Gold Fields Ltd (GFI) 2005 Q4 法說會逐字稿

Good morning, good afternoon and good evening ladies and gentlemen. Welcome to your Gold Fields year-end and quarterly results conference call. My name is Rob; I will be your operator today. [OPERATOR INSTRUCTIONS]. This time I would like to turn the conference over to your host for today's call Mr. Willie Jacobsz, Senior Vice President of Investor Relations.

Thank you very much Rob. Ladies and gentlemen, thank you very much for joining us for this quarterly results and year-end results conference call. We will follow the normal procedures with Ian Cockerill, our Chief Executive Officer giving introduction. He will be followed by Nick Holland, our Chief Financial Officer, who will give you an overview of the finances for the quarter, Mike Prinsloo will then talk briefly about the South African operations, and John Munro about the international operations. Where after Ian Cockerill will wrap up and we will take questions. I now hand over to Ian.

Thanks very much Willie, and good morning and good afternoon everybody. Welcome you to fourth quarter and 2005 fiscal year-end results. I think it's fair to say that this has been a very, very significant year for Gold Fields. But, we are very pleased to be able to report back today on what I think are a good set of results. But, let's firstly look at what this last quarter has been like. As for the guidance that we gave last quarter, we certainly, we have finished up with attributable production, which has been maintained at just under 1.08 million ounces, at a cash cost which has improved to $330 an ounce, which is down from $340 an ounce in the last quarter. And, in line with that our operating profit was up 14% in the US dollar terms to $103 million. Core earnings i.e. that is net earnings which excludes gains and loses on financial instruments, foreign currency translations and impairments was also up significantly quarter-on-quarter to $37 million.

Now, whilst most of our operations performed well and particularly in South Africa we had again good performances from Driefontein and excellent turnaround at Beatrix. We also had good operational performance from the international operations and certainly both in Ghana and Australia, it was a record gold production, at this quarter from them. So, all in all strong performances from six out of our seven operations. Progressively, Kloof had a poor quarter, they experienced low-grade issues, which frankly has detracted from an otherwise excellent set of with both operating and financial results.

Another important milestone this quarter was the Driefontein mine which (indiscernible) has produced 100 million ounces of gold, and this is the first gold mine in the world to do so. And I think what is significant about that is not only has it produced a 100 million ounces, it still has over 20 million ounces in the ground. Truly, I think that is what you can call a world-class operation. Also we have seen significant progress such as Demay (ph) with our mining license conversion. We have submitted the recent conversion application, and that is currently in adjudication. And based upon the interaction to date, with the Department of Mineral and Energy Affairs, we certainly expect our conversions to be accepted in due course. In conjunction with the DME, they have asked us to hold back on the submission of both Kloof and Beatrix, pending the approval of Driefontein, in such a way that we standardize the format and then we can submit Kloof and Beatrix. But all the work that is necessary to be done on Kloof and Beatrix has been completed.

It is simply a question of packaging it, in a way that the DME would like. But we are very pleased to be in the progress to date, and bear in mind, that this is a five-year process, and we are only just over a year, into the process I think good progress has been made on this conversion process. Most importantly, this is a dividend quarter. We are pleased to announce that the final dividend for the year is 40 South African cents per share, which together with the interim 30 South African cents, paid earlier this year, makes to a total dividend to 2005, of 70 South African cents per share. Moving onto the year, the quarter was an eventful one which is certainly under statement. It's pleasing now to announce further improvements in our safety assets and certainly we are now getting very, very close to our stated goals of wanting to have a safety, level of safety in our operations, which is on a par rate wide with the benchmark of the world which is the Ontario mines.

We also saw a 2% increase in gold output, to 4.22 million outputs, but importantly, at a 2% reduction in unit costs, of R66,000 per kilogram, in local currency terms or $331 per ounce, in US Dollar terms. Now our two important organic growth projects in Ghana and Australia were successfully completed. Our balance sheet certainly remains very strong, very healthy, and all these against the background of the successfully defended Hostile Harmony bid. I think you will all agree with me, that this is a (indiscernible) feet indeed. And with that let me pass on to Niek to give you some of the details on the financials.

