Gold Fields South Deep Rebase...
Transcript of Gold Fields South Deep Rebase...
Gold Fields South Deep Rebase Plan
Media Site Visit Presentation
March 2017
2
Forward looking statements
Certain statements in this document constitute “forward looking statements” within the meaning of Section 27A of the US Securities Act of
1933 and Section 21E of the US Securities Exchange Act of 1934.
In particular, the forward looking statements in this document include among others those relating to the Damang Exploration Target
Statement; the Far Southeast Exploration Target Statement; commodity prices; demand for gold and other metals and minerals; interest
rate expectations; exploration and production costs; levels of expected production; Gold Fields’ growth pipeline; levels and expected
benefits of current and planned capital expenditures; future reserve, resource and other mineralisation levels; and the extent of cost
efficiencies and savings to be achieved. Such forward looking statements involve known and unknown risks, uncertainties and other
important factors that could cause the actual results, performance or achievements of the company to be materially different from the future
results, performance or achievements expressed or implied by such forward looking statements. Such risks, uncertainties and other
important factors include among others: economic, business and political conditions in South Africa, Ghana, Australia, Peru and elsewhere;
the ability to achieve anticipated efficiencies and other cost savings in connection with past and future acquisitions, exploration and
development activities; decreases in the market price of gold and/or copper; hazards associated with underground and surface gold mining;
labour disruptions; availability terms and deployment of capital or credit; changes in government regulations, particularly taxation and
environmental regulations; and new legislation affecting mining and mineral rights; changes in exchange rates; currency devaluations; the
availability and cost of raw and finished materials; the cost of energy and water; inflation and other macro-economic factors, industrial
action, temporary stoppages of mines for safety and unplanned maintenance reasons; and the impact of the AIDS and other occupational
health risks experienced by Gold Fields’ employees.
These forward looking statements speak only as of the date of this document. Gold Fields undertakes no obligation to update publicly or
release any revisions to these forward looking statements to reflect events or circumstances after the date of this document or to reflect the
occurrence of unanticipated events.
South Deep Reabse Plan, 9 March 2017
3
Overview of South Deep performance in 2016
Reached key milestone of cash breakeven
● Strong safety performance with a TRIFR of
2.42 (FY 2015: 2.91)
● FY16 production and costs beat revised
guidance
● Cash positive for the first time
Net cash flow of US$12m (R175m)
generated in 2016
● Most of the key skills are now in place
Resignation of Nico Muller in December –
the search for a replacement is ongoing
● Rebase Plan announced
Steady state production of 500koz at AIC
below US$900/oz
FY
2016
FY
2015
Q4
2016
Q3
2016
Production koz 290.4 198.0 80.9 69.4
AISC US$/oz 1,207 1,490 1,097 1,289
AIC US$/oz 1,234 1,559 1,122 1,317
South Deep Reabse Plan, 9 March 2017
0
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1600
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0
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2013 2014 2015 2016
Production (koz) and AIC (US$/oz)
Production AIC
0
200
400
600
800
1000
1200
1400
1600
-140
-120
-100
-80
-60
-40
-20
0
20
2013 2014 2015 2016
Net Cash Flow (US$m) and gold price (US$/oz)
Net CF Gold price
Operational strategy and progress
5
Fix the base - Business improvement
Strategy and Progress
ProgramTotal
Projects
Projects
Completed2017 2018
People 9 7 2 -
Health and Safety 5 3 2 -
