Integrated Annual Report for the year ended 31 December 2015 Gold Fields Integrated Annual Report for the year ended 31 December 2015
To be the global leader in sustainable gold mining The Gold Fields Integrated Annual Report 2015 1.1 About this report
Our 2015 Integrated Annual Report About Gold Fields comprises the following volumes: ❯❯ The Integrated Annual Report (IAR) 2015, Gold Fields Limited is an unhedged, which examines the integrated nature of globally diversified producer of gold with our operational, financial and sustainability eight operating mines in Australia, Ghana, performance ❯❯ The Annual Financial Report 2015, which Peru and South Africa with attributable fulfils our statutory financial reporting annual gold production of approximately requirements ❯❯ The Mineral Resources and Mineral 2.2 million ounces. It has attributable Reserves Overview 2015, which provides Mineral Reserves of around 46 million detailed technical and operational ounces and Mineral Resources of around information on our mines and growth projects 102 million ounces. Attributable copper ❯❯ Gold Fields Global Reporting Initiative Mineral Reserves total 532 million pounds (GRI) Content Index for the IAR 2015 and Mineral Resources 910 million The aim of our integrated approach is pounds. Gold Fields has a primary listing to enable our stakeholders, including investors, to make a more informed on the JSE Limited, with secondary assessment of the value of Gold Fields and listings on the New York Stock Exchange its prospects. The IAR also forms part of our (NYSE) and the Swiss Exchange (SWX). Communication on Progress to the United Nations Global Compact. A summary of our adherence to the GRI, the 10 Principles of the United Nations Global Compact and the 10 Principles of the International Council on How to read this integrated Annual report:
Mining & Metals (ICMM) and its mandatory GOLD FIELDS AR 2015 PROOF 2_3 MARCH 2016 requirements of the position statements are
presented online. Integrated Annual Report Mineral Resource and Mineral Reserve for the year ended 31 December 2015 Supplement to the Integrated Annual Report for the year ended 31 December 2015 Forward looking statements Readers are referred to the forward looking statements on p148.
To be the global leader To be the global leader in sustainable gold mining in sustainable gold mining
Integrated Annual Report Mineral Resources and Reserves Supplement
GOLD FIELDS FINANCIAL REPORT 2015 SHELL 01_02 FEBRUARY 2016
GRI G4 Content Index Annual Financial Statements for the year ended 31 December 2015 for the year ended 31 December 2015
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To be the global leader To be the global leader in sustainable gold mining in sustainable gold mining
Annual Financial Report Global Reporting Initiative (GRI) Content Index www.goldfields.com Contents
1 Our business IFC 1.1 About this report 2 1.2 Our operating environment 4 1.3 Gold Fields DNA 5 1.4 Our value creation model 8 1.5 Gold Fields annual performance dashboard 10 1.6 Total value distribution 12 1.7 Group performance scorecard 2015
Leadership, governance and 2 materiality 14 2.1 Vision of the Chairperson 16 2.2 CEO Report 31 2.3 Corporate governance 39 2.4 Operating context 42 2.5 Risk and materiality 3 Financial focus 52 3.1 Introduction 57 3.2 Strategic focus areas 4 Business optimisation 60 4.1 Introduction 61 4.2 Operational performance overview 68 4.3 Strategic focus areas 5 Social licence to operate 90 5.1 Introduction 92 5.2 Strategic focus area 6 Focus on people 122 6.1 Driving a high-performance culture 126 6.2 Strategic focus areas 132 6.3 Remuneration and benefits 7 Assurance 138 7.1 First party: Internal audit statement 7.2 Independent Assurance Provider’s Report 139 to the Directors of Gold Fields Limited 143 7.3 Key sustainability performance data
147 Administration and corporate information The Gold Fields Integrated Annual Report 2015
Scope and boundaries of February 2013. This report has been (ICMM subject matter 5 is not this report compiled in accordance with the applicable due to Gold Fields’ This is Gold Fields’ 2015 IAR. GRI’s G4 Guidelines and the transition to GRI G4 Core). The key It covers the reporting period from International Integrated Reporting sustainability performance data for 1 January 2015 to 31 December Council Framework. Gold Fields also assurance by KPMG in 2015 can be 2015. The previous IAR was references a broad range of found on page 143. published in March 2015 and additional codes, frameworks and covered the financial reporting standards in compiling the report, Board approval period from 1 January 2014 to the full list of which can be found on The Gold Fields Board of Directors 31 December 2014. page 35. We believe the Integrated considers that this IAR complies in all Annual Report, together with material respects with the relevant This IAR provides an overview of additional documents held online, statutory requirements of the various Gold Fields’ eight global operations complies with the requirements of regulations governing disclosure and in Australia, Ghana, Peru and South GRI G4 Core Reporting Guidelines. reporting by Gold Fields and that the Africa, as well as our exploration and annual financial statements comply in business development activities. An average exchange rate for 2015 all material respects with the South Detail on the exact location of each of R12.68 and A$0.72 to the African Companies Act No 71 of operation and project can be found US Dollar have been used in this 2008, as amended, as well as with on the global map on page 2. report. For 2016 forecasts exchange International Financial Reporting rates of R14.14 and A$0.73 to the Standards. As such, the Board We use an integrated approach to US Dollar have been used. approves the content of the IAR reporting that examines our 2015, including the Annual Financial operational, financial and Assurance Report 2015. sustainability performance. All Our auditors, KPMG, have provided non-financial data for 2013 exclude reasonable assurance on selected the Yilgarn South assets we acquired sustainability information in this that year, unless otherwise indicated. report, which is prepared in All 2014 and 2015 non-financial data accordance with the GRI G4 are inclusive of the Yilgarn South guidelines. As a member of the assets. Furthermore, all 2012 data, ICMM we are committed to obtaining where stated, cover only the assurance in line with the ICMM Cheryl Carolus continued operations of Gold Fields, Sustainable Development Chairperson of the Board i.e. they exclude the contributions Framework: Assurance Procedure. from the Sibanye Gold assets, which KPMG has provided assurance on the 22 March 2016 were unbundled from Gold Fields in four subject matters of the ICMM
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Send us your feedback To ensure that we report on issues that matter to our stakeholders please provide any feedback and questions to: [email protected], [email protected] or visit www.goldfields.com to download the feedback form. 1 The Gold Fields Integrated Annual Report 2015 1.2 Our operating environment
Key
Mines Corporate Office ▲ Regional Offices
Projects Status Cerro Corona Far Southeast (Philippines) Scoping study Lima ▲
Salares Norte (Chile) Scoping study Salares Norte (Chile) Arctic Platinum project (Finland) For disposal
Americas region Gold Fields presence in the Americas region consists of 2015 Production the Cerro Corona mine in Peru and the Salares Norte project 13% contribution to in Chile Group
Safety All-in Cost Net cash inflow2 (TRIFR)1 score US$ per ounce3 US$m
1.2 800 150 700 1.0 120 600 0.8 500 90 0.6 400 60 0.4 777 300 200 2015: 30 2015: 0.2 100 0 fatalities 0.0 0 US$35m 0 15 14 /oz 15 14 15 14
West Africa region Production Gold Fields West Africa region consists of two mines in 201534% 34% contribution to Ghana, Tarkwa and Damang Group
Safety All-in Cost Net cash inflow2 (TRIFR)1 score US$ per ounce US$m 1.2 1,200 150
1.0 1,000 120 0.8 800 90 0.6 600 60 0.4 1,049 400 2015: 30 2015: 0.2 200 1 fatality 0.0 0 US$44m 0 15 14 /oz 15 14 15 14 1 TRIFR - Total Recordable Injury Frequency Rate ( Injuries per 1 million hours worked), including employees and contractors 2 Net cash flow from operating activities after taking account of net capital expenditure and environmental payments 3 Per gold - equivalent ounce 4 The two fatalities listed were workplace accidents. A third fatality occurred involving a member of the protection services team at South Deep, who was shot and killed during a robbery at the mine 2 Arctic Platinum project (Finland) The Gold Fields Integrated Annual Report 2015
Far Southeast
Tarkwa
Damang ▲ Accra
¨ South Deep Johannesburg Agnew Darlot Granny Smith St Ives Perth▲
Australia region The Australia region consists of four mines in Western 2015 Production Australia - Agnew, Darlot, Granny Smith and St Ives - and the 44% contribution to Far Southeast project in the Philippines Group
Safety All-in Cost Net cash inflow2 (TRIFR)1 score US$ per ounce US$m
20 1,200 300 1,000 250 15 800 200 10 912 600 150 400 100 5 2015: 200 2015: 50 0 fatalities 0 0 US$255m 0 15 14 /oz 15 14 15 14
South Africa region Production The South Deep mine, which is still in a ramp-up phase, is the 20159% 9% only operating asset in the South Africa region contribution to Group
Safety All-in Cost Net cash outflow 2 (TRIFR)1 score US$ per ounce US$m
5 2,000 0
4 (20) 1,500 (40) 3 1,000 (60) 2 1,559 (80) 500 1 2015: 2015: (100) 2 fatalities4 0 0 US$80m (120) 15 14 /oz 15 14 15 14
3 The Gold Fields Integrated Annual Report 2015 1.3 Gold Fields DNA
Our Vision We are an international company with a global portfolio of assets, T r... o the location of which has been de informed by our global growth a b .le e strategy. ..
t h e Being a leader g means focusing on lo excellence and b delivering value to a l. our shareholders, .. employees and host We focus solely communities. on gold mining. This is our area of expertise and ... we believe in in s the long-term value u of gold. s ta in g a in b l in e m We focus on delivering sustainable value . ld . ..go - not just now but in the future. This means . . responsibly managing our environmental and social impact, and planning the business so that we can continue to deliver value to our stakeholders long into the future. underpinned by Our Values
Safety Integrity Respect Innovation Delivery Responsibility If we cannot We act with We treat all We encourage We strive for excellence We responsibly mine safely, honesty, fairness and stakeholders with trust, innovation and and do what we manage our impact on we will not mine transparency dignity and respect entrepreneurial spirit say we will do the environment and host communities
to deliver on our Stakeholder Charters
Employee Investor Society & Community Charter Charter Charter
A safe, winning and A quality portfolio of assets, The most trusted and productive team providing superior returns on gold valued mining partner
❯ To be a company of which employees ❯ To build a quality ❯ To build strong relationships and trust can be proud portfolio of productive mines ❯ To create and share value ❯ To celebrate achievement ❯ To provide superior returns ❯ To measure our actions and impact ❯ To treat employees with respect and ❯ To deliver on our commitments ❯ To deliver on our commitments to work with them to ensure their health and safety ❯ To provide the right development and support for employees to succeed ❯ With employees’ help, to make Gold Fields the best place to work 4 The Gold Fields Integrated Annual Report 2015 1.4 Our value creation model How Gold Fields creates and distributes value
Gold Fields is able to create and distribute value to its stakeholders by achieving its overarching strategic objective, which is to deliver a sustainable free cash flow margin of 15% at a long-term planning gold price of US$1,300/ oz. This means we will not only invest to achieve this year’s targets but also those in the years to follow.
A wide range of internal and external Our business uses a number of and invest in host communities and factors – or inputs - have either had capitals and resources including countries. We pay interest to a direct impact on or influenced the natural, manufactured, human, social financial institutions, salaries to development of this strategy. Many and financial capital. employees, payments to suppliers of these inputs pose a risk to the and taxes and royalties to Group, and can be directly linked to All of these inputs come together to governments. the top 10 risks on our business risk inform our strategy, which in turn is register (p46), while others are an executed by: Once these payments are made, the opportunity. net cash remaining is used to reduce ❯ Improving the quality of our our debt, pay dividends to At a macro level, we continually portfolio: Having a quality shareholders and invest in growth consider the global geopolitical portfolio of assets allows us to – three of our most critical strategic climate and macroeconomic trends generate the cash needed objectives. as well as the socio-economic and to meet our objectives. This entire value generation and political environment in the specific A combination of business distribution process is underpinned jurisdictions where we operate. In optimisation and active risk by certain non-negotiable recent years, gold price volatility and management allows us to grow fundamentals. These include a decline in prices have had a direct and improve the portfolio of adherence to our safety ethos of ‘If impact on how we steer the assets. business strategically, and currently we cannot mine safely, we will not mine’; securing and maintaining our pose a key business risk. ❯ Focusing on delivery: In social licence to operate; meeting Furthermore, the level of exchange addition to having a quality our environmental responsibilities; rates in regions in which we operate portfolio of assets we also and, ensuring we have the necessary have a material influence on our require an absolute focus on licences in place to meet all business. delivery. This is enabled by regulatory compliances. The Gold driving a high-performance Certain factors that are more directly Fields values, which inform the way culture, ensuring we have linked to our business include the in which we work, also underpin all superior processes in place and contributions and expectations of our aspects of our business. employing and retaining the right shareholders, host communities and people in the right jobs. employees and contractors. The For a graphic illustration public and fiscal policies of host The successful execution of our of our business model, governments, and their stance on strategy results in revenue creation, the mining industry, is a further and from this we are able to deliver refer to the pages that important factor. value to a number of stakeholders follow
5 The Gold Fields Integrated Annual Report 2015
1.4 Our value creation model (continued)
Factors influencing our strategy
External
Socio-economic and political environment ▼ Business Optimisation Exchange rates Geographical environment ▼ Gold and copper price Active Risk Management Macro-economic trends Host governments
Through Host communities ▼ Mining, water and other licences
Improving the quality of our portfolio
Our Strategy To deliver a sustainable free cash flow margin ➨ EXECUTED BY TO DELIVER of 15% at a gold price of US$1,300/oz
Focusing on delivery
Internal ▼ Asset base
Our people Through
▼ High - Our suppliers Performance Our vision Culture Our balance sheet ▼ Superior Our shareholders Processes
The right ▼ people in the right jobs
Social licence to operate
Values: Safety Integrity 6 The Gold Fields Integrated Annual Report 2015
Strategic priorities
US$123m in Reduce debt Dividends to Invest in growth shareholders net cash US$73 million US$89 million brownfields generated debt reduction 25 SA exploration and project cents/share development spend
Total value distribution
Interest and dividends paid to investors Salaries US$117m US$435m
Taxes and royalties Supplier payments to government GOLD = REVENUE US$1,663m US$196m
Community impact
Community investments: US$14 million Host community workforce employment: 10,009 people Host community procurement: US$514 million
Environmental impact
Water withdrawal: 35,247Mℓ Mining waste: 167 tonnes
CO2 emissions: 1.75m tonnes Energy usage: 11.2m GJ
Underpinned by: Fundamental Non-negotiables
Environmental responsibilities Zero harm ✓ Regulatory compliances
Respect Innovation Delivery Responsibility 7 The Gold Fields Integrated Annual Report 2015 1.5 Gold Fields annual performance dashboard 1 Financial Category 2015 2014 2013
Gold price received (US$/oz) 1,140 ■ 1,249 1,386 Revenue (US$m) 2,545 ■ 2,869 2,906 Operating profit (US$m) 1,089 ■ 1,191 1,239 Headline earnings/(loss) (US$m) (28) ■ 27 (81) Normalised earnings (US$m) 45 ■ 85 58 Capital expenditure (US$m) 634 ■ 609 739 Net cash flow (US$m)1 123 ■ 235 (235) Free cash flow margin (%) 8 ■ 13 N/A Dividend (SA cents/share) 25 ■ 40 22 Total net debt (US$m) 1,380 ■ 1,453 1,735 Debt/EBITDA2 ratio 1.38 ■ 1.30 1.50
■ 2015 Performance drop against 2014 ■ 2015 Performance on par with 2014 ■ 2015 Performance improvement on 2014 or achievement in line with strategy 2 Business optimisation Category 2015 2014 2013
TRIFR (rate per million) 3.40 ■ 4.04 4.14 Fatalities 43 ■ 3 2 Gold produced – attributable (Moz) 2.16 ■ 2.22 2.02 All-in Sustaining Cost (US$/oz) 1,007 ■ 1,053 1,202 All-in Cost (US$/oz) 1,026 ■ 1,087 1,312 Attributable Gold Mineral Resources (Moz) 102.210 ■ 108.843 113.398 Attributable Gold Mineral Reserves (Moz) 46.064 ■ 48.123 48.608 Attributable Copper Mineral Resources (Mlb) 910 ■ 1,001 1,119 Attributable Copper Mineral Reserves (Mlb) 532 ■ 620 708 Brownfields exploration (US$m) 72 ■ 58 32 Brownfields exploration – metres drilled 651,189 ■ 349,511 250,138
■ 2015 Performance drop against 2014 ■ 2015 Performance on par with 2014 ■ 2015 Performance improvement 2014 or achievement in line with strategy 1 Net cash flow from operating activities after taking account of net capital expenditure and environmental payments 2 EBITDA – Earnings before interest, taxation, depreciation and amortisation 3 Three of the four fatalities were workplace accidents, while the fourth fatality was a member of the protection services team at South Deep who was shot and killed during a robbery at the mine
8 The Gold Fields Integrated Annual Report 2015 1.5 Gold Fields annual performance dashboard 3 People Category 2015 2014 2013
Total employees 9,052 ■ 8,954 10,167 Contractors 7,798 ■ 6,486 6,685 HDSA employees in SA (%)1 71 ■ 71 70 Female employees (%) 14 ■ 14 11 Employee wages and benefits (US$m) 435 ■ 468 595 Ratio of basic salary men to women 1.09 ■ 1.10 1.20 Employee turnover (%) 8 ■ 20 10 ■ 2015 Performance drop against 2014 ■ 2015 Performance on par with 2014 ■ 2015 Performance improvement on 2014 or achievement in line with strategy
4 Licence/Social licence to operate Category 2015 2014 2013
Total value distribution (US$m) 2,425 ■ 2,650 2,980 SED spending (US$m) 13.7 ■ 17.42 17.22 Workforce from host communities (%) 59 ■ 57 – In-country procurement (US$bn) 1.27 ■ 1.44 1.44 Host community procurement (US$m) 514 ■ 600 430 Environmental incidents (Level 3 and above) 5 ■ 4 3 Water withdrawal (Mℓ) 35,247 ■ 30,207 30,302 Water recycled/reused (Mℓ) 43,120 ■ 42,409 33,453 Electricity (MWh) 1,322,353 ■ 1,338,075 1,382,106 Diesel (TJ) 6,930 ■ 6,066 5,509 3 ■ CO2 emissions (’000 tonnes) 1,753 1,694 1,731 Mining waste (’000 tonnes) 167,357 ■ 138,522 190,007 Closure costs provisions (US$m) 353 ■ 391 355 ■ 2015 Performance drop against 2014 ■ 2015 Performance on par with 2014 ■ 2015 Performance improvement on 2014 or achievement in line with strategy
1 In terms of the Employment Equity definition, which includes white women as HDSA’s (Historically Disadvantaged South Africans) 2 Restated to include spending from the South Deep Community and Education Trusts 3 Scope 1, 2, 3 emissions 9 The Gold Fields Integrated Annual Report 2015 1.6 Total value distribution
Gold Fields generates significant value for all the societies in which it operates – some of which can be quantified and some of which cannot. The most important means by which Gold Fields generates quantifiable value is outlined below:
National value distribution by region and type 2015 National Govern- Employees/ Capital value (US$m) ment Business contractors SED providers distribution
Americas 44 175 33 8 4 264
Australia 75 676 137 1 0 889
South Africa 11 175 129 42 5 314
West Africa 71 628 112 2 14 827
Corporate 5 9 24 – 94 131
Total Gold Fields 196 1,663¹ 435 14 117 2,425 1 South Deep does not yet pay tax as it is in a loss-making position 2 This includes spending from the South Deep Community and Education Trusts
National value distribution in our four regions
Americas 2015 (US$m) West Africa 2015 (US$m)
n Government 44 n Government 71 n Business 175 n Business 628 n Employees/contractors 33 n Employees/contractors 112 n SED 8 n SED 2 n Capital providers 4 n Capital providers 14 Total 264 Total 827
South Africa 2015 (US$m) Australia 2015 (US$m)
n Government 1 n Government 75 n Business 175 n Business 676 n Employees/contractors 129 n Employees/contractors 137 n SED 4 n SED 1 n Capital providers 5 n Capital providers 0 Total 314 Total 889
10 The Gold Fields Integrated Annual Report 2015
Stakeholder value distribution
Government Business Employees/ Socio-economic Capital contractors development providers
Payments include Payments include Payments include Payments include Payments include
Mining royalties and land-use Payments to business, Payments to employees and SED spending, including on Payments to the providers of payments, Income taxes, including both operational and contractors, such as wages, infrastructure, health and capital, including interest and Taxes, duties and levies capital procurements benefits and bonus payments wellbeing, education and dividend payments to related to the procurement of (including shares and payroll training, local environmental shareholders goods and services. Dividends taxes) initiatives and donations
Why these Why these Why these Why these Why these stakeholders matter stakeholders matter stakeholders matter stakeholders matter stakeholders matter and what we and what we and what we and what we and what we contributed in 2015 contributed in 2015 contributed in 2015 contributed in 2015 contributed in 2015
Governments provide us with Our supply chain businesses The technical skills, Host communities are the Financial institutions, access to ore bodies by provide the equipment and experience, and manpower of source of a large portion of shareholders and bond granting mining and other services needed to develop our people drive the our workforce and provide us holders invest with us, thus licences. They also deliver the and maintain our operations: day-to-day operations of our with our social licence to enabling us to fund the infrastructure necessary to ❯ In 2015, we paid business, while their operate: development, maintenance build and maintain our mines, US$1,663 million to intellectual capital contributes ❯ In 2015, we paid out and growth of our operations: including roads, electricity suppliers and contractors, to our strategy: US$13.7 million (2014: ❯ In 2015, Gold Fields paid and water supply: representing 69% of total ❯ In 2015, Gold Fields paid US$17.4 million) in terms US$117 million (2014: ❯ In 2015, we paid value creation (2014: US$435 million (2014: of SED investment US$137 million) to the governments US$1,835 million/69%) US$468 million) to ❯ Independently, the South providers of debt and US$196 million (2014: ❯ Of the total 2015 employees in terms of Deep Trusts spent equity capital, mainly in US$194 million) in taxes procurement expenditure, salaries, dividends and R24.3 million the form of interest and and royalties, 8% of total US$1,268 million, or 76%, benefits, representing (US$1.9 million) in 2015 dividends. This made up value distribution was spent on businesses 18% of total value (2014: R10.7 million 5% of our total value (2014: 7%) based in operating distribution (2014: 18%) (US$1.0 million)) distribution (2014: 5%) ❯ In addition, the Ghanaian countries (2014: ❯ Gold Fields continues to ❯ In 2015, 59% of our ❯ Net debt was reduced by government received US$1,410 million/76%) provide employees (where workforce were drawn a further US$73 million to US$11 million in dividends ❯ Within this figure, legislated) with additional from host communities US$1,380 million during relating to its 10% US$514 million, or 35%, benefits such as (2014: 57%) 2015 shareholding in Gold Fields of procurement was spent retirement savings, ❯ See page 110 for an Ghana on suppliers and healthcare assistance, life analysis of our host contractors from host and disability insurance, community employment communities (2014: housing assistance and and procurement as well US$600 million/39%) personal accident cover as other benefits and (p110) investment in communities
11 The Gold Fields Integrated Annual Report 2015 1.7 Group performance scorecard 2015
The Group’s performance for the year under review was measured against the focus areas shown in this 2015 Group performance scorecard.
Our performance against the objectives is reported in this IAR.