Thanks Ian and good afternoon or good morning. Revenue at $492 million for the quarter, the first three in line with the previous quarter. And that was due to some of the production with (indiscernible) virtually flattening at $429 per ounce. Operating costs of $385 million for the quarter, were $10 million low than the previous quarter. And that's mainly due to continued good cost control, and also a 7% weakening of the Rand against the US dollar, from R5.95 to R6.39. For the first time that happened in some quarters. Operating profits of $103 million for the quarter, was up $30 million against previous quarter. Net operating profit offset taking accounts of amortization was $42 million, which was 50% higher than the March quarter figure of $28 million. During the quarter, a gain on financial instrument of $16 million was generated due to mark-to-market gain, on an interest rate swap relating to the (indiscernible).

The swap converged at a fixed rate of interest, to a floating rate. The swap was closed out, and also cash flow of $41 million was generated in the quarter. Since it's conception in March last year, over $52 million of realized profit has been generated from this position, and to put that into perspective, that's virtually a year's debt service cost on in that business. Profit before tax on exceptional items were $47 million as against $17 million in the previous quarter. As it's fiscal year end, there are usually exceptional costs at the end of the year, principally related to impairments, and during the quarter, we had exceptional cost of $57 million, $23 million of this related to the Harmony Hostile Bid, and that brought the total cost to $51 million, the total defense costs in designing that bid. $42 million of impairments were incurred, of which roughly half or $20 million related to Beatrix North and the cross section.

This write- down occurred due to the increases in high limits associated with normal cost escalation, which eliminated marginal areas in the old south section of the mine and (indiscernible). Being a relatively low-grade ore body, this mine is very sensitive to changes in pendulum. However, this write-down is only an accounting entry, and with marginally higher rent prices this could be reversed. With the de-commissioning of the old mill in Australia, its remaining book value and redundant phase were written off, and that totaled $13 million. The balance of the write-down was an accumulation of relatively small items. These exceptional costs were partially offset by the sale of our rights in the Angelina Exploration Project in South America, which generates a profit $7.5 million. A deferred tax credit of $90 million was generated for the quarter, largely due to an uplift in X values of assets in Australia following the consolidation of St. Ives and Agnew for tax purposes. The tax uplift is the difference between the existing tax values and the current book values of the assets including post acquisition property. As a consequence, the deferred tax credit of $27 million was up during the quarter. A tax rate of $12 million was posted in the previous quarter due to a reduction in tax rates in common.

Headline earnings for the quarter were $21 million compared to $2 million in the previous quarter and the core earnings of the business, that is earnings excluding gains on financial instruments as one of the exceptional items, were $37 million compared to $21 million in the previous quarter. Cash flow from operating activity for the quarter was strong at $110 million and after accounting for capital expenditures, $68 million, most of which relates to the major project in the group. A positive net cash flow of $42 million was generated. The cash position of the group remained strong, and cash at the end of the fiscal year was $503 million. Debt relating to (indiscernible) transaction is $280 million, giving net cash of $285 million. In addition, the group has made cash in the form of largely liquid investments of $148 million and closed that currency financial instruments in Australia of $71 million. The group is thus well positioned to pursue its growth strategy.

Looking very briefly at the financial year or the fiscal year, core earnings for the fiscal year was $73 million as against $85 million in the previous year. The higher gold price of $422 an ounce, compared to the previous year's price of $387 an ounce, was more than offset by the Rand exchange rate, which strengthened from 6 Rand 19 to 6 Rand 21.

