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Gold Fields Ltd.

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September 17, 2024 at 8:20 AM (MDT)|Broadmoor Hotel & Resort

Mike Fraser

CEO

Mike joined Gold Fields as CEO on 1 January 2024, based at the Corporate Office in Johannesburg. Following an early career in industrial services, Mike joined the mining sector in 2001 in BHP’s human resources department. He rose through the ranks at BHP to head the Mozal Aluminium Smelter project in Mozambique in 2009 and was appointed the group’s President of Human Resources based in Melbourne.

When BHP created South32 in 2015, Mike became President and Chief Operating Officer of its global aluminium, nickel, and South African manganese and energy coal businesses. In 2022, he was appointed CEO of Chaarat Gold, an AIM-listed junior gold miner, a position he held until his appointment to Gold Fields.

This is an automatically generated transcript. Denver Gold Group cannot accept responsibility for mistakes, errors, omissions, or any action taken in reliance thereon. Use of this transcript is governed by Denver Gold Group’s Terms of Use.

Moving on to the next presentation, the next company presenting would be Goldfields and to talk to us on Gold Fields. We have Chief Executive Officer Mike Fraser Mike. It's good to have you. Good day, good morning, ladies and gentlemen. And thank you for joining us for the Goldfield presentation today. I just ask you to please take note of the disclaimers including the forward looking statements in the presentation. Just, I think before we start, I just wanted to highlight a slide which really just talks to the gold fields share price performance over the past five years. If you look at this graph, you can see the gold fields has created significant value for our shareholders over these past five years. shares have increased by more than 100 and 20% over the period and that has outperformed the gold spot price as well as the the general index over the past five years. We believe that gold Fields offers an attractive value proposition. This value is being created by a focus on the three pillars of our strategy. This is clearly articulated it focuses on firstly maximizing the potential from our current current assets. It focuses on improving the value and quality of our existing portfolio and addition and adding additions. And lastly, it's about building our leading commitment to, to ESG I will talk a little bit later about our portfolio and particularly some of the catalysts to add value in the near term. In particular, regarding Solaris Norte, as well as the windfall project, which we have recently moved on acquiring 100% of that asset. We also have a very robust balance sheet. At the end of June, we have a net debt to IDA of 0.53 net debt to IB A. And this provides us significant flexibility to invest further in our existing assets for Life Extension or alternatively investing in value of creative growth. In terms of our ESG commitment. We have made significant commitments to 2030 in the areas of safety, stakeholder, value, creation, gender diversity, decarbonisation, responsible water stewardship and tailings management. And we are making very good progress to all of these commitments in 2030. Before I proceed on this slide, I just wanted to spend a minute on safety. I think first and foremost, I I will be the one to admit that our industry whilst we've made really good progress and gold fields as well, we haven't yet solved creating AAA fatality free industry. And while some have been better than others. Certainly, Goldfields has not been immune to this. We had two fatalities this year and one of the first priorities that I've taken is to really take significant strides to reset our safety culture, our safety systems of work. And we have now created a strong belief within our leadership that we can actually create a a fatality free workplace where we can guarantee everyone goes home safe and well, at the end of every shift and we believe safety is tied to good operating performance, just moving to the portfolio. So, so today Goldfields is a globally diversified gold producer. Whilst we have our roots in South Africa, only 12% of our production is out of South Africa. Today, nearly 50% of our production out of Australia, nearly 30% out of Ghana. And that will dilute as we grow our position in Latin America and in Canada. if I just move on to our portfolio and the way we see it, we, we think about our portfolio in, in three, in three categories. And whilst many people may have the view that Goldfields is a short life portfolio. We we really don't, don't believe that. on the one hand, we have four multi decade assets in our portfolio. This being ST Ives the cornerstone of that being the invincible all body which we believe has got fundamental potential at depth and laterally. and we are also investing in renewable energy at Saint Ives will give us the opportunity to unlock future optionality, particularly in respect of all handling study which will will reduce costs and allow us to extend life of that asset in South Deep. This is an asset that's been challenged for for decades, but we really have turned the corner and whilst this year may not have not been the best year for for South Deep. Last year, we produced $200 million of free cash. This year, we produce free cash again and be a significant contributor and given the life and the opportunity ahead of us, we believe South