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12 The Gold Fields Integrated Annual Report 2015
Leadership, governance2 and materiality
2.1 Vision of the Chairperson p14 2.2 CEO report p16 2.3 Corporate governance p31 2.4 Operating context p39 2.5 Risk and materiality p42
13 The Gold Fields Integrated Annual Report 2015 2.1 Vision of the Chairperson
Being a global company, we deal with a range of stakeholders across the multiple jurisdictions in which we operate and through these engagements we generally find solutions that are best for our business and our stakeholders
❯ Cheryl Carolus – Chairperson
The past year has been another In 2015, we continued to optimise our presentation on The Gold Mine of the challenging period for the global gold strong international portfolio and Future, and strongly believe that this industry. After peaking around focused on fixing the base at South changing mind-set bodes well for the US$1,300/oz in January 2015, the Deep. We are pleased to have seen long-term future of Gold Fields. US Dollar gold price steadily some early signs of improvement at decreased through 2015, to end off South Deep during the second half of Being a global company, we deal the year around the US$1,050/oz the year. Underpinning this was the with a range of stakeholders across level. Fortunately, our actions in strength of the international the multiple jurisdictions in which we recent years placed us in a stronger operations, which produced operate and through these position to withstand this further fall 1.96 million attributable ounces at an engagements we generally find in the gold price. In addition, our average AIC of below US$950/oz. In solutions that are best for our globally diversified portfolio has Australia, our biggest region, we business and our stakeholders. allowed us to benefit from commodity expect the current level of exploration currency depreciation against the expenditure to continue in order to When it comes to the safety and US Dollar. sustain and potentially grow wellbeing of Gold Fields’ employees production. Our strategy towards and contractors there is never a time to During 2015, we further reduced our growth, which is a preference for be complacent or rest on our laurels All-in Cost (AIC) to US$1,026/oz, acquisitions of producing assets over despite the undoubted progress that placing Gold Fields in the bottom half greenfields exploration, remains intact has been made. Tragically four fatalities of the industry cost curve. In 2012 AIC and we continue to evaluate value- occurred during the year – at our South averaged US$1,537/oz, which means accretive opportunities. Deep mine in South Africa and the we have cut costs by one-third in Tarkwa mine in Ghana. Three of these three years – a remarkable While we believe in the long-term were workplace accidents, the fourth achievement. This allowed the Group value of gold, we must continue our was a member of our protection to generate US$123 million of net efforts on modernising all aspects of services who was shot and killed cash flow from operations, which has our business in order to survive during a robbery at South Deep. My enabled us to deliver on our volatile and ever-changing market heartfelt condolences go out, once commitments of paying dividends and conditions. We commend our CEO, again, to the relatives, friends and improving the balance sheet. Nick Holland, on his recent colleagues of Kennedy Katongo, Albert
14 The Gold Fields Integrated Annual Report 2015
Chiungo, Sbongiseni Ngqoleka and mining industry has not always been improve energy efficiencies and Clement Aidoo. successful in addressing the rightful supply at these operations, as well aspirations of these communities to as securing ongoing water supplies. In honour of their memory, and those see greater social and economic who died at our mines before them, benefits from the mines. As a committed corporate citizen, this Board will continue to press Gold Fields is more than willing to play management on the achievement of This can no longer be the modus its role in addressing these challenges Zero Harm at all our operations. operandi of the industry. We need to and find solutions that benefit all Similarly, reducing the exposure of our intensify engagement with host stakeholders. We can only do so if our employees to occupational and communities, understand their stakeholders engage with us in open non-occupational diseases such as aspirations and implement strategies dialogue and genuine partnerships Silicosis, Tuberculosis, HIV/Aids, Noise and projects to successfully and and if additional regulatory, fiscal and Induced Hearing Loss and Malaria collaboratively meet them without cost imposts, which will be difficult to must remain a priority. undermining the economic viability of absorb by the embattled mining our mines. Gold Fields has listened and industry, are avoided. In fact, in some With regards to the high-profile is painfully aware of the wide trust gap cases fiscal relief is required to sustain Silicosis court case, in which Gold that still exists between these our industry for the benefit of all Fields is a co-respondent, it is worth communities and us. In response, we stakeholders. noting that further significant are implementing a range of initiatives, progress has been made in in addition to work already ongoing, As directors of this Company one of underground dust management and ranging from strengthening the our key responsibilities is to ensure related work at South Deep over the capacity of our community relations that the corporate governance past few years. The past year has teams to upskilling small businesses in systems at Gold Fields are in line been spent with our peer companies our host communities for them to be with the ever-changing and more in an intensive engagement process able to supply goods and services to stringent rules and regulations that with all stakeholders to find a our mines. are being rolled out by regulators comprehensive solution to the across the globe. The Gold Fields occupational lung disease challenge In addition, we have supported the Board is committed to high levels of that is both fair to past, present and ability of the South Deep Trusts as corporate governance and statutory future employees, and sustainable to well as Foundations in Peru, Ghana compliance and will review policies the companies and the industry. and Australia to distribute funds and procedures when required. more effectively to host community Stakeholder engagement, beyond projects. Gold Fields is making In conclusion, I would like to the regular interaction with our significant strides in putting welcome Steven Reid to the Board. shareholders and investors, is community contribution on a more He joined in February 2016 and becoming an increasingly critical issue sustainable footing – but brings with him 35 years of and the Board devotes a large amount undoubtedly there is always more experience in the mining industry. of time to ensure that Gold Fields’ that needs to be done. I would also like to express my management deals appropriately with gratitude to my fellow directors and the challenges, issues and concerns Globally, our operations are executive management, led by our of the key stakeholders in our host confronted by a range of external CEO, Nick Holland. Most importantly, governments, amongst our workforce regulatory, political, labour and price I want to thank every employee at and in our host communities. During dynamics that will impact on their Gold Fields for their hard work and 2015, Gold Fields’ total value future business performances. None dedication to the Company. They are distribution to our stakeholders – as more so than those initiated by integral to its success and it is measured by World Gold Council governments, which through their thanks to their efforts that (WGC) standards – was almost policies, regulations and taxes, have Gold Fields is now in a position to US$2.43 billion in the form of the ability to create the environment withstand the low gold price payments to governments, capital necessary for businesses to prosper. environment and flourish when the providers, communities, business gold price does start to recover. suppliers and employees. The industry around the world is also facing high electricity tariffs, which Communities adjacent to the mines we are exacerbated by regular power operate grant us our social licence to outages, as well as water shortages. operate and increasingly have to be This is most acute at our Ghanaian consulted on mining operations on and South African mines and we Cheryl Carolus their doorsteps. Unfortunately, the have implemented measures to Chairperson 15 The Gold Fields Integrated Annual Report 2015 2.2 CEO Report
Despite the 45% decline in the price of gold between 2011 and 2015, Gold Fields is today in much better shape generating substantially more cash than when the gold price was at its peak
❯ Nick Holland – Chief Executive Officer
Dear Shareholders perception that gold mining The success of our restructuring The global gold mining industry has companies, including Gold Fields, journey is reflected in our operational operated under the shadow of a were not providing investors with the and financial performance during falling gold price since September expected leverage to the then 2015, the highlights of which are 2011, when it was trading at a prevailing high gold price. This was described below. It also reflects in record high of about US$1,900/oz. to be achieved by turning Gold Fields the progress that we have made with into a lean, focused and globally our key strategic priorities for 2015, Since then gold has lost about 45% of diversified gold mining company that which were: ❯❯ its value and traded at an intraday low generates substantial free cash flow. Setting up South Deep for of US$1,045/oz on 3 December 2015. In turn, this would enable Gold Fields long-term success ❯❯ Subsequently, the gold price has to meet the legitimate expectations Cash flow and margin – making recovered to levels of around of all of its stakeholders, in particular, money at current lower gold prices ❯❯ US$1,200/oz. Weaker currencies in to provide its shareholders with Dividends – paying between 25% commodity-exporting nations provide superior leverage to the price of gold. and 35% of normalised earnings ❯❯ a cushion to the cash flows of Balance sheet – further reducing companies operating in these Little did we know at the time that our net debt to EBITDA ratio ❯❯ countries. The weaker Australian Dollar the industry was facing its first year Growth through brownfields and South African Rand have improved in the multi-year decline in the price exploration and opportunistic, the current prospects of Gold Fields of gold. What we can say with value-accretive acquisitions despite lower US Dollar gold prices, certainty is that it has proven with up to two-thirds of our fortuitous that we embarked on our It is fair to say that, despite the 45% production benefiting from the transformation journey when we did. decline in the price of gold between softer exchange rates. Not only was our pre-emptive 2011 and 2015, Gold Fields is today restructuring the right thing to do to in much better shape generating When Gold Fields started on its start rekindling investor interest and substantially more cash than when strategic transformation journey in confidence in Gold Fields and the the gold price was at its peak. While the final quarter of 2012, the gold gold mining sector generally, but it this is reassuring in the current low price was still trading between provided Gold Fields with a built-in price environment, it also positions US$1,700/oz and US$1,800/oz. The safety cushion which has enabled us Gold Fields for enhanced cash core objective of the transformation to withstand the lower gold prices generation when the gold price process was to address investor experienced since then. eventually starts to appreciate again, which it undoubtedly will.
16 The Gold Fields Integrated Annual Report 2015
The ability to generate cash is critical in distributing the benefits from mining that our stakeholders rightfully expect. These include: ❯❯ Shareholders and debt providers, who are seeking a return on their invested capital through interest and dividend payments ❯❯ Our employees, whose work is rewarded through salaries and other benefits ❯❯ Contractors and suppliers, from whom we procure goods and services ❯❯ The governments and regulators, who grant us our mining licences and who benefit from our taxes and royalties ❯❯ Communities, whose support is critical for our social licence to operate and who benefit through jobs and procurement as well as our social investment programmes
Performance highlights 2015 vs 2014 2015 2014 TRIFR 3.40/million hours worked 4.04/million hours worked Attributable production 2.16Moz 2.22Moz All-in Sustaining Costs (AISC) US$1,007/oz US$1,053/oz All-in Costs (AIC) US$1,026/oz US$1,087/oz Net cash flow1 US$123 million US$235 million Free cash flow (FCF) margin 8% 13% Net debt US$1,380 million US$1,453 million Net debt: EBITDA 1.38 1.30 Dividends R0.25 per share R0.40 per share Total value distribution US$2,425 million US$2,650 million Energy spend US$312 million US$367 million Water withdrawal 35,247 Mℓ 30,207 Mℓ
Total CO2 emissions (Scope 1, 2 and 3) 1,753,163 tonnes 1,694,043 tonnes 1 Net cash flow from operating activities after taking account of net capital expenditure and environmental payments
❯❯ The Group’s Total Recordable ❯❯ Despite a 9% decline in the ❯❯ A final dividend of R0.21 per share Injury Frequency Rate (TRIFR) average gold price received from was declared. Together with the improved by almost 16% to US$1,249/oz in 2014 to interim dividend of R0.04 per share 3.4 recordable injuries per million US$1,140/oz in 2015, net cash for the six months ended 30 June hours worked, though this strong flow from operating activities – 2015 this brings the total dividend safety performance was after taking account of net capital for the year to R0.25 per share. At overshadowed by the four fatalities expenditure and environmental 34% of normalised earnings, this is reported in 2015 payments – amounted to in line with the Group’s policy to ❯❯ Gold Fields recorded a strong US$123 million in 2015 compared pay out between 25% – 35% of operational performance in 2015 with US$235 million in 2014 normalised earnings as dividends with attributable production of ❯❯ The Group’s free cash flow margin ❯❯ Gold Fields generated over 2.16 million gold equivalent for 2015 was 8% despite the fact US$2.43 billion in value measured ounces, broadly in line with guidance that, at US$1,140/oz the actual in terms of spending on business for the full year of 2.17 million ounces annualised gold price received was suppliers and contractors, and 3% below the 2.22 million 12% below the long-term planning economic development spending, ounces reported in 2014 price of US$1,300/oz. If the price wages and salaries, taxes and royalties as well as interest and ❯❯ Strong cost management across received for the year was normalised dividend payments to capital the Group resulted in an to US$1,300/oz, then the free cash providers. This was slightly below outstanding cost performance with flow margin would have been 15% the total value creation of AIC of US$1,026/oz being 5% – in line with our stated target US$2.65 billion in 2014, as we below guidance for the year of ❯❯ Normalised earnings for 2015 reduced our capital and US$1,075/oz and 6% below the totalled US$45 million compared operational expenditures AIC of US$1,087/oz reported in with US$85 million in 2014 ❯❯ While energy consumption and 2014. If South Deep, which is still ❯❯ As a result of the strong cash water withdrawal increased by 7% in ramp-up, is stripped out then generation during the year, net and 17% respectively in 2015 – the Group’s AIC for the year would debt was reduced by a further with a concomitant rise in carbon have been US$944/oz (2014: US$73 million to US$1,380 million emissions – we also achieved US$1,020/oz), which (31 December 2014: energy savings of around demonstrates the robustness of US$1,453 million), stabilising the US$30 million amid greater the rest of the portfolio Group’s net debt to EBITDA ratio operational energy efficiencies. from 1.30 at the end of 2014 to Water reuse and recycling 1.38 at the end of 2015 improved by 1.7% 17 The Gold Fields Integrated Annual Report 2015
2.2 CEO report (continued)
Group performance This fundamental shift in strategy is account of net capital expenditure and scorecard embodied in our overarching environmental payments). Despite the strategic objective of generating a 31% decline in the average annual In 2015, Gold Fields adopted a 15% FCF margin at a gold price of price of gold between 2012 and 2015, Group performance scorecard that US$1,300/oz, which has become Gold Fields’ ability to generate cash incorporated the strategic priorities the core commercial driver and has improved substantially. During listed above and seeks to instil the guiding principle underpinning 2015 this was also aided by the right culture and behaviours amongst everything we do – from exploration weakening of the South African rand our workforce, driven by the strategic to production. and the Australian Dollar against the imperative of cash generation by US Dollar. the business. Why US$1,300/oz? Because we ❯❯ In 2012 Gold Fields (then including believe this is a sensible long-term Sibanye Gold) had negative net By integrating all of the key value price for bullion. The premise is that cash flow of US$280 million drivers into the business, the when the gold price trades above despite an all-time high average scorecard also aims to enhance the US$1,300/oz, the free cash flow gold price for the year of Group's sustainability. The scorecard margin will grow commensurately. US$1,656/oz consists of four key performance Conversely, when prices trade below ❯❯ In 2013, the first full year of the areas and elements against which US$1,300/oz, as we have seen since transformation process, Gold Fields we measure our performance. The 2012, the inclusion of the 15% free reduced its negative net cash flow four key performance areas are: cash flow margin at a gold price of to US$235 million despite a 16% financial performance; business US$1,300/oz provides Gold Fields with decline in the average gold price to optimisation; people; and, our social a safety cushion down to our cash US$1,386/oz during the year and licence to operate. A brief overview break-even level of approximately incurring restructuring costs of each area, broken down by the US$1,050/oz. The bottom-line is that ❯❯ In 2014, Gold Fields generated respective elements follows. the Group is focused on cash US$235 million of net cash, a a) Financial performance generation at all levels of the price cycle positive swing of US$470 million, and this drives our strategies, activities despite the average gold price The first key performance area in and culture. received once again falling by the Group scorecard is financial 10% to US$1,249/oz for the year. performance, as measured by cash The Group’s free cash flow margin The Group’s free cash flow flow generation and debt reduction as for 2015 was 8% despite the fact margin improved to a positive well as improving investor confidence. that, at US$1,140/oz, the actual gold margin of 13% price received was 12% below the ❯❯ In 2015, Gold Fields generated The impetus to improve the financial long-term planning price of US$123 million of net cash despite performance of the Group lies in the US$1,300/oz. the average gold price received strategic shift introduced in 2012, of again declining – by 9% – to replacing the then industry-wide Net cash flow US$1,140/oz. The free cash flow prevailing production growth Gold Fields today is in much better margin was 8% for the year philosophy, of ounces for the sake of shape than it was in 2012, when ounces, with a rigorous new focus measured by net cash flow (cash flow on growing the margin and improving from operating activities after taking free cash flow per ounce.
Cost reductions amid lower gold price and stable production Strong focus on cash generation (net cash ow1)
(Ounces) (US$/oz) (US$m) (US$/oz) 700,000 2,000 1,600 250 1,500 600,000 1,400 150 1,000 500,000 1,200 500 400,000 1,000 50 0 0
800 4
300,000 (50) 38 54 65 63 54 30 75 47 (500) 600 (29) (229) 200,000 (150) (45) (1,000) 400 100,000 (1,500) 200 (250) 0 0 (2,000) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2014 2015 2013 2014 2015 Attributable gold production Gold price All-in Costs Net cash ow Gold price (ounces) (US$/oz) (US$/oz) (US$m) (US$/oz) 1 Net cash ow from operating activities after taking account of net capital expenditure and environmental payments 18 The Gold Fields Integrated Annual Report 2015
Focus on cost ❯❯ The ongoing rationalisation and raising was significantly Central to our ability to generate free prioritisation of capital expenditure oversubscribed and the proceeds cash flow is a commitment to and, where appropriate, the were used to fund the February 2016 aggressive cost management. This deferral of capital investment buy-back of US$148 million of the continued to be reflected in the 6% without negatively impacting the US$1 billion 2020 bond. reduction in AIC during 2015, which short, medium and long-term brings the cumulative reduction in sustainability of our mines The effect of these transactions will be our AIC since 2012 to 33% in ❯❯ The cancellation of near-mine and a reduction in the net debt to EBITDA nominal terms. greenfields growth projects that ratio from 1.38x as at 31 December demonstrated inadequate returns 2015 to 1.21x, which gets Gold Fields During 2015, we were also able to ❯❯ The closure of the Group’s closer to achieving one of its key beat our cost guidance. Our original greenfields exploration and project strategic objectives of a net debt to guidance for AISC and AIC for 2015 development division and, where EBITDA ratio of 1.0x (p57). The was US$1,055/oz and US$1,075/oz appropriate, the sale of projects in repayment of debt, together with respectively, while our actual costs the project pipeline dividend payments, will remain the top for the year were US$1,007/oz and financial priority for the Company. US$1,026/oz respectively, an A key driver in reducing the Group’s improvement of 5% each on AISC and AIC is the South Deep Improving investor confidence guidance. mine in South Africa, which is still in In Gold Fields’ 2014 IAR, the Group build-up and not yet at steady-state published its Investor Charter for the While the bulk of the cost reduction levels of production. If South Deep is first time. The Charter embodies initiatives were implemented during excluded from the Group’s AISC and three core commitments aimed at 2013 and 2014, as described in our AIC for 2015, then the AISC and AIC regaining and growing investor 2014 Integrated Annual Report (IAR), would have been US$930/oz and confidence in Gold Fields: we continue to revisit every aspect of US$944/oz respectively, placing ❯❯ To build a quality portfolio of our operations to ensure the Gold Fields among the lowest-cost productive mines sustainability of previously captured gold producers worldwide. The ❯❯ To provide superior returns cost reductions, and to ensure that objective is for South Deep to reach ❯❯ To deliver on our promises new opportunities for cost reductions cash break-even by the end of 2016. are achieved. Amid the continued Gold Fields’ portfolio has undergone a decline in the gold price in 2015 our Debt reduction fundamental change since 2013. We focus shifted to reducing cash costs Gold Fields has long maintained the spun off the Sibanye Gold assets to and trimming non-essential capital position that its debt comfort zone is shareholders, eliminated marginal and we were careful not to cut our approximately 1.0 times net debt to mining as a practice at all of our assets, sustaining and growth capital EBITDA (Earnings before interest, stopped all projects in our growth expenditure critical to maintaining the taxes, royalties, depreciation and pipeline that did not provide an long-term integrity of our ore bodies. amortisation). Following the adequate return and, in October 2013, Over the past three years our total unbundling of Sibanye Gold and the acquired the Yilgarn South assets in annual capital expenditure was acquisition of the Yilgarn South assets Western Australia from Barrick Gold. US$739 million in 2013, in 2013, this ratio increased to The latter deal has proved a model for US$609 million in 2014 and approximately 1.5 times at the end of the kind of value-accretive acquisition US$634 million in 2015. 2013. During 2015, net debt was we are seeking in future, as we reduced by US$73 million to managed to pay off the US$262 million It is worth recalling the core elements US$1,380 million by the end of the consideration for the three mines in Q3 of our cost reduction programme year on the back of lowering the debt 2015, two years after the acquisition. implemented between 2013 and by US$282 million during 2014. The 2015. They included the following: net debt to EBITDA ratio at end-2015 The portfolio of operating assets is ❯❯ Trimming costs through elimination was 1.38 compared with 1.30 at the consistently reviewed in line with our of inefficiencies and productivity end of 2014. Although debt was again portfolio management strategy (p76). improvements reduced in 2015, the lower gold price During 2016, we expect to decide ❯❯ The elimination of marginal mining more than offset these gains on the the long-term future of our Damang at all of our operations net debt to EBITDA ratio. mine in Ghana and Darlot mine in ❯❯ The restructuring of all of our Australia. corporate, regional and operational In March 2016, Gold Fields structures successfully completed a R2.3 billion As mentioned before, we have ❯❯ The stabilisation of our workforce (US$150 million) equity raising by reduced the AIC by 33% over that at 9,052 employees and 7,798 way of a private placement of an period while turning around the cash contractors additional 5% of its shares to flow position of the Group with net institutional investors. The equity cash generated of US$235 million in 19 The Gold Fields Integrated Annual Report 2015
2.2 CEO report (continued)
2014 and US$123 million in 2015, safely we will not mine’. Nevertheless, The fatalities were an undoubted despite significant declines in the we reported three mining-related setback on our path to Zero Harm. gold price received. fatalities and one fatal shooting during However, our TRIFR continued to 2015 and my condolences once again improve during 2015 – by almost 16% Gold Fields has also made significant go out to the families, friends and to 3.4 recordable incidents per million progress in its ability to deliver on its colleagues of the deceased. hours worked – demonstrating that guidance and has, since 2013, the numerous regional safety consistently met or exceeded its Three fatalities occurred at the South programmes being implemented are Group production and cost guidance. Deep mine in South Africa and one yielding positive results. at the Tarkwa mine in Ghana: One operating asset in the Gold ❯❯ In March, Kennedy Katongo, a The Group has also intensified Fields Group that still has to be boilermaker, was injured at a operation-specific health and wellness brought to account fully is the South station tip. He succumbed to his programmes, focusing on improving Deep mine in South Africa. Here injuries in hospital three days later the physical and mental health of our we are targeting cash breakeven by ❯❯ Alberto Chiungo, a contracted employees. These are having a the end of 2016 with long-term locomotive operator, was fatally significant impact as the 53% decline production metrics to be published wounded in May, when he was early in 2017. in Noise Induced Hearing Loss caught between the loco and a submissions and the 40% reduction hopper during tramming in the number of Silicosis cases During 2015, we made considerable operations progress in ‘getting the basics right’ submitted last year illustrates. ❯❯ In August, Sbongiseni Ngqoleka, a at South Deep with improvements in security contractor, was shot and the three key performance areas that Quality portfolio of assets killed by armed robbers targeting we are focusing on: people, fleet In 2015, Gold Fields consolidated its copper cables at South Deep. Two and mining methodologies. As a position as a focused, leaner business other security personnel were result, the production and cash burn by pro-actively managing its portfolio injured in the same attack position of the project have improved of operating and growth assets. This ❯❯ In December, a spotter at Tarkwa, markedly through the second half active portfolio management Clement Aidoo, was struck and of 2015. approach requires an ongoing fatally injured by a truck when it strategic review of all existing assets reversed after dumping its load of We certainly believe that we have put as well as potential acquisition targets material the building blocks in place to restore against our strategic imperatives. The the confidence of our large shareholder aim is to improve the quality of our base and attract the long-term South Deep’s two fatal mine overall portfolio measured by the investors that seek value and long-term accidents and another serious improvement in cash generation and leverage to the gold price. accident at the mine led to Section sustainability of operations. It implies 54 orders being issued by the that we are prepared to trade existing b) Business optimisation Department of Mineral Resources, assets for better, new assets. Underpinning the financial placing a moratorium on mine- performance of the business is Gold related activities across the mine and The most obvious manifestation of Fields’ commitment to running its effectively stopping production for this was the 2013 unbundling of the operations safely, efficiently and a total of about 18 days. We fully Group’s conventional, deep-level cost-effectively without undermining support these orders and during underground mines in South Africa the long-term sustainability of our the year also conducted a to create Sibanye Gold and the mines. We measure the success of comprehensive mine-wide review of subsequent acquisition of Barrick business optimisation by looking at all safety protocols, procedures and Gold’s Yilgarn South assets in our progress on safety and wellness; standards at South Deep in line Western Australia. Gold Fields’ the performance of our portfolio of with the mandate to improve portfolio is now characterised by assets; the implementation of our the mechanised mining culture modern, fully mechanised open-pit growth strategy and setting up the at the project. Many of the and underground mining, with South Deep mine for long-term recommendations arising from diversified production spread across success. the review have already been three continents. implemented and are having a visible Safety and wellness impact on our safety performance. In this context, Gold Fields continued Safety is management’s first priority in The fatal accident at Tarkwa, the first to focus on improving the cash- running our operations, and it is critical at our Ghanaian operations in almost generation performance of its that we continuously emphasise that four years, has also led to a review of our first value is ‘if we cannot mine truck loading and driving procedures.
