Gold Fields Limited Q2 FY2020 earnings call

Management Statement and Operational Highlights:

• COVID Impact: Weathered COVID storm, with production largely contained in Australia, but South Africa and Peru impacted by lockdowns. Now recovering, with South Deep at 80% manning and Cerro Corona at 70% manning.
• Projects: Salares Norte project commenced in February, with $250 million equity raise secured; Agnew Gold Mine's micro grid and accommodation village recapitalization completed.
• Production and Costs: Half year production just under 1.1 million ounces, all-in costs $1,065 per ounce, net cash flow $320 million, net debt down ~$400 million to under $900 million.
• Asset Achievements: Extended Cerro Corona's life by 7 years to 2030; St Ives complex growing both laterally and at depth; Agnew's exploration potential; Tarkwa's down dip extensions with ~11 million-ounce potential; Damang's higher grade material being accessed.

Segment Performance:

• West Africa: Produced 384,000 ounces, made $139 million in cash.
• Americas region: Produced 108,000 ounces, made $49 million in cash.
• South Deep: Despite closures, made a little money; currently at ~80% manning.
• Australia: Annualizing at just under 1 million ounces a year, made $208 million in cash.
• Total portfolio: Just under 1.1 million ounces produced, all-in costs $1,065 per ounce, mine cash flow $400 million, net cash flow $320 million for the half year, net debt reduced to just under $900 million.

Guidance:

• Production guidance: 2.2 million to 2.5 million ounces, 3% down from original guidance given in February.
• Costs: All-in sustaining costs up $40 per ounce, all-in costs up $35 per ounce due to COVID (c. $10 per ounce) and higher royalties (c. $20 per ounce).
• Outlook: Manage COVID, ensure Damang's strong second half, prepare Salares Norte for pre-strip and process plant construction in Q4, continue work on South Deep to restart new mine development.

Risks:

• Potential second or third wave of COVID impacting operations.
• Safety issues, including three COVID-related fatalities and one fatality at South Deep.
• Potential cost overruns in the Salares Norte project, with ~two-thirds of capital in local currency and need to monitor inflation.

Question and Answer: Q: On retirement, is it mandatory in South Africa based on age?

A: Yes, retirement is at 63 as per internal policy.

Q: How is succession planning for retirement?

A: Board will handle search process, ensuring seamless transition with existing management team.

Q: On reserve price and margin, how is Gold Fields' philosophy?

A: Reserve price moved to $1,300 based on long-term market forecasts, aiming for 15% margin, balancing conservatism with future price fluctuations.

Q: On exploration and capital allocation, how is it structured?

A: Exploration costs around AUD80 per ounce in Australia, same business capital ~$600 million, with focus on Salares Norte, delevering, dividends, and organic growth at existing mines.