Gold Fields - Q3 2023

Transcript

Operator (participant)

Good day, ladies and gentlemen, and welcome to the Gold Fields Q3 2023 operational update. All participants will be in listen-only mode. There will be an opportunity to ask questions later during the conference. If you should need assistance during the call, please signal an operator by pressing star then zero. Please note that this call is being recorded. I would now like to turn the conference over to Martin Preece. Please go ahead, sir.

Martin Preece (Interim CEO)

Thank you, Irene, and good afternoon, ladies and gentlemen, and thank you for making the time to join us for our Q3 operational update for Gold Fields. I'm just gonna run with some brief introductory comments, just touching on what is in the book. I think just starting with health, safety, and well-being, tragically, we lost a colleague during the quarter at Tarkwa in a safety-related incident on one of our waste dumps. And again, on behalf of Gold Fields and the executive, we want to extend our heartfelt condolences to the family, loved ones, and colleagues of our, our colleague that has succumbed to his injuries.

We did touch on it, in August, the Elizabeth Project review, which we have rolled out across our business, and we are busy implementing the 22 recommendations from that review, and we'll have a follow-up audit within 3 years. I think very pleasingly, we have announced, on the 9th of October that the board has concluded the search process, for a new CEO, and pleased to announce that Mike Fraser, who was with Chaarat Gold and previously with South32 and BHP, will be joining us, in the beginning of the new year, on the beginning of January next year.

I think Mike brings with him a lot of, I think, really strong experience and capability, and we look forward to Mike joining us and the positive impact he's gonna have on our business as we go forward with Gold Fields and build on, I think, the really strong base that's been put in place.

Touching on the strong base, those of you who follow the press, we're really proud of the achievement of being ranked number 1 in the Sunday Times Top 100 Business Companies last Thursday evening, and I think it's a great testament to our teams across the globe, who've worked consistently and hard over the last 5 years, I think, to translate the strategy into action and deliver this phenomenal sort of as far as results and the recognition belongs to all our people. Pleasingly, we don't wanna get distracted with Q3 results, and Paul will touch on some of the bigger numbers a little bit later. But our guidance remains unchanged despite the operational challenges that we have had during the quarter.

A gold equivalence at 2.25-2.3 million ounces, and the AIC, excluding Windfall, expected to land between $1,480-$1,520 for the full year. I think if just on touching on the costs, I think what's important to note is the impact on the big impacts on cost, and we'll touch on it. We produced 50,000 less ounces for the quarter. That's largely driving the change in all-in cost. Driven, there's a portion attributable to Windfall that's additional, but otherwise our costs in absolute terms remain fairly flat. The real big impact has been at Tarkwa, where we were mining at the bottom of the pit.

We took the decision in Q2 to accelerate mining there, knowing that Q3 is the rainy season, so we've certainly slowed down in Q3. But if you take the combination of Q2 and Q3, we're dead on target in terms of cost, and that will come to fruition with the full year. Across the business, I think we've also had some challenges with lower grades at our St Ives and Agnew mines in Australia, impacted by some ventilation concerns. That's impacted on the ounces. I think very pleasingly, despite the slow start at South Deep earlier this year, Q3, they've seen a 19% improvement on recovery. Ghana stays, we're comfortable with where we are in Ghana and Peru. The important news with Salares Norte.

At the end of the quarter, project construction at 97%. Paul and myself sat in reviews yesterday. Construction is now at 99%, and we're pleased to report that on Monday night, they started the Ball Mill. They've run that on Tuesday night. We started the SAG mill and started feeding material into the mill. We're currently treating barren material to just get everything commissioned and running up, and first gold is expected, still expected in December, and the project is on track in terms of spend. In terms of the JV announcements that we made earlier in the year, ourselves and AngloGold Ashanti are progressing, working closely together and progressing with the pieces of work between the two parties.