20 The Gold Fields Integrated Annual Report 2015
existing operations. During 2015, this Gold Fields believes that at the In 2015 we continued the disposal of included: current point in the price cycle projects that are not aligned with our ❯❯ Protecting the commercial near-mine exploration offers the best Group objectives: the Woodjam sustainability of its mines by route to low-cost ounce replacement project in Canada was sold, while avoiding high-grading and that can generate cash in the short the Arctic Platinum project in Finland stripping and investing in ore and medium term at our Australian remains earmarked for sale. development on an ongoing basis operations, which have a history of ❯❯ Brownfields exploration for reserve replacement. In 2015, Gold We continue to drill our Salares Norte life-of-mine extensions Fields raised its total near-mine project in northern Chile to assess its ❯❯ Production and strategic planning exploration expenditure by 20% to longer-term potential. based on the delivery of a 15% US$72 million, on top of the free cash flow margin at a gold US$60 million and US$32 million The Far Southeast project in the price of US$1,300/oz spent in 2014 and 2013 respectively, Philippines has also been retained in pursuit of this strategy. Much of in our portfolio and we maintain To ensure that our business has a this activity was focused on the optionality on this project. strong future, we have made Australia region, where the mines in continued exploration and the Gold Fields portfolio spent Gold Fields is also open to the development of our mines’ A$91 million (US$69 million) in 2015. possibility of further value-accretive underground and surface ore bodies a This builds on the A$64 million transactions similar to our acquisition strategic priority. These are among the (US$58 million) spent in 2014 and of the Yilgarn South assets in 2013. last activities we would cut, even in a A$34 million (US$32 million) in 2013. sustained low gold price environment To build on the work undertaken in South Deep and costs associated with maintaining 2015 we have budgeted A$86 million After a difficult 2014 and the the integrity of our ore bodies is built (US$63 million) for 2016. introduction of a new management into the mines’ cash-flow models. team, we took the decision at the Should gold prices go down to levels This is part of a multi-year strategy to start of 2015 to take a step back and of around US$1,000/oz or lower for a both replace and increase reserves ‘get the basics right’ at South Deep sustained period of time, we would and resources at the operations in to ensure a stronger foundation for need to look at a new operating and Australia. In addition to exploration sustainable growth in the future. The planning protocol at these lower drilling to extend current ore bodies, first six months of the year came with prices to protect the integrity of our activity was also focused on its own challenges as the new ore bodies. developing early-stage generative management team adopted a targets on the prospective leases. strategy of embedding an improved Growth Some successes can be recorded: safety and productivity culture as it Growth at Gold Fields is not just a ❯❯ St Ives’ Invincible mine has already set the mine up for the long-term. matter of increasing the Group’s produced over 131,000 ounces Mineral Resources and Mineral ❯❯ Work at Agnew has shown good However, the second half of the year Reserves or boosting the production potential at the Cinderella and FBH showed some early encouraging profile. It is about growing cash flow ore bodies indicators of improvement. per ounce and per share in the ❯❯ Exploration at Granny Smith has Production in the second half was medium and long term. Since 2013, indicated further mineralisation at 64% higher at 123,000 ounces this has resulted in: depth at the existing Wallaby than in the first half, with total ❯❯ The cessation of all early underground mine production for the year coming greenfields exploration activity ❯❯ Multiple targets have been in at 198,000 ounces (2014: ❯❯ Refocusing from greenfields identified across the lease at Darlot 200,500 ounces). In Q4, aided in exploration to lower risk, near-mine but more work needs to be done part by the rising rand gold price, exploration to improve the quality to scope these ore bodies the cash outflow from the project of ore feed and provide longevity was limited to R57 million down to our operations At our Damang mine in Ghana, work from R266 million in Q3. ❯❯ Disposing of growth projects that is continuing to evaluate the long- are marginal, located in higher-risk term growth potential of the mine. locations and/or are primarily The mine has a good ore body at focused on metals other than gold depth under the original pit that will ❯❯ Focusing on portfolio-enhancing, require a push-back to expose. value-accretive acquisitions We expect to announce a decision by mid-2016.
21 The Gold Fields Integrated Annual Report 2015
2.2 CEO report (continued)
We remain committed to our target experts, reviewed the de-stress being adjusted to ensure we build a of achieving a breakeven cash mining method. A strategic mine robust internal skills pipeline that can position by the end of 2016. Further, design change in the de-stress supply the skills that the business Gold Fields will provide an updated methodology and a conversion from needs, now and in the future. production ramp-up schedule early low profile (2.5 metres vertical height) Furthermore, we continue to in 2017, once our ‘back to basics’ to high profile (5.0 metres vertical entrench a high-performance culture programme has had more time to height) de-stress mining commenced that encourages people to meet and in the September quarter. By exceed their performance targets. be bedded down. year-end about 70% of the mine was Finally, employees need a work employing this approach, which, environment that supports optimal The three main focus areas at South even at this early stage, has already functioning and ensures they are Deep have been: contributed to simplifying and safe, healthy, balanced and derisking the mining process. The productive. People: To augment the current transition to high profile de-stress is skills base, South Deep recruited an expected to continue until the early The People strategy is reflected in our additional 164 skilled employees part of 2018. Group scorecard objectives for 2015: during 2015, mostly from the ❯❯ Training, development and talent platinum sector, which has a similar c) People management mechanised mining skills set. The The profile of our workforce was ❯❯ Employee engagement recruitment of identified critical skills profoundly impacted during the initial ❯❯ Performance management was 98% completed by the end of years of our transformation journey 2015. Importantly, most of the core (2012 – 2014) with large-scale A large portion of our workforce mining and engineering positions reductions in the number of in Ghana and South Africa is have now been filled. This has been employees and contractors. represented by a number of trade supported by intensified training However, since then, our human unions. We successfully engaged programmes for our existing staff, resource base has stabilised with with these trade unions during 2015 backed by the signing of a three-year 9,052 employees and and concluded wage deals in both wage deal with trade unions in 7,798 contractors on our books countries. In South Africa we opted March 2015. This will govern wages at the end of 2015. out of the centralised wage and other working conditions until negotiations and moved to March 2018 and should give South With the shift towards mechanisation company-level negotiations to reflect Deep a degree of labour stability as and automation, we have found that the different skills set at South Deep. the mine builds up. in addition to the continued In April, we signed a three-year development and training of our comprehensive wage deal that Fleet: During 2015, the South Deep workforce, it is also important to recognises the mechanised mining machinery and vehicle fleet were recruit the appropriate skills at our requirements of the project as we optimised and a total of 24 mines. At South Deep in 2015 we take South Deep to full production. Category 1 machines were delivered employed an additional In Ghana, talks with the trade unions to the mine during the year, with all 164 mechanised mining skills. continued into 2016. A deal was machines, except one, However, our strategy remains to concluded in Q1 2016, which commissioned before year-end. grow our own people through resulted in employees in Ghana An additional 24 machines will be focused internal training efforts. receiving a back-dated 5% salary acquired during 2016. These fleet During 2015, we spent over increase for 2015. acquisitions will mean that South US$12.4 million globally on training Deep would have replaced more and development – on top of d) Social licence to operate than half of its fleet by the end of recruiting the best mining skills to Despite a third year of adverse 2016, which should have a positive supplement the existing talent pool. market conditions in 2015, impact on availability and utilisation. Gold Fields continued to distribute The maintenance capacity at South Since the restructuring, our smaller, value to a wide range of Deep improved during the year yet more skilled, workforce has stakeholders, including employees, through the implementation of ensured that Gold Fields works more host governments, host supplier maintenance contracts in efficiently to improve productivities. communities, businesses and corridor 2 (approximately 35% of The key to this is that employees are suppliers as well as the providers total mining), as well as the incentivised to deliver against clearly of risk capital. commissioning of the 93 level defined performance targets that workshop. directly support the achievement of In 2015, our total value distribution business objectives. – reported according to World Mining method: During 2014 and Gold Council methodology – 2015, South Deep management, in Our remuneration strategy is evolving was US$2.43 billion collaboration with a team of leading to attract and retain these skills, and (2014: US$2.65 billion), with 69% international and local geotechnical our people development approach is going to businesses and suppliers 22 The Gold Fields Integrated Annual Report 2015
(2014: 69%), 8% to governments It takes substantial time, effort and local employment opportunities. This (2014: 7%), 18% to employees resources to establish and maintain a will require a significant investment in (2014: 18%), 5% to capital providers strong social licence to operate. training and skills development, but (2014: 5%) and 0.5% on socio- Increasingly, our ability to grow is an investment that is essential for economic development programmes Gold Fields through the expansion of our long-term sustainability. (2014: 1%) – mostly in host existing mines and the development communities. The slight decline in of new projects is determined by our Host community procurement and the overall value distribution was ability to build strong relationships employment are critical pillars of our largely due to a cutback in spending and trust with communities in our community investment strategies at all with business suppliers and partners operating areas. our operations in developing countries. amid lower operational expenditures. At present host community Gold Fields has invested heavily in employment accounts for 29% of our The success of our business is critically communities through social workforce in Peru, 50% at South Deep dependent on the relationship with a investment projects and, more and 67% at our Ghanaian operations. number of key external stakeholders recently, through Shared Value The respective numbers for host that determine both our regulatory and projects (see p118). However, it is community procurement spend are our social licences to operate: evident that mining companies need 7%, 10% and 9% respectively. In governments at national, regional and to expand and deepen their Australia 90% of our workforce and local level and, above all, the investment in and engagement with 66% of procurement is from Western communities that host our mines. host communities, who have found Australia, which is classified as the These stakeholders determine both our their voice and are rightfully seeking a host region. Gold Fields will continue regulatory licence and social licence to greater share of the benefits of mining. to look at ways to increase local operate, and we therefore devote employment and procurement considerable resources and energies in In response Gold Fields has opportunities in 2016. securing and maintaining these implemented a range of initiatives, in licences. This is not merely a addition to the work already being Shared Value compliance-based approach but one done, including: Our contribution to host communities that seeks to ensure that we win the ❯❯ Boosting the capacity of our is on a more sustainable footing now long-term support of governments and community relations teams that we have implemented the communities through the sustainable ❯❯ Working with peer companies to Shared Value approach to structure development of our mines and jointly address community needs, part of our investments in community projects. such as the alliance with Sibanye projects with a focus on social and Gold in the Westonaria economic benefits rather than just A number of elements are critical in municipality, home to our South social spend. We are gaining achieving the support of these Deep mine in South Africa valuable experience with each stakeholders: improved community ❯❯ Supporting the ability of the South project that we are undertaking. relations and the related development Deep Trusts as well as foundations of Shared Value projects and other in Peru, Ghana and Australia to To date, our regions have investment projects in these deliver benefits to host implemented five Shared Value communities, as well as the communities more effectively projects ranging from the promotion responsible management of ❯❯ Expanding the quantity and quality of mathematics and science environmental resources, particularly of Shared Value projects education among South Deep’s host water. These resources, if not communities to multilateral water managed sustainably, can have an At South Deep in particular, we have management projects at Cerro adverse impact on the environment intensified our community investment Corona and increased sourcing from or create social tensions with host work after we commissioned community suppliers at all our mines. communities, thus threatening our independent surveys among our host Our Ghanaian mines are working licences to operate. communities in Westonaria, which with government to build a tar road revealed a significant relationship gap to connect our two mines and Improved community relations between the mine and these adjacent communities. The communities in which we communities. operate are directly and often Reducing energy and carbon exclusively dependent on the Based on these findings, South emissions sustainability and growth of our Deep has strengthened and Energy remains a major performance mines. One of the biggest challenges restructured its community relations driver at 22% of Group operating facing mining companies is building and stakeholder engagement costs in 2015, having risen from 18% relationships and trust with these capacity. At the same time, the in 2013, amid increasing energy host communities, without which community investment programmes demand and supply constraints in all there is potential for operational are increasingly focused on sourcing of our operating regions. Unless we disruption, project delays and goods and services from enterprises act to find more cost effective and cancellations. in these communities and increasing alternative energy sources, this trend 23 The Gold Fields Integrated Annual Report 2015
2.2 CEO report (continued)
will continue in future. As part of the ensure sustainable production for (US$281 million) mainly as a result Integrated Energy and Carbon existing operations and the future of the opening up and development Management strategy, implemented viability of projects. of new ore sources at the various in 2013, each of our regions has set mines as well as higher expenditure energy reduction targets, which The Group water management on near-mine exploration across the have already delivered around guideline, implemented in 2014, region. US$30 million in cumulative savings focused on water stewardship, from 2013 to 2015 (against plans). including identifying opportunities to The region reported net cash inflow this equates to energy savings of enhance water reuse, recycling and of A$338 million (US$255 million) around 7% against our business conservation practices at all during 2015. plans over the period and had the operations. In 2015, the operations additional benefit of leading to 9% focused on identifying projects to Ghana savings in our CO -equivalent 2 support these objectives and by Gold Fields’ two mines in Ghana, emissions. year-end a total of 20 initiatives were Tarkwa and Damang, produced a listed, such as the use of in-pit tailings strong operational performance in At the same time, the regions have at our St Ives and Tarkwa mines. A 2015 with total managed gold been tasked with securing access to number of these initiatives are already production of 753,900 ounces which future energy sources. In Ghana, being implemented and they are was 2% higher than the 736,000 where our mines were asked by the expected to deliver multiple benefits. ounces produced in 2014. government to reduce their electricity These include cost savings, reduced consumption by 25% – 30% during impact in water scarce areas, Strong cost management ensured a 2015, the operations have reached improved regulatory compliance, 7% decrease in net operating costs an agreement with a private utility identification and mitigation of from US$551 million in 2014 to that will deliver the bulk of their water-related risks, reduction of mine US$513 million in 2015, while capital energy requirements within the next closure liabilities and enhancing expenditure increased from two years. In Peru and Australia, new Gold Fields’ social licence to operate. US$190 million in 2014 to long-term supply agreements have US$221 million in 2015. As a been signed with utilities. Operational overview consequence, AIC for the region of US$1,049/oz was 4% better than While South Deep has a long- Australia During 2015, the Group’s four mines the US$1,094/oz reported in 2014 standing agreement with the and 13% ahead of guidance. state-owned utility to implement in Western Australia – St Ives, Agnew, Darlot and Granny Smith – collectively The aggregate performance of the load-curtailment programmes, we region was outstanding, underpinned have solicited proposals for an delivered a strong operational performance, with gold production of by the strong showing of Tarkwa and on-site 40MW photovoltaic solar despite the significant operational plant. Other non-carbon energy 988,000 ounces at an AIC of A$1,211/oz (US$912/oz), which was challenges faced by Damang. The projects we are developing include a region as a whole reported net cash gas plant at our Granny Smith mine in line with full year guidance for the region of 983,000 ounces at an AIC inflow of US$44 million during 2015 in Australia to replace the diesel of which Tarkwa contributed power station. We also remain of A$1,210/oz (US$965/oz). AIC in US$76 million while Damang had a committed to our goal of 20% 2014 was A$1,124/oz (US$1,015/oz). negative cash flow of US$32 million renewable energy generation at all for the year. new projects. Greater use of Compared to 2014, production renewables creates power price and decreased by 4% from Damang's reduced output and supply stability and has the added 1,031,000 ounces mainly as a result higher costs have prompted benefit of reducing our carbon of planned lower production from Gold Fields to evaluate various future footprint, which is one of Gold Fields’ Granny Smith, Agnew and Darlot, options for the mine. We expect to key environmental priorities. offset by higher production from St Ives. Both St Ives and Granny complete this work before the middle of 2016 and announce a decision on Enhanced water management Smith exceeded their guidance for the mine's future then. Responsible water management the year, compensating for Darlot and remains a vital component of Agnew, both of which did not achieve Peru Gold Fields’ licence to operate and their guidance. social licence at all our operations Despite the significant decline in the and projects as water is becoming Net operating costs in the region price of copper during 2015, Cerro an increasingly scarce and expensive decreased by 7% from A$799 million Corona in Peru recorded a relatively commodity globally. Managing the (US$721 million) to A$747 million good performance with total risks around current and anticipated (US$562 million), mainly due to good managed gold equivalent production water security, which includes the cost control, while capital expenditure of 295,600 ounces in 2015, 6% quantity and quality of supply as well increased from A$304 million ahead of guidance. However, it was as associated costs, is essential to (US$274 million) to A$373 million 9% lower than the 326,600 ounces 24 The Gold Fields Integrated Annual Report 2015
produced in 2014, as a result of the achieved through transparent and Chamber of Mines, we are engaging lower copper price and a planned mutually beneficial relationships with the South African government on decline in gold and copper grades. governments at all levels (national, three key issues in 2016: the review regional and local), organised labour of the Mining Charter; the once- Net operating costs decreased by and host communities, who might empowered, always-empowered 9% from US$158 million in 2014 to disrupt our operations. Our corporate principle in Black Economic US$145 million in 2015, mainly due and regional management teams have Empowerment ownership of mining to good cost management and been tasked with intensifying companies; and, the finalisation of lower ore tonnes mined, while stakeholder engagements in 2016 to amendments to the Mineral and capital expenditure increased from ensure that we operate in a business Petroleum Resources Development US$51 million in 2014 to environment that allows us to operate Act. US$65 million in 2015. The region profitably to the benefit of these reported net cash inflow of stakeholders and others. As part of In Ghana, our appeal to government US$35 million during 2015. this, we have completed an extensive is to finalise and implement the relationship assessment exercise at long-awaited investment agreement Total AIC amounted to US$718/oz in South Deep and are starting this that is critical for Gold Fields to 2015 compared with US$316/oz in progress in Ghana and Peru in 2016. achieve a level investment playing 2014 due to lower gold sold, lower field with its peers in the country. by-product credits and higher capital The appeal to governments is Other investments in the sector expenditure, partially offset by lower net particularly urgent in South Africa would also be supported by a operating costs. On a gold equivalent and Ghana, where pending level playing field and without it, we only basis AIC rose from US$702/oz in legislation and regulations have the fear, the much-needed economic 2014 to US$777/oz in 2015. potential to adversely affect the growth linked to mining in Ghana mining sector. In Peru, poor relations will not occur. South Africa with communities and activists are At the South Deep mine production threatening the growth of the entire In Peru, the mining industry is working closely with government to remained steady during 2015 with mining sector and all stakeholders find joint solutions to the social and production of 198,000 ounces need to work together to address environmental issues that appear to compared with 200,500 ounces in these challenges. be the root causes for the distrust 2014, mainly due to lower grades, towards the sector by communities. partially offset by increased volumes. In South Africa, Gold Fields has Engagement with these communities Higher wage hikes and rises in other dedicated substantial human and and their representative organisations operating costs led to net operating capital resources towards meeting will have to be the critical next step. costs increasing by 13% from the targets of the 2010 Mining R2.66 billion (US$246 million) in 2014 Charter, including the equity I would like to reiterate a commitment to R3 billion (US$237 million) in 2015. empowerment target of 26% I have made on a number of Capital expenditure at South Deep ownership. We will commit similar occasions. For the mining sector to decreased from R994 million resources in achieving the continued transformation of the sector to make benefit all its stakeholders we have to (US$92 million) in 2014 to work in partnership to grow the R848 million (US$67 million) in 2015. South Deep truly representative of the South African population. mining economy – to expand, not shrink, the ‘mining pie’. Distributing AIC of R635,622/kg (US$1,559/oz) smaller slices of a shrinking mining in 2015 compared with AIC of True transformation will take time and cannot happen without the financial pie will inevitably lead to a gradual R602,363/kg (US$1,732/oz) in 2014 decline in the industry. due to lower gold sold and higher backing of investors, many of whom have fled the sector over the past operating costs, partially offset by Strategic priorities and lower capital expenditure. few years amid poor returns on their capital. We welcome the South guidance for 2016 South Deep’s net cash outflow African government’s commitment to The 2016 Group scorecard is reduced sharply from US$116 million engaging with the sector openly and displayed on the next page. in 2014 to US$80 million in 2015. honestly through Project Phakisa to devise an action plan for further The pillars of Gold Fields strategy are Progress on the re-basing of the growth and transformation that firmly in place and have successfully South Deep mine can be found on encourages renewed investment guided the transformation of the pages 21 and 73. in the industry. Group over the past three years. We do not envisage major changes to However, as it drafts critical policy this strategy in the year ahead, Stakeholder relations based on these engagements we though there has been a shift in Gold Fields’ prosperity in the short urge government to avoid additional emphasis in some of the key and longer term is – as I have stated fiscal or regulatory burdens that will performance areas, which has led to before – critically dependent on inevitably further stifle the growth of an adjustment to some of the societal acceptance. This can only be the sector. Directly, and through the measurements. 25 The Gold Fields Integrated Annual Report 2015
2.2 CEO report (continued)
Group scorecard
Sustainable free cash flow margin Meet production and cost guidance
Debt reduction Improved investor and Continue to use cash analyst confidence generation to pay off net debt Position our share price above the median of our peer group
Creating and sustaining Performance shared value management Develop three-year Measure, incentivise and procurement and local motivate employees to employment plans for deliver high-performance South Africa, Ghana and results Peru Improved talent Financial management Improved community relations Ensure the right people in the right jobs at the Develop and implement right time and deliver community engagement effective training strategies in each region programmes for the appropriate supply of Social skills licence to People operate Communication and engagement Mine closure and Improve engagement by implementing a water management two-way Put integrated post- communication closure water Business platform management plans optimisation Improved talent and in place in all regions management skills Create strong people Manage climate managers who are able to change risk attract, motivate and Undertake a risk-based manage a diverse gap analysis to further assess workforce operational vulnerability to Create a condusive climate change work environment Review the Employee Value Proposition for each region
Improve quality and growth Rebase South Deep of our asset portfolio to deliver Grow mineable resources that Achieve a cash neutral or cash maintain growth in FCF/oz and the positive position by end of average reserve life per operation 2016 and develop a framework through exploration and portfolio and system, as well as capacity to manage and management (acquisition, joint execute business improvement venture and/or disposal) projects Energy cost management Improved safety Implement action plans as practices detailed in the 2015 energy Implement and track security plan and upgrade behavioural-based safety programmes throughout energy efficiency plans Technology and Gold Fields innovation Design a technology strategy for each region with a three-year implementation plan
26 The Gold Fields Integrated Annual Report 2015
Gold Fields’ strategic review for 2016 Our portfolio of mines will continue Vote of thanks takes into account a continued to be evaluated in line with the I would like to express my gratitude depressed gold price and our operations' abilities to contribute to my fellow directors, led by our budgets have been built around an towards the growth of the average Chairperson, Cheryl Carolus. Their anticipated average gold prices of reserve life per mine and free cash sound experience and guidance to US$1,100/oz, A$1,500/oz and flow per ounce. In particular, we the executive management team R500,00/kg. This places renewed anticipate decisions on the long-term ensured that Gold Fields is reaping emphasis on business optimisation future of our Damang mine in Ghana the rewards of its transformation as a priority for our operations and and the Darlot mine in Australia. strategy, whose implementation we are guiding on an AIC of between Growth will be driven, in the main, demanded so much of their time, US$1,035/oz – US$1,045/oz and an through brownfields exploration at energy and wealth of experience. AISC of between US$1,000/oz – our mines though we are also I would also like to welcome Steven US$1,010/oz for 2016 compared aggressively looking at value- Reid to the Board. He joined in with the 2015 actuals of accretive acquisitions. February 2016 and brings with him US$1,026/oz and US$1,007/oz 35 years of experience in the respectively. Capital expenditure for An important addition to our 2016 mining industry. the year is forecast at US$602 million scorecard is Technology and (2015: US$634 million). Innovation, with our regions having The composition of the ExCo been tasked to develop and remained steady since January Our production guidance for the year implement three-year technology 2015, when Avishkar Nagaser joined is 2.05 – 2.10 million ounces, a plans in 2016. Gold Fields’ size still as Head of Investor Relations. The decline of at least 3% on the suggests that we do not necessarily ExCo team provided the renewed 2.16 million ounces achieved in have to be pioneers of research and energy, input and experience to see 2015. Notable changes in 2016 development in technology but fast the Group through the sometimes include a reduction in production adopters of best practice. However, difficult and painful restructuring and from the Australian region to recent advances in digitisation, is now ensuring that we stay the 901,000 ounces; the negative impact automation and mechanisation make course. Subsequent to year-end we of the lower copper price on Cerro it critical that we develop strategies have appointed Richard Butcher as Corona; lower production from to implement new technologies and Executive Vice-President Technical. Damang; and a 30% increase at partner with IT companies and He joined us from Australia’s MMG South Deep to 257,000 ounces. Original Equipment Manufacturers and will bring 30 years’ experience (OEMs) that are leaders in the field. in technical services in the mining The main expected contributors to We have appointed a new member industry to this new ExCo position. lower production in Australia in 2016 to our Executive Committee (ExCo) are as follows: to oversee our progress in this area. Finally, I would like to express my ❯❯ At Granny Smith, mining of lower sincere gratitude to all the employees grade areas of the mine on Zones Integrated thinking of Gold Fields who continue to 90 and 100 As I discussed last year, the astound me with the resilience, ❯❯ At St Ives, closure of Athena sustainability of our business is commitment and long hours they put underground mine and ensured by understanding the in to ensure the operational and outperformance on grade from linkages between all of the inputs financial success of the Group. The Neptune ore in early 2015 at and outputs of our operations, Gold Fields team rivals any of our St Ives enabling us to maximise the benefits peers in terms of experience, ❯❯ Deeper mining at Agnew and for all stakeholders and reduce the technical ability and, above all, timing to access the new high risks to the business. Integrated enthusiasm and energy. I am proud grade FBH and Cinderella ore thinking underpins this approach and to lead them. bodies while many of our processes and ❯❯ Limited mining planned at Darlot linkages are formalised they are not pending further exploration as fully articulated in our integrated success during the current year reporting. This will be one of my priorities in 2016; the objective will The 30% increase in production from be to explain in greater detail how Nick Holland South Deep is expected to be driven integrated thinking is factored into CEO mainly by an increase in available our business decisions. Our working places, an increase in integrated reporting will be an output productivity, fleet replacement and of this thinking. grade improvements.