Deep will continue to improve and provide a cornerstone for the portfolio. I'll talk a little later about the joint venture that we are proceeding with, with Idio Prim, our neighbor at in Ghana. And this will be an opportunity to increase production, reduce costs and extend life of that asset and lastly windfall, We've spoken a bit about it in the investor presentation last month when we acquired the 2nd 50% I'll touch a little bit on that later. But if you look at the exploration potential of windfall beyond just the the the primary links deposit, this will be an again a cornerstone part of our portfolio for decades to come. In the second category, we have assets which have upside optionality. Granny Smith has been a consistent performer. We know that that ore body continues that depth. And it's just really consistent in its delivery. The real challenge is how we deal with structural inflation. So we've got another all handling study underway there to look at how we can unlock the potential of this asset for a much longer period. Agnew. We're doing a lot of exploration. Again, this is an asset that we've continued to develop just to depth. But now we've got the opportunity of really looking at the opt the exploration potential laterally to see if we can find something at shallower depths. Grue our joint venture with Gold Road. This is an asset which again is a an asset that probably hasn't yet got to its best days. But we do believe that there's there's significant potential to close the gap to its its its real potential. In addition, we're doing studies on Golden Highway and as well as an underground study to potentially extend the life beyond its current current horizon. And lastly, Solare, while we're talking about it in the second category, the only reason we do that is whilst it's a high quality deposit, we yet haven't confirmed its life beyond the next 10 years. And we're doing significant exploration in the region to look at where it goes. And lastly, we have two maturing assets with regards to demand and serra corona demand, we are already processing stockpiles Sera Corona, we start processing, processing stockpiles in 2026 and we'll look to the appropriate pathway for either sustainably closing or exiting that those two assets. We do believe with beyond our existing portfolio, there are significant opportunities to add further upside to our business. We have a resource and reserve base today to to maintain our production profile of 2 to 3 million ounces into the mid 20 thirties at least. And we have a number of levers that we are pulling to continue to improve the portfolio over time to extend the life of these this portfolio production. Firstly, our Greenfields exploration program, we've reinvigorated that we've taken a very measured approach to how we deploy capital and how we partner up to extend our opportunity set. And we have, we've entered into a number of JVS and earning agreements that allows us pathway to, to control of some really highly attractive exploration tenements. In addition, we've taken some equity positions that also allow us pathway to, to full control of some of these assets. So you'll see a lot more of that and our ambition is to rapidly rotate the opportunity set because we do believe within the next decade, we will be able to add some opportunities through this program. Secondly, our brownfields exploration is really important to us. So we continue to look for additional value out of our existing portfolio. and we'll spend on average around $100 million through this program to extend life and to identify further opportunities within our portfolio. And lastly, as part of our, our, our portfolio optimization, we continue to look at opportunities of for bolt on M and A. we don't believe and whilst there is a place for transformational M and A, we don't believe we have to necessarily go down that path and we believe opportunities to incrementally improve our portfolio through these three levers. And where where bolt on opportunities come up. We will continue to pursue those, but those will be incremental improvements like the ones you've seen on windfall. We also think there's over the next few years, there's a number of significant near term catalysts that will allow us to really unlock value through growing cash flow per share, which is one of our fundamental tenets of our, our strategy. And if you look at those near term catalysts that we have, it's the Solaris ramp up. I'll talk about this in a few minutes, but we really are now in the process of recommencing that ramp up. So we will start seeing us delivering answers this year. We'll see the ramp up continuing into 2025 and then 26 where we will actually start really seeing the full production potential of solar and given the, the, the economics of that mine and the grade and the cash costs that we produce that this will be a significant cash generator. The second lever that we have is the TWA prim JV. Again, I'll touch on that a little bit later, but we have made really good progress on working with the regulators on getting the right approvals. We're also planning with a G Anglo Gold Shanti for the integration of that mine, which we expect to take place in 2025. This will again unlock further reserves, reduce costs and increase production. Really hitting the trifecta of that opportunity set. The third lever for unlocking value in the next five years is really around the windfall acquisition. We now are able to fully