At the South African operations, production for the year increased by 1%, whereas cash costs in local currency decreased by 1%. This is despite the impact of the above inflation rate increases, high steel price increases, and general inflation in South Africa, which clearly demonstrates that Gold Fields' revenue and cost matrix are working. In local currency terms over the past year, a 140 million Rands of sustainable savings were generated from improved controls of our stores usage, which is 25% of the total costs, this is known as Project 100. In addition, 103 million Rands was saved on Project Beyond, which is the supplying chain project through the negotiation of more favorable, supply contracts. These savings will be realized in costs over the new year and supplied against the new contracts that are drawn. In addition, a further 100 million Rands per annum of savings is targeted on Project Beyond for 2006. And a new Project 100 plus has been set up to replicate the success of Project 100 in other areas of business like improved labor management, rationalization of medical facilities with other gold companies, and better planned maintenance, just to give a few examples. Early indications are that up to 200 million Rands a year could be saved. The procurement initiatives have also been rolled up the international operations with targeted savings of $20 million per annum we have set for the New Year.

With that information, I will hand you over to Les Van.

Thanks, Niek. Good afternoon ladies and gentlemen. As Ian mentioned, Basin 10 and Beatrix performed well. Overall, the South African operations produced 687,000 ounces, down 24,000 ounces from the previous quarter, which all was attributable to Kloof, which had a very difficult quarter. In terms of our federal cash costs in US dollar terms, they improved from $374 an ounce to $363 an ounce, and the operating profit improved nicely to $35.1million compared to $26.6 million the previous quarter, leaving us with an operating margin of 12%. Our capital programs, we spent $27.3 million on the Longlord capital programs at the seamine, and that spend will continue this year and then we will start getting to the end of the major expansion projects in South Africa.

Looking forward to the second quarter, we are likely to have a very difficult quarter, if recovery is underway and I will talk later to it. The costs will be impacted this quarter in terms of the wage increases that are expected on the 1st of July for all the unions and associations across the mines. The strike uncertainty could impact on the prediction for the quarter. At this stage, we are still in talks with the unions and associations to lower their indicated strike action for some of their mines.

Starting with Kloof, Kloof had a disappointing quarter, producing only 226,000 ounces compared to 264,000 ounces the previous quarter. The total cash costs were hit by the lower gold production and they produced at $416 an ounce. They made an operating loss of $1 million and a negative margin of 1%. The capital programs were reduced in line with that quarter's performance and only spent $7.4 million on the number four shaft project.

In terms of the dry problems that I have experienced, it was at number 3, 4, 7 and 8 shafts where it is associated with slope mining. We mined the BCR reef which tends to go from terrace to slope and from slope back to terrace and this last quarter, we had a lot more slope mining tightening across the shafts than we expected and that we had planed, that led to gold production being down 15%.

In terms of the outlook for the coming quarter, the (indiscernible) recovered at 3, 4 and 8 shafts, 7th shaft is still a problem and we are busy with crew moves to man terrace areas to improve that situation.

So, in terms of gold and cost performance, we should return to the historic levels by the December quarter, down about to 8 tons of gold with 250,000 ounces at a cash cost of between $390 and $380 an ounce. Willie explained at earlier session how easy our slope terrace model that we work to and has had lot of photographs on what has happened at Kloof, suffice to say that it is a short-term problem and we're recovering at the moment, and all efforts are going into the actions that have been put in place, which is to improve quality volumes across all operations by moving Kloof from the slope areas to non-terrace areas, implementing weather and stronger controls on the mining mix, better ore body structure modeling and guide prediction in terms of putting more samplers and geologists on the prices and increasing the sampling frequency. We've also had more flexibility arrived at number 4 shafts with the holding of key ventilation districts and that now allows us to increase the development rights on the shaft allow more flexibility in its production build up. Underpinning that action plan is also an accelerated filler mining and out gold recovery process that we've put in place to recover gold as soon as possible to the previous level.

Turning to Beatrix. Beatrix had an improved quarter, with gold up 6% that's 163,000 ounces. Yields improved 17% mainly due to the improved volumes coming out of number 4 shaft, the higher grades (indiscernible) areas and the stoppage of certain marginal areas at number 2 shaft. Total cash cost came from $424 an ounce the previous quarter to $380 an ounce this quarter, giving us an operating profit 6.4 million compared to 1.3 million operating loss in the previous quarter. So, a very good achievement by our Beatrix.