27 The Gold Fields Integrated Annual Report 2015
2.2 CEO report (continued)
The mine of the future – looking ahead
This is a summary of a presentation Gold Fields’ CEO, Nick Holland, gave at the Future Mining Conference 2015 hosted by the Australian Institute of Mining & Metallurgy in Sydney in November last year. The full presentation can be found on our website at www.goldfields.co.za/pdf/presentations/2015/gold_fields_mine_of_the_future_28102015.pdf
Gold mining remains relevant and At Gold Fields, we recognised that class technologies and equipment at valuable in today’s global economy. a new recipe is required for the various levels of automation. It But for mines to prosper in the long Company – and the industry – to makes sense for mines to contract term they have to transform overcome these challenges. The OEMs to utilise their expertise. This is themselves into mines of the future gold mine of the future has to be particularly critical in South Africa’s – mines that are sustainable and set-up, structured and managed gold industry, where the next big create value for all their stakeholders. differently from what it is today if it is mining drive will have to take place in to remain relevant and value-adding ever deeper and dangerous Gold mining’s contribution to the to all its stakeholders. This will conditions. Technologies such as global economy is significant: 60% of require a focus on four key areas: remote pillar mining and raise boring the top 30 gold-producing countries operating practices and technology, will only be possible in co-operation are in the low or lower-middle talent and leadership, partnerships with OEMs and technology income bracket. Over US$171 billion with key stakeholders and industry companies. per annum is added to total GDP partners as well as governance and from mining. The global gold mining transparency. At South Deep, Gold Fields is in industry employs 4.2 million people many ways pioneering bulk, deep- directly and indirectly, with a 5 – 10 The key operational challenges level, mechanised gold mining on dependency ratio for each direct confronting gold mining can be a significant scale. The skills of employee. Despite what the gold grouped under five major headings: operating and optimising of bears think and say, gold has ❯❯ Embracing digital mining, equipment don’t come easy in continued to be a safe haven during advanced analytics and new a mining culture that has been times of world crises, from the oil software technologies overwhelmingly conventional mining. shock of 1975, the Soviet/Afghan ❯❯ Mining on demand, being the But we are making gradual progress war and Iranian revolution in the early ability to run agile production in setting the base for what could 1980s, the stock market crash in schedules well be South Africa’s last major 1987 and the latest financial crisis ❯❯ Converting conventional mining gold mine. that started in 2008. practices to mechanisation and automation A number of technology companies However, of late the industry has ❯❯ Improving the economics of low are working on software advances in been confronted by a number of grade and residual ore bodies mining, which can be grouped under headwinds, which present significant ❯❯ Embracing energy and water the ‘Big Data’ heading, where data risks to its long-term wellbeing. efficiencies is captured by various sources, Today it takes an average of 18 years digitised, analysed and finally from discovery of gold to first Optimising existing technologies and leveraged for better decision-making. production compared to 10 years a new technologies will provide the This has multiple applications for decade ago. While the grade of gold solutions to these challenges, but mines, such as geological mapping, has fallen 3% per annum since adoption by the industry has been geotechnical design, fleet tracking 2000 and prices are dropping, cost slow, particularly in developing and operator safety. We believe that inflation is ever-present. Both countries. Mines in Australia on the such technologies will provide us governments and communities are other hand have been rolling out new with the edge to fundamentally demanding greater benefits and technologies with a significant impact change our cost structure and incidents of clashes with local on costs, productivities and safety. If improve safety. To meet these communities have risen 22% per mines in other countries want to be technical challenges, the mining year over the past 10 years. sustainable they will have to follow workforce of the future needs to be this course. highly skilled, specialised and Throw in a gold price that has trained. Mining companies and declined by around 35% since its A further feature of the mining universities will need to work peak in September 2011, and it is industry’s technological together to develop and train the not surprising that the sector has transformation will be ever-closer personnel required. seen shareholder value slump by co-operation with OEMs. These between 50% – 80% since 2007. OEMs develop and operate best-of-
28 The Gold Fields Integrated Annual Report 2015
Without a doubt, the mine of the capacity constraints. Whether this I also believe that our employees and future will have a high-level skills set trend will lead to a more formal trade unions need to embrace a that will lead to a smaller overall consolidation of the gold sector risk-reward relationship with the workforce. This creates a dilemma remains to be seen. mines that will see them sharing the for many gold miners as adjacent risks in downtimes and participating communities rely on them for jobs The main benefits mines provide to in the rewards of strong earnings and procurement. We need to find society are job creation and paying growth in better times. Wage a new model for community taxes and royalties. But increasingly increases linked to productivity- engagement where we train some we are also seeing governments and based performance are also likely to community members for the new miners work together in private- become the norm in future. mine, but where we also encourage public partnerships, developing the development of the local essential road, power and water Another area of focus for the mine economy, so it is not reliant on jobs infrastructure and supporting local of the future is transparency, in or services from mining alone. While governments in building educational operational and financial performance, today’s mining CEO manages and medical facilities. These social development, managing assets, tomorrow’s leaders will be partnerships, I believe, will increase environmental impact, regulatory strategists, focusing on coaching in size and scope in future. adherence and corporate governance. and mentoring, integrated The world is becoming more stakeholder management, In so far as communities are accountable and as mining collaborative decision-making and concerned, we believe that the most companies, we need to embrace the managing a portfolio of mines. direct benefits for communities can change and meet the new standards. Operating decision-making will be be achieved by implementing Shared devolved down to mine site level. Value projects in these communities, Future gold mines will not succeed where they and the mine itself benefit without the support of shareholders, Forging partnerships, with an from the creation of sustainable governments, employees and emphasis on joint ownership, risk value. Should we go further than this communities. They are rightfully management and shared benefits, by considering giving communities demanding to see the benefit of the will be an essential element of the direct equity or participation in profit resources we mine. This brings with mine of the future. One of the trends sharing in the mines in their area? it many challenges but through already in evidence is that mining That is something we, as the open engagement and partnerships, companies are increasingly co- industry, should start debating as it I believe we can create a successful operating in developing and could certainly assist in earning and gold mining company of the future. managing gold mines to achieve maintaining our future social licences economies of scale and address to operate.
❯ Employee in training at South Deep 29 The Gold Fields Integrated Annual Report 2015
❯ South Deep processing plant 30 The Gold Fields Integrated Annual Report 2015 2.3 Corporate governance
Overview The Board takes ultimate The Board is kept informed of all Our vision of global leadership in responsibility for the Company’s developments relating to the Group, sustainable gold mining, and our adherence to sound corporate primarily through the executive ability to fulfil our stakeholder governance standards and sees to it directors, executive management promises requires the highest levels that all business decisions and and the Company Secretary. of corporate governance. This judgements are made with Furthermore, the Board stays means an approach to governance reasonable care, skill and diligence. up-to-date through a number of that supports the proactive and other mechanisms, including effective management of those In terms of the Memorandum of employee climate surveys, strategic dynamics that will ultimately Incorporation (MOI), the number of newsletters and internal staff determine our long-term directors shall not be less than four and communication, among others. sustainability, whether operational, not more than fifteen. The Board economic, social, environmental or currently comprises 10 directors, two Directors are required to declare otherwise. of whom are executive directors and personal interests on an annual basis eight are independent non-executive and conflict of interest declarations This approach is essential given the directors. Advised by the Nominating are done quarterly and at Board long-term, capital-intensive nature of and Governance Committee, the meetings. Should a conflict of our mining projects, as well as the, at Board ensures that the election of interest arise its is dealt with in terms times, challenging social and political independent directors falls on reputable of the Companies Act by the Board. contexts in which we operate. It persons of well-known competence requires us not only to ensure our and experience, who are willing to The non-executive directors are business remains profitable but also devote a sufficient part of their time to entitled to seek independent to deliver clear economic, social and the Company. Each Board member professional advice, at the Group’s environmental benefits to our offers a range of relevant knowledge, expense, on any matters pertaining stakeholders. expertise and technical experience and to Gold Fields. They also have business acumen, which enables them unrestricted access to the Group’s Our management approach is to exercise independent judgement in management and access to the underpinned by our commitment Board deliberations and decision- external auditors, when necessary. to sound and robust corporate making. Furthermore, the Nominating A brief curriculum vita for each governance standards, which are and Governance Committee also Board member is set out on pages essential to our ultimate operational ensures that the Board has adequate 36 – 37 of this report. and strategic success. A key element diversity in respect of race, gender, of the approach is to ensure that the business, geographic and academic Chief Financial Officer Company complies with all laws and backgrounds. Paul Schmidt was appointed Chief regulations as well as the highest Financial Officer (CFO) from 1 January levels of corporate governance. The role of non-executive directors, 2009. In accordance with the JSE who are independent of Limited Listings Requirements, the Board of Directors management, is to protect Audit Committee considered and shareholders’ interests, including Board overview agreed unanimously that the level of those of minority shareholders. expertise and experience of Paul The Board of Directors is the highest Furthermore, they ensure that Schmidt was satisfactory during 2015. governing authority of the Group and individual directors or groups of the Board's Charter articulates its directors are subject to appropriate The Audit Committee was of the objectives and responsibilities. scrutiny in their decision-making. opinion that Mr Schmidt, together with Likewise, each of the Board sub- other members of his financial committees operates in accordance The roles of the Chair of the Board management team, had managed the with its written terms of reference, and the CEO are kept separate. Group’s financial affairs effectively which are reviewed on an annual Non-executive director Cheryl during the 2015 financial year. basis by the various Board Carolus was the Chair of the Board committees. During 2015, the Board and Nick Holland the CEO of Gold approved the establishment of a Fields for the entire period under separate Risk Committee (p34). review.
31 The Gold Fields Integrated Annual Report 2015
2.3 Corporate governance (continued)
Board appointments and Directors’ dealings in shares of directors’ responsibilities under the rotation Gold Fields Charter include: Directors are appointed through a Gold Fields Board members and ❯❯ Determining the Company’s Code of formal process, and the Nomination employees are informed of closed Ethics and conducting its affairs in a and Governance Committee assists in and prohibited periods for share professional manner, upholding the identifying suitable candidates and dealings by the Company Secretary. core values of integrity, transparency evaluating candidates from time to Closed and prohibited periods and enterprise time. The Chair is appointed on an remain in force until final annual and ❯❯ Evaluating, determining and annual basis by the Board after a now bi-annual results are published. ensuring the implementation of review of the Chair’s performance This was done on a quarterly basis corporate strategy and policy and independence. In line with during 2015. Similar closed periods ❯❯ Determining compensation, recommendations by the King III Code, will be in place should the company development, and other relevant the Board carries out a thorough trade under a cautionary policies for employees evaluation of the independence of announcement. Any directors’ ❯❯ Developing and setting best- directors annually and specifically dealings (including executive practice disclosure and reporting where Board members have served on directors) require the pre-approval of practices that meet the needs of the Board for nine years or more. the chairperson and the company all stakeholders secretary keeps a register of ❯❯ Authorising and controlling capital The Nominating and Governance such dealings. expenditure and reviewing Committee also develops and investment capital and funding facilitates an induction programme with Board remuneration proposals ❯❯ Constantly updating the risk management for new members of the Non-executive board members are management systems, including Board to ensure their understanding of remunerated for their services as setting management expenditure Gold Fields and the business non-executive board members, the authorisation levels and exposure environment in which it operates. separate committees’ they sit on limit guidelines annually, and where applicable, travel ❯❯ Reviewing executive succession In accordance with Gold Fields’ MOI, expenses to attend board meetings. planning and endorsing senior one-third of all directors (including Shareholders approve these fees on executive appointments, executive directors) shall retire from an annual basis at the Company’s organisational changes and office at each Annual General Meeting. Annual General Meeting. The first to retire are those directors general remuneration policies. In this, the Board is guided by the appointed as additional members of Further details on non-executive Remuneration Committee as well the Board during the year, followed by directors and executive directors’ as the Nominating and the longest serving members. Retiring remuneration can be found on Governance Committee directors can be re-elected page 135. immediately by the shareholders at the Company Secretary Annual General Meeting. Board of Directors’ Charter The Company Secretary provides During the year, the Board reviewed The Board, assisted by the company secretarial services, oversees the Board of Directors’ Charter to Nominating and Governance Board governance processes in align it to the recommendations of Committee, recommends the relation to the Board (in accordance the King III Code of Corporate eligibility of retiring directors (subject with JSE Listings Requirements) and Governance (King III). The application to availability and their contribution to attends all Board and Board of the King III principles at Gold the business) for re-appointment. Committee meetings, other than the Fields can be found on our website The MOI can be found on the Gold Remuneration Committee. The Board at http://www.goldfields.co.za/au_ Fields website at http://www. has access to the Company Secretary, standards.php. goldfields.co.za/au_standards.php. who guides the directors on their duties and responsibilities. During the year The Charter compels directors to The Board appointed Rick Menell as under review, the Company Secretary promote the Vision of the Company Deputy Chair, effective 19 August oversaw ongoing training of the while upholding sound principles of 2015. After year-end Steven Reid directors and assisted the Board and corporate governance. Other joined the Board as an independent its committees, with annual plans, non-executive director. agendas, minutes and terms of reference.
32 The Gold Fields Integrated Annual Report 2015
The Company Secretary for the year Board attendance All directors are provided with the under review was Lucy Mokoka, The Board is required to meet at least necessary information through and the Board is satisfied that four times a year. It convened six times comprehensive Board packs prepared Ms Mokoka is competent, qualified during 2015 as two special Board by management in advance of each and has the necessary expertise and meetings were held to deliberate on Board or committee meeting to enable experience to fulfil the role. The urgent substantive matters. A meeting them to discharge their responsibilities Company Secretary is not a director of the Board may be conducted by effectively. of the Group and has an arm’s-length electronic communication in terms of relationship with the Board. the Board Charter.
Number of Board meetings, Board committees meetings and directors’ attendance during the year
Safety, Nominating Special Health and Capital Social and and Board Board Audit Sustainability Projects Remuneration Ethics Governance Directors Meetings Meetings Committee Committee Committee Committee Committee Committee No. of meetings 4 2 71 4 4 4 4 4 per year CA Carolus2 4 2 – 4 2 4 4 4 K Ansah2 4 2 – 4 – – 2 4 AR Hill 4 2 – 4 4 4 4 – NJ Holland 4 2 7 4 4 4 4 4 RP Menell 4 2 7 4 4 – 4 – DN Murray 4 2 – 4 4 – 4 – DMJ Ncube2 4 2 7 1 – 4 4 4 PA Schmidt 4 2 7 – – – – – GM Wilson 4 2 7 – 4 4 4 – ‘–’ denotes that the Board member is not a member of the Committee
1 This included a second, unscheduled, review meeting of the Integrated Annual Report 2 During the latter part of 2015, it was agreed that certain Board Members attend the following Committees as invitees going forward. CA Carolus – Capital Projects Committee, K Ansah – Social and Ethics Committee and DMJ Ncube – Safety, Health and Sustainability Committee
33 The Gold Fields Integrated Annual Report 2015
2.3 Corporate governance (continued)
The Board agenda and meeting Similarly, the Group’s reporting in Gold Fields' risk management structure focuses on strategy, terms of Section 3.84 of the JSE processes. Given the increased sustainable development, finance, Listings Requirements on Board significance of risk management it performance monitoring, governance Governance processes can be found was decided to move it under a and other related matters. During the at https://www.goldfields.co.za/ standalone subcommittee. period under review, the Board au_standards.php. Committees operate in accordance meetings and some committee Board committees with written terms of reference meetings were preceded by closed and have a set list of responsibilities. session meetings of non-executive The Board has established a number These are outlined at https://www. directors. The Board members also of standing committees in goldfields.com/au_standards.php. attended a multi-day strategy session compliance with the South African The charters of the Board and the on the Company. Companies Act with delegated committees can be found at https:// authority from the Board. The www.goldfields.co.za/au_standards. Application of King III within committee members are all php. Gold Fields independent non-executive directors, In addition, the committees The Board’s Charter is aligned to the and the CEO and various members of management are permanent are required to evaluate their King III corporate governance report invitees to the committee meetings. effectiveness and performance on and is reviewed annually. King III is Each Board committee is chaired by an annual basis and to report the endorsed by the JSE Limited and an independent non-executive respective findings to the Board for certain aspects of King III are director. consideration. In line with the King III included in the JSE Listing recommendations, the Board Requirements. The Board supports In February 2016, the Board annually reviews the terms of the recommendations on good reviewed the membership and reference for all committees, and, if governance contained in King III. structure of the Risk Committee, necessary, adopts changes which The implementation and adherence which historically was the sole are approved by the Board. to relevant King III principles and responsibility of the Audit Committee. The full Directors’ Report is recommendations across Gold Fields This Committee will continue to contained in the Annual Financial can be found at https://www. assist the Board in its oversight of Report on pages 35 – 42. goldfields.co.za/au_standards.php. the integrity and effectiveness of the
Board of Directors
Safety, Health Capital Projects Nominating and Social and Risk Audit Remuneration and Sustainable Control and Governance Ethics Committee Committee Committee Development Review Committee Committee Committee Committee
Executive Committee
34 The Gold Fields Integrated Annual Report 2015
Standards, principles and systems Internal and external standards and principles
Internal standards and Business ethics and principles Listings requirements Sustainability standards standards
Gold Fields has developed a Our primary listing is on the Our Sustainable Our Code of Ethics is comprehensive set of internal JSE Limited (JSE) and we Development Framework is aligned with national and standards and principles that are subject to the JSE guided by the International international business underpin how we do business. Listings Requirements Council on Mining and ethics and anti-corruption These include: Metals’ (ICMM) 10 standards, including the Gold Fields has a principles on sustainable UN Convention against Our Vision and Values: secondary listing on the development, their Corruption (2003) and the Everything that we do to New York Stock Exchange supporting position OECD Convention on achieve our Vision of (NYSE) and therefore, as a statements and external Combating Bribery of becoming the global leader in foreign issuer, subject to assurance thereof Foreign Public Officials in sustainable gold mining is the NYSE Listings International Business informed by our Values. These Requirements, the We are guided by the Transactions (1997) are applied by our directors, as provisions of the US 10 principles of the UN well as employees at every Securities and Exchange Global Compact (in which We support the principles level of the Group Commission, as well as the we are a participant), and processes of the terms of the Sarbanes- including their Extractive Industry Board of Directors’ Charter: Oxley Act (2002) implementation in our Transparency Initiative The Charter articulates the business activities, and the (EITI), through our objectives and responsibilities Gold Fields is also listed on annual submission of the membership of the ICMM. of the Board. Likewise, each of the Swiss Exchange (SWX) Communication on Ghana and Peru are the the Board committees Progress Report EITI-compliant countries in operates in accordance with We have implemented which we operate written terms of reference that South Africa’s King III All of our eligible operations are regularly reviewed principles and conform with the World King III as well as the recommendations Gold Council Conflict-Free Prevention and Combating Sustainable Development across Gold Fields Gold Standard. A copy of of Corrupt Activities Act Framework: our Conflict-Free Gold (2004) Gold Fields’ Sustainable Report, our Statement of Development Framework is Conformance, together The United States’ based on best practice, as with the independent Sarbanes-Oxley Act (2002), well as our operational limited assurance opinion Dodd-Frank Act (2010) and requirements. The framework can be viewed online at the Foreign Corrupt is governed by an overall https://www.goldfields. Practices Act (1977) Sustainable Development co.za/sus_reporting.php Policy All relevant regulations and Our reporting is guided legislations in jurisdictions The Group has developed a by the internationally in which Gold Fields range of guidelines that directs recognised Global operates business conduct in those Reporting Initiative (GRI) areas (https://www.goldfields. G4-Core Sustainability com/au_standards.php) Reporting Guidelines, including the Mining and Code of Ethics: Metals Sector Supplement. The Gold Fields Code of Ethics Our 2015 GRI submission commits and binds every can be viewed online at employee, officer and director https://www.goldfields.co. within Gold Fields to za/sus_reporting.php conducting business in an ethical and fair manner. The A number of environmental Board’s Audit and Social and and safety standards, Ethics Committees are tasked including ISO 14001, with ensuring the consistent OHSAS 18001 and the application of, and adherence International Cynide to, the Code. The Code is on Management Code our website at https://www. goldfields.com/au_ethics.php 35 The Gold Fields Integrated Annual Report 2015
2.3 Corporate governance (continued)
2 3 4
5 1
❯ From left: Cheryl Carolus – Chairperson, Richard Menell – Deputy Chair, Kofi Ansah, Alan Hill, David Murray
Directors 2. Richard P Menell (60) 1984 to 1999, he was the Chief Executive Deputy Chair of the Ghana Minerals Commission. He is BA (Hons), MA (Natural Sciences currently a mining and energy consultant. Non-executive directors Geology), Cambridge; MSc (Mineral Exploration and Management), Stanford 4. Alan R Hill (73) 1. Cheryl A Carolus (57) University, California BSc (Hons); MPhil (Rock Mechanics), Chair Leeds University BA Law; Bachelor of Education, Mr Menell was appointed a director of Mr Hill joined the Board on 21 August University of the Western Cape Gold Fields on 8 October 2008 and was appointed as Deputy Chair on 19 August 2009. On 2 October 2010, he was Ms Carolus was appointed a director of 2015. He became a non-executive director appointed the CEO and executive Chair Gold Fields on 10 March 2009 and was of Sibanye Gold on 1 January 2013. of Teranga Gold Corporation and appointed as the Chair on 14 February Mr Menell has over 37 years’ experience in non-executive Chair in 2013. After 2013. She is Executive Chair of Peotona the mining industry, including service as graduating, Mr Hill worked for a number of Group Holdings. She is a director of a President of the Chamber of Mines of mining firms before joining Barrick Gold in number of other public and private South Africa, President and CEO of Teal 1984. He spent 19 years with Barrick from companies, including Investec and Exploration & Mining, as well as executive which he retired in 2003 as Executive De Beers, and she also serves pro bono Chair of Anglovaal Mining and Avgold. Vice-President: Development. on non-profit organisations, including the He is a director of Weir Group Plc and World Wildlife Fund and The British Rockwell Diamonds Inc, as well as Senior 5. David N Murray (71) Museum. She served as South Africa’s High Adviser to Credit Suisse. He also serves BA (Hons) Econ; MBA, University of Commissioner to the United Kingdom from as a director of a number of unlisted Cape Town 2001 to 2004, Chairperson of the South companies and non-profit organisations. Mr Murray was appointed a director of African National Parks board for six years Gold Fields on 1 January 2008. He has and Chairperson of South African Airways 3. Kofi Ansah (71) more than 40 years’ experience in the from 2009 to 2012. She was awarded an BSc (Mechanical Engineering), UST mining industry and has been CEO of Rio honorary doctorate in law from the Ghana; MSc (Metallurgy), Georgia Tinto Portugal, Rio Tinto Brazil, TVX Gold University of Cape Town for her contribution Institute of Technology Inc, Avgold and Avmin. He also served as to freedom and human rights. In 2014, she a non-executive director of Ivernia Inc. was awarded the French National Order of Mr Ansah was appointed a director of Gold Merit by the Government of France. Fields in April 2004. He also serves as a director of Ecobank (Ghana) Limited. From
36 The Gold Fields Integrated Annual Report 2015
10 7 9
6 8
❯ From left: Donald Ncube, Steven Reid, Gayle Wilson, Nicholas Holland, Paul Schmidt
6. Donald MJ Ncube (68) He has served as a director of Silver Executive Directors BA (Economics) and Political Science, Standard Resources since January 2013 Fort Hare University; Postgraduate and a director of Eldorado Gold since Diploma in Labour Relations, Strathclyde May 2013. He served as Chief Operating 9. Nicholas J Holland (57)
University, Scotland; Graduate MSc Officer of Goldcorp from January 2007 Chief Executive Officer (CEO) BCom, BAcc, University of the (Manpower Studies), University of until his retirement in September 2012, Witwatersrand; CA(SA) Manchester; Diploma in Financial and was the company’s Executive Vice Management; Honorary Doctorate in President, Canada and USA. Before Mr Holland was appointed an executive Commerce, University of the Transkei joining Goldcorp, Mr Reid spent 13 years director of Gold Fields in 1997 and at Placer Dome in numerous corporate, Mr Ncube was appointed a director of became CEO on 1 May 2008. Prior mine management and operating Gold Fields on 15 February 2006. to that, he was the Company’s CFO. roles, including country manager for Previously, he was an alternate director of Mr Holland has more than 36 years’ their Canadian operations. He also Anglo American Industrial Corporation and experience in financial management, held leadership positions at Kingsgate Anglo American Corporation, a director of of which 26 years were in the mining Consolidated and Newcrest Mining, AngloGold Ashanti as well as non- industry. Prior to joining Gold Fields, where he was responsible for running the executive Chair of South African Airways. he was Financial Director and Senior Asian and Australian operations. He is currently executive Chair of Badimo Manager of Corporate Finance at Gencor. Gas and Managing Director of Vula Mining Supplies. 8. Gayle M Wilson (71) 10. Paul A Schmidt (48) BCom; BCompt (Hons) Unisa; CA(SA) Chief Financial Officer (CFO) 7. Steven Reid (60) Ms Wilson was appointed a director on BCom, University of the Witwatersrand; BCompt (Hons), Unisa; CA(SA) Bachelor of Applied Science in Mineral 1 August 2008. She was previously an Engineering (Mining), South Australia audit partner at Ernst & Young for 16 years, Mr Schmidt was appointed CFO on Institute of Technology; MBA, Trium where her main focus was on listed gold 1 January 2009 and joined the Board NYU/LSE/HEC; Directors’ Education and platinum mining clients. She was lead on 6 November 2009. Prior to this, he Program, Institute of Corporate Directors partner on the global audit of AngloGold held the positions of acting CFO from Ashanti and other mining clients during her Mr Reid was appointed as a director 1 May 2008 and Financial Controller from career included Northam Platinum, of Gold Fields on 1 February 2016. 1 April 2003. He has more than 20 years’ Aquarius Platinum, Avmin (now African He has over 35 years’ international experience in the mining industry. Rainbow Minerals) and certain Anglo business experience and has held senior Platinum operations. leadership roles in numerous countries.