fund that that transaction without any dilution to our shareholders. In addition, we will build that project with our own cash generation as well as generating enough free cash to return cash to shareholders over that time. And this really will set us up with the first build to be delivering production by around 2027 2028 which will build on the growth out of out of Solaris norte. Again, this is a very low cost mine. So the cash margin generation and improvement will be really significant for gold fields. And lastly, we we don't sit on our hands. So we are also very active in our own organizational efficiency drivers. So we've recently also changed our operating model to be more effective in in integrating and leading a global operating company. We have also been upgrading our leadership team over the past 12 months and we also are doing quite significant work on advancing our asset optimization projects to unlock further value from our existing portfolio just moving on to, to Solaris Norte. So I think what what I can say about Solaris Norte and there's been, you know, obviously a number of disappointments, we've been really late on getting the process plant running. I think the the on the on the positive side, mining has been proceeding really well. We have nearly 870,000 ounces of contained gold sitting in front of the processed plant waiting to be processed. And mining has really not been impacted at all by the challenges that we faced with contractor performance and weather events. We have now got the plant after all of the weather events that we've had. it's now in the, in the being prepared for a restart before the 30th of September. And therefore, we are confident that we are on target for the delivery of our revised gold production forecast of 40 to 50,000 ounces equivalent in 2024. This graph that I show on the slide is really intended to show the the impact of the ramp up and, and really what what happened between June and now is we, we really lost a month of this ramp up curve. And if you look at what happens with the ramp up. We essentially got 30 30,000 ounces in, in December. So if you add that into, to January, it's 40,000 ounces. So we actually just lost that 40,000 ounces of the ramp up curve at the back end of the year. And, and that's probably the biggest impact of, of what we experienced. We do know that Solaris is a high quality deposit. It is gonna contribute meaningfully to cash generation for gold fields starting into 25 and into 26. And our steady state production of 550,000 to 600,000 ounces of gold equivalent will be delivered in 26 at a cost of around $800 per ounce. So just on, on what we've achieved to date, so the crusher and the mill have been successfully tested and, and operated, we now have continuous circulation of thickeners in the lee area. We've actually tested the tailings filtration area over the weekend and produced produced dry tailings out of that which we now can transition into the Me Merrill Crow. We also have completed all functional testing of the filtration circuit and all of the control system checks. And we've also installed a number of bypass pipelines. So, whilst the weather is significantly improved over the last two weeks or so at, at Solaris, we now have completely unfrozen the piping and we have an opportunity now to, we have redundancy on the on the circuits. Over the next six months, we will also increase the amount of heat tracing and insulation on the, the next size up diameter piping. We've had cold weather experts come in and do a, a further review on our design standards and we've got some recommendations which we will implement ahead of the next weather system. next wintry winter period. And just lastly are the chin chairs. We have also spent the winter which we had planned not to do an activity working with the environmental agency to really understand and align around this capture and relocation program which now will recommence in early October. So at this point, there's no impact on our mining or operational activities from the cheers just moving on to, to Tako Prem. I think the, the the opportunity that was identified and this was certainly before my time. But I know Alberta and my predecessor were engaged in this. This was a really an opportunity that that probably was way overdue in, in, in prosecuting. And the because of the neighboring and the contiguous nature of these all bodies, the opportunity to really create value for all stakeholders is a, is a unique opportunity and not something we come across all the time and, and what we will create out of, out of Tau and Idio Prem is probably the largest gold mine in Africa for a period of time. And we also create a mine that will allow this, this mine to operate well into the 20 forties. It will increase annual average annual production certainly in the first five years, it will reduce all in sustaining costs and will increase the the all reserves of the combined entity. We have been working really hard over the last 12 months with the the government of Ghana in order to get the required approvals necessary to proceed. We have appro reached the consent of the Minister of Land and Natural Resources. He's given us a no objection letter to the agreement proceeding after a long, long negotiation with him, it's now with the Minister of Finance and his technical team to just upon on the tax treatment and particularly on the acquisition of Idio into the joint venture. And then the next step is to