We have started engagement with the government in Ghana, but that is going slower than we originally envisaged. But we will, we will continue with it, as we do believe that the joined up entity makes sound economic sense for the people of Ghana, for AngloGold Ashanti, and ourselves. I think in terms of, the partnership with the Osisko Mining to develop the project in Windfall, the EIA was submitted in March. We expect that to come to fruition towards the back end of next year or very early 2025. In that period, we're gonna continue with pre-construction activities. We are permitted to do certain work. We have already spent, in Q3, $25 million this year, and making good progress.

Just on the ESG part, we've made good progress with our tailings disclosure this quarter, for our extreme and high-risk dams at Tarkwa and Cerro Corona, and there's no material dam safety issues to report. Paul successfully concluded a second sustainability-linked loan for our Australian facilities on the same terms as the $1.2 billion revolving credit facility that he negotiated earlier this year. And again, I think that shows our commitment and belief in the ESG targets we're setting, to make sure that we are valuable members of society. We've seen a slight increase in net debt to EBIT ratio moving up to 0.48, linked to payments at some of the payments at Windfall, as well as the interim dividend.

And then lastly, a great pleasure to welcome Jongisa, who joined us on the first of September. She's here with us today. We did talk about Paul Schmidt, who will be retiring next year. That process to find Paul's replacement is well advanced, and the board will be looking at certainly the initial list of candidates next week when we meet. We also spoke on the road in at the back end of August about Naseem, our EVP Sustainable Development. He reaches retirement age next year, so towards the sort of middle Q3 of next year, Naseem will be leaving us. And then Stuart Matthews also has reached retirement age, and will be leaving us towards the end of Q1 next year. So, the process to those replacements in place.

Then lastly, Rosh Bardien, who is our EVP for People and Organization Effectiveness, has also taken a decision to leave Gold Fields, and we will start that search process for Rosh's role. In the interim, Gerrit Lotz will be acting in that position. Just one last thing, and I must apologize to my colleagues for not introducing them when we started, but with me on the call today, we've got Paul Schmidt, our CFO, Jongisa, who I did talk to, who is Investor Relations, Thomas Mengel, who works with Jongisa, and then Sven is also in the room with me. So with that, my apologies to my team. I will hand back to you, Irene, and we can start to deal with questions.

Operator (participant)

Thank you. Ladies and gentlemen, if you would like to ask a question, please press star and then 1 on your touchtone phone or on the keypad on your screen. You will hear a confirmation tone that you have joined the queue. If you decide to withdraw the question, you may press star and then 2 to remove yourself from the queue. Once again, to ask a question, you may press star and then 1. The first question we have is from Adrian Hammond of SBG Securities. Please go ahead.

Adrian Hammond (Executive Director)

Good day, Martin. Thanks for the update. Just got three questions for you. I'd like to ask you a bit about safety, firstly. Safety performance has regressed materially, and I think it's fair to say, as a global major, that's pretty unacceptable. Could you just give us a bit more color on what's going on, and why this is happening in the business, and what you would do about it? Because, as you know, safety is a big driver of ratings. Secondly, Asanko gave an update recently from Ghana.

They improved the outlook. Lower costs, top end of guidance and production, but you don't mention it. Why is that, and what's the situation with the relationship there, and your intentions? And then, just on South Deep, what bothers me is the volatility in the grade. Could you give us a bit more detail about how mining has progressed from the fringes, and are you opening up flexibility off the fringe or plans to do that? Thanks.

Martin Preece (Interim CEO)

Hi again. Thanks for your questions. I think safety... I'll start with the safety question. Certainly, as concerning as it is for you, it's deeply concerning to us. You know, Gold Fields has had a great track record with safety. Unfortunately, we had the incidents in Ghana this year, and we had an incident in Australia last year. What we are doing about it, we've had a review of our safety performance, our critical controls, and what is falling through the cracks, where are we failing? I think key issues that we believe that we need to improve on linked to safety and the incidents recently is around contractor management.

That we might, as much as we've got, I think a really strong control environment in our own operations, some of the activities that have been contracted out have maybe not been managed as robustly as internally. So that is certainly a focus area. What we have done, we are bringing in independent experts from outside to assist with the investigations, so that we can get a more robust view. And we've also initiated work with a well-renowned international consultancy that is doing reviews at our- at two of our operations currently, and based on those outcomes, to see what we're missing culturally with safety, if there's opportunities to learn. I think as you move further up the curve with your safety performance-...