37 The Gold Fields Integrated Annual Report 2015
2.3 Corporate governance (continued)
Compliance and ethics A Group compliance index has been External organisations Gold Fields is committed to acting developed to accommodate Increasingly, the reputational and responsibly, honestly and with respect changes within the business, operational risks of companies are for others. This means going ‘beyond applicable statutes, as well as tied to external parties who form part compliance’ and applying the highest compliance and regulatory risks. The of a company’s value chain and Gold ethical standards, so the Group can programme and associated internal Fields strives to develop and continue to enjoy the confidence of its controls will be assured by maintain strong relationships with investors, business partners, management, internal audit and these parties. During 2015, Gold employees, host governments and external assurers on an annual basis. Fields implemented a due diligence community members. application to establish the risk Ethics profiles of external suppliers and Legal, ethical and regulatory Gold Fields has a zero tolerance contractors by monitoring a range of compliance approach to any activities that local and international databases. Regulatory compliance undermine the legitimate business The application concentrates on the environment and all directors and financial, environmental, social, As Gold Fields operates in various employees are bound by its Code of governance and labour performance jurisdictions, the legal and regulatory Ethics. The Code articulates Gold of the external parties. environment is an ever changing one Fields policy with respect to an array which can lead to complex matters. of activities, transactions, The outcomes of the screening In order to manage this effectively engagements and conduct. exercise are filtered through to and efficiently, and enhance risk Implementation of the Code is regional risk management processes mitigation strategies, Gold Fields has supported by: and used by the regions to decide established a risk-based Group ❯❯ An online ethics portal on the appointment of external compliance programme to provide ❯❯ Well-defined responsibilities and suppliers and contractors and, where the highest levels of assurance for accountabilities applicable, the continuation of regulatory compliance. In terms of ❯❯ Stringent internal reporting existing relationships. the programme, Gold Fields: processes ❯❯ Identifies and consistently reviews ❯❯ An anonymous whistle-blowing Gold Fields’ procurement processes all statutes in its operating hotline managed by an are designed to ensure suppliers jurisdictions and assesses the independent third party (Deloitte) adhere to the Group’s policies and exposure to non-compliance and ❯❯ Annual training for all employees, standards. All agreements entered regulatory risks especially training for those in into by suppliers and contractors ❯❯ Ensures that the internal control high-risk roles require suppliers to comply with all environment is aligned to ❯❯ Gold Fields is rolling out training to relevant legislation, best practice prioritised risks encompassed in suppliers on ethics and regulatory standards and Gold Fields policies statutory requirements matters in our various jurisdictions and procedures that the Group ❯❯ Conducts reviews by Internal Audit adheres to. Furthermore, Gold Fields to assess that appropriate Breaches of the Code will result in has the right to audit the supplier or measures are implemented and disciplinary action, which can lead to contractor’s processes to ensure that controls are effective to dismissal or even criminal prosecutions. compliance. Furthermore, on a mitigate and manage risk The Code of Ethics can be found on regular basis, all suppliers are Gold Fields’ website at www.goldfields. required to attest to their compliance com/au_ethics.php. with all applicable regulations governing their business.
38 The Gold Fields Integrated Annual Report 2015 2.4 Operating context
Strategic trends strategy and the volatility of the price The gold price continued to decline Like other companies, Gold Fields over the past few years has been in 2015 by 8% year-on-year amid is subject to a range of external one of the key reasons for the slowing demand and fears of an strategic dynamics that inform restructuring journey on which we interest rate hike in the US – which decision-making, and influence both have embarked. did not materialise. On balance, the current and future business negative supply and demand trends performance. Analysis of three of Much of the traditional investor case have seen the average gold price these key strategic issues – and how for gold as a safe haven has come received by Gold Fields decline to Gold Fields is responding to them – under pressure over the past four US$ 1,140/oz in 2015 from a high is set out below. years. In 2012, investor demand of US1,656/oz in 2012. eased as it became apparent that Gold supply and demand many of the feared economic While much of the gold price’s worst-case scenarios were unlikely short-term movements are the result Issue to materialise. The gold price of market sentiment, the longer-term The price of gold has fallen by subsequently retreated to sub-2011 movements remain underpinned by around 45% between 2011 and levels – just as the equity and real supply and demand fundamentals. 2015. Since then it has recovered estate markets started to offer An analysis of these fundamentals and in early March 2016 was trading stronger returns. As a result, many confirms our belief that the gold price at levels of around US$1,200/oz – investors sold their physical gold will improve over the next few years US$1,250/oz. More than any other holdings in 2013 and 2014 – though it will undoubtedly experience variable, the gold price is the key resulting in a sharp drop in the gold more short-term volatility. dynamic informing our business price. According to the World Gold Council, gold demand was little changed last year declining from 4,414 tonnes in 2014 to 4,258 tonnes in 2015. Central banks’ net gold purchases However, in the longer term, key (Tonnes) demand fundamentals are asserting 800 themselves due to: 600 ❯❯ Ongoing growth in emerging
400 620 598
580 590 market demand for physical gold 200 500 90 – in China, India and other 0 countries. Jewellery demand in (200) (50) both countries rebounded in the (620) (500) (680) (370) (490) (400) second half of last year continuing (250) (600) a long-term trend which confirmed (800) the inherent affinity of consumers
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 in those countries to gold Net sales Net purchases ❯❯ A continued build-up of gold
Source: Metals Focus; GFMS, Thomson Reuters; World Gold Council reserves by the world’s central banks (or, at least, maintaining their current holdings) amid Global gold mine production economic and political uncertainty Annual mine production (Moz) and reserve diversification away Peak gold production from the US Dollar. Net purchases 100 by central banks and other official 96 94
95 93
92 92 institutions totalled 588 tonnes in 90 90
90 89 89 2015, in line with the strong 87 85 85 purchases of around 600 tonnes 82 82 81 81 per annum for each of the 80 80
77 preceding three years 76 75
75 74 70 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Actual production GFMS forecast
Source: GFMS
39 The Gold Fields Integrated Annual Report 2015
2.4 Operating context (continued)
❯❯ The continued need for a safe Gold Fields’ ability to maximise value Social licence to operate haven asset in times of economic can be attributed to its strategic shift Issue and political uncertainty. Though to cash flow generation by: The nature of the extractive sector this may not have been as ❯❯ De-prioritising production volume means the industry must pay prevalent a factor over the past five ❯❯ Setting cash flow targets and particular attention to its social years as previously used to be the margins and linking short- and licence to operate. Unlike other case, the gold price’s more recent long-term management incentives companies, mining companies are recovery to levels of around to key deliverable criteria dependent on their mineral deposits US$1,250/oz has been driven ❯❯ Closing marginal mining operations and cannot relocate to new locations amid investor uncertainty in global at existing mines and selling when facing deteriorating local and/ stock markets non-strategic growth assets or national operating environments. ❯❯ Stopping all greenfields exploration Furthermore, many mines’ lifecycles Long-term gold supply issues will and focusing on brownfields can span decades – and mines must also act to support a recovery in the exploration be able to navigate complex social, gold price, we believe. According to economic and political dynamics the WGC total gold supply declined This strategy, conceived before the over time. by 7% in Q4 2015, due to an price of gold experienced a serious estimated 4% drop in global mine drop – means Gold Fields now To manage the potential risks, mining output, the largest quarterly enjoys a measure of resilience in the companies need to maximise their reduction since 2008. Total mine face of current market conditions. positive local impacts, minimise their production for 2015 at 3,176 tonnes For example, all production is being negative local impacts and make was only 1% higher than 2014 planned around the delivery of a sure that this is communicated to – production, its slowest annual 15% free cash flow margin at a and recognised by – host community increase since 2008. long-term planning gold price of stakeholders. US$1,300/oz. This means the Group This trend is set to continue. The is in a relatively strong position to While many companies generate GFMS consultancy predicts a further weather a sustained low gold price significant value for their host drop in mine production in 2016, due and/or further falls in the price of societies and governments – to lower production at more mature gold (should they re-occur). It also including through the generation of mines, a decline in average grades at means Gold Fields will be particularly public revenues – this does not most gold operations and a lack of well-positioned to capture future always benefit those host new mines coming on stream. upside and deliver superior leverage communities who bear the brunt Many analysts believe peak mine to investors when the gold price of the direct negative impacts. production was reached in 2015 recovers. In such circumstances, Additional and targeted efforts need coinciding with a high in gold Gold Fields is committed to to be made to ensure host discoveries in the mid-1990s and maintaining discipline when the communities benefit directly from the assuming an average 20-year market becomes more buoyant, and presence of mines and have a direct development cycle. Goldman Sachs to avoiding the temptation of interest in their continued and has stated that there may be only producing incremental ounces. profitable operation. 20 years of known mineable reserves of gold left. This builds on Gold Fields’ existing commitment to avoid ‘high-grading’ Response Response – due to the obvious negative impact Gold Fields understands that it must satisfy immediate shareholder Gold Fields believes in gold. This this would have on the sustainability requirements for cash generation means the Group will continue to of its ore bodies. As such, Group while securing the longer-term value focus on gold mining and will not guidance requires all operations to of its assets. As a result, it also hedge, on the basis that we believe: mine at or below their reserve grade. recognises that the long-term ❯❯ The supply and demand Gold Fields is also continuing to generation of value for shareholders fundamentals support a medium- invest in the future of its mines. This will ultimately be supported by: to long-term recovery in the gold includes the ongoing development ❯❯ Responsibility: ongoing price of its ore bodies – and proactive investment in responsible ❯❯ The Group’s portfolio approach near-mine exploration. These are operational standards to avoid and strategic and mining expertise strategic essentials that will in no and mitigate negative social and should provide returns for gold way be compromised by the current environmental impacts. This investors now and in the future price environment. includes effective water management, an increasingly 40 The Gold Fields Integrated Annual Report 2015
material issue for most mining Regulatory issues remains significant, particularly in companies and that can, if poorly Over the past four years the global developing countries. Mining tends managed, have a serious impact gold mining industry has been to generate large numbers of on local communities (p97) severely impacted by falling indirect jobs and to enjoy significant ❯❯ Trust: frank, two-way commodity prices and rising input economic multiplier effects communication, realistic costs. Nonetheless, a forward- ❯❯ The impact of gold mining goes expectation management and looking regulatory and fiscal beyond economic growth and jobs. visibly honouring commitments environment should enable us to ride Gold Fields has adopted WGC builds trust. This includes ongoing out these kinds of short-term methodology on total value engagement on issues such as fluctuations and achieve sustained distribution that shows the wider indigenous rights, employment returns over the 15- to 20-year national impact mining has on the opportunities (p110) and social average life of a mining project. In economy. Over the past three transformation. many jurisdictions, however, the legal years, Gold Fields has consistently ❯❯ Understanding: investment in and tax environment has become distributed between US$2 billion communities relies on a thorough less conducive to the long-term and US$3 billion to our wide range understanding of the risks, viability of the mining sector, partly of stakeholders – accounting for community needs and community driven by continued government- around 90% of revenue on average perceptions. Since 2014, Gold backed resource nationalism. (p11) Fields has undertaken relational ❯❯ Increasingly, miners are seeking to proximity studies at its South Deep This has been fuelled by the actions have an impact not just on the mine, which have revealed a gap in of governments all over the world, national economy, but also on the the mine’s community investment which views the industry as an easy local economy of the communities programmes. This assessment target for higher taxes and other that live adjacent to the mines. survey is being extended to our fiscal imposts. As a result the These communities hold the mines’ Ghanaian and Peruvian operations. governments’ share of the ‘mining social licence to operate and often ❯❯ Shared Value: the pursuit of pie’ has grown at the expense of do not feel they are receiving a fair cost-effective, mine-level business other stakeholders, especially share of the pie. Beyond traditional strategies that enhance the value workers and, crucially, the providers socio-economic development of our own business and generate of capital. (SED) spend, Gold Fields is actively positive social impacts helps to promoting employment and ensure that interactions with local Strategic response procurement from host stakeholders are firmly based on communities. This is starting to The question is how the trust gap mutual interest from the start. Gold have a positive impact on our host between mining companies and Fields currently has four Shared communities (p110) governments can best be bridged. Value pilot projects (p118). These Gold Fields on its own and in are further supported by Gold Despite all of its perceived conjunction with its peers in the gold Fields’ broader, ongoing efforts to shortcomings, there can be no doubt sector and the wider mining industry, recruit employees and contractors that – if executed responsibly – has sought to address this trust gap from local communities – and to mining can be a significant force for in a number of ways. source goods and services from sustainable growth. However, this local companies (p110) potential is currently not being ❯❯ In 2013, Gold Fields was one of realised, as the key stakeholders the drivers in the World Gold These efforts are particularly have failed to find common ground Council (WGC) to adopt greater important in the low gold price with each other and investors have transparency about the real costs context, which has significant impact fled, denying the industry the capital it of mining, with the introduction of on employees due to the potential needs to fund sustainable growth. new cost metrics, namely All-in for retrenchments and on the ability Costs and All-in Sustaining Costs. of the Group to invest in community Gold Fields is actively engaging with This cost reporting is now development projects. its host governments in Ghana, Peru entrenched in the sector and South Africa in addressing the ❯❯ A number of recent economic resource nationalism that, we believe, studies show that, far from being a prevents the industry from achieving sunset industry, the socio- sustainable growth and broad-based economic impact of mining value distribution.
41 The Gold Fields Integrated Annual Report 2015 2.5 Risk and materiality
Gold Fields uses a set of four The ERM process – which prioritises 8. Internal audit review: The internal well-defined processes to assess its risks on the basis of probability and audit function assesses progress risks, opportunities and material severity – is based on the following against – and adherence to – issues: process: mitigation strategies on a regular 1. Key risks – and mitigating actions 1. Workplace risk assessments: basis – are identified using an Managers carry out ongoing Enterprise-wide Risk workplace risk assessments in The Group heat maps on pages Management (ERM) process accordance with international 46 – 49 set out: 2. The Group takes into account the standards (for example, ISO ❯❯ The Group’s top 10 risks as well as views and concerns of a wide 31000 and the SAMREC top five risks per region, as group of stakeholders through guideline) identified through the ERM direct and indirect stakeholder 2. Mine/region reviews: Each process (i.e. the Group’s top engagement processes regional and mine ExCo conducts operational and strategic risks at 3. As part of the integrated reporting a review of the top risks and the end of 2015) process, the Group conducts mitigating strategies on a ❯❯ Key movements in the top 10 comprehensive interviews with quarterly basis Group risks between 2014 and key management, collects 3. Presentation to the Group ExCo: 2015 operational, financial and Each mine manager presents the ❯❯ Key mitigating strategies to avoid sustainability data, and analyses top 10 risks and mitigation and/or mitigate the top 10 Group the short-, medium- and long- actions to Exco during quarterly risks for 2015, and the top five term strategic trends affecting the business reviews – and mitigating risks per region business actions are assessed for 4. Material sustainability issues are relevance and effectiveness External assessment: assessed and prioritised 4. Compilation of Group Risk Stakeholder engagement according to the GRI G4 Register: The Group Risk Proactive and frank stakeholder Guidelines, and comprehensive Manager extracts the top risks engagement plays a vital role in internal and external stakeholder from the regional and operational helping Gold Fields identify its interviews conducted to registers in line with the tolerance material issues. All stakeholder determine the relative ranking of levels set by the Board, and engagement activities are informed material issues compiles the Group Risk Register by the AA 1000 principles of: 5. Assessment and moderation: ❯❯ Inclusivity The outputs from these four The risks are assessed and ❯❯ Materiality processes have informed the moderated at a Group-level by ❯❯ Responsiveness identification of the risks, relevant risk owners and ExCo opportunities and material issues members Gold Fields’ engagement activities contained in this Integrated Annual 6. ExCo risk meeting: Every six fall into two categories: Report (IAR). Key elements of the months, ExCo reviews the top ❯❯ Direct engagement, including four processes are set out alongside. risks and sets and monitors organised dialogues, roundtable Group-wide mitigation strategies discussions, one-to-one meetings, Internal assessment: Enterprise- 7. Audit Committee review: The internal surveys and regular wide Risk Management (ERM) Audit Committee reviews the top engagement with local Gold Fields’ mature ERM process is risks and mitigation strategies communities and other aligned with the ISO 31000 twice a year. This work will move stakeholders at each operation international risk management to the reconstituted Risk and project standard, as well as the risk Committee during 2016 management requirements of South (AFR – p2). Africa’s King III Code.
42 The Gold Fields Integrated Annual Report 2015
❯❯ Indirect engagement, including ❯❯ Shareholders and potential The IAR is prepared on the basis of the use of external benchmarks investors by the Group investor this process and is subject to a and standards (such as the UN relations team, CEO, CFO and rigorous internal assurance process. Global Compact) that are designed regional EVPs The Board – through the Audit to reflect and address societal ❯❯ Materiality assessment process Committee – is ultimately responsible expectations (p45) for the contents of this IAR.
Operational engagement The outcomes of stakeholder Materiality assessment At an operational-level, all mines engagement are integrated into Gold Gold Fields has carried out a formal identify, prioritise and directly engage Fields’ internal reporting processes process to assess and prioritise its stakeholder groups that have the – including its quarterly regional material sustainability issues. It has potential to affect their operational, board reports, sustainable done so using criteria aligned with sustainability or financial development reports and other those set out in the GRI G4 performance. documents. In addition, they inform Guidelines taking into account the Gold Fields’ ERM process, and actual or potential impact of these This includes, for example, ongoing external reporting processes. issues on Gold Fields and its engagement of: stakeholders. ❯❯ Employees and their Integrated reporting process representatives by our human The outputs of the ERM and Materiality process resources teams and general stakeholder engagement processes Gold Fields’ GRI G4 materiality managers are analysed alongside the information process is based on a series of ❯❯ Local communities by our collected for the IAR. This includes: iterative assessments using a community relations teams and ❯❯ Gold Fields’ operational, financial common, quantitative scoring general managars and sustainability data generated framework. It draws on a range of ❯❯ Regulators by our discipline heads through our data management internal and external sources, as and general managers systems outlined below: ❯❯ Key contractors and suppliers by ❯❯ The output of dedicated integrated our procurement teams, health reporting interviews with managers 1. National and international and safety managers and and executives at operation-, legislation and regulation operational personnel region- and Group-level ❯❯ Short-, medium- and long-term 2. Standards Strategic engagement strategic analysis of the external Internal: At a strategic-level, Gold Fields’ environment Gold Fields’ Vision and Values; corporate and regional management Sustainable Development teams implement an ongoing This is with the aim of: Framework; Stakeholder Charters; programme of direct and indirect ❯❯ Gaining greater insight into the and Code of Ethics engagement. This includes ongoing Group’s material issues engagement of: ❯❯ Identifying and assessing the External: ❯❯ In-country peer companies by the management actions taken in 10 Principles of the UN Global regional Executive Vice-Presidents response to each material issue Compact; UN Guiding Principles (EVPs) – as well as the effectiveness of on Business and Human Rights; ❯❯ Central, regional and local such actions ICMM 10 Principles on governments by the Group’s ❯❯ Defining the content of this IAR Sustainable Development; and corporate affairs teams and legal ISO 14001 (environment) and teams, as well as members of the OHSAS 180001 (safety) Group ExCo and regional EVPs management standards
43 The Gold Fields Integrated Annual Report 2015
2.5 risk and materiality (continued)
3. Documentation Each step of the G4 materiality Once these rankings had been made Internal: process is outlined below with the they were averaged and a score Gold Fields Board reports; Safety, outcome shown in the table on reached for each aspect. A score Health and Sustainable the following page. between 1 and 5 means that these Development reporting; and ERM issues are material to Gold Fields. output documents These steps involve detailed Scores between 5 and 10 suggest engagement to determine the ranking that internal and external stakeholders External: of Gold Fields’ material sustainability consider these issues of less material Media reports; NGO commentary; issues. Senior executives at the importance to Gold Fields and its and sector analysis Company, including its regional stakeholders. However, this does not operations, and representatives of mean that they will not be addressed 4. Engagement external stakeholders - including by our management team when the industry, government, community and issues arise. Internal: environmental organisations - were Engagement around the specific briefed on the GRI process and asked The outcome – depicted in the table requirements of the GRI with to evaluate all G4 aspects in terms of alongside – ranks health and safety, senior management importance to Gold Fields and its water management, social licence stakeholders. This took the form of a to operate and management of External: ranking with 1 being the most critical environmental issues as the key GRI Engagement with external to Gold Fields and its stakeholders, aspects that internal and external stakeholders and 10 considered not material at all. stakeholders consider most material to Gold Fields and its wider stakeholder base.
