Release Date: August 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gold Fields Ltd (GFI, Financial) reported positive adjusted free operating cash flow from all operations despite a 20% decline in production.
- The company announced a dividend of 300 SA cents, representing 40% of normalized earnings for the half.
- Gold Fields Ltd (GFI) made significant progress in its decarbonization journey with the commencement of renewable energy plants at St. Ives and Granny Smith.
- The acquisition of Cisco Mining consolidates 100% ownership of the Windfall project, expected to contribute significantly to future cash flows.
- The company signed a landmark native title agreement with the Ngadju people, delivering significant value to the community over the life of the St. Ives mine.
Negative Points
- Gold Fields Ltd (GFI) reported a 20% decline in production, significantly impacting unit cost performance.
- The company experienced two fatalities in the first half of 2024, highlighting ongoing safety challenges.
- Production guidance for 2024 has been downgraded to between 2.05 million to 2.15 million ounces, a reduction of 150,000 ounces from previous guidance.
- Higher all-in costs and all-in sustaining costs were reported due to lower production, increased cost of sales, and rising CapEx.
- The Solaris Norte ramp-up was delayed due to severe winter weather conditions, impacting production volumes and guidance.
Q & A Highlights
Q: Can you provide more details on the safety review conducted by DSS plus and the subsequent safety improvement plans?
A: Michael Fraser, CEO: The DSS plus review highlighted both good practices and areas needing improvement. Based on these findings, we developed a multiyear safety improvement roadmap. We are also collaborating with our business partners to co-design safety improvement plans and focusing on mental health as part of our respectful workplace review.
Q: What were the main factors contributing to the 20% decline in production?
A: Michael Fraser, CEO: The decline was primarily due to operational challenges at several mines, including heavy rains at Gruyere, lower grades at St. Ives, and increased off-reef development at South Deep. We expect a significant recovery in the second half as recovery plans are implemented.
Q: How is the acquisition of Cisco Mining expected to impact Gold Fields?
A: Michael Fraser, CEO: The acquisition consolidates our ownership of the Windfall project, a high-quality asset with significant exploration potential. This strategic and accretive transaction will enhance our portfolio and contribute significantly to our cash flows in the coming years.
Q: Can you elaborate on the financial performance and position for H1 2024?
A: Alex Dall, Interim CFO: Despite a 20% decrease in production, we achieved USD 320 million in adjusted free cash flow from operations, thanks to higher gold prices. However, normalized earnings decreased by 22% to USD 355 million, and we reported a negative adjusted free cash flow of USD 58 million.
Q: What are the expectations for the second half of 2024 in terms of production and costs?
A: Michael Fraser, CEO: We anticipate a stronger performance in H2, with production expected to be between 1.13 million to 1.23 million ounces. All-in sustaining costs are forecasted to be between USD 1,440 to USD 1,560 per ounce, and all-in costs between USD 1,600 to USD 1,720 per ounce.
Q: What are the key priorities for Gold Fields for the remainder of 2024?
A: Michael Fraser, CEO: Our immediate priorities include improving safety performance, ramping up Solaris Norte, delivering recovery programs at Gruyere and South Deep, completing critical projects like the Tarkwa JV, and making progress on our 2030 ESG targets.
Q: How is the St. Ives mine performing, and what are the expectations for H2 2024?
A: Michael Fraser, CEO: St. Ives experienced a 25% decrease in production in H1 due to lower grades. However, we expect a significant increase in H2 as open pit volumes and grades improve. The 2024 guidance remains at 350,000 ounces with an all-in cost of AUD 2,100 per ounce.
Q: What is the status of the Tarkwa JV and its expected impact?
A: Michael Fraser, CEO: We are awaiting final approval from the Ghanaian Parliament for the Tarkwa JV. Once approved, this joint venture will enhance our operational efficiency and contribute significantly to our production and cash flow.
Q: Can you provide an update on the Solaris Norte project?
A: Michael Fraser, CEO: The ramp-up of Solaris Norte was delayed due to severe winter weather. We now expect to restart the plant by September 30, 2024, with production guidance for 2024 revised to 40,000 to 50,000 ounces. Full-scale production is anticipated in 2025.
Q: How is Gold Fields addressing the challenges at South Deep?
A: Michael Fraser, CEO: South Deep faced production challenges due to increased off-reef development and lower grades. We have implemented a recovery plan and revised the 2024 production guidance to 250,000 to 264,000 ounces. We are focusing on safe and reliable ramp-up to improve performance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