Those improvements get harder and harder, and doing the same old things isn't gonna deliver the results. So, I think we're trying to get a step change. I think the last aspect that we're doing, we've certainly recognized the need. Safety has typically been managed in each of the regions, and we're in process of appointing a group safety lead, so that we can try and get the learning shared a little bit better across the business. I think second question related to Asanko, we're fairly advanced in our discussions with Asanko, how to take the asset forward. We certainly expect an announcement, hopefully before we close for Christmas this year, where we're gonna go with that deal.

I think we've reached a lot of common ground, and we are at a fairly advanced stage of discussing where we are with Asanko. And obviously, at this stage, once we've finalized our discussions, we're happy to update the market. Paul, do you want to talk to the South Deep?

Paul Schmidt (CFO)

Yeah. Adrian, I can talk to the grade, Martin can talk to the South. In the grade, there's not- you've gotta go and have a look at the underground reef grade, and that's been fairly consistent, 6.5 mine versus 6.77. And even if you compare it to the corresponding period, last year, the grade was around 6.4, 6.5. So the yield, that depends on how the stuff is loaded, and then obviously taken to the plant, and you can get variations. But the mine grade has been fairly consistent over the last period.

Martin Preece (Interim CEO)

I think some of it is just ore timing, what ends up on stockpiles, what ends up in silos underground, as we manage the flow of ground from underground through the stockpiles, and as it's impacted by, by be it load shedding or other events. And we've had some of those, poor ground conditions that we reported in Q1, so you end up getting a slightly different mix. But as the ground comes through, it'll go. Adrian, there isn't huge variations of grade at South Deep. You know, I've said it a couple of times, you've got to start at one end and plow through to the other end, and you're gonna get a bit of upside here and there. I know the team is finding a bit of grade at the moment, but there's no mining sequence.

Adrian Hammond (Executive Director)

Understood. Well, well done. The percentages seem to be holding good, good ground, and I think if you get the safety right, it's a good value unlock. So, good luck.

Martin Preece (Interim CEO)

Just on South of Wrench, I think we have talked about it before, Adrian. We are steadily moving towards South of Wrench. That was originally planned to sort of start down in 2031, I think, if I'm not mistaken. As we've reported before, we'd rather go there slowly now. So, the team is slowly sort of loading out, developing certain ends. But, that gets us there a little bit earlier, and I think it links to your questions you've asked before. Opening the South of Wrench earlier takes it off the critical path, and it will start giving the mine a bit more flexibility of mining areas.

Adrian Hammond (Executive Director)

Thanks a lot.

Operator (participant)

Thank you. The next question we have is from Martin Creamer of Mining Weekly. Please go ahead.

Martin Creamer (Publishing Editor)

Hi, Martin, and, hi, Martin and everybody. Every time I listen to your presentation these days, I hear about the lack of skills. I mean, if you listen to people in Canada, you listen to people in Australia, all over the place, skill set. But what are you gonna do about it? I see one of the smallest little juniors has opened a school of mining in the Northern Cape. There's no effort by the bigger companies. What are you gonna do about the lack of skills?

Martin Preece (Interim CEO)

Martin, thanks for the question. So I think it's we're tackling it in different ways. Certainly in Western Australia, the Western Australian government is certainly reducing entry requirements and making it easier for us to get expats in. The challenge in Western Australia is a little bit different to what we find at South Deep, in that you've basically got 97% employment in Western Australia, or 3% unemployment, and the view is that that 3% unemployment is not people looking for jobs, it's people that either can't work or don't need to work. So what you do is you have a market that doesn't have surplus skills. You've got big infrastructure spend in the cities, which is attracting people, because they're not on FIFO, they can go home every night.