Fleet and Fleet Management 11 5 4 2
Infrastructure 16 6 6 4
Mining 15 2 8 5
Mineral Resource Management 10 5 4 1
Financial and Administration 2 1 1 -
TOTAL 68 29 27 12
• Management Team
• Technical Support
• Mechanised Mining Up-Skilling Program
People
• Ensure Statutory Compliance
• Safety Incident / Behaviour Management System
• Implement tracking and flagging system (ISOMETRIX)
Health and Safety
• Fleet Renewal
• Underground Workshop Stores
• Fleet Conditions Assessment
• Equip and Commission 93L Workshop
Fleet
• Rail Bound Equipment Proximity Management System
• Twin Shaft Skip Loading Facility RehabilitationInfrastructure
• Footwall Ripping to Hanging wall Ripping
• Basic Equipment AppreciationMining
• High Profile destress Stoping
• South Deep Rebase Project
• Regional Pillar Layout
• VCR Economic Potential
Mineral Resource Management
• Improve Business Analyses and ReportingFinancial and Administration
Key projects completed:
South Deep Reabse Plan, 9 March 2017
6
Skills and fleet
South Deep Reabse Plan, 9 March 2017
Description 2017 2018 2019 2020 2021 2022
Management 22 23 23 23 23 23
Core 4 291 4 142 4 081 4 058 4 023 4 028
Services 1 262 1 276 1 212 1 212 1 212 1 212
SLP 574 574 574 574 574 574
Total 6 149 6 015 5 890 5 867 5 832 5 837
Full skills and fleet complement in place
Description 2017 2018 2019 2020 2021 2022
Category 1 108 111 106 105 100 95
Category 2 91 91 91 91 91 91
Total 199 202 197 196 191 186
Trackless fleet schedule
Critical skills
7
Positive operating trends achieved
Setting a solid foundation
South Deep Reabse Plan, 9 March 2017
-
100
200
300
400
500
600
700
2014 2015 2016
metres Development - monthly average
Development Linear (Development)
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2014 2015 2016
m3 Backfill Placed - monthly average
Backfill Linear (Backfill )
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2014 2015 2016
tonnes Longhole Stoping - monthly average
LHS Linear (LHS)
20%
69%
-
500
1,000
1,500
2,000
2,500
3,000
2014 2015 2016
m2 Destress - monthly average
Low Profile High Profile
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• No compromise on safety and health
• Infrastructure maintenance and renewal
• Safe mining methods (mechanisation & automation, seismic controls, safe design)
• Secondary support capacity designed to match requirement
Safety and Health
• Geology block model updates, Geotechnical, Seismic Hazard Analyses
• Mining methods validated
• Mining system capacity analyses
• Infrastructure capacity
• Independent reviews (Gold Fields Technical, GRB, Consulting firms)
Technical Assurance
• Drive towards positive cash flow build up
• Increase operating margins with volume growth
• Capital expenditure efficiency
• Apply technological advancements for increased efficiency
• Sustainability
Profitability
• Full SLP compliance (targets aligned to operational status)
• Full environmental compliance
• Continued support for LED and Joint Alliance projects
• Community relations key priority
Social Licence
Sustainability and profitability
Rebase Plan strategy and objectives
South Deep Reabse Plan, 9 March 2017
Orebody, mine design and geotechnical considerations
10
A world class orebody
South Deep Reabse Plan, 9 March 2017
Ramp-up profile only incorporates Current Mine and North of Wrench
SoW-W
SoW-E
NoW
CM
VCR
610 m
1,4
20 m
1,4
90 m
980 m
● Corridors increased from 4 to 6 based on
regional pillar changes
● 240m horizontal destress span decreased to
180m
● Converted from low (2.2m) to high (5.5m)
profile destress stoping. Increased yield pillar
width from 2.5m (low profile) to 6.0m (high
profile)
● Introduced rib pillar design (8 x 20m)
11
A world class ore body
slot
Corridor progression 3 active cuts
40 – 60 kt/month
High Profile Destress & Longhole Stoping
slotslotslotslotDevelopment
Twin Footwall Cross Cut
Drain Hole
Shaft
Stope Access &
Infrastructure Cut 1 : Mature
Cut 2 : LHS Starts
Cut 3 : Destress
Starts