❯ Winder house at South Deep 44 The Gold Fields Integrated Annual Report 2015
Flow from operating environment to risks, materiality and strategy
Prioritised materiality issues
Initial research ❯ Review of current sustainability issues facing the gold mining sector and Gold Fields footprint countries and engagement ❯ Preliminary engagement with internal discipline experts STEP 1 ❯ Review of ERM system outputs
Development ❯ Prioritisation of all GRI G4 aspects – in line with the G4 materiality assessment criteria of initial results STEP 2
❯ Presentation of initial results to key internal stakeholders Integration of ❯ Presentation of initial results to key external stakeholders feedback ❯ STEP 3 Collation and adjustment of results
Development ❯ The setting of ‘boundaries of impact’ for each GRI G4 aspect of the final ❯ Categorisation and consolidation of GRI G4 aspects into higher-level, Gold Fields-specific ‘issues’ materiality ❯ Sign-off of the final assessment results by ExCo results
Prioritised material issues Cluster Score Health and safety 2.3 Water management 2.7 Social licence to operate 2.9
STEP 4 Managing environmental issues across the lifecycle 3.2 Workforce 3.5 Compliance 3.5 Government relations 3.7 Community value distribution 3.8 Total value distribution 3.8 Employee development 4.0 Industrial relations 4.4 Human rights 4.5 Energy and carbon management 4.6 General grievance mechanisms 4.7 Equal remuneration 5.0 Human rights due diligence on investments 5.1 Supply chain management 5.6 Resettlement 5.7 Biodiversity 5.8 Child/forced labour and freedom of association 6.5 Materials 6.5 Market regulation 7.0 Product impacts 8.0
45 The Gold Fields Integrated Annual Report 2015
2.5 risk and materiality (continued)
Group and regional risk tables Gold Fields – Top 10 risks
6 2
7 5 3 1 Maximum 9 4
10
8 SEVERITY
PROBABILITY
Minimum Maximum
Top 10 risks in 2015 – Mitigating strategies
2015 RISK 1 2 3 4 5 2014: 1 2014: 2 2014: 4 2014: 3 2014: 6 DESCRIPTION
South Deep – Failure to Lower price and Replacing Mineral Failure to achieve Regulatory uncertainty deliver the operational currency volatility Resources and annual operational in South Africa and plan and loss of Reserves at production and free Ghana investor confidence international operations cash flow plans MITIGATING STRATEGIES
❯ Core focus on ❯ Updated metal prices ❯ Comprehensive ❯ Comprehensive ❯ Supporting the getting the basics used for 2016 and near-mine exploration business planning Chamber of Mines in right continues to be 2017 mine planning programmes in place cycle implemented its negotiations and implemented during ❯ Ongoing portfolio ❯ M&A strategy to in 2015 to improve legal proceedings the year optimisation to ensure identify opportunities accuracy and delivery regarding BEE ❯ Working towards cash cash-generation ❯ Salares Norte, 2016 of plans ownership to ensure breakeven by the end ❯ Business structured to budget approved for ❯ Operational risk the security of mining of 2016 generate sustainable further drilling assessments licences (AFR – p41) ❯ Fit-for-purpose free cash flow at a conducted – ❯ Lobbying through the organisational design lower gold price mitigations in place Chamber to influence and new management ❯ Business Process to reduce impact of the development of the team appointed with Re-engineering and potential interruptions MPRDA Amendment strong mechanised continuous focus on Act mining experience cost control and cash ❯ Continued compliance ❯ Introduction and generation by South Deep with implementation of a the provisions of the new regional pillar Mining Charter and design and mining Social and Labour method (high-profile Plans de-stress mining) ❯ Ongoing engagement and lobbying with the Ghana Government to finalise the Investment Agreement
Severity Severity Severity Severity Severity
❯ ❯
❯
❯ RISK ❯ ❯ RANKING ❯ Probability ❯ Probability Probability ❯ Probability ❯ Probability 46 The Gold Fields Integrated Annual Report 2015
2014 Risks – How we performed in 2015 2014 RISK RATING
South Deep Despite the significant financial and operational – failure to deliver the performance improvement at South Deep during 2015, 1 this remains the Group’s top risk business plan How we performed1
100
❯ ❯ ❯ ❯
Lower gold The continued decline in both gold and copper prices ❯ price and 2 volatility during 2015 ensured that this remains a high risk 80 81 81 80 80 72 72
Replacement of 70 Reserves and Since four out of seven international operations reported 60 63
Resources at lower Reserves (after depletion) in 2015 this is now a 60 60 3 international higher risk ops 40
Non- achievement of Despite the better operational and cost performance in 20 15% FCF 2015 this risk remains at a high level amid the lower 4 margin at gold price US$1,300/oz 0 1 2 3 4 5 2015 2014 Loss of social Social and economic pressures from communities remain licence to a pressing issue at our South African, Peruvian and 1 The risk rating in this graph is based on our severity and probability 5 operate Ghanaian mines matrix. Both are rated from one to 10 and the result is a product of the two ratings for each risk.
6 7 8 9 10 2014: 5 2014: 14 2014: 9 2014: 11 2014: 7
Loss of social licence Level of debt and debt Labour relations at Water discharges/ Security of power to operate service costs South Deep pollution and supply supply and cost of energy
❯ Ongoing focus on ❯ Strong focus on paying ❯ Enhanced and ❯ Strict and focused ❯ Five-year energy and growth opportunities down debt through ongoing engagement compliance with carbon plans built into in lower risk mining cash generation from strategies in place environmental operational plans for destinations operations ❯ Robust performance management implementation ❯ Fit-for-purpose ❯ Targeting a net debt/ management requirements in all ❯ Continued investigation community relations EBITDA ratio of 1.0 processes being regions into the feasibility of structures in ❯ Restructuring of applied ❯ All operations are ISO renewable energy operations and regions existing debt ❯ Implementation 14001 certificated options ❯ Group review of of improved ❯ Independent ❯ Agreement with Genser community relations communication environmental and Energy for the supply strategies, plans, structures and legal due diligence of power in Ghana progress and channels carried out to assess being implemented and structures Group-wide tailings monitored ❯ Implementation of storage facilities ❯ Load curtailment community investment ❯ Integrated post- arrangements at South and Shared Value closure water Deep implemented projects in Ghana, management plans ❯ South Deep 40MW Peru and South Africa to be in place for all solar photovoltaic (PV)
regions project in RFP phase
Severity Severity Severity Severity❯ Severity ❯ ❯
❯ ❯ ❯ ❯ ❯ ❯
Probability Probability Probability ❯ Probability Probability 47 The Gold Fields Integrated Annual Report 2015
2.5 risk and materiality (continued)
Group and regional risk tables Top 5 risks in 2015 – Americas region Top 5 risks in 2015 – Australia region
2 1 Maximum Maximum 3 1
3
4 5 2
4 SEVERITY SEVERITY
5
PROBABILITY PROBABILITY
Minimum Maximum Minimum Maximum
RISK DESCRIPTION WITH MITIGATING STRATEGIES RISK DESCRIPTION WITH MITIGATING STRATEGIES
Erosion of free cash flow, sustained low copper and gold 1 prices and cost inflation 1 Reserve life at all operations
❯ Enhanced business planning process and continued delivery of ❯ Near-mine exploration spend increased to A$86 million to the operational plan delineate further reserves budgeted in 2016 ❯ Improved understanding of operational risks and ❯ Ongoing business improvement to achieve cost savings, implementation of effective mitigation improve operating margins and improve the Resource cut-off ❯ Continued focus on cost control and reduction measures grade ❯ M&A strategy – opportunities being considered 2 Social pressures, conflicts and community expectations
2 Failure to achieve delivery against operational plans ❯ Social pressures around Las Tomas spring relocation, despite regulatory approval ❯ Pro-active community and stakeholder engagement ❯ Ongoing improvements to mine plan accuracy and operational ❯ Properly planned contingencies in place for conflict delivery ❯ Stringent follow-up and feedback on all community ❯ Operational risk assessments conducted to reduce potential commitments business interruptions ❯ Implement contingency plan for a potential social conflict ❯ Weekly, monthly and quarterly monitoring of performance
3 Increase in regulatory scrutiny, sanctioning process and 3 Australian gold price inspections
❯ Process in place to challenge sanctions and penalties ❯ Ongoing monitoring and review of compliance to annual ❯ Strict compliance with regulations through internal auditing and operational plans on all sites constant monitoring ❯ Monitor relationship between Australian Dollar and US gold price ❯ Development and implementation of margin improvement 4 Government/political instability programmes
❯ Continued dialogue and engagement with authorities. ❯ Active participation in Peru’s National Chamber of Mining, Oil 4 Native title at Kambalda and Energy and local Chamber of Commerce ❯ Appeal heard on 25 May 2015 – judgment reserved ❯ Strategy in response to adverse decision, including further 5 Houses in very serious conditions appeal process if required.
❯ Voluntary programme to repair houses in Hualgayoc at high Ongoing safety performance risk of collapse 5
❯ Vital behaviours programme rolled out and producing good results ❯ Active Visible Felt Leadership training for all managers ❯ Review undertaken to consolidate safety initiatives for 2016
48 The Gold Fields Integrated Annual Report 2015
Top 5 risks in 2015 – South African region Top 5 risks in 2015 – West African region
3 2 1
1 4 3 2 Maximum Maximum 4 5
5 SEVERITY SEVERITY
PROBABILITY PROBABILITY
Minimum Maximum Minimum Maximum
RISK DESCRIPTION WITH MITIGATING STRATEGIES RISK DESCRIPTION WITH MITIGATING STRATEGIES
Failure to achieve the South Deep operational plan and 1 loss of investor confidence 1 Tightened fiscal policies by government
❯ Align planning process with realistic productivities ❯ Investment Agreement negotiation and implementation ❯ Core focus on getting the basics right continues to be ❯ Frequent engagement with government and lobbying via the implemented Chamber of Mines ❯ Identification of 68 business improvement projects - ❯ Strict adherence to Bank of Ghana foreign exchange implementation commenced regulations to ensure compliance ❯ Improve production output by acquiring additional and appropriate staff and fleet resources Geotechnical risk: Lower gold price, currency fluctuations and increased ❯ Changes in mining method 2 input costs 2 ❯ Seismicity ❯ Secondary support and backfill ❯ Ongoing implementation of business process re-engineering initiatives ❯ Implemented Geotechnical Review Board recommendations, ❯ Evaluate future options for Damang – decision in mid-2016 including revised support strategies, mining sequence, pillar ❯ Cost containment configuration changes and improved modelling capabilities ❯ Fit-for-purpose structure in place with regular reviews ❯ Introduction of high profile de-stress stoping ❯ Full plant tailings commissioned and utilised to reduce backfill ❯ Renegotiate strategic supplier contracts backlog ❯ Initiated analysis of secondary support requirements 3 Erratic power supply and load shedding 3 Union and labour relations ❯ Independent Power Purchase Agreement with Genser Energy ❯ Damang and Tarkwa power plants to be commissioned in ❯ Extensive union engagement and union re-basing strategy 2016 ❯ Wage negotiations successfully concluded outside the ❯ Ongoing consultations/engagement with national electricity Chamber of Mines central bargaining unit authorities ❯ New engagement structures and higher frequency of ❯ Increase generation capabilities from back-up generators engagement
4 Leadership capabilities 4 Loss of environmental and social licence to operate
❯ Consideration of regulatory requirements during planning ❯ Retention of individuals in leadership positions ❯ Skills deficit addressed through the appointment of 146 processes people in core disciplines in 2015 ❯ Frequent engagement with the Environmental Protection Agency (EPA) ❯ Community awareness campaigns. 5 Loss of social licence to operate and community activism ❯ In-depth preparation for EPA’s annual Akoben environmental audits ❯ Meet Mining Charter and Social and Labour Plan commitments ❯ Fit-for-purpose community relations and stakeholder 5 Increased stakeholder expectations engagement structure in place ❯ Five-year community relations strategy prepared for ❯ Working with employees to improve productivity as a implementation in 2016 trade-off for real wage rises ❯ Implementation of two Shared Value projects focused on ❯ Stakeholder engagement Mathematics and Science education and local community ❯ Shared Value rollout procurement ❯ Alliance with Sibanye Gold to continue into 2016 ❯ Continued community investment programmes ❯ Collaboration with South Deep Community Trusts in their strategy formulation and implementation ❯ Implementing a water management plan at South Deep ❯ Develop stakeholder engagement plan and strategy for the nearby community of Thusanang 49 The Gold Fields Integrated Annual Report 2015
Focus areas in the 2015 Group performance scorecard Financial p51 – 58 Business optimisation p59 – 88 Social licence to operate p89 – 120 People p121 – 136
❯ Storage facility at Cerro Corona
50 The Gold Fields Integrated Annual Report 2015
Financial focus 3 3.1 Introduction p52 3.2 Strategic focus areas p57
❯ Free cash flow p57
❯ Reducing debt p57
❯ Dividends p57
❯ Improving investor confidence p57
❯ Share price performance p58
51 The Gold Fields Integrated Annual Report 2015 3.1 Financial focus – Introduction
Gold Fields' financial strategy has a 2. Improving our balance sheet by fact that, at US$1,140/oz the actual singular focus – growing the margin paying down debt annualised gold price received was and free cash flow (FCF) for every Our target is to further and 12% below the US$1,300/oz ounce of gold produced. This has consistently reduce our net debt long-term planning price. If the price long replaced the traditional focus on and net debt to Earnings before received for the year was normalised growth in production and reserve interest, taxes, depreciation and to US$1,300/oz, then the free cash ounces and is aimed at turning the amortisation (EBITDA) ratio flow margin would have been 15% Group into a focused, lean and 3. Pursuing accretive acquisitions – in line with our stated guideline. globally diversified gold mining Our preference is for the Details of the Group’s production company that generates significant acquisition of in-production and cost performance are contained FCF and provides investors with ounces that will contribute in the Operational Performance superior leverage to the price of gold, positively to EBITDA and cash Overview (p61 – 67). even when gold is trading at its flow from the outset current low levels. 2015 financial performance Our strategy is embodied in our During 2015, the ongoing impact of Our priorities for the cash we overarching objective of generating Gold Fields’ transformation process generate include: at least a 15% FCF margin at a was reflected in its positive financial 1. Rewarding our shareholders with notional long-term planning gold performance, which enabled the dividends price of US$1,300/oz, which Group to improve its cash reserves, Our policy is to pay out between translates to an All-in Cost (AIC) balance sheet and debt position and 25% and 35% of our normalised breakeven level of approximately to continue to reward shareholders earnings as dividends US$1,050/oz. The Group's FCF with dividends, despite the lower margin for 2015 was 8% despite the gold prices.
The financial highlights for Gold Fields during 2015 were:
2015 2014 2013
Average US$ gold price received US$1,140/oz US$1,249/oz US$1,386/oz Average A$ gold price received A$1,541/oz A$1,404/oz A$1,446 Average Rand gold price received R478,263/kg R441,981/kg R434,915/kg Revenue US$2,545 million US$2,869 million US$2,906 million AIC US$1,026/oz US$1,087/oz US$1,312/oz AIC excluding South Deep US$944/oz US$1,020/oz US$1,040/oz Net operating costs US$1,456 million US$1,678 million US$1,667 million Capital expenditure US$634 million US$609 million US$739 million Net cash flow1 US$123 million US$235 million (US$235 million) Free cash flow margin 8% 13% n/a Net debt US$1,380 million US$1,453 million US$1,735 million Net debt/ EBITDA ratio 1.38 1.30 1.50 Normalised earnings US$45 million US$85 million US$58 million Total dividend payment R0.25/share R0.40/share R0.22/share Dividend as % of normalised earnings 34% 34% 30% 1 Net cash flow from operating activities less net capital expenditure and environmental payments
52 The Gold Fields Integrated Annual Report 2015
During 2015, net revenue decreased investment in the Far Southeast African Rand during 2015 this by 11% from US$2,869 million in project in the Philippines offered the operations in these 2014 to US$2,545 million, as a result (US$101 million) and Hummingbird countries a measure of protection of lower production and the 9% drop Resources (US$15 million) against the weaker US Dollar gold in the average gold price received. ❯❯ Royalty payments of US$76 million price when converting their revenues Net operating costs declined by 13% in 2015 compared with to local currency. The impact has to US$1,456 million as a result of the US$86 million in 2014 been computed as follows: 17% weakening in the Rand/US ❯❯ A rise in capital expenditure from ❯❯ Australia: During 2015 the Dollar and Australian/US Dollar US$609 million in 2014 to Australian Dollar weakened by exchange rates, the lower oil price US$634 million in 2015 17% against the US Dollar and the and good cost control. (p62) ❯❯ An increase in the taxation charge average gold price received by our to US$247 million (2014: Australian mines therefore rose The Group All-in Sustaining Costs US$118 million), mainly due to from A$1,404/oz in 2014 to (AISC) of US$1,007/oz and total AIC impairments of deferred tax assets A$1,541/oz in 2015. Taking into of US$1,026/oz in 2015 compared of US$68 million at Cerro Corona account the 43,000 ounces drop with US$1,053/oz and US$1,087/oz and US$37 million at Damang, in production in the region last in 2014. These lower costs were due along with a US$32 million charge year, this had the impact of to lower net operating costs, the related to the weakening of the boosting revenue by A$75 million. weaker average Rand/US Dollar and Peruvian Nuevo Sol ❯❯ South Africa: The South African Australian/US Dollar exchanges, Rand weakened by 17% against partially offset by lower by-product As a result of the above, net losses the US Dollar during 2015 and the credits and higher capital attributable to the Gold Fields average Rand gold price received expenditure. Operating profits fell shareholders amounted to strengthened from R441,981/kg in from US$1,191 million in 2014 to US$242 million in 2015 compared 2014 to R478,263/kg in 2015 as a US$1,089 million in 2015. with net earnings of US$13 million in result. South Deep’s revenues in 2014 leading to a headline loss of 2015 benefited by around Other salient features during 2015 US$28 million in 2015 compared R190 million, taking into account included: with earnings of US$27 million in the marginal drop in production. ❯❯ Asset impairments and write-offs 2014. Normalised earnings fell During Q4 2015, the average Rand of US$213 million including from US$85 million in 2014 to gold price received averaged just impairments at Darlot US$45 million in 2015. over R500,000/kg, assisting South (US$14 million), Damang Deep to operate cash positively for (US$36 million), scrapping of Impact of weaker currencies the first time in November and assets no longer in use at Cerro In Australia and South Africa, Gold December. Corona (US$8 million) and the Fields receives its gold revenue in Arctic Platinum project in Finland foreign currency terms. As a result A weaker local currency means that (US$39 million) as well as of a significant weakening in the imported costs rise at the same time, impairments to the Group’s Australian Dollar and the South which can push up the costs of the heavy equipment, machinery and other components that we mostly import at our South African and Gold price in various currencies Ghanaian operations. (Index: 1 Jan 2015 = 100)
160 A detailed analysis of our financial performance is provided in the 140 Management’s Discussion and Analysis of the Financial 120 Statements in the 2015 Annual Financial Report (p6 – 33).
100 The Consolidated Income 80 Statement, Statement of Financial J F M A M J J A S O N D J F M Position and Cash Flow Statement 2015 2016 – extracted from the Annual Financial Report 2015 – are US$/oz A$/oz R/oz provided on the pages that follow.