Capital programs were 8 million for the quarter and in terms of the prediction for this current quarter, we've had some problems in terms of (indiscernible) development excess closure that's a number 4 shaft, which we are working on that, that's opening in that closure (ph)and would take us between 6 to 8 weeks to that find and get the whole shaft back to normal levels.

Driefontein, Driefontein maintained an excellence performance quarter-on-quarter producing just short of the 100,000 ounces for the June quarter and dropping at overall total cash cost down to $314 an ounce compared to $337 an ounce the previous quarter. So, a very good achievement, giving us an operating profit of 29.6 million for the quarter and a 23% margin which is a healthy at these price levels (indiscernible).

In terms of capital, we accelerated the number 5 and the number 1 shaft development programs in line with the good achievement that Driefontein had and they spent $11.8 million compared to $6.8 the previous quarter on these two projects to give us more flexibility as we go forward. Niekerk mentioned our Project 400, just to refresh you on what Project 400 initiatives we have had in place and which we continue to implement. Its a ongoing program, the mine staff are to stop unpaid areas and move through to more pay areas, and increase our gold initiatives across all the shafts, accelerate our high rate pillar mining areas and opening up programs and removing all the bottlenecks and constraints that restrict us to improving the pace advance. We've also got strong drives on (indiscernible) with programs and all the restructuring programs that we initiated over the last 18 months have basically been completed and we will continue at this into the future one of the big drives now is a footprint to that thing, as we go forward to make the mines more efficient. In terms of the year-on-year improvement, Niekerk mentioned that there is also a good overall achievement with production up for the year and costs down for the year.

In terms of our productivity programs, we also had improvements year-on-year and we've set stringent targets for year 2006. We are still sticking to the regional challenge that the Board put down to us, which is a 10% improvement per year for the next five years in terms of productivity. So, in conclusion, it's all about driving our margins and continue doing what we have been doing over the last seven, eight quarters, and we have had a lot of success with the programs which is to increase relative volumes across all the shafts, further implement productivity improvements and programs to support this and to continue with our aggressive cost management process, and with a bottom line focus and a business trench (ph).

With that, I will hand you over to John.

Good afternoon and good morning. Just starting with an overview on the international operations. It was another excellent quarter. Gold production increased 4% to 391,000 ounces for the June quarter and that's in the back of the full benefit of the two organic growth projects now operating, as well as an outstanding performance from the Agnew mine in Australia. Total cash cost for the international group declined slightly to $281 an ounce, an excellent achievement against the background of the tough operating environment that as been widely reported for gold mines and mining generally around the world. (indiscernible) operations able to turn the increase in gold production into profits and operating profits for the international group increased some 10% to $68 million for the quarter. In terms of outlook for the entire International group, we are spacing (ph)a slight decline going into September quarter in gold production necessarily on the back of incredible out performance of both Tarkwa and Agnew in this last quarter and our unwillingness to forecast that going forward. St. Ives has had a slightly disappointing start in the July month with the difficulty in opening high grade (indiscernible) one of the underground mines. But overall the international group remains in good condition.

Looking at the individual operations and starting with the Tarkwa mine in Ghana. Really excellent performance there both in operational level and financial level. Gold production increased 8% to a 199,000 ounces for the period, and that is really on the back of an excellent performance from the EPH (ph) operation, higher volumes through the plant as well as bit of gold production of the leach pad. We also saw full contribution from the new mill, that mill is now operating from 12% to headed design and achieve 1.2 million tons for the quarter. Mining operation performed excellently in the quarter moving just short of 22 million tons in the period. We will recall that the original plans for this expansion of the mining (indiscernible) was designed to achieve about 75 million tons per annum, on current annualized rates by achieving over 85, so an excellent performance there. Additional mining capacities have been used for stripping. Current strip ratio is about 3.2 tons waste to ore ratio.

Total cash cost increased flatly (indiscernible) to US $240 announced in the June quarter and that is in the best of the numbers, small line item, the most significant of which was about a $1.5 million increase in the cost of the maintenance and repair cost. That is the contractual repair cost associated with the new fleet. That maintenance is provided by the original suppliers of the equipment. These are contracted rates of the repair and increase as the equipment get beyond $6000, which a number of the old trucks and excavators had during the final quarter of the year. Just in context the $240 an ounce, again our original target of achieving about 210 post the expansion of the Tarkwa mine. There are three options in particular that contribute to the $30 an ounce difference, all about $10 an ounce.

The first is that we announced stripping this mine faster than we originally planned at about 3.2 tons versus 2.8 that's about $10 an ounce, much higher (indiscernible) through the financial year about $10 an ounce. Then a whole number of other small input costs, tires, diesel, steel for the liners of the (indiscernible) that sort of thing, again a similar quantum of $10 an ounce. The actual unit cost control on Tarkwa is performing very well. Operating profit was stable on this mine quarter-on-quarter. We have set off in the book which is available in our website, details of the oil price or diesel price hedge that we have put in place. A lot has been spoken about the exposure of surface mines to the oil price particularly in the incredibly volatile environment and we put in the front which could take it up against oil price moves about $56 a barrel of oil on the global market. And that is in respect of old diesel consumption for our (indiscernible) operation.

Moving across to the Damang mine in Ghana, an excellent performance there, gold production up from 7% quarter-on-quarter and that's in the back of better volumes and grade out of the new open pit mine at (indiscernible) South East, and the new (indiscernible). You will recall these are mines we opened up earlier this year once the main Damang pit had ceased operations earlier in the financial year. So in the back of the better grade, total cash cost is actually down quarter-on-quarter despite the cost pressures referred to in the (indiscernible). The Damang operating well, the exciting development during the quarter was the decision to proceed with the cut back on the old and now disused Damang pits. This cut back will occur over a five-year period generating 700,000 ounces of gold. That will require the mining of 51 million tons of waste and 9 million tons of ore at a total capital cost of around 44 million US dollars.

It is a very significant development for Damang, that combined with the discoveries and then subsequent production from the satellite (ph) pits I referred to earlier has added just short of a million ounces of reserves to this mine securing a life through least 2010, which really is a small time to continue opening up other options at Damang and we continue the grandiose entry for the exploration around that mine. Moving across to Australia, the St. Ives mine, the operational -- the operational figures and financial performance was poor in the corporation and it's a line and line improvement in performance, which has been critical to get this mine back on track. Gold production declined to 143,000 ounces in the quarter, but that is only on the back of the fact that in the March quarter, we operate the old mill at St. Ives along with some new Lefroy mills, while the new Lefroy mill was being commissioned in that quarter. In March month that old mill was shutdown and is being decommissioned at the moment. New Lefroy mill performed reasonably well during the quarter, exceeding design tonnage and achieving 1.2 million tons for the quarter. We are having some difficulties in the gold recovery section of that plant. There, really, are teething problems associated with commissioning and that will be resolved during the September quarter.

Total cash got stable quarter-on-quarter at 450 Australian dollars now substantially away from our target of being in the mid-300s for this mine, but we should recognize that there are a number of one-off non-cash and GIP charges in the 450, in fact amounting to 754 Australian dollars. We actually were close on the underlying performance to our target of getting a 3 in front of these hundreds as the first priority.

Finally, on to the Agnew mine in Australia, really our star performer in the quarter. Gold production increased some 23% quarter-on-quarter to 65,000 ounces for the period and that's in the back of an ongoing incredible performance from the Kim underground mine, the ramp up on the Main Zone underground mine, and establishment of decent O volumes from the new Songvang open pit. In fact, the decent volumes now are invested, we are now creating a stockpile ahead of the mill, which puts that mine in a very good position. So, with increased volumes and in fact improvements in unit costs, total cash cost at Agnew were 265 Australian dollars, that's a 12% improvement on the previous quarter and that then gives this mine more than 100% operating margin for the June quarter, an outstanding performance leading to a 50% increase in operating profit to some $15 million for Agnew for the period.