Then you're competing with the big bulk miners, you know, who sometimes make in a month what we make in a year. So their ability to attract talent with reward is a lot easier than us. So the Western Australian government is certainly relaxing and facilitating entry for expats and for people to take up residence. Some of our colleagues from Ghana are actually moving to Australia, but we're obviously recruiting from other parts of the world there as well. I think at South Deep, the problem is slightly different. It's not a broad skill shortage, it's a skill shortage in long-hole operator skills, and with the artisans that maintain that equipment, that big trackless equipment underground.

We're losing those skills to the other bulk mines in Central Africa and some in South Africa. The view that we've taken there, certainly with operators, is, we've employed additional people. We will train way in excess of what we require, and hopefully we'll saturate our market, and hopefully, not lose too many, but if it means losing a couple, at least we keep ourselves staffed. We're doing the same with our training center for artisans, trying to upskill artisans. The challenge, again, with artisans is it's a bit of a longer timeframe. Artisan can take you anything between 3 and 5 years to get trained, and that certainly they leave with a qualification and ability. But operating or maintaining those fancy pieces of equipment needs a couple of years' experience as well.

So in addition to recruiting and training artisans, we've built a fit-for-purpose, I suppose, building, where we put these machines in, and we're teaching artisans sort of on the ground fault finding and simulations on how to repair and fix those machines. That will take us a bit longer, but we've just got to invest in training additional people, Martin.

Martin Creamer (Publishing Editor)

Thank you. My final question, we spoke last, you said in 2024 there might be some new moves in renewables. You said you're investigating things for South Deep, going into wind and solar for 2024. What have you done on the renewables front and in South Deep, or what are you gonna do? And what about renewables elsewhere?

Martin Preece (Interim CEO)

So, Martin, at South Deep specifically, we are busy with the wind study. To put up those wind turbines, it's certainly delivering very positive, I suppose, results on the tower we put up. We put a net mast up to measure the wind, measure the bird life, bat life. We are currently busy with the environmental permitting for the wind facility. That should be close to complete sort of Q2 next year. At the same time, the team is doing the positioning of where those turbines would be. We've got the broad area, and we're busy doing the engineering, design, detail, and costing on the wind turbines.

And so hopefully, we can get that, make a sensible argument to the board about advancing that project, and take it to the board towards the back end of next year for approval. Paul has made provision in our long-term costing for that, but obviously we need to produce a business plan. In terms of other renewables, at our mines in Australia, we have approved additional solar at Granny Smith and Emu mines, and we're busy finalizing a big study to take St Ives mine to about 70%-72% renewables. That will be going to our board before year-end for approval. That's over $200 million investment.

Martin Creamer (Publishing Editor)

U.S. dollars.

Martin Preece (Interim CEO)

U.S. dollar investment, not Aussie dollar. That will be spent over the period of 2024 and 2025. I think we know about Sierra, that's now on renewable electricity. The only other piece that is new is the Windfall project in Canada. We have just been in the last week or two been granted allocation by Hydro-Québec from which is a fully renewable source from hydropower. And we are busy constructing the power line in from Lebel to the mine. That's at about 80% complete. And so early next year, we should be able to switch Windfall onto a renewable source of electricity from hydroelectricity.

Martin Creamer (Publishing Editor)

And now it's completely approved.

Martin Preece (Interim CEO)

Then the Salares project that we're busy commissioning, the EIA has been approved for the Salares, but we've still got to do the study workout. I think it's more important right now that we get the mills turning and some gold coming out the back end, than people focusing, losing focus with solar panels.

Martin Creamer (Publishing Editor)

How many megawatts you think you'd have at South Deep for wind?

Martin Preece (Interim CEO)

We most probably gonna be somewhere between 30 and 80 M-W. We haven't landed the exact number for South Deep on the megawatts yet.

Martin Creamer (Publishing Editor)

Thanks, Martin.

Operator (participant)

The next question we have is from Ed Stoddard of Daily Maverick. Please go ahead.

Ed Stoddard (Journalist)

Yeah. Hi, good afternoon. So Martin, I'm just kind of interested, if you can give us an update on the ESG front, on the Chinchilla project in Chile. Has a new attempt at translocating the rodents begun?