53 The Gold Fields Integrated Annual Report 2015
3.1 Financial focus – Introduction (continued)
Consolidated income statement for the year ended 31 December 2015 UNITED STATES DOLLAR Figures in millions unless otherwise stated
2015 2014
Revenue 2 545,4 2 868,8 Cost of sales (2 066,1) (2 334,4) Net operating profit 479,3 534,4 Investment income 6,3 4,2 Finance expense (82,9) (99,2) Loss on financial instruments (4,7) (11,5) Foreign exchange gains 9,5 8,4 Other costs (21,2) (62,5) Share-based payments (10,9) (26,0) Long-term incentive plan (5,3) (8,7) Exploration expense (53,5) (47,2) Share of results of equity accounted investees after taxation (5,7) (2,4) Restructuring costs (9,3) (42,0) Impairment of investments and assets (221,1) (26,7) Profit on disposal of investments 0,1 0,5 Profit on disposal of Chucapaca – 4,6 Loss on disposal of property, plant and equipment (0,1) (1,3) Profit before royalties and taxation 80,5 224,6 Royalties (76,0) (86,1) Profit before taxation 4,5 138,5 Mining and income taxation (247,1) (118,1) (Loss)/profit for the year (242,6) 20,4
(Loss)/profit attributable to: – Owners of the parent (242,1) 12,8 – Non-controlling interest holders (0,5) 7,6 (242,6) 20,4 (Loss)/earnings per share attributable to ordinary shareholders of the Company: Basic (loss)/earnings per share – cents (31) 2 Diluted basic (loss)/earnings per share – cents (31) 2
54 The Gold Fields Integrated Annual Report 2015
Consolidated statement of financial position at 31 December 2015 UNITED STATES DOLLAR Figures in millions unless otherwise stated
2015 2014
ASSETS Non-current assets 4 969,6 5 764,9 Property, plant and equipment 4 312,4 4 895,7 Goodwill 295,3 385,7 Inventories 132,8 132,8 Equity accounted investees 129,1 252,4 Investments 10,9 5,5 Environmental trust funds 35,0 30,4 Deferred taxation 54,1 62,4 Current assets 908,1 1 092,8 Inventories 298,2 368,3 Trade and other receivables 168,9 226,5 Cash and cash equivalents 440,0 458,0 Assets held for sale 1,0 40,0 Total assets 5 877,7 6 857,7 EQUITY AND LIABILITIES Equity attributable to owners of the parent 2 656,1 3 538,8 Share capital 58,1 57,9 Share premium 3 412,9 3 412,9 Other reserves (2 262,2) (1 636,5) Retained earnings 1 447,3 1 704,5 Non-controlling interest 111,9 124,5 Total equity 2 768,0 3 663,3 Non-current liabilities 2 545,6 2 481,3 Deferred taxation 487,3 387,0 Borrowings 1 761,6 1 765,7 Provisions 284,1 320,3 Long-term incentive plan 12,6 8,3 Current liabilities 564,1 713,1 Trade and other payables 427,6 509,7 Taxation and royalties 77,8 58,2 Current portion of borrowings 58,7 145,2 Total equity and liabilities 5 877,7 6 857,7
55 The Gold Fields Integrated Annual Report 2015
3.1 Financial focus – Introduction (continued)
Consolidated statement of cash flows for the year ended 31 December 2015 UNITED STATES DOLLAR Figures in millions unless otherwise stated
2015 2014
Cash flows from operating activities 743,9 808,5 Cash generated by operations 1 005,4 1 061,3 Interest received 5,9 3,6 Dividends received – 0,1 Change in working capital 43,6 83,7 Cash generated by operating activities 1 054,9 1 148,7 Interest paid (86,8) (103,8) Royalties paid (76,9) (88,8) Taxation paid (118,4) (105,3)
Net cash from operations 772,8 850,8 Dividends paid (28,9) (42,3) – Ordinary shareholders (15,1) (29,8) – Non-controlling interests holders (12,1) (10,6) – South Deep BEE dividend (1,7) (1,9)
Cash flows from investing activities (651,5) (530,9) Additions to property, plant and equipment (634,1) (608,9) Proceeds on disposal of property, plant and equipment 3,1 4,9 Proceeds on disposal of Chucapaca – 81,0 Purchase of investments (3,0) (4,4) Proceeds on disposal of investments – 6,4 Environmental trust funds and rehabilitation payments (17,5) (9,9)
Cash flows from financing activities (88,3) (125,9) Equity contributions from non-controlling interest holders – 2,0 Loans raised 506,0 463,9 Loans repaid (594,3) (591,8)
Net cash generated 4,1 151,7 Effect of exchange rate fluctuation on cash held (22,1) (18,7) Cash and cash equivalents at beginning of the year 458,0 325,0 Cash and cash equivalents at end of the year 440,0 458,0
56 The Gold Fields Integrated Annual Report 2015 3.2 Financial focus – Strategic focus areas
Free cash flow Net debt as a percentage of out between 25% – 35% of enterprise value increased to 39% During 2015, Gold Fields generated normalised earnings as dividends. at the end of December 2015, a US$123 million net cash flow This policy is viewed as an important compared to 24% at the end of compared to US$235 million in element of Gold Fields’ investment December 2014, amid the decline in case and we have consistently 2014. This was achieved despite the our market value during the year. fact that the gold price for 2015, at honoured this commitment with an average payout of approximately US$1,140/oz, was 9% lower than The net debt reduction during 2014 the US$1,249/oz realised in 2014. 30% of normalised earnings every and 2015, together with the year over the past six years, one of Gold Fields has generated positive agreement reached with our group the highest pay-outs in the global net cash flow in all but one of the of bankers in 2014, to amend gold mining sector. past 10 quarters. A free cash flow and extend the maturity date of (FCF) margin of 8% was achieved commitments totalling compared with 13% in 2014. This is US$745 million, by two years to Our strong cash generation during a good achievement in view of the November 2017, on the same terms, 2015 has enabled the Group to lower gold price received. Indeed, if has significantly improved the declare a final dividend of the price received is normalised to Group’s solvency and liquidity. 21 SA cents per share for 2015. our long-term planning price of Together with the interim dividend of US$1,300/oz the FCF margin would At the end of 2015, Gold Fields had 4 SA cents per share (for the first six have been 15%. committed and uncommitted loan months of the year ended 30 June facilities totalling US$2,648 billion 2015), this brings the total dividend In fact, to put our net cash flow and R3.947 billion, of which for the year to 25 SA cents per generation in context, during 2015 US$0.844 billion and R3.695 billion share, which translates to 34% of respectively are unutilised. The our international mines in Australia, normalised earnings for the year. facilities will mature between 2017 Ghana and Peru collectively and 2020, unless they are refinanced generated US$334 million of net Improving investor and before their maturity dates. cash flow. Of that US$80 million was analyst confidence We seek to position Gold Fields as a re-invested into our developing Subsequent to year-end Gold Fields focused, lean and globally diversified South Deep mine in South Africa, made a tender offer to buy back which is not yet at a steady state of US$200 million of our US$1 billion gold mining company that generates production, and US$73 million was 2020 bond as the bonds were trading significant free cash flow, and used to further reduce our debt. at a discount on the secondary provides investors with superior market. Upon expiry of the tender leverage to the price of gold. This demonstrates the robustness of offer on 25 February 2016 Gold Fields our international portfolio of assets opted to accept US$148 million of the Gold Fields today is a significantly and the improved cash generating bonds tendered at a price of 88% of smaller, more focused and global potential of the portfolio once the the notional value. This resulted in a company than it was before 2013. South Deep mine achieves cash reduction in net debt of approximately With the unbundling of our breakeven level, which is targeted US$18 million. Gold Fields intends conventional South African mines for the end of 2016. holding the bonds acquired until their into Sibanye Gold in 2013 we have maturity date. created a company that is today Reducing debt exclusively focused on mechanised This debt buy back was funded mining. Shareholders have also Owing to the fact that, as a gold through a successful R2.3 billion producer, we are essentially a price benefited from the creation of (US$150 million) equity raising, by way Sibanye Gold, whose share price has taker for the primary product that we of a private placement to institutional produce, we have long held the outperformed that of most other investors on 18 March 2016. The gold counters on the Johannesburg position that our debt comfort zone effect of these transactions will be a Stock Exchange. is a net debt to EBITDA ratio of reduction in the net debt to EBITDA approximately 1.0 times. ratio from 1.38x as at 31 December Gold Fields’ re-organisation was 2015 to 1.21x and gets us closer to During 2015 our net debt decreased our strategic objective of reducing the further enhanced by the successful by US$73 million from US$1,453 million ratio to 1.0x, though the timing of restructuring and rightsizing of our at the end of December 2014 to achieving this objective also depends corporate, regional and operational US$1,380 million at the end of on the gold price. structures over the past three years, December 2015, which resulted in a together with the reduction of our net debt to EBITDA ratio of 1.38. Dividends workforce around the world. This is in addition to the reduction of Gold Fields has a long and well- our net debt by US$282 million to established ‘dividends first’ policy of US$1,453 million during 2014. rewarding shareholders by paying 57 The Gold Fields Integrated Annual Report 2015
3.2 Financial focus – Strategic focus areas (continued)
Over the past three years, Gold improved from an outflow of of the asset, which has the world’s Fields has successfully transformed US$235 million to an inflow of second largest gold ore body. The itself into a company that US$235 million, a positive swing of achievement of cash breakeven for consistently generates FCF despite US$470 million. In 2015, we South Deep, which is targeted for the steady declines in the price of managed to generate US$123 million the end of 2016, is expected to not gold during this time. In 2012 and in net cash flow from operating only further enhance the Group’s 2013, Gold Fields had net cash activities, despite a further 9% capacity to improve FCF generation outflows of US$280 million and decline in the gold price but, in particular, to further improve US$235 million respectively. In 2014, from US$1,249/oz in 2014 to market confidence in Gold Fields. despite a 10% decline in the average US$1,140/oz in 2015. A detailed update on the financial, gold price from US$1,386/oz in 2013 operational and development to US$1,249/oz, cash flow from The one outstanding issue that performance of South Deep during operating activities – after taking remains to be fully addressed, is to 2015 is provided on page 73. account of net capital expenditure deliver the South Deep mine in South and environmental payments – Africa and release the intrinsic value
Share price performance (Feb 2013 – Feb 2016) Share price performance (Jan 2015 – Feb 2016) (Index: 11 Feb 2013 = 100) (Index: 1 Jan 2015 = 100)
150 200
150 100
100
50 50
0 0 2013 2014 2015 2016 J F M A M J J A S O N D J F M 2015 2016 Combined Gold Fields + Sibanye Gold price Gold Fields Gold price Philadelphia Gold index JSE Gold index Philadelphia Gold index JSE Gold index
Share price performance This transformation has, however, Over the same period of time the Gold Fields has made a commitment coincided with a slide in the gold gold price declined by 25.8%, the to its investors to offer leverage to price from levels of around JSE gold index – representing gold the gold price. This commitment was US$1,650/oz at the beginning of miners listed on the JSE – fell by one of the main reasons why, in 2013 to approximately US$1,050/oz 5.3%, and the Philadelphia gold 2012, Gold Fields embarked on its at the end of 2015. By the end of index – representing gold miners major restructuring drive to enhance February 2016, the price had listed on the New York Stock cash flows. recovered to around US$1,200/oz. Exchange – decreased by 57%. This represents a significant market Since then Gold Fields has The long-term share price endorsement of the Gold Fields’ fundamentally transformed its performance of both Gold Fields and transformation decision. business and become a focused, Sibanye Gold has validated this modern, mechanised mining transformation journey. Just before Between 1 January 2015 and operation, significantly reducing its the announcement of the Sibanye 29 February 2016, the Gold Fields cost base and thus offering greater Gold unbundling on 28 November share price improved by just over cash returns. A key pillar of this 2012, the Gold Fields share price was 25%, once again outperforming the transformation was the unbundling of trading at R102.73/share. Since then gold price, which showed a 3.4% Gold Fields’ legacy mines in South Sibanye’s share price in particular has gain. The Philadelphia gold index still Africa into Sibanye Gold – this was performed strongly, rising by 320% to traded in negative territory, down announced on 1 November 2012 R57/share over the period. The 7%, but the JSE gold index has and took effect on the stock combined share price of Gold Fields improved by 81% as JSE-listed gold exchanges on which Gold Fields is and Sibanye Gold on 29 February miners received a boost by the listed on 11 February 2013. 2016 was valued at R122.56/share stronger Rand gold price. – an increase of 19.3% on its pre-announcement level. 58 Focus on business optimisation4 4.1 Introduction p60 4.2 Operational performance overview p61 4.3 Strategic focus areas p68
❯ Safety and wellness p68
❯ South Deep p73
❯ Quality portfolio of assets p75
❯ Growth in 2015 p77
❯ Mineral Resource and Mineral p82 Reserve Statement
❯ Technology and innovation p88
❯ Processing plant at Damang
59 The Gold Fields Integrated Annual Report 2015 4.1 Business optimisation – Introduction
Introduction During 2015, Gold Fields continued Similarly, Gold Fields focused on life In 2015, Gold Fields consolidated its to focus on improving the cash- extensions of its operations and the position as a more focused, leaner generation performance of its sustained cash flow margin per business and its portfolio is now existing operations. This included: ounce of gold produced. This ❯❯ characterised by modern, fully The avoidance of marginal ounce process of active portfolio mechanised open-pit and mining, whilst protecting the management in 2015 resulted in: ❯❯ underground mining operations, with commercial sustainability of its The continued focus on low-risk, diversified production spread across mines by eschewing high-grading near-mine exploration activities as eight mines in four countries. and investing in ore development opposed to early greenfields on an ongoing basis exploration, which saw resources ❯❯ This supports our broader strategy Enhanced cost-efficiency at all of increase by 13% in Australia ❯❯ focused on disciplined spending and its operations Examining further cash-generative ❯❯ cash-generation rather than ounces Production and strategic planning acquisition opportunities aligned for ounces sake, enhancing the based on the delivery of healthy with Gold Fields’ core Company’s ability to generate free free cash flow margins at lower competencies ❯❯ cash flow and delivering investors gold prices The continued disposal of growth ❯❯ value over and above the price of A back-to-basics strategy at the projects that are marginal and gold through its dividend policy and South Deep mine, which is primarily focused on metals other share price performance. As a result showing early benefits in improving than gold of this proactive strategy, Gold Fields its operational performance has been in a favourable position to weather current low gold prices.
Key operating statistics 2015 2014 20131 20121
Gold produced – attributable ('000 ounces) 2,159 2,219 2,022 2,031 Revenue (US$m) 2,545 2,869 2,906 3,531 AISC (US$/oz) 1,007 1,053 1,202 1,310 AIC (US$/oz) 1,026 1,087 1,312 1,537 Gold price (US$/oz) 1,140 1,249 1,386 1,656 Operating profit (US$m) 1,089 1,191 1,239 1,879 Operating costs (US$m) 1,431 1,685 1,679 1,674 Headline earnings (losses) (US$m) (28) 27 (71) 350 Normalised earnings (US$m) 45 85 58 409 Net cash flow (outflow) (US$m) 123 235 (235) (280) Free cash flow margin (%) 8 13 n/a n/a 1 Continuing operations
60 The Gold Fields Integrated Annual Report 2015 4.2 Business optimisation – Operational performance overview
Group production and guidance
2016 Guidance 2015 Actual 2015 Guidance 2014 Actual Prod AISC AIC Prod AISC AIC Prod AISC AIC Prod AISC AIC (Moz) (US$/oz) (US$/oz) (Moz) (US$/oz) (US$/oz) (Moz) (US$/oz) (US$/oz) (Moz) (US$/oz) (US$/oz) 2.05 1,000 1,035 – 2.10 – 1,010 – 1,045 2.16 1,007 1,026 2.17 1,055 1,075 2.22 1,053 1,087
In 2015, Gold Fields’ attributable gold production declined by 2.7% Production Costs What Gold Fields to 2.16 million ounces (2014: What Gold Fields guided for 2015: 2.22 million ounces). This reflected: guided for 2015: AISC of US$1,055/oz; ❯❯ Higher production at St Ives in 2.17 million attributable gold AIC of US$1,075/oz Australia, South Deep in South equivalent ounces Africa and at Tarkwa in Ghana What Gold Fields ❯❯ Lower production at Granny What Gold Fields achieved in 2015: Smith, Agnew, Darlot in Australia, achieved in 2015: AISC of US$1,007/oz; at Damang in Ghana and Cerro 2.16 million attributable gold AIC of US$1,026/oz Corona in Peru equivalent ounces
Central to Gold Fields’ strategy of Group and regional managed production growing our margin and maximising FCF, is a relentless focus on 2015 2015 2014 2014 managing costs on an AIC basis. Actual % Actual %
During 2015, the Group recorded Australia 988.0 44.2 1,031.1 44.9 AIC of US$1,026/oz, from Peru 295.6 13.2 326.6 14.2 attributable gold equivalent production of 2.16 million ounces. Ghana 753.9 33.7 736.0 32.1 Compared with 2014, the Group’s South Africa 198.0 8.9 200.5 8.7 AIC improved by 6% from US$1,087/oz. If the South Deep Group 2,235.6 100 2,294.2 100 mine, which is not yet at steady-state levels of production, is excluded from These included: ❯❯ Restructuring of the Group’s the results for 2015, then the Group’s ❯❯ Stopping of marginal mining at all Growth and International Projects AIC was US$944/oz. of the Group’s mines division in late 2013 and the ❯❯ The restructuring and rightsizing of divestment of associated The overall drop in Gold Fields’ costs our corporate, regional and greenfields growth projects that over the last three years is mainly did not meet the Group’s 15% FCF due to lower operating costs, operational structures, focused on margin criteria improved rationalisation and relocating operational responsibility ❯❯ restructuring as well as prioritisation and accountability in the regions The cancellation of all on- or of growth capital expenditure and at the operations. Our overall near-mine growth projects that allocation. corporate costs have been reduced demonstrated inadequate returns to approximately US$10/oz, ❯❯ The ongoing rationalisation and Over the past few years, Gold Fields which is amongst the lowest in the prioritisation of capital expenditure has implemented a number of industry and the deferral of non-essential cost-focused initiatives that ❯❯ A 12% reduction in our global capital, while not affecting the continued into 2015 and were pivotal workforce between 2013 and sustainability of our mines’ ore to lowering the Group’s cost base. 2015 bodies
61 The Gold Fields Integrated Annual Report 2015
4.2 Business optimisation – Operational performance overview (continued)
While the bulk of these initiatives at all our international mines we largely the result of new equipment were initiated and implemented raised overall Group capital acquisition at Tarkwa during 2013 and 2014, expenditure to US$634 million in consolidations of the gains made 2015 from US$609 million in 2014. Effect of oil prices on AIC continued into and throughout 2015 Regional capital expenditure through ongoing business process For Gold Fields, the impact of the included: re-engineering and general cost lower oil price during 2015 was not savings. In particular the following ❯❯ Australia: Our Australian mines significant. This is because in Ghana initiatives were implemented: increased capital expenditure from and Peru fuel price stability ❯❯ The further rationalisation of our A$304 million (US$274 million) in mechanisms are followed by growth portfolio during 2015 with 2014 to A$372 million government and short-term variations the sale of Gold Fields’ 51% (US$281 million) in 2015, largely in prices are not always passed onto interest in the Woodjam project in as a result of the rise in near-mine consumers and industry. All other British Columbia (p77). The Group exploration spending to A$91 million things being equal the impact of a is also looking to divest its holding (US$65 million) in 2015 (2014: decrease of US$10 per barrel of Brent in the Arctic Platinum project in A$60 million (US$54 million)) Finland (p87) crude on AIC is a reduction of US$18/oz ❯❯ South Africa: Capital expenditure at ❯❯ The stabilisation of our workforce for Ghana, A$6/oz (US$5/oz) for in 2015 after a net reduction of South Deep decreased from Australia and US$7/oz for Peru. 12% in the preceding three years. R994 million (US$92 million) to During 2015 Gold Fields had to R848 million (US$67 million), despite The Australian operations entered retrench 148 staff, led by acquiring a number of new heavy into a hedge at a base price of 67 retrenchments each at our underground vehicles in 2015 US$99.10 per barrel of Brent crude on Ghanaian and Australian ❯❯ South America: At Cerro Corona 10 September 2014. On 26 November operations. However, at South capital expenditure increased from 2014, an additional hedge at a base Deep we recruited 164 critical US$51 million to US$65 million amid price of US$78.45 per barrel of Brent skills in line with the rebasing ongoing construction of new tailings strategy at the mine crude was entered into. This resulted dams raises ❯❯ Unlike in previous years, Gold in 100% of diesel requirements for the ❯❯ West Africa: Capital expenditure Fields did not cut back its capital March 2015 quarter and 75% of diesel increased from US$190 million in expenditure. With a focus on requirements for the remaining nine 2014 to US$221 million in 2015, extending the life of our ore bodies months (April to December) of 2015 for Australia being hedged.
❯ Borehole drilling at our Australian operation 62 The Gold Fields Integrated Annual Report 2015
Group regional performance – overview Americas region 2016 2015 2015 2014 Guidance Actual Guidance Actual
Gold only produced (koz) 150 158.8 147 150.8 Copper produced (tonnes) 28 28.7 28 32.3 Gold-equivalent produced (koz) 260 295.6 280 326.6 AIC/AISC (US$/oz) 790 718 800 316 AIC/AISC gold-equivalent ounces (US$/oz) 860 777 915 702
Despite the significant 28% decline US$145 million in 2015 mainly the compared with US$702/oz in 2014 in the price of copper during 2015, result of the lower Nuevo Sol – due to lower gold sold, lower Cerro Corona in Peru recorded a exchange rate against the US Dollar, by-product credits and higher capital relatively good performance with good cost management and lower expenditure, partially offset by lower total managed gold equivalent ore tonnes mined. Capital net operating costs. production of 295,600 ounces which expenditure increased from was 6% better than the guidance for US$51 million in 2014 to The region reported net cash inflow 2015 of 280,000 ounces. It was, US$65 million in 2015, mainly of US$35 million during 2015. however, 9% lower than the related to the ongoing construction 326,600 ounces produced in 2014, of the tailings storage facility as well 2016 Guidance: mainly as a result of the lower copper as the construction of a new camp ❯❯ Gold only production: 150,000 price (as a consequence of its as the existing camp will be flooded ounces impact on gold-equivalent later in 2016, as the tailings dam ❯❯ Copper production: 28,000 tonnes production) and a planned decline in expands. ❯❯ Gold equivalent production: gold and copper grades, as per the 260,000 ounces life-of-mine plan. AISC and AIC amounted to ❯❯ AIC/AISC: US$790/oz US$718/oz in 2015 compared with ❯❯ AIC/AISC (gold-equivalent Net operating costs decreased by US$316/oz in 2014 – and, on a gold production): US$860/oz 9% from US$160 million in 2014 to equivalent basis, US$777/oz in 2015
❯ Tailing Storage Facility at Cerro Corona 63 The Gold Fields Integrated Annual Report 2015
4.2 Business optimisation – Operational performance overview (continued)
Australia region 2016 Guidance 2015 Actual 2015 Guidance 2014 Actual AIC/ AIC/ AIC/ Prod AISC Prod AISC Prod AISC Prod AIC/AISC (Koz) (A$/oz) (Koz) (A$/oz) (Koz) (A$/oz) (Koz) (A$/oz)
1,380 1,287 1,300 1,289 St Ives 350 (US$1,010) 371.9 (US$969) 350 (US$1,040) 361.7 (US$1,164) 1,350 1,276 1,190 1,096 Agnew 223 (US$990) 236.6 (US$959) 260 (US$950) 270.7 (US$990) 1,660 1,403 1,420 1,353 Darlot 58 (US$1,215) 78.4 (US$1,057) 83 (US$1,130) 83.6 (US$1,222) 1,170 1,016 1,050 896 Granny Smith 270 (US$855) 301.1 (US$764) 290 (US$840) 315.2 (US$809) 1,330 1,211 1,210 1,124 Region 901 (US$970) 988.0 (US$912) 983 (US$965) 1,031.1 (US$1,015)
During 2015 the Group's four mines Total AIC for the region of A$1,211/oz Net operating costs decreased by in Western Australia – St Ives, (US$912/oz) in 2015 compared with 6% from A$313 million (US$282 Agnew, Darlot and Granny Smith – A$1,124/oz (US$1,015/oz) in 2014. million) in 2014 to A$293 million collectively delivered a strong (US$220 million) due to good cost operational performance, with gold The region reported net cash inflow control. Total AIC of A$1,287/oz production of 988,000 ounces at an of US$255 million during 2015. The (US$969/oz) in 2015 compared with AIC of A$1,211/oz (US$912/oz), lower value of the Australian Dollar A$1,289/oz (US$1,164/oz) in 2014, which was broadly in line with full against the US Dollar had a beneficial which was 1% better than guidance year guidance for the region of impact on the region's performance of A$1,300/oz for the year. 983,000 ounces at an AIC of as the average gold price received A$1,210/oz (US$965/oz). rose from A$1,404/oz in 2014 to The good cost performance at A$1,541/oz in 2015. Taking into St Ives was mainly due to the higher Compared to 2014, production account the 43,100 ounce drop in production as well as tight cost decreased by 4% from production in the region, this had control, partially offset by higher 1,031,100 ounces mainly as a result the impact of boosting revenue by capital expenditure of A$152 million. of planned lower production from A$75 million. The higher capital expenditure was Granny Smith, Agnew and Darlot, associated with increased offset by higher production from Mine performances exploration across the site; the St Ives. Both St Ives and Granny St Ives had an outstanding year as it development of the Invincible open Smith exceeded their guidance for started to make the transition from a pit mine; and the commencement the year, compensating for Darlot predominantly underground mine to of the stripping campaigns at the and Agnew, both of which delivered a predominantly open pit mine. Gold Neptune and A5 pits. These two pits below guidance. production increased by 3% from are expected to complement the 361,700 ounces in 2014 to Invincible Pit as St Ives moves Net operating costs in the region 371,900 ounces in 2015, against towards being a predominantly open decreased by 7% from A$799 million guidance of 350,000 ounces for the pit operation after the closure of the (US$721 million) to A$747 million full year. The increase in production Athena underground mine. (US$562 million), mainly due to was mainly due to higher grades tight cost control, while capital mined from the new high grade St Ives generated net free cash flow expenditure increased from Invincible open pit, partially offset by of US$119 million for the year. A$304 million (US$274 million) to lower production from the Athena A$373 million (US$281 million) underground mine which is A brief review of the mine's following the opening up and scheduled to close in early 2016. brownfields exploration activity development of new ore sources during 2015 is on page 79. at the mines as well as higher expenditure on near-mine exploration across the region.
