can see is 2022 attributable production guidance of 2.25-2.29 million ounces. Again, a few percentage points increase. Then, of course, you can see the very rapid increases coming in 2023 and 2024, offset by a little bit of production down at Damang.
All-in sustaining costs will be up by $1,140-$1,180. All-in costs, $1,370-$1,410. All-in costs excluding Salares, $1,230-$1,270. Now you look at those and you'll see the range is somewhere between 6% and 9% increase year-on-year. I think that just really is a reflection, number one, of increasing capital investment in our own assets, but also the very high inflation rate that we're seeing right across the world, in particular, South Deep, with inflation around about 10%, but also in Australia, now around about 10%. This used to be a 2% inflation environment. We don't think that'll last forever, but in this very hot environment, we're seeing very high inflation in Australia.
Likewise, some of our other areas, not quite as high as that, but Ghana and Peru also seeing very strong inflation at the moment. Our CapEx, the guidance for 2022, between $1.05 billion-$1.15 billion. We also try to give a little bit more, although not further guidance like production, but we have given you updated guidance on how to think about sustaining capital, and I think the way to think about that longer term is about using $300 an ounce for sustaining CapEx. We have used the exchange rates very importantly because the exchange rates can fluctuate, and then some of these numbers change. Aussie dollars to US dollars, 0.76, and 15.55 rand to the dollar.
The slide on the right-hand side, you can see now we're giving 3-year production guidance going forward. A big focus area for us, embedding the new purpose, vision, and values, but very importantly, delivering the strategy that I outlined earlier, making sure that we can continue to get those production increases at South Deep and Gruyere in Australia. The rest of the operations continuing to focus on costs. Okay. Well, thanks, ladies and gentlemen. Welcome back. I think let's first start by seeing if there's any questions on the conference call.
Yes. Thank you. The first question comes from Patrick Mann of Bank of America.
Hi. Thanks very much for the call and for the opportunity. Chris, I just wanted to ask about how you guys are thinking about reserve prices now that we're seeing quite high cost inflation coming through. I mean, I imagine if you hold reserve prices flat and, you know, we start to see this double-digit cost inflation that it might start to impact mine plans. If you could just give us an idea around where you see your reserve prices going or what impact the costs have on that. Thanks very much.
Okay. Yeah, thanks for the question, Patrick. We are not adjusting our reserve and resource prices. Resource, we're still planning at $1,300, reserve at $1,500. You're absolutely right in that inflation may over time start putting pressure on those prices, but at the same time, we get the question the other way sometimes to say, "Well, you know, with the high gold price, shouldn't you be lifting the price for reserve and resource?" Our answer to that is no, because then we start bringing marginal production into our asset portfolio and into our production base. We don't wanna do that because then, of course, when prices drop, you have uneconomical production.
At this point in time, Patrick, for both of those reasons, we think that a $1,300 resource and a $1,500 reserve price, I think are appropriate prices. Perhaps one other comment, what we are seeing though is that some in the reserves, and that was the particular case at South Deep this year, is when we had some of the production around the edges with costs increasing, we did see a reduction in some of the reserve and resource at South Deep.
Okay, interesting. Yeah, I was just wondering whether it was gonna start having a material impact or it sounds like it's at the moment just at the margin. Yeah.
Yeah, I think that's how we see it at the moment, Patrick. Thanks.
The next question comes from Adrian Hammond of SBG Securities.
Hi, Chris. Thanks for the opportunity to ask you some more questions. I'm very curious on the profile you've given, the growth profile. I think you're probably the most significant producer on the senior gold cost curve that's gonna show such growth of some 20% over the next couple of years. I'd like to ask you, where do you see Gold Fields positioned on the cost curve in 2024, and how do you intend on staying there? With that in mind, you know, I've noticed your reserve replenishment isn't near where you're currently producing at 2.2 million ounces.
How does that strategy play out for you and what's your view on greenfield exploration because I don't think you have much, and is that really just not something you see much opportunity globally for your company? Thank you.
Do you wanna talk a little bit about the costs? I'll talk about exploration.
Yeah. Adrian, I don't think we're gonna be giving long-term cost guidance. We gave production guidance. We have to get over the hump this year of the inflation. You saw on the last page of this presentation, we did give indications of the inflation we are facing this year. In terms of the reserve replacement, I'll get to that before Chris goes. Remembering he did talk about South Deep and that we got caught in some of the costs bringing down, but in most of the other ops, we did have reserve replacement. Chris?
Sorry. Just remind me what the second part of the question was, Adrian.
Okay. Just curious to know, like, where-
Oh, the greenfields, yeah.
Not so much what the cost would be, but where your position would be on the global cost curve and how you intend staying there, Chris, 'cause you know, your growth is incredible, some 20%. I don't think any other miner has that but, of course, we're aware that you've got some mines coming off. I'd just like to
Yeah
assess your strategy for Gold Fields to sustain that.
Yeah. I mean, thanks, Adrian. Look, I personally haven't looked at the global cost curve for a bit to see where we're gonna be in 2024. We do know that we are going to move materially down the cost curve when we add Salares. When Salares coming in at you know, $550 an ounce or something to that effect. You know, that's gonna materially move us with big chunk of production down the cost curve. With time, we expect to see South Deep moving down the cost curve. Of course, we've got pressure in Australia moving up the cost curve, and there's a lot of work underway to see how we can mitigate some of that.
I think other than to say we are going to be moving down the cost curve and our high-cost producer in South Deep is already starting to beat inflation. But with a 10% inflation in South Africa, we've got to work really hard to do that. For example, that's why we see the investment in the ESG component, like the solar, to help us reduce those costs. Yes, it's got benefits for decarbonization but also reducing costs. We will be moving down the cost curve, and that's really what our focus is. At the moment, we've got those assets. They are fairly low-cost assets, and we believe that if we continue with solar, we'll be coming down the cost curve.
When I mentioned the third leg of our strategy is to focus on the quality of the portfolio. Whatever we do, that is very, very important to us, both quality of jurisdiction, but also quality of all-in cost is very important for us. This is very foremost in our mind. Exactly where that puts us in four years' time, I'm not exactly sure, but yeah, we can come back to you on that. The other question you asked is about greenfields exploration. For a long time, we didn't need to do that, and it was the strategy of the company is let's fix the company internally. The big restructuring and the, you know, the restructuring of South Deep, but then also the disposal and the spin-off of the Sibanye assets meant that Gold Fields is a very different company.
We focused internally. We said, "Let's fix up and fix our portfolio." We've done that now. Now we can start thinking again about careful greenfield exploration. We've started taking a few stakes in smaller exploration companies, so we've got three or four, and we'll update the markets, maybe at the interims or at one of the investor conferences, as to what some of that progress is. We're starting to do that now, in particular in Peru and Chile and going forward a little bit in Australia as well.
You're gonna see some more work by Gold Fields in greenfields exploration, but carefully and for now, probably in the countries in which we operate, just to make sure that we can have the focus and the spend on the exploration in our existing assets and our existing regions and then branching out a little further afield, but in the regions that we operate in. You're gonna see more greenfields exploration from Gold Fields going forward, and it's already something that we've started carefully increasing.
Thanks, Chris.
Thanks, Adrian.
The next question comes from Leroy Mnguni of HSBC.
Good afternoon, guys. Thanks for the opportunity. My first question is around the chinchillas at Salares. It does seem like you have it under control, and based on what you can foresee, it's not gonna have a material impact on your mine plan. Could you maybe articulate for us a worst case scenario? If you do not agree with the environmental authorities on an effective way of moving the chinchillas successfully, how would that impact your mine plan going forward and maybe your ramp-up profile as well? The second question is perhaps just for my understanding. The Agnew power solution seems to include batteries now.
I understand the issue at South Deep was. It's not really possible to come up or not cost effective to come up with a battery storage solution for the solar power. Is there any possibility that you can apply some of the learnings of what you're doing at Agnew at South Deep and maybe reduce your reliance on Eskom power?
Okay. Paul, do you wanna talk? Why don't you talk Chile's?
Okay.
Seen as a core component of financial.
Yeah. I'm a little animal lover. The chinchillas are in the area of Agua Amarga. Now, we only start stripping Agua Amarga in 2025, and first ore from Agua Amarga is only in 2028. For the foreseeable future, as Chris showed, we are mining Brecha Principal. It's not. In the next three years, we have no issue. It's only in 2025 where it'll start affecting the stripping. I hope that answers your question.
Yes, it does. Thanks.
Yeah, Leroy, just to add on to what Paul's saying, I mean, we are spending, you know, one of the questions I got this morning was, you seem pretty relaxed about it. No, we're not relaxed about it. The team in Chile are spending a huge amount of time engaging with the authorities. We think that there was, you know, during the election time, that's not normally the time where you get the most progress with government officials. Now that we're stabilizing that, we think that hopefully in the near future we will get now some traction. Our team in Chile have got good relationships with the authorities.
We've got good relationships with the NGOs and the other specialists that are helping us to come up with a plan that really works for relocating the chinchilla. As Paul said, we don't have a risk in the next couple of years, but we're working very, very closely with the authorities and hopefully we can get approval pretty quickly so that we can start moving the chinchilla so that in the fullness of time, that issue is resolved.
All right. Thanks for that.
What was the second piece?
Agnew power.
Oh, yes, Agnew. The battery storage solution in Australia at Agnew is still quite small. The scale that we're saying to move the dial at South Deep, we are going to have to have a much bigger storage solution. You're absolutely right. I mean, our teams are talking to each other around, you know, what has worked, what hasn't worked. Wind is already now a solution that's in place at Agnew. Our team, for example, at South Deep is engaging with the team in Australia. We are one team after all. Yeah, we're learning from that. Actually at the moment the storage solution that we're looking for at South Deep is a much bigger solution.
Yeah, that's still unresolved, but we are looking at a whole range of options as to what that looks like. Also under our technical team in Australia, to make sure that we are still, you know, not operating as a whole lot of little individual units, we have our central technical team that has got some oversight in making sure we do learn from each other and that we implement the best practice. Leroy, yes, a work in progress, but it is something very high on our radar screen, so we can take the next steps of both solar and wind at a number of our operations. Thanks, Leroy.
That, that's very clear. Thanks, Chris.
The next question comes from Scott MacDonald of Scotiabank.
Hi, Chris and Paul. Thank you very much for the update. Just a couple of questions for me about your revised strategy to preserve value beyond 2024. Firstly, on M&A, you talked a fair bit in a fair bit of detail on your Q2 2021 call, I think it was, about the types of external opportunities you might consider in terms of asset stage, geography, and other sorts of parameters you're looking at. Just wondering whether there are any changes to how you're thinking about this, in light of the revised strategy review process you undertook recently.
Yeah, Scott, thanks very much for the question. The answer is no, there's been no change in the strategy. I think just to reiterate for perhaps other folk on the call, who may not recall, what we discussed at the interim. What we said is, having built the value of the company up to where we're going to build it up in 2024, 2025, you know, we think that having built that value, we think we can maintain that. I think very importantly, we really are focused on the value and not on the volume. I mean, we think that's a bit of a proxy for that value if we can get the right quality production.
Very importantly, if we can't find the right solution to stop that potential drop-off, although it's not a cliff drop-off, but a gradual drop-off of a company's production beyond 2024-2025, when we peak at 2.7-2.8 million ounces. You know, if we don't find the right solutions for value, then we are okay to let the volume drift off a bit, off that number. Because what we don't want to do is add volume that actually reduces the value of the company. That's the first point I'd like to make. The second point I'd like to make is we've got a bit of time to do that, and we don't have to rush out by Friday and try and do something.
In a very high price environment with high valued assets, we wanna be very careful that we don't overpay for something that we can't create additional value for. We still maintain that we've got some internal options. One of them, for example, that I mentioned earlier is Damang. I mean, we may find an internal solution for Damang. As we start dropping off production at Cerro Corona, we know that there's some regional solutions around us. Internal focus is still absolutely always first prize, having a look at the early production assets or assets that are in production. Anything along that continuum, we'd be quite happy to look at. We've got some time to do that. The team are looking at that.
It's not like we've got nothing to do and that we're gonna be chasing things that devalue the company because we want to stay at some production number that is preordained. That is not our strategy. We think that we can, as we grow the value of the company, we think we can maintain that. We've got some time to do that, and we're gonna be looking at a range of options that can make us, we believe, sustain that value that we have created.
Great. Thanks for that. Just to confirm, geographically, would you have a preference to stay within the regions you are currently operating in?
Yeah. We are comfortable with the regions that we operate in. Yeah, we'd be happy to look in those regions. Likewise, there are still other good mining jurisdictions that we don't operate in. We would be also keen to look at some of those regions. Again, what we're not gonna be doing is spray and pray and just look all around the world. We still want quality jurisdictions and quality production to make sure that we do deliver that third leg of our strategy that focuses on quality. There are one or two other jurisdictions that we would consider. Thanks, Scott.