Martin Preece (Interim CEO)

Thanks, Ed. So in terms of where we are with that, the compliance program, or what's called the PDC, we got that back from the regulator earlier this year. We've been busy preparing for the monitoring and preparation of that location. We've increased our cameras and built in night vision capability from 35-158. We have to do all the monitoring of the areas, that's up at 35% now. Importantly, one of the learnings, we've increased our veterinarians on site from 3-5 to shift. So that's basically 10 vets in total that we have on site, and 12 during the relocation phase. We've identified the buffers, and we're busy demarcating those. We'll have everything on site ready to start relocation by December.

We will start relocation in January, and we expect the first capture in the first 2 weeks of January. We're starting in an area called R3, with 8 chinchillas. And then the plan is in terms of to liberate a rockery, it's a minimum of 40 days. You do 10 days of capture, 20 days of observation, and then another 10 days of capture. And then obviously there's a release. We'll start with areas R3, with the 8 chinchillas in R5, those are on our critical path. In Q1 next year, as you know, we stop in winter, and we'll then recommence in September with areas R8 and R10. That's 2 chinchillas there, and in early 2025, in areas R7 and R6, which is a total of another 11 chinchillas.

So, that will allow us to commence pioneering activities in Q1 2025, because we'll have cleared areas R5, 8, and 10, and we are looking at pit redesign to make sure that we can get that going, and start pre-strip, in Q2 2025. So that's where we are, Ed. We've certainly significantly more monitoring, more veterinary staff on site, and, so a clear plan that's aligned to the critical path, that we will now actively push, but not aggressively push.

Ed Stoddard (Journalist)

So just as a follow-up, so you said you've got 10 veterinarians on site. That's about one veterinarian to 2.5 chinchillas, if I'm doing my math correct. And then also, have you decided to reconfigure the pit? Are you going to go underground?

Martin Preece (Interim CEO)

So we've done as a plan B, and we'll keep on progressing the underground study. That also comes with permitting issues. But I think we—you know, we've got to do things in parallel. We can't say either this or that. We still—there's a viable case or business case for the open pit. We'll keep on doing the underground study, as we've discussed before, but I think we can't sit and wait for the underground study before we start the relocation of the chinchillas.

Ed Stoddard (Journalist)

Okay, thanks. And just, again, on the vet, if you have 10 vets on site, that must be costly. I mean, I'm guessing that it's the whole project has now gone beyond its initial $400,000 estimate.

Martin Preece (Interim CEO)

Yeah. It's significantly more, but I think it's important, Ed. This is something that's important to us. I think it's important to our stakeholders, and so do you count any money, or what is the right thing to do?

Ed Stoddard (Journalist)

Right. Okay. Cool. Thanks!

Operator (participant)

The next question we have is from Raj Ray of BMO Capital Markets. Please go ahead.

Raj Ray (Managing Director)

Thank you, operator. Good afternoon, Martin and team. I apologize in advance if you already answered some of these questions. There's a bit of a trouble dialing in. But Martin, first up, on the Australian operations, I mean, the one thing, one takeaway we had from the site visit last year was that there's a lot of upcoming underground development and infrastructure development that's needed, and also extension of resources that's needed at the underground operations. With the skill shortage that you are having, how are you tracking with respect to your underground development? And looking forward to 2024, is there any impact on operational flexibility at those operations, if you can comment on that? And my second question is, regarding the Asanko asset. Wanted to see if Gold Fields is with respect to making a decision on that.

Martin Preece (Interim CEO)

Raj, thanks for your questions. Certainly the development pressure we're under now, we have stress-tested that leading up to our business plans that are being presented next week. There's certainly no risk for next year. I think the impact is has been part of it skills, but part of it also ventilation following the incident. So we obviously had to review how we raise bore. That has obviously delayed some ventilation. We do believe we've got the flexibility we need for next year, but it's something we've got to keep our fingers on. And, you know, we can't let it, you know, slip for another 2 years. But we've stress-tested our plans.

I think Stuart and his team, you know, have had enough development in place and, very comfortable next year we're not gonna feel pained due to the poor performance this year. In terms of Asanko, we had fairly advanced discussions with Galiano, our JV partners there, on the way forward with the asset. And we certainly are hoping to be able to make some sort of announcement before year-end, on the way forward with Asanko. I think that's the answer that you've got on that.