Finally, on development projects, specifically decided to run a project in Peru, this is the (indiscernible) project that we are developing in Northern Peru. Permitting continued to advance during the quarter and we continue to make good progress in strengthening relationships with the immediate community around the project. Important development just towards the end of the quarter was the first and only official public hearing in terms of the permitting process, this is very widely attended by people from the region and from the national government and the overall total was very positive with very few objectives to the project and saw a very good step forward in terms of permitting, but also maintaining the quality of the community relationships that are on the mine.

We are obviously concerned about the more national issues around money in Peru keeping a very close watch on these issues. We believe that the mine invasion that had been seen over the last while already to the convergence of a number of issues from legacy of mining due to frustration of local communities, those are the other layer associated with the service towards the April 2006 elections in Peru. Feasibility in engineering progressed very well during the quarter and we are on track for completion of the feasibility in the first quarter of 2006. Clearly, capital remains under pressure with the global commodity boom but the internal numbers suggests that the project remains viable at this stage. It's not the discussions weren't satisfactory during the period.

With that conclusion on the international operation, development project looking good, and operations in excellent conditions both operationally and financially. Back to Ian, thank you.

John, thank you very much indeed. Now, you have heard from my colleague how we've done this last quarter and over the last year and how some of the projects performed once we've got in place. I think many of you have asked questions as well -- that's fine but people would like to sense what our strategy is going forward. Let me just re-emphasize, our strategy is based on three important components; operational excellence, growth in our business, and last by no means, at least securing the future for this company. Firstly you have already heard from Nick and Mike how we started to tackle the operational excellence issues. And that is mainly focused on cost control through Project 100 and Project Beyond and improved quality volume in some of the excellent progress that we have made to-date. And supporting these initiative is a variety of projects that create an enabling environment such as that our mining crews can be successful.

These include improved underground environmental conditions, upgrade to metallurgical plants so we get improved recoveries, increase in mechanization of the development of phase of our South African deep level mines and a greater emphasis on building capacity within the workforce. There is no way that we can improve our levels of productivity unless we have people who are well educated and more skilled. This will, I believe, assisted for achieving the necessary improvement in labor productivity over the next few years. Internationally as well the move to undermining in (indiscernible) as you go heard from John has certainly helped us write out the worst excesses of the rising oil prices as we have invested in a newer, more fuel efficient fleet importantly of a larger capacity. That is one of the reasons why we have been able to keep our costs under control in governing as well.

Secondly as far as securing a future is concerned, two main areas crop up. Firstly, the conversion of our mineral write downs here in South Africa. As I mentioned previously, we have submitted the conversion for Driefontein and progress in this regard is excellent. And the applications for both Beatrix and Kloof are ready to be submitted and will be done so at the time and in a form to be agreed with the Department of Mineral & Energy SA.

In addition, our license to operate globally will, I believe, be subjected to ever increasing levels of scrutiny with local authorities and local communities alike. And to this end the group has embraced the concept of having all our mines certified ISO 14001 compliant. We adhere to some of the worlds strictest levels of environmental compliance, what believe is the right thing to do that makes sound commercial sense. And you have seen how we had re-certification on all of our operation in the ISO 14001 field.

We are also extending the basic principles of the South African mining chart set to all of our operations with particular reference to investing in local communities and by that I mean that one of the main policies of mining charter is investment in the local communities certain projects, making sure that when we leave an area we don't just leave a hole in the ground. We actually leave a thriving and viable community there and we are doing this in terms of certain projects, for instance in South Africa with local agricultural project. We are doing some of the things in Ghana as well. Thirdly, the third leg of our strategy is growth. Again, I wish to reiterate that Gold Fields have an objective of increasing its global footprint by an additional 1.5 million ounces before the end of 2009. And this we are going to do in several ways - by organic growth, new project development, acquisitional growth and exploration success. To date, we have already delivered 350,000 ounces against this long-term goal and that has come from the new Tarkwa as well as the (indiscernible) new mill that will be put in place there.