Would you care to mention them specifically or?
No, I think it's a little bit early at the moment. I mean, there are other good mining jurisdictions other than the ones we operate in. You know, we only operate in five countries. You know, I think North America is still interesting to us, just as an example. There are one or two other, you know, one or two other South American countries that are interesting. No, there are still some other good mining jurisdictions, and those are the things that we'd be interested in.
Right. You mentioned the third leg of your strategy is focused on quality. On the flip side, I guess, are there any opportunities perhaps to prune the portfolio of any assets you consider lower quality, particularly, as you mentioned, in a higher price environment, the value proposition might be more interesting on the sell side. Any thoughts on that?
Yeah, we don't have a lot of those that are not, you know, contributing very positively. For example, in the first half of the cost curve, there's not a lot of our production assets that are like that. You know, as we improve, South Deep is always improving, so that's great. We've got Damang that, you know, in the fullness of time, if we can't find a solution, then that might be something that we may consider in, you know, in improving the quality of the portfolio, b ut, you know, the Damang team still believe that they're gonna find the right solution.
So let's see. I think there is a question mark around Asanko that we need to think about what comes up with when Galiano do their presentation at the end of Q1. I think that's probably the asset that's got the biggest question mark next to it.
Got it. Thank you very much, Chris. That's it for me.
Yeah. Thanks, Scott.
At this stage, I'll hand over for questions from the webcast.
Okay, great. Okay, Chris, we have a whole lot of questions from the webcast. I'm gonna ask them one at a time, so we can get through them as quick as possible. Firstly, Peter from Mergermarket asks, "At what point will Gold Fields start considering options for the 2024 debt maturity?
That's for me. I think we will start looking at it towards the end of this year. We'll start looking at refinancing some of our group facilities, the bank debt. In 2023, we'll start having a look at the bond. At the moment, it makes no economic sense to do any maturity management on the bonds.
Thanks, Paul. Sandile from Umthombo Wealth has a few questions. Firstly, it doesn't look like Gold Fields attracts the multiples it deserves relative to its peers, given its production profile and quality of assets. Does this concern you, and do you have any plans to address the gap?
Yeah, we would agree with that we don't believe that we get the full value just yet. This has been improving over the last while, which is, I think, very positive. There, there's three key areas that we think we still are not getting the full value. Most of these are still in our hands. For example, South Deep, we know, we don't yet get the full value for South Deep. And, you know, we must just keep delivering. And as we deliver, we're seeing, the increase in value for South Deep. That's the first one, and it's in our hands, and we're doing something about that. Secondly is Salares Norte. Really when you're in a construction phase, you never get the full value, and I think that's understandable.
We have seen, though, also over time, as we get closer to delivering the project, we are starting to see the values increase from Solaris, but we have to deliver. When we deliver that project, we think that you're gonna see a very nice kick-up in the value of the company. Thirdly, we think that there's still assets in Australia that you know that some of the analysts, some of the shareholders don't really understand the assets. If you look only at the reserve life, they look like they're short life assets. They've had that life of mine for the last 20 years, and we still keep going. We can absolutely still see life of mine for all of those assets in Australia, you know, more than 10 years.
We've got, we think, the right solution. When time allows us, we're gonna take more people out to Australian assets to see how we've been investing in those assets, to see what the future looks like, to engage with the teams, and they'll really get a sense for the quality of those Australian assets. Yeah, we have been increasing over the last number of years. Our multiple gap has been decreasing. We've still got some potential. Most of that is in our hands. The plan is to deliver, and you're gonna see that continuing multiple continue to increase. Then we start seeing premium multiples for the quality of company that Gold Fields is.
Thank you, Chris. We have seen a significant rise in left-wing forces in the LatAm region. Does this concern you from a capital investment decision point of view?
Yeah, Paul, you know, why don't I just talk in general-
Yeah.
You talk to us a little bit about the stability agreement in Chile. Yeah, you know, it's not just traditionally we've always complained that that's the prerogative of African governments to scare investors away. We have seen, as you correctly mentioned, over the last number of years, increasing left-wing governments, you know, particularly when they're electioneering, saying all sorts of strange things that worry us. Yes, we are worried about that. Our teams in Peru and Chile give us the assurance that, number one, it's a lot harder to make some of those things happen than you know, just a statement. And that actually, there's a lot of sense prevails in the congresses where there's a much more, I guess, fair and even distribution of views.
Yeah, we don't think that these things are about to happen overnight. Governments all over the world are under tremendous pressure at the moment, particularly because of the impacts of COVID. We're seeing, not just in South America, but all over actually, governments seeking to raise taxes, raise royalties, get money in different ways. We're under a lot of pressure in different areas, but we're not overly concerned. It is, you know, of course, the moment somebody says something like that, it is of concern to us. We think we've got additional protections that perhaps many other mining companies don't. Perhaps you can-
Yeah. I think in Chile, at Salares Norte, we have a stability agreement that protects us from all mining taxes, so we don't see any move in that in Chile.
Some of the recent comments about water, we haven't seen anything. We haven't been approached. Our water rights are still in place, and we're not under any pressure on that front.
Okay. The last one from Sandile. Are there any specific tax benefits associated with decarbonizing the operations? If so, is it material?
At the moment, we haven't factored any tax benefits into our modeling. The benefits are in terms of lower cost. That's one of the reasons we've done the South Deep project. It's not only about decarbonization. It's coming off Eskom that's getting between 15%-20%. We see the benefits coming through lower costs of operating green energy. I think an additional area, Sandile, that you may see is what we may avoid is some of these extra carbon taxes that are being talked about, in particular, in the Eurozone. I think by whilst we won't get tax benefits, we think that we could avoid some of these very material taxes that people are talking about because of the good work that we're doing.
In addition to the point that Paul makes, actually this is reducing our costs in all the places that we're putting this in.
Okay. The next one is from Mark at Oyster Catcher. Are there any one-off costs at South Deep or is the current cost the run rate for the mine?
For the 2022 year, there's ZAR 550 million associated with completing the solar project. They have got approximately ZAR 1.5 billion sustaining capital this year. That should drop to ZAR 1 billion, and that's the number you should be using for sustaining capital for South Deep going forward. That's the big outlier this year.
Thanks, Paul. The next one comes from Lawrence at Atlas Peak Investments. Do you foresee the gold price carrying on its upward trajectory in the future? And how will the company sustain its earnings and value should the gold price start to slow down or decrease?
Look, I think firstly, we don't manage the company for the existing gold price. We manage the company for a much lower gold price, and then the gold price will be what the gold price be. We are focused on making sure that we can generate good margins at much lower prices. When you get high gold prices, we will benefit and our shareholders will benefit as a result. That's the first comment I'd make. Secondly, you know, it looks like, you know, most commentators are feeling that yes, there's pressure from inflation. Traditionally, that puts some pressure on the gold price. You're not seeing interest rates. Interest rates being the talk of rising interest rates, particularly in the U.S., that normally puts pressure on the gold price. That's not a global phenomenon yet.
What we are seeing, which is a global phenomenon, is the increasing inflation, and that's normally good for the gold price. I think if you put these different forces and many others against each other, I think you would say they probably even each other out, and I think we should see for the next period of time, a fairly strong gold price and even a slight increase in gold price. Hopefully, the geopolitical risks don't escalate because that's not what we wanna see gold prices rising on. You wanna see it rising on actually proper fundamentals. We think those are in place, and we think that largely you should see, a strong gold price for longer.
Okay. Jared from RMB has a couple questions. Firstly, how much of the reduction in Damang's production from 2022 to 2025 is due to lower expected grades relative to the Damang reinvestment plan? And what does a lower grade mean for potential reinvestment into the asset? i.e., is it not NPV accretive to sell the asset into frothy asset valuations while there's still some life left in it?
I mean, that is one of the options available to us, but at the same time, we still have underground potential at Damang. There is still a potential for another cutback. There could even be a combination between those. I think until we are sure that there's not much better valuation in our own hands, we would not wanna sell it now. I mean, you know, we wouldn't wanna sell it when everything's finished, so we don't have a lot of time to make that decision. We wanna be very sure that this is actually still not a good asset in our hands, so that you know, I guess, that's the first point that I would make.
Second point that I would make, to date, both because of volume and grade, we have got slightly more ounce production than we had anticipated at this point in time. By the time 2025 comes, we will generate more ounces than we'd originally commissioned, committed to the market from the Damang Reinvestment Project. We have had times where we've had a higher grades than planned. We are in an area where it's got lower grades. That certainly was the case in 2021. We are seeing a slight reduction, and that's why we had about 200,000 ounces for 2022, because of lower grades. But overall, the grade and anticipated volume that we were planning to get out of the asset, we've got out of the asset.
Some of the extra mining that we've done that we haven't been able to treat is on stockpiles. Then at the end, the last two years of the mine, we'll be treating that through the plant. Overall, yes, we are in a lower grade area now. For the whole project, we're still there or thereabouts on the grade, but we have got more ounces than we originally planned.
Thank you, Chris. The next one, what is preventing you from giving cost guidance for 2023 and 2024?
I think as I said earlier, we've got a very high inflationary year ahead of us. We don't believe it's necessarily gonna be long term. We need to see where we end up at the end of the year, at the end of 2022, and then we'll have to give firmer guidance. I wouldn't want to be giving guidance for 2023 based on the inflationary numbers we are seeing for 2022.
Okay. The last one from Jared. If the ramp up at Salares goes according to plan in 2023 and 2024, should we think of the longer term production profile, as disclosed in 2029 as still being intact?
Yeah, I think that, look, there's nothing at the moment. We haven't got into production yet, so there's nothing that changes our original view. At this point in time, we're just starting to do the regional exploration. The original guidance that we gave of the 7 years at the higher production, but 11 years life of mine, I think that's still the plan that we've given. There's nothing that we've done that would change that plan. There's nothing that we've seen that should undermine that plan either. Yeah, we're starting to do the exploration.
I mean, the plan and the reason for doing the exploration is because we do believe that because this is how these things work with mines, that you're likely to get extra, we're likely to find extra ore, but it, you know, until we find it, we haven't found it. There's nothing to undermine or inflate the previous guidance that we've given the market.
Okay. Thanks, Chris. The next one comes from Arnold at Nedbank. He asks, "Could you quantify the potential unit cost savings associated with your solar plant at South Deep? Could you also comment about the broader impact associated with less production disruptions? How much production was lost due to Eskom outages in 2020 and 2021, and how much of this could be offset by your own solar projects?
The cost, I mean, you know, just take $120,000, $100 million, roughly. As Eskom prices increase, we're gonna save more than that. Just take roughly $120 million, divide by the ounces, and that'll give you a sense of the unit cost saving. You know, I think this project, initially, we thought it would pay back in 7 years. Now it looks like we're paying it back in 5 years. The way Eskom's going, we're gonna pay it back a lot quicker than that. We did have some production losses in the Q1, about 10,000 ounces. I don't think I'd want to just bake it in on top of what we had. We did have some really good production.
I think the guidance that we've given you is the right guidance, Arnold. Yeah, I mean, we do see another increase between, I think it was 9.6-9.7 tons of gold this year. You know, that's a very nice increase year-on-year. You know, I don't wanna go beyond that. We didn't have any Eskom losses.
Yeah, sorry. The 10,000 ounces Chris referred to was COVID.
COVID, yeah.
In terms of Eskom losses, we didn't have any. Remember, the way Eskom does it's about load. We don't have load shedding, we have load scheduling. They tell us when we're gonna be off. Because of the excess milling and hoisting capacity at South Deep, they tell us when we need to be off, we defer, and then a day later, we'll catch up on the hoisting and the grading. We had no production loss this year due to Eskom interruptions.
Okay. Then the last one comes from Herbert at Investec. Please confirm if all your gold hedges have matured, and if there's any appetite to hedge going forward. Does the lack of hedging communicate you're comfortable with the CapEx commitments, given where the gold price is?
Yeah. I can confirm that all our hedges in terms of commodities, both copper and gold, were completed at the end of 2021. The only hedge we have, a small oil hedge in place, and obviously we have the remainder of the Salares Norte currency hedge taking place. Remembering the philosophy for Gold Fields behind the hedging is when we have high capital investment or we're protecting high cost operations. At the moment, we are comfortable that we're over the hump with Salares Norte in terms of the spend. Yeah, we're comfortable. No need to hedge commodities at the moment.
Thank you, Paul. Chris, over to you for concluding comment.
Yeah. Thanks very much. Thanks for all the interest shown on the line and on the webcast. Thank you, guys. Yeah, I think we've had a solid performance. Again, just a big shout-out to the Gold Fields team for a great job, a job well done. Of course, it's a new year. We've got new challenges to face, but I'm sure the Gold Fields team are up to it. Thanks very much.