Raj Ray (Managing Director)

Okay, thanks, Martin. That's it from me.

Operator (participant)

Ladies and gentlemen, just a final reminder, if you would like to ask a question, you're welcome to press star and then one. We have a follow-up question from Adrian Hammond of SBG Securities. Please go ahead.

Adrian Hammond (Executive Director)

Yeah, thanks very much. Martin, just briefly, on Salares Norte, what critical items remain to get to first gold? What's still left to be commissioned? And just give me a sense on how quickly you can ramp up. I mean, as I understand, you almost have all of next year's gold above ground already, so does that suggest you could get to steady state within the Q1, or there are other critical items in terms of the processing that needs still to be commissioned or fully ramped up there? Thanks.

Martin Preece (Interim CEO)

Thanks, Adrian. So I think by the year end, we're gonna have more than next year's gold on stockpiles in front of the process plant. There'll be 600,000 ounces. We're calling 400-430 next year. The magic sort of number is about 50,000 ounces at when you get to steady state a month for this initial period. So obviously we want to get the ramp-up done to get to that 50,000 ounces a month as quickly as possible. What's outstanding, so basically, the comminution circuit up front is basically 100% constructed. That's basically your primary crusher, your stockpile, your mills. We are busy running barren materials through the mills. We start putting that into the leach tanks and thickener.

That's all working, and that's all full of water. They've had water in for a while. And that's gonna allow us to start getting sludge to the filter plants, which are basically ready, but waiting for material to come through. The last sort of two pieces is the Merrill-Crowe, which is, as we've said before, about 85% of the metal. The reagent tanks and facilities to dispatch reagents into the final process are busy being stocked. And we've just got to finish the construction. Commissioning of that, there's bits and pieces of equipment to go with that. We certainly need that by the end of this month.

Then the carbon circuit at the back end, which is the last 15% of the metal, will be done also with the intention of being finished during the sort of middle, back end of December, which will then give us the full capacity of the plant. I think ramp up from a mining perspective, not a risk at all, because the material's on the ground. I think Max and Lucho and the team have been quite smart and rigid. We've been handing over pieces of the plant to the operational team as the construction guys commission it. So the general manager of the mine basically owns a comminution circuit this week, and next week he'll be taking charge of the leach tanks and thickener, and the week after, the filter presses.

So what we're doing is, with the operational teams that are there, they're starting to operate, own, and run that. We believe that's gonna go some way to mitigate, I suppose, the snag list and the things that can go wrong. You know, typically project teams, they finish and then they hand it over, and it's the operational team's baby. I think as you're doing it in parallel, you open your probability of success, because you're running, there's an operational team running parts of the plant while the construction guys are finishing.

Adrian Hammond (Executive Director)

Mm-hmm. So that's, that's... Thanks for the details. So all going well, when do you think 50,000 ounces a month is achievable?

Martin Preece (Interim CEO)

When do you think?

Ed Stoddard (Journalist)

50,000.

Martin Preece (Interim CEO)

It's Q3. We get to commercial levels in Q2, and Q3 is when we get to the 50,000 ounces a month marking.

Adrian Hammond (Executive Director)

Got it.

Martin Preece (Interim CEO)

Yeah.

Adrian Hammond (Executive Director)

Okay. Great. Thanks very much.

Operator (participant)

It seems at this stage we have no further questions, and I would like to hand it back to Martin for any closing remarks.

Martin Preece (Interim CEO)

Thanks a lot for everybody for joining. We certainly look forward to closing our year out. I'm sure you've had as long a year as we've had. And we, we're fairly confident, Paul and myself spent yesterday with our teams across the globe, testing the sort of full-year guidance report that we believe that's intact. So we're looking forward to reporting a good set of results in January or February when we talk to you next time. And thanks to my team that's here with me. All the very best to all of you we won't chat to again for the festive season, and may 2024 be a fantastic year for you. Thanks, Irene.

Operator (participant)

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