John mentioned the new mine circle on in northern Peru and when that is up and running, that would certainly in its initial stages give us somewhere in the order of about 400,000 ounces per year of gold equivalent. So that will leave us with a gap of around about 800,000 ounces, which needs to be filled before the end of 2009. Now some of this maybe still by successfully converting existing exploration projects such as Asochan (ph) into mines and as we mentioned in the previous quarter, this is a project where we are undertaking a pre-feasibility study. While it is still early days, we are hopeful that this will give us sufficient encouragement that we can move on to a feasibility study and hopefully ultimately developing mines. Some of the increase or some of the gap that we need to fill likely have to come from acquisition, that's where those initial ounce is going to come from -- those acquisitions you may well ask.

Now, I believe that all gold companies are faced with the similar problems by trying to replenish the ores and increasingly they are going to have to look to the areas of the world that firmly would have been viewed as too risky. Progressively, God had a sense of humor when he laid down the world's great gold belt and certainly did place some pretty hostile terrain. So, that's where companies such as Gold Fields will probably have to go and look for new reserve. With this in mind, we are very pleased to have our senior shareholder, Norilsk Nickel on Board and certainly we have two other nominees as representatives, as non-executive directors of the Company. And we are very pleased about this because we've identified Russia as one of the areas in the world that certainly could provide good hunting ground for old reserve replenishments and we are pleased that Norilsk stated in our annual report that they see Gold Fields as an important partner and may request for an increased presence in the gold business.

Now moving to Peru, it should be viewed as a foothold in a part of the world where Gold Fields is sadly underrepresented in South America. We would like to grow our presence in that continent. Clearly, there are other parts of the world as well that our business development teams have identified as offering potential opportunities to Gold Fields. Clearly, areas such as the Meliadine project in Northern Canada comes to light and importantly areas where we have been successful which is in West Africa. But what I must stress is that vastly that we have been able to identify certain potential opportunities for Gold Fields. I have to say that in this current market we struggle to find decent value according to our very strict investment criteria. Nevertheless, I'm confident that Gold Fields will be able to deliver on its key goal of additional ounces and thus further improve its global presence.

Now moving on, I know that many of you are concerned about the possibility of industrial action around the recent wage talks here in South Africa. Frankly, I don't know whether or not [Indiscernible] from the strike certificate that they've been awarded. And at this stage, I think the industry is still hopeful that a mutually acceptable settlement can be reached, but it's certainly is going to be tough going, should a strike occur then clearly it will have an impact on production into the September quarter. However, without a strike I think it's also fair to say that shareholder should look to September quarter where gold production will be at or slightly below this level's production, but with slightly high unit cost as the impact of the -- some of the proposed wage settlements flow through.

Finally, I would like to pay tribute to the team at Gold Fields, that is the Board, members of my executive team here at corporate, corporate colleagues as well as the people after the operations. This has been an incredibly stressful year, yet the results that Gold Fields has produced I believe that tribute to resilient, the professionalism and sheer determination and what I believe is one of the best teams in the gold mining business. I would also like to thank all of our shareholders who stuck by us throughout the bid. We are deeply in new debt and we intend to repay that debt by continuing to do what we've done well in the past and that deliver on our promises, grow the business (indiscernible) way and we look forward to that challenge.

With that, let me open up the line to any questions you may have.

[OPERATOR INSTRUCTIONS]. Victor Florace (ph).

Question on the ongoing efforts to improve the performance of the South African assets. You talked Ian previously about the conversions of the SAKS 5th Avenue of mining approach. Could you give us a sense where do you think you are in that process, how much longer it will take for you to say, yes we've have achieved SAKS 5th Avenue and what are some of the metrics in terms of perhaps production and cost, given some of the uncertainties that you would see as indicating that you have achieved that.