Return Ventilation Pass
Intake Ventilation Pass
Ore Pass
South Deep Reabse Plan, 9 March 2017
12
Capital infrastructure
Capital Development - 2016 - 2022
2017
2018
2019
2020
2021
2022
2W Main Crusher
Feeds rock to 100 level and
105 level conveyers
4W Main Crusher
Feeds 105 level conveyor
Corridor 2A
Cross Cut
Development
100-1A and 1B
Cross Cut
Development
Corridor 4
Cross Cut
Development
Corridor 3
Cross Cut
Development
Corridor 2B
Cross Cut
Development
105 level conveyor
100 level conveyor
95 level
93 level
Twin Shaft
South Shaft
93 Level access to 1W (2018)
• Return air ways
• Access to 93 level workshop100 level
workshop
South Deep Reabse Plan, 9 March 2017
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Geotechnical considerations: Seismicity
-
20,000
40,000
60,000
80,000
100,000
120,000
0
50
100
150
200
250
Jan'
11
Mar
'11
May
'11
Jul'1
1
Sep
'11
Nov
'11
Jan'
12
Mar
'12
May
'12
Jul'1
2
Sep
'12
Nov
'12
Jan'
13
Mar
'13
May
'13
Jul'1
3
Sep
'13
Nov
'13
Jan'
14
Mar
'14
May
'14
Jul'1
4
Sep
'14
Nov
'14
Jan'
15
Mar
'15
May
'15
Jul'1
5
Sep
'15
Nov
'15
Jan'
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Mar
'16
May
'16
Jul'1
6
Sep
'16
Nov
'16
tonnes
Seis
mic
Energ
y (
MJ)
Seismicity (Energy) vs Production
Seismic Energy (MJ)
Destress (tons)
Massive (tons)
Crush pillars in LP Destress Stopped for
secondary support
All HP DestressCombined
LP & HP
-
10,000
20,000
30,000
40,000
50,000
60,000
0
20
40
60
80
100
120
140
Jan'
11
Mar
'11
May
'11
Jul'1
1
Sep
'11
Nov
'11
Jan'
12
Mar
'12
May
'12
Jul'1
2
Sep
'12
Nov
'12
Jan'
13
Mar
'13
May
'13
Jul'1
3
Sep
'13
Nov
'13
Jan'
14
Mar
'14
May
'14
Jul'1
4
Sep
'14
Nov
'14
Jan'
15
Mar
'15
May
'15
Jul'1
5
Sep
'15
Nov
'15
Jan'
16
Mar
'16
May
'16
Jul'1
6
Sep
'16
Nov
'16
Destr
ess (
tonnes)
No. of E
vents
Seismicity (Events) vs Destress Production
No. of Events
Destress (tons)
Crush pillars in LP Destress Stopped for
secondary support
All HP DestressCombined
LP & HP
Strong correlation with destress stoping volumes
Lower energy release rates (potency) due to improved mining methods (increased regional stiffness)
South Deep Reabse Plan, 9 March 2017
Mine planning and production profile
15
Mine planning
South Deep Reabse Plan, 9 March 2017
Ramp-up in LHS will drive future production
56 49 53 47 64
43 41
24 24
39 35
33
31 33
64 80
82 110
113 150 160
0
50
100
150
200
250
2016 2017 2018 2019 2020 2021 2022
kt/m
th
Development Destress Stoping
153
174
Longhole Stoping
47%
8 Rigs
26 Stopes
57%
9 Rigs
26 Stopes
54%
9 Rigs
30 Stopes
67%
11 Rigs
35 Stopes
68%
12 Rigs
35 Stopes
52%
8 Rigs
19 Stopes
44%
6 Rigs
15 Stopes
144
235224
210192
Production ramp-up achieved through:
● Increased contribution from longhole stoping
● Increased mining footprint (increase in number of available faces/stopes)
● Increased productivity
16
LoM tonnage profile: Average tonnes per month
South Deep Reabse Plan, 9 March 2017
70 years of steady state mining
0
5
10
15
20
25
30
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50
100
150
200
250
3002
01
6
201
8
202
0
202
2
202
4
202
6
202
8
203
0
203
2
203
4
203
6
203
8
204
0
204
2
204
4
204
6
204
8
205
0
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2
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4
205
6
205
8
206
0
206
2
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4
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6
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0
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4
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6
207
8
208
0
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2
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4
208
6
208
8
209
0
209
2
209
4
Au P
roduction (
t)
Ore
Pro
duction (
kt/m
th)
Current
Mine
NoW
SoW East
80kt/mth
SoW West
150 kt/mtht Au
Steady state from
Current Mine and North of Wrench
2022 ≈ 10 years
South of Wrench
(East and West)
Destress starts in 2033 ≈ 63 years
230
17
Production profile: Tonnes and ounces