get it through cabinet and the and ultimately parliament, hopefully this side of the year before parliament breaks. One of the challenges that we do have is that there is an election in early December. And if it doesn't happen this time of the year, this side of, of the election, we'll be reengaging with government in January for, for getting this in front of parliament. Having said all of that, I think from our timeline, we, we are not sitting on our hands. We continue to proceed with the the integra integration of these mines and we are ready to proceed. We will be ready to proceed as soon as we get that approval. just moving on to windfall very briefly and I'm not going to go through this in a huge amount of detail because we did cover it off at our presentation last month. But I think the one thing that we are really pleased about is it gives us an opportunity to consolidate a truly world class asset with a high grade and a significant land package. This gives us a district scale opportunity in Canada and I'll show you a slide on that a little later. We also know that this is completely aligned to our core competencies of mining orogenic ore deposits, underground ore deposits and is able to leverage across our technical skills. It is also an asset that we understand. Well, we, we first invested in windfall in the beginning of 2023 we spent the last 18 months getting to know the asset very well and certainly all of our expectations on the quality of the asset have been exceeded on an overall basis. And I know there's been commentary about the acquisition cost of the second bit. For those that haven't read the circular, you will see that this was a competitive process. And we certainly believe that this is create will will create fundamental value even at the price that we paid. But when you look at it on an integrated basis, we certainly have been able to integrate this at a an attractive all in all in cost. And the last thing that's really pleasing about windfall. And and again, when we look at targets, it's about improving the life of the portfolio. It's about reducing the cost average cost of the portfolio. It's creating optionality through an extended land package, but importantly, reducing our carbon footprint per ounce of gold produced. And with windfall, we're getting an asset that's gonna be hydro powered to the plants. So it will enable us to again really be innovative in how we use energy solutions to reduce costs over time. Again, this asset offers significant growth potential. In this slide. We, we show how some of the analogs with, with the examples in Canada. And you can just see that this is again an asset that just has got massive potential to grow and sustain a production base for for a long period of time. Again, the slide just talks to the district scale potential and you can see in the orange, the size of the land package that that we acquire. and the land package, you know, really hasn't been fully fully explored and, and, and and assessed. But we absolutely know, given, given the potential of that that province that there is gonna be more to be identified. And the way that we will undertake exploration is really looking at it in, in c in circular around our existing plant that we'll be building and then over time just expanding that out. The other thing that's just really important is the striking similarities to ST Ives. And for those that don't know, Saint Ives, we bought this acid in 2002 with a two year mine life. We've been mining it for 20 years and it's got another 20 plus years on our known our known exp areas of mining. ST Ives has got probably 70% less land package than, than windfall. Windfall has probably done 40% more drilling around the Invincible ore body. So there's been significant definition around around the potential here and we absolutely know that this is gonna be an asset that will be a cornerstone for us for a time just lastly. And I know I'm out of time now. The one thing I did wanna call about is that our ambition is to really be a predictable, high quality, low cost operator. We don't have to be the biggest by size. We wanna grow by growing cash flow per share and growing the value of the company. And as you think about creative add ons to our company, there'll be opportunities that we're gonna be driving to continually improving the quality of the cash flow that we're generating within the portfolio. And we believe that with that. And certainly, if we look at the next five years, we'll have the opportunity of adding significant cash to our business, which we can use to enhance the portfolio and generating returns for shareholders. We have a strong balance sheet that now gives us a lot of flexibility with no near term commitments for for repayments. And lastly I included in this pack just our updated view on capital allocation and ultimately our view after maintaining credit average, our credit investment grade credit rating ensuring that we spend the necessary capital on safe and reliable production and paying a base dividend to shareholders. All other free cash should compete. So there's no automatic right to sustain the size of the company. And we will really be looking at how we share the free cash to our shareholders and sustaining the business for future generations. And with that, I thank you and apologies for being a minute over time. Thank you, Mike. We're out of time for questions all the best.


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