Victor thanks, good question. I think the main indicator that we use for that is certainly looking at the great from the underground operation and in the March quarter, I think it was fair to say that we felt that we were there (indiscernible), we were still somewhat off the pace at Beatrix. This quarter as we said, regrettably fell off the cliff a little bit both literally and figuratively (indiscernible) whereas Beatrix has come back and is very much in the groove of where we wanted it to be and if you look on the Website and if you look at the presentation and even in the quarterly booklets where we clearly indicate what we consider as the acceptable underground yields coming from that operation. And we would be looking at producing somewhere in the order of plus minus 5% either side of those yield graves at each of the three mines. Now obviously this quarter cliff was off the pace, which was disappointing and we've got to get back there. We certainly felt getting back onto those grades probably by the end of this quarter. So, we will see a full quarter's performance at what you called a SAKS level in the December quarter. In terms of the outputs, I think you should assume that we would be dealing a plus 9,000 kilograms or 9 tons of gold to (indiscernible) on a quarterly basis at these grades. We will be looking at or around between say 7.8 and 8 tons of gold at Cliff. Has been an acceptable level and certainly at round about 5 to 5.1 tons of gold per quarter coming out from Beatrix. And all of that at an aggregate cost of production below 70,000 LAN per kilogram. Those are the broad metrics that we would be looking at, Victor. At the timing, we nearly got their last quarter in the March quarter, we were hopeful of getting there in June quarter. Regrettably we are at the cliff, which has taken us back a bit. As wage increases come through during the later part of this quarter, (indiscernible). But I think you didn't hear Nick's presentation on the cost saving initiatives, which he gave this morning to investors and such like. And this is a very powerful initiative, which still has to float through the bottom line. So I am quite confident that certainly before the end of this year, this fiscal year we will be at or below 70000 land kilograms in our South African operation which means that's almost three years of flat performance land per kilogram in nominal terms little in real terms. So there has been some excellent cost control from this group. To answer your question crisply I think we are almost there. We see this not as a destination, we see it more as a philosophy. And you will get to the certain level, and we will crunch it up again and we will try to improve from there onwards. So it is really a continuous improvement process.

Great thanks, if I could just ask a follow up question on a different topic. I believe the figure quoted for the listed investments was a $148 million, did I hear that correctly, and could you perhaps run us or remind us of which are some of the most important of those investments, and what the status and expectations are for some of those, that's a the pretty big number?

Yes Victor, Niek here, I will answer the first part of the question at least. $148 million is correct. And the main investments out there, locally we obviously have the investment in Western Areas that we have had for years, the 4% interest. Offshore we have investments in (indiscernible) a 19.8% interest, we have 15% interest in Bolivar. We also have an interest in Sino gold, and also we have the investments in Mvelaphanda resources which is made up of shares and also made up of listed equity. Those make up about 75% to 80% of the value. In terms of the second part of the question, I guess we got to look at the spaces of all those investments on an ongoing basis, and the strategy that we have applied previously is that we've often bought these investments as a lead into an exploration play. And if we found that the exploration deposits added some value, once we have invested some funds along with the (indiscernible), we've often found that we had an up tick in the equity value of the first year of investment, which has usually been the term of the deal. In order for you get a piece of the project, you had to invest in a piece of the equity, and over the last three or four years, we have actually made around $80 million of unrealized value of which we've crystallized round about half of that over the period. And that is being done in situations where the particular project didn't quite meet the Gold Fields franchise, and in that case we exited, but we exited with a profit, and it was taken over by somebody else who may have a different approach to the asset. So, I don't think we are going to change our strategy on that. It's worked for us in the past, obviously if these are franchise type projects that we evolve out of the exploration work, then we will have a completely different attitude to that investment. I think at this stage, all of those companies with which we have exploration joint ventures, there is -- fairly stages -- on the Bolivar -- sorry, on the Conquest investment for example, we have an interest in the (indiscernible). And it is too early for us to make the call as to what we are going to do long term there, so we evaluate each of these investments, on an ongoing basis depending on how the situation changes.

Great. Thank you very, very much.

Okay, thank you sir. [OPERATOR INSTRUCTIONS]. Sir, I have no further questions queuing up for you at this time.

Good. Thank you very much indeed, and ladies and gentlemen, thank you for listening in. It's been a pleasure running this Company for the last 12 months. And as I said previously, we are looking forward to the challenges of the year ahead, and hopefully we can improve, from the performance that we've delivered this year. Thank you all very much indeed, and bye bye.

Okay. Thank you sir, and thank you again ladies and gentlemen. This brings your conference call to a close. Please feel free to disconnect your lines now.