Steady build-up to full production
● 2016 saw a step change in production as the base was reset
● Production build up will be much steadier over the next six years as South Deep approaches full
production
● Mining from North of Wrench increases from 36% to 73% at full production
● At steady state:
Production = 15.5t (500koz)
AIC = R400,000/kg (US$900/oz)
South Deep Reabse Plan, 9 March 2017
36%46%
64%68%
75% 69%73%
64%
54%
36%32%
25% 31%27%
0
2
4
6
8
10
12
14
16
0
50
100
150
200
250
2016 2017 2018 2019 2020 2021 2022
TonnesKtpm Production profile
North of Wrench Current mine Annual production (rhs)
0
1
2
3
4
5
6
0
50
100
150
200
250
300
350
400
450
500
2016 2017 2018 2019 2020 2021 2022
g/tkoz Ounces produced vs. recovered grade
Annual production Recovered grade
18
Cost and capital profiles
South Deep Reabse Plan, 9 March 2017
Most of the capital is sunk
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2016 2017 2018 2019 2020 2021 2022
Rm South Deep capital profile
Sustaining capex Growth capex
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400
600
800
1000
1200
1400
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
2016 2017 2018 2019 2020 2021 2022
AIC: R/kg and US$/oz
R/kg US$/oz (rhs)
● Most of the operating expenditure is in the cost base
70% - 80% of South Deep’s cost base is fixed
● Significant improvement in unit costs as volumes ramp up
● Total growth capital of R2,280m will be spent over the next six years – mainly on underground
infrastructure (R1,044m) and follow-on development (R724m)
Executive summary and risks
20
Executive summary (in 2017 money terms)
Long Term Guide
1. Gold production remains at
circa 500koz per annum from
2023 to 2031 and thereafter
reduces to circa 480 koz per
annum due to a reduction in
grade.
2. Operating costs remains at
circa R4.5bn per annum after
2022.
3. Sustaining capex reduces
from R1b in 2022 to circa
R800m per annum from 2026
onwards.
4. Growth capex increase
steadily from R250m in 2022
to R880m in 2027 to account
for South of Wrench
expenditure, and thereafter
steadily reduces to R200m
per annum in 2040.
5. South of Wrench capex
commences in 2024 and
escalates to a peak of R600m
in 2031 before dropping off.
6. All in Costs remain below
US$900/oz after 2022 and
reduce to US$800/oz from
2044.
Description Unit 2016 2017 2018 2019 2020 2021 2022
Tonnes Milled kt 2 249 2 452 2 868 2 733 2 687 2 766 2 861
Underground Reef kt 1 634 1 829 2 085 2 300 2 518 2 691 2 815
Underground Waste kt 107 56 182 183 168 75 46
Surface kt 508 567 600 250 - - -
Recovered Grade g/t 4.02 4.00 3.88 4.47 5.10 5.56 5.40
Underground g/t 5.16 5.17 4.89 4.91 5.10 5.56 5.40
Surface g/t 0.08 0.08 0.08 0.08 - - -
Gold Produced kg 9 032 9 800 11 136 12 224 13 698 15 385 15 454
Ounces Produced koz 290 315 358 393 440 495 497
All-In-Cost Rm 5 248 5 734 6 325 6 736 6 428 6 425 6 217
Operating Cost Rm 4 003 4 296 4 650 4 685 4 736 4 755 4 790
Capital Expenditure Rm 1 145 1 291 1 559 1 952 1 590 1 562 1 318
Other Cost Rm 101 147 115 99 103 108 108
All-In-Cost R/kg 583 059 585 129 567 910 551 004 469 273 417 647 402 273
All-In-Cost US$/oz 1 234 1 280 1 240 1 195 1 020 905 875
Operating Expenditure Rm 4 003 4 296 4 650 4 685 4 736 4 755 4 790
Labour Rm 1 872 2 060 2 254 2 227 2 239 2 217 2 220
Stores Rm 896 971 1 034 1 068 1 092 1 120 1 145
Outsourced Services Rm 382 384 298 293 293 292 292
Utilities Rm 436 513 547 577 590 600 608
Other Rm 417 369 516 519 522 524 525
Capital Expenditure Rm 1 145 1 291 1 559 1 952 1 590 1 562 1 318
Sustaining Capex Rm 1 030 1 004 1 135 1 370 1 237 1 289 1 066
Growth Capex Rm 115 287 424 582 353 274 253
South Deep Reabse Plan, 9 March 2017
Investor Relations Contacts Media Contact
Avishkar Nagaser
Tel: +27 11 562 9775
Mobile: +27 82 312 8692
E-mail:
Sven Lunsche
Tel: +27 11 562 9763
Mobile: +27 83 260 9279
E-mail:
Thomas Mengel
Tel: +27 11 562 9849
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E-mail: