Gold Fields Ltd (GFI) 2011 Q2 法說會逐字稿

Good day, and welcome to the Gold Fields' Q2 2011 results.

All participants are now in listen-only mode. There will be an opportunity for you to ask questions after today's presentation. (Operator Instructions). Please also note that this conference is being recorded.

I would now like to turn the conference over to Nick Holland. Please go ahead sir.

Thank you. Good afternoon, everyone, and thank you for dialing into our conference call to discuss the interim results for 2011. That's the six months to June and also the quarter ended June.

By now, you will have had an opportunity to view our webcast or read through our [SANS] announcement issued this morning. On this call with me is our CFO, Paul Schmidt, Peter Turner, the newly appointed EVP for the South Africa region and previously head of West Africa. They are on hand to respond to operational specific and financial questions. I hope also to have Juancho Kruger join us from Peru on the call a little later. Richard Weston from Australasia unfortunately could not be with us this week.

Before we go to the Q&A, let me provide you with some of the highlights from our results to remind you. Net earnings for the period were up 15% to ZAR1.3 billion. Quarter-on-quarter production was up 5% to 872,000 gold equivalent ounces. This is despite unscheduled production stoppages at St. Ives in Australasia and KDC in South Africa, as well as a total of six public holidays in South Africa during the quarter, which is almost the same number of public holidays as in the March quarter which of course carries the Christmas break.

Notwithstanding the significant impacts of electricity tariff hikes which includes not only the 27% increase that we've had from April 1 in South Africa but also the imposition of winter tariffs to one month of the three-month period we're reporting on, the Group managed to contain net operating costs to ZAR5.1 billion, an increase of 5% on the March quarter. If you look at these costs without the electricity tariff increases and winter tariffs, we would've kept our cost increases to just 1%. This cost containment is largely the result of our business process reengineering program, which was introduced a year ago.

Gold Fields has made significant progress at our international growth projects over the last six months. That will help us to achieve our target of 5 million ounces of gold equivalent either in production or in development by the end of 2015.

Here are some of the headline achievements in our growth portfolio. The South Deep project in South Africa continues to progress towards its target of 750,000 ounces at full production. We have eight underground diamond drill rigs turning right now at our Far South East project in the Philippines, of which we have an option to acquire a 60% interest in that particular project.

Now, results to date of that drilling at Far South East not only support the existence and extent of the known core of mineralization, but also support the continuation of such mineralization, both laterally and at depth outside of that known core.

Obviously, there's a lot more work to be done, and this morning on the webcast I showed the results of our first three drill holes which indicated that this particular orebody looks like it could be bigger than initially thought. Much work is still required to be done, and we'll be continuing to drill this orebody over the balance of this year and of course into next year. We hope to share with you in some six months' time some of the additional results from our drilling exercise.

The feasibility study for the Chucapaca project in Peru is ongoing, and we anticipate that this study and a final resource model should be completed by the middle of next year. We also look forward to completing an updated resource model in the last quarter of this year.

Turning to Finland, our Arctic Platinum project in Finland, we expect to complete metallurgical test work that we've been busy with for most of this year on that particular project. Just to remind people, we are testing a hydro-metallurgical technology called Platsol that will enable us to produce the medals on site essentially using an autoclave and introducing chloride irons into the autoclave, thereby enabling front-leaching and a separation of the platinum group metals and gold early on in the process and then to continue to extract the copper and the nickel in metal form down the track. So that follows laboratory test work we had done on a bench scale basis earlier in the year and culminated in then a larger pilot plant that we put in place for two 50 tonne cuts out of the two large elements of that particular orebody being [Amavar] and [Conciarbi] that makes up about 7.5 million ounces of the orebody. We are in the process now of completing that work. We expect to complete that over the next two months, and so far the results are looking very encouraging.

Turning to Yanfolila in Mali, we continue to drill that resource. At this stage, we believe that we have an estimated resource of about 1 million ounces compared to the 740,000 ounces we announced in our reserve and resource upgrade in March. We are completing our scoping study on the Komana East and Komana West deposits, which are the two principal pits at this point in time. Nonetheless, this project I'm sure will continue its drilling into 2012, and I am sure, at that point in time, we should have enough to have a starter project, which is about 1.5 million ounces to 2 million ounces that we need to get away. We believe there's a lot more there, but it's a very drill-intensive property and over time we'll bring that to the fore.

Safety remains a challenge to our operations, particularly in the South African region. We regret to report that we recorded seven fatalities in the June quarter. So much work requires to be done to have a new big push on safety. After three years of significant improvement on safety in 2008, 2009, and 2010, clearly we have to address this regression and get back to continuing to reduce fatalities in our operation. That is the most important thing that this management team has to work on.

We remain committed to improving our safety by focusing on two real issues -- engineering out the risk and improving compliance to standards, along with further behavioral changes supporting improved working place practices for our employees. This will be the big focus I'm sure as Peter gets to grips with these operations.

Before I open to questions for either myself or my colleagues, I'd like to note that our shareholders overwhelmingly supported the acquisition of IamGold, 18.9% take in Tarkwa and Damang in Ghana on June 20. This increases our indirect shareholding to 90% and adds around 180,000 ounces to our annual total production. Also, we are extensively drilling the Damang orebody as we believe there is the potential for a fourfold increase in that reserve by the March declaration next year and that's the target we set ourselves.

With that short introduction and a summary of the highlights for the quarter, I'll now hand over to questions, which either myself, Paul Schmidt, our CFO, Peter Turner who is with us, and hopefully Juancho Kruger, who I hope will join us in a few minutes, will endeavor to answer. Thank you.

(Operator Instructions). It would appear we have no questions. Do you have any closing comments sir?

How many people do we have on the call or should we give people a couple more minutes? I'm not too sure if people might still have dialed in late.

We have 11 people in the call in total.

I think let's just give it another minute and see if there are any questions that might come through before we sign off.

Of course.

Still nothing?

Still nothing.

Obviously, it's all clear. So I just want to thank those people who did dial into the call for your attendance this afternoon, and we look forward to seeing you in due course. Thank you very much indeed and good-bye.

On behalf of Gold Fields, that concludes this conference. Thank you for joining us. You may now disconnect your line.