64 The Gold Fields Integrated Annual Report 2015
2016 Guidance: capital developments associated A brief review of the mine's ❯❯ Gold production: 350,000 ounces with accessing the FBH and brownfields exploration activity ❯❯ AISC/AIC: A$1,380/oz Cinderella deposits. during 2015 is on page 79. (US$1,010/oz) Despite the difficult production 2016 Guidance: At Agnew, gold production issues, Agnew generated ❯❯ Gold production: 58,000 ounces decreased by 13% from US$47 million of net free cash ❯❯ AISC/AIC: A$1,660/oz 270,700 ounces in 2014 to during 2015. (US$1,215/oz) 236,600 ounces in 2015. The reduced production was mainly due A brief review of the mine's Granny Smith enjoyed another to lower tonnes mined as well as brownfields exploration activity strong operational performance lower grades. The change to during 2015 is on page 79. during 2015. Production guidance sequence was caused mainly by anticipated a 5% decline in gold challenging geotechnical conditions 2016 Guidance: production from the 315,200 ounces at Waroonga's Kim ore body, where ❯❯ Gold production: 223,000 ounces in 2014 to 301,100 ounces in 2015, ground conditions necessitated ❯❯ AISC/AIC: A$1,350/oz but the mine managed to beat the rehabilitation and extra ground (US$990/oz) guidance by 4% instead. support. This resulted in slower rates of mining in some higher grade areas Darlot had a challenging year due to The mine generated US$111 million and the consequent substitution of the constraints of mining in scattered of net free cash for the year. higher grade tonnages with lower remnant areas over a relatively large grade areas elsewhere in the footprint, while developing towards Attention to cost control and Waroonga complex. the higher grade Lords South Lower efficiencies realised through a margin virgin ore body. As a consequence improvement programme resulted in Waroonga is in transition as the Kim gold production decreased by 6% a 7% decrease in net operating load matures. During the year the from 83,600 ounces in 2014 to costs from A$202 million new drive from the Kim decline to 78,400 ounces in 2015 due to lower (US$183 million) in 2014 to the high grade Fitzroy, Bengal and tonnes mined and processed. This A$188 million (US$141 million) in Hastings (FBH) ore bodies was was partially offset by higher grades 2015. Total AIC of A$1,016/oz completed and development mined in the new Lords South Lower (US$764/oz) in 2015 compared with activities commenced. Production deposit, where production A$896/oz (US$809/oz) in 2014 due from FBH is scheduled to increase commenced during the second half to the lower gold production and during 2016. In addition, decline of the year. higher capital expenditure, with these development started to the effects being partially offset by the Cinderella ore body in the New Notwithstanding the difficulties lower operating costs. Holland complex. Cinderella associated with mining in remnant straddles the tenement boundary areas, Darlot is continuing its The higher capital expenditure of between New Holland and strategy of self-funding a meaningful A$96 million was due to a record Waroonga and will be accessed exploration programme in order to programme of mine development through the existing New Holland extend the mine's life and to find a and a very substantial increase in infrastructure. ‘game changer’, which is targeted to exploration activity. The mine return the mine to a 15% free cash development programme saw 5.4km The lower production combined with flow margin. of horizontal capital development good cost control resulted in the net advanced (2014: 2.2km), providing operating costs decreasing from Net operating costs decreased by access to lower ore horizons at the A$191 million (US$173 million) in 2014 15% from A$93 million (US$84 Wallaby mine. These zones will to A$188 million (US$141 million) in million) in 2014 to A$79 million provide the bulk of the operation's 2015. Total AIC for Agnew of (US$59 million) in 2015. Total AIC of ore for 2016. A$1,276/oz (US$959/oz) in 2015 A$1,403/oz (US$1,057/oz) in 2015 compared with A$1,096/oz compared with A$1,353/oz A brief review of the mine's (US$990/oz) in 2014, due to lower (US$1,222/oz) in 2014, due to lower brownfields exploration activity gold production and higher capital gold output and higher capital during 2015 is on page 80. expenditure, partially offset by the expenditure of A$27 million, partially lower net operating costs. The higher offset by lower operating costs. 2016 Guidance: capital expenditure of A$97 million ❯❯ Gold production: 270,000 ounces was as a result of increased Darlot generated US$11 million of ❯❯ AISC/AIC: A$1,170/oz expenditure on exploration as well as net free cash flow for the year. (US$855/oz)
65 The Gold Fields Integrated Annual Report 2015
4.2 Business optimisation – Operational performance overview (continued)
South Africa region 2016 2015 2015 2014 Guidance Actual Guidance Actual
8,000 6,160 7,100 6,237 Gold only produced (kg/(koz)) (257) (198.0) (228.0) (200.5) 550,000 607,429 520,000 538,254 AISC (R/kg (US$/oz)) (1,200) (1,490) (1,400) (1,548) 575,000 635,622 545,000 602,363 AIC (R/kg (US$/oz)) (1,250) (1,559) (1,470) (1,732)
At the South Deep mine, production AIC of R635,622/kg (US$1,559/oz) around R190 million (US$15 million), remained steady during 2015 with in 2015 compared with AIC of taking into account the marginal production of 198,000 ounces R602,363/kg (US$1,732/oz) in 2014 drop in production and all other compared with 200,500 ounces in due to lower gold sold and higher variables being equal. Progress on 2014, mainly due to lower grades, operating costs, partially offset by the re-basing of the South Deep partially offset by increased volumes. lower capital expenditure. mine can be found on pages 73 Higher wage increases and rises in and 74. other operating costs led to net The 17% weakening of the South operating costs rising by 13% from African Rand against the US Dollar 2016 Guidance: R2.66 billion (US$246 million) in during 2015 had a beneficial impact ❯❯ Gold production: 257,000 ounces 2014 to R3 billion (US$237 million) in on South Deep as the average Rand ❯❯ AISC: US$1,200/oz 2015. Capital expenditure at South gold price received strengthened ❯❯ AIC: US$1,250/oz Deep decreased from R994 million from R441,981/kg in 2014 to ❯❯ De-stress development: 36,000m2 (US$92 million) in 2014 to R478,263/kg in 2015. South Deep's (2015: 29,071m2) R848 million (US$67 million) in 2015. revenues in 2015 benefited by
West Africa region 2016 Guidance 2015 Actual 2015 Guidance 2014 Actual Prod AISC/AIC Prod AISC/AIC Prod AISC/AIC Prod AISC/AIC 2015 (Koz) (US$/oz) (Koz) (US$/oz) (Koz) (US$/oz) (Koz) (US$/oz) Tarkwa 560 940 586.1 970 580 1,040 558.3 1,068 Damang 150 1,160 167.8 1,326 180 1,220 177.8 1,175 Region 710 986 753.9 1,049 760 1,180 736.0 1,094
Gold Fields' two mines in Ghana, the guidance of US$1,180/oz for Electricity challenges Tarkwa and Damang, produced a the year and 4% better than the One of the key challenges facing strong operational performance in US$1,094/oz reported in 2014. Gold Fields Ghana is the curtailment 2015. Total managed gold on electricity usage by the industry. production of 753,900 ounces was While the aggregate performance of Government has enforced a 33% less than 1% below guidance of the region was outstanding during power-shedding programme on all 760,000 ounces for the year and 2% 2015, it somewhat masks the mining and industrial companies. In higher than the 736,000 ounces exemplary performance of Tarkwa response Gold Fields Ghana has produced in 2014. Strong cost on the one hand, and the significant signed a purchasing power management ensured a 7% operational challenges faced by agreement with independent power decrease in net operating costs Damang on the other hand. The producer Genser, whereby the from US$551 million in 2014 region as a whole reported net cash company is installing three 11MW to US$513 million in 2015, while inflow of US$44 million during 2015, solar turbines at Tarkwa and four capital expenditure increased of which Tarkwa contributed solar 5.5MW turbines at Damang. from US$190 million in 2014 to US$76 million while Damang These plants are scheduled to be US$221 million in 2015. As had a negative cash flow of operational in the second half consequence AIC for the region of US$32 million for the year. of 2016. US$1,049/oz was 12% better than 66 The Gold Fields Integrated Annual Report 2015
Mine performances Tarkwa's processing plant achieved increased use of diesel generators to record throughput in 2015 of compensate for power disruptions as At Tarkwa, which is the largest 13.5 million tonnes compared to well as additional load shedding and one of the most consistent 13.4 million tonnes in 2014. requirements by the state electricity producers in the Gold Fields Group, utility ECG. Total AIC of US$1,326/oz gold production increased by 5% Tarkwa generated net free cash of in 2015 was 9% higher than from 558,300 ounces in 2014 to US$76 million during 2015. guidance and 13% above the 586,100 ounces in 2015, which was US$1,175/oz recorded in 2014. The also 1% higher than the guidance of A brief review of the mine's mine’s net cash outflow totalled 580,000 ounces for the year. This brownfields exploration activity US$32 million in 2015. improvement was mainly due to during 2015 is on page 80. higher grades mined from the To address the loss making position Teberebie pillar and surrounding high 2016 Guidance: of Damang, a comprehensive review grade areas. Throughput and ❯❯ Gold production: 560,000 ounces of the mine commenced during the efficiencies in the processing plant ❯❯ AISC/AIC: US$940/oz second half of 2015, with a view to also improved significantly. evaluating all options for the future of Damang had a challenging year with the mine. Options being considered Net operating costs improved by managed gold production of include a push back to expose 12% from US$372 million in 2014 167,800 ounces, 7% below higher grade ore under the original to US$327 million in 2015 due to guidance for the year and 6% below Damang pit or placing the mine in ongoing business improvement 2014 production of 177,800 ounces. care and maintenance. initiatives across all facets of the The lower production was mainly as operation as well as the lower oil a result of lower grades caused by A brief review of the mine's price. As a consequence of the inadequate exposed and available brownfields exploration activity increase in gold production and high grade ore in the pits, in during 2015 is on page 80. improved cost management, offset particular at the Juno South East and by higher capital expenditure Saddle Bridge areas. 2016 Guidance: associated with fleet replacement ❯❯ Gold production: 150,000 ounces and increased stripping, AIC Net operating costs increased by ❯❯ AISC/AIC: US$1,160/oz improved by 9% from US$1,068/oz only 3% from US$180 million in 2014 in 2014 to US$970/oz in 2015. to US$186 million in 2015 mainly due This represents a ‘holding plan’ to increased tonnes processed as pending the outcome of the review well as higher fuel costs, amid the of different options for the mine.
❯ Aerial view of the Damang mine 67 The Gold Fields Integrated Annual Report 2015 4.3 Business optimisation – Strategic focus areas
Safety and wellness During the reporting period, the Occupational disease at the South Deep mine (rate per 1,000 employees) Group’s overall Total Recordable Injury Frequency Rate (TRIFR) improved by 1 1 2015 2014 2013 almost 16% to 3.40 recordable incidents per million man-hours Noise-induced hearing loss (NIHL)2 0.68 1.52 0.62 (2014: 4.04). This reflected: Cardio-respiratory tuberculosis (CRTB) 6.16 9.15 6.5 ❯❯ A significant reduction in the total Silicosis1 1.54 2.67 1.86 recordable injuries at South Deep Chronic obstructive airways disease (COAD)2 0.17 0.76 0.00 (p69) ❯❯ A continued reduction in total South Deep workforce 5,837 5,246 6,466 recordable injuries at our Australian 1 Numbers are now presented per 1,000 employees. Comparatives have been restated operations, with the exception of 2 Based on the number of cases submitted for compensation the Granny Smith mine, following Gold Fields continues to uphold its As stated in its Occupational Health the entrenchment of a behavioural- promise, ‘if we cannot mine safely, and Safety Policy, Gold Fields strives based health and safety strategy we will not mine’. This reflects the for ‘Zero Harm’ at all of its operations (p69) need to minimise any potential and to minimise occupational health ❯❯ A deterioration in the TRIFR at negative impact on people, maintain and safety hazards. All of the Group’s Cerro Corona as well as our operational continuity and protect the operations are certified to the Ghanaian mines (p69) Company’s reputation. Gold Fields’ OHSAS 18001 international health Group annual performance bonus and safety management standard Nevertheless, we reported four contains a significant safety and are fully compliant with the fatalities during 2015. Three fatalities component (p133). Furthermore, requirements of the International occurred at the South Deep mine in maintaining safe and healthy working Cyanide Management Code (ICMC). South Africa and one at the Tarkwa conditions is a key compliance issue As Cerro Corona produces a mine in Ghana: for the Company. copper-gold concentrate it is not ❯❯ In March, Kennedy Katongo, a required to comply with the ICMC boilermaker, was injured at a station tip. He succumbed to his Safety performance injuries in hospital three days later. ❯❯ Alberto Chiungo, a contracted Group safety performance locomotive operator, was fatally 2015 2014 2013 injured in May, when he was caught between the loco and a 1 TRIFR 3.40 4.04 4.14 hopper during tramming Fatalities 45 3 2 operations ❯❯ Lost time injuries2 68 75 52 In August, Sbongiseni Ngqoleka, a security contractor, was shot and 3 Restricted work injuries 68 84 73 killed by armed robbers targeting Medically treated injuries4 35 38 54 copper cables at South Deep. Two other security personnel were Total recordable injuries 174 200 181 injured in the same attack Total hours worked 51,198,910 49,456,833 43,767,818 ❯❯ In December, a spotter at Tarkwa, ¹ Total Recordable Injury Frequency Rate (TRIFR) Group safety metric was introduced in Clement Aidoo, was struck and 2013. TRIFR = (Fatalities + Lost Time Injuries + Restricted Work Injuries + Medically fatally injured by a truck when it Treated Injuries) x 1,000,000/number of man-hours worked reversed after dumping its load of 2 A Lost Time Injury (LTI) is a work-related injury resulting in the employee or contractor material being unable to attend work for a period of one or more days after the day of the injury. The employee or contractor is unable to perform any of his/her duties 3 A Restricted Work Injury (RWI) is a work-related injury sustained by an employee or The two fatal mine accidents at contractor which results in the employee or contractor being unable to perform one or South Deep and a further serious more of their routine functions for a full working day, from the day after the injury injury at the mine precipitated the occurred. The employee or contractor can still perform some of his/her duties issuing of Section 54 orders by the 4 A Medically Treated Injury (MTI) is a work-related injury sustained by an employee or Department of Mineral Resources, contractor which does not incapacitate that employee and who, after having received medical treatment, is deemed fit to immediately resume his/her normal duties on the next placing a moratorium on mine- calendar day, immediately following the treatment or re-treatment related activities across the mine. 5 Three of the four fatalities were workplace accidents. A fourth fatality was a member of This effectively stopped production the protection services team at South Deep who was shot and killed during a robbery at at the mine for a total of 18 days, the mine with production losses estimated at around 8500 ounces. 68 The Gold Fields Integrated Annual Report 2015
Safety management A risk assessment undertaken on all ❯❯ A compliance system checklist Details of specific regional safety recordable injuries since 2012 that ensures work is stopped if a initiatives implemented in 2015 are indicates that the risk of incidences workplace is not fully compliant set out below: that result in recordable injuries is with safety standards steadily declining with no high-risk ❯❯ Ongoing monitoring of the top five events having occurred since the accident causes and ensuring Americas region implementation of Vital Behaviours appropriate measures are in place In 2015, the TRIFR at the Cerro in 2014 and 2015. ❯❯ The inclusion of leading and Corona mine deteriorated to 1.09 lagging indicators in the analysis from 0.38 in 2014, largely the result However, a re-vitalisation of the Vital of the safety component of the of an increase in total recordable Behaviours programme and safety bonus. Achievement of safety injuries from two to seven during the discipline will be instituted in 2016 targets accounts for 30% of the year. While a number of audits were to reinforce safety culture and total bonus paid to teams performed on the mine’s safety standards at our mines. A particular management system, with no major focus will be new employees and In addition to behavioural-based findings reported, the mine has contractors, where there is evidence management, South Deep has also intensified a safety campaign that of a greater risk of injury. intensified its effort to engineer-out commits all employees and safety risks. As part of this a contractors to zero accidents. The South Africa region rail-bound proximity detection campaign contains 10 relevant safety The South Deep mine reported two system was completed in Q1 2016, rules that every employee and mining-related fatalities and one fatal through which all 56 locomotives at contractor has to sign up to and shooting in 2015, undoubtedly the the mine have been fitted and focuses on improving the leadership low point in its safety performance relevant operators and artisans skill of safety supervisors and during the year. The fatalities were a trained in its usage. The second conducting robust risk assessments setback on the mine’s path to Zero phase of the project will comprise before performing tasks. Harm, but overall South Deep the installation of fixed beacons at showed a strong improvement in its the mine in 2016, to facilitate Australia region safety performance as highlighted by communication between the For 2015, the TRIFR for Gold Fields the 37% improvement in TRIFR from locomotives. Australia improved by 4.5% over 4.65 in 2014 to 2.91 in 2015. Total 2014 and the number of recordable injuries improved from 167 to 68 over Fall-of-ground accidents have been injuries fell from 97 to 92. The the same period, while the Serious on a steady decline and fell from St Ives, Agnew and Darlot mines Injury Frequency Rate improved by eight in 2014 to six in 2015. We recorded continued improvements in 21%. A 38 injury-free day record was continue to work with outside their recordable injury frequency achieved during Q4. institutions, including the Institute rates, but at Granny Smith the TRIFR of Mine Seismology, to monitor, deteriorated from its low 2014 base A number of new initiatives were understand and mitigate against during 2015. launched in 2015 to complement seismic underground events. and support the behavioural-based The rising TRIFR trend at Granny Smith incident-management system, which A further focus on safety has been predominantly related to is the base for the mine’s safety management in 2016 will be placed incidents underground. Efforts to campaign. These include: on safety practices for contractors address the trend are focused around ❯❯ Proper start-up procedures through a dedicated incident a re-vitalisation of the Vital Behaviours through workplace assessments management system. programme, specifically in the and employees’ medical screening underground areas, providing coaching ❯❯ Increased visibility underground West Africa region and mentoring for supervisors and through multi-discipline audits and In 2015, there was a deterioration in managers and a return to the required management presence the overall safety performance of the levels of discipline on safety protocols ❯❯ The launch of a number of safety region, with the TRIFR rate rising to and systems. Launched in May 2014, enablers, such as competitions 1.02 from 0.75 in 2014 and total the programme has achieved an and recognition awards recordable injuries rising to 21, from overall reduction in total recordable ❯❯ A weekly safety meeting at which 15 in 2014. The Tarkwa mine also injuries of around 30% over the all incidents are discussed and reported a fatality in 2015, the first period of 2013 to 2015. analysed at our West African operations in four years.
69 The Gold Fields Integrated Annual Report 2015
4.3 Business optimisation – Strategic focus areas (continued)
Several interventions are being underground mining poses to incorporate the noise reduction effect considered to prevent a re- workers. provided by hearing protection occurrence of the accident, which devices, which are freely available at occurred when a dump truck ran There have been significant South Deep, and are compulsory to over a spotter after he had offloaded improvements in occupational health wear in demarcated areas. waste rock. The mine is looking at a and wellness rates throughout the number of ways of eliminating the Group during 2015. The number of South Deep continues to implement human interface with machinery, occupational health cases submitted a range of medical, educational and wherever possible, and investigations for compensation by the Group was engineering interventions to improve have also begun into the use of other as follows: its performance. These include: spotting systems for trucks. ❯❯ Six cases of NIHL (2014: 13) ❯❯ Thorough examinations during ❯❯ Nine cases of Silicosis (2014: 15) pre-employment and periodic A key part of the safety strategy is a at South Deep medical examinations zero tolerance approach to drug and ❯❯ Early diagnosis and management alcohol usage. As part of the mines’ Furthermore, in 2015, 36 new cases of treatable medical diseases zero tolerance approach almost of CRTB (2014: 49) were recorded. ❯❯ Preventative counseling on NIHL 126,664 sobriety tests were In addition, the COAD rate has ❯❯ Silencing of underground fans and conducted during 2015 and decreased by 78% from 0.76 (2014) pumps 15 employees and contractors, who to 0.17 (2015) at the South Deep ❯❯ Application of noise management were found to be over the limit, were mine. measures to the underground discharged immediately. The zero mining fleet tolerance approach is supported by Wellness is a material issue given the ❯❯ Participation in Chamber of Mines' free counselling and educational location of Gold Fields’ mines, the occupational health initiatives sessions on drug and alcohol abuse. nature of employees’ working ❯❯ Distribution of personalised patterns and the lifestyle challenges moulded hearing protection Behavioural-based safety associated with the sector. All of devices to high-risk employees, a programmes are being intensified to Gold Fields’ regions run dedicated programme that is 65% complete arrest the weaker safety record at wellness programmes, tailored to both mines and more regular both the national and local context of The Mine Health and Safety Council meetings between senior each mining operation. These (MHSC) has set new targets, which management and their teams on programmes aim to identify and require that total noise emitted by all safety are now taking place. The manage chronic medical conditions mining equipment should not exceed majority of safety-related incidents within the workforce, whilst also 107 dB(A) by 2024. South Deep will involve contractors on site and maximising its productive capacity continue to develop and enhance greater pressure is being exerted on and reducing absenteeism. technical solutions to achieve this contractor management to ensure target. effective supervision and Noise implementation of safety standards. During 2015, Gold Fields’ South At our Australian operations a Deep mine achieved a significant comprehensive NIHL strategy was Employee health and wellness 55% improvement in the NIHL rate rolled out during the year, to ensure management to 0.68 per 1,000 employees and in that the management of noise is Gold Fields is committed to reducing the number of NIHL cases submitted standardised within the region. This the exposure of its employees to from eight in 2014 to four in 2015. strategy, which remains a key priority, occupational health risks, including Throughout 2015, the mine met the optimises current practices and aims those associated with air quality, Mine Health and Safety Council to maintain personal noise exposures silicosis, tuberculosis and hearing (MHSC) milestone for below 85dB(A) for the duration of the loss. As such, each region has equipment noise not to exceed shift. The strategy centres around implemented occupational health 110 (A-weighted) decibels (dB(A)). four pillars: and hygiene monitoring for diesel Personal noise sampling results, ❯❯ Adopting a risk-based approach particulates, respirable and silica even though they are steadily ❯❯ Implementation of controls and dust, other airborne pollutants, improving, indicate that 72% of engineering solutions to reduce radiation and noise. Particular South Deep’s personnel are exposures emphasis is placed on managing the potentially exposed to noise ❯❯ Enforce the correct use of underground working environments measurements above the appropriate personal protective in Gold Fields’ Australian and South Occupational Exposure Limit (OEL) equipment (PPE) African operations, due to the of 85dB. It is important to note that ❯❯ Ongoing monitoring to assess the heightened health risks that these measurements do not efficacy of our controls 70 The Gold Fields Integrated Annual Report 2015
A number of audiometric tests at our as sound proof seals for equipment who have filed legal suits against the operations showed that the strategy operator cabins, are also having a companies. is demonstrating early success. positive impact on noise levels. The companies – Anglo American There were no reportable NIHL cases Silica dust exposure South Africa, AngloGold Ashanti, in the region and at St Ives, where In 2015 the MHSC introduced new African Rainbow Minerals, Gold audiometric testing was completed aspirational silica dust exposure Fields, Harmony and Sibanye – for 127 workers exposed to above targets for South African gold mines, believe that fairness and 95dB(A) in the underground and called ‘silica dust milestones’. These sustainability are crucial elements open pit operations, none reported milestones require that personal of any solution and are working positive for NIHL. Furthermore, only exposure levels to silica dust be together with these stakeholders nine vehicles and machinery reduced from 0.1mg/m³ to to design and implement a equipment across our four <0.05mg/m³ by 2024. In Q4 2015, comprehensive solution that is both operations recorded noise levels South Deep reported that 23% of fair to past, present and future gold above 110dB(A) throughout 2015. the personal silica dust samples mining employees and also Operators of this equipment use exceeded this level. This is an sustainable for the sector. appropriate hearing protection to improvement from the 38% over ensure noise levels below 85dB(A). exposures recorded in Q1 2015, but The companies are among South Deep has accelerated the respondent companies in a number In West Africa during 2015, the implementation of a range of of lawsuits related to occupational number of NIHL cases reported fell improved dust control measures, lung disease, but do not believe that to two from five in 2014, but including: they are liable in respect of the personal noise samples taken at our ❯❯ Real-time dust monitoring claims brought, and they are Tarkwa and Damang mines regularly ❯❯ The fitting of water mist sprays at defending these. The companies reveal high percentages above our dust sources have been working for many years internal standard of 85dB(A). This ❯❯ Dust management controls on to try to eliminate the incidence of does not factor in the mitigating footwalls and internal tips occupational lung disease at their impact of hearing protection devices. ❯❯ Installation of manually controlled mines. These efforts continue. Noise management measures water blasts in all working areas implemented to protect employees At our open pit operations in Ghana, working in these environments In South Africa, during 2015 the Australia and Peru, contact with include: Silicosis rate per 1,000 employees silica dust is limited due to the nature ❯❯ The mandatory use of hearing improved by 43% to 1.54 from of open pit mining and the low silica protection devices (ear plugs and 2.67 in 2014 with the number of content of the ore bodies. ear muff) in areas with noise Silicosis cases submitted to the exposures above 85dB(A) relevant health authorities falling In 2015, there were no new cases of ❯❯ Introduction of noise engineering from 14 to nine. Similarly, the CRTB Silicosis and CRTB at our Ghanaian controls, where feasible, to reduce rate improved by 33% in 2015 to operations. However, there was only potential exposure from identified 6.16 per 1,000 employees and the one case each in 2014. Despite this, noise sources number of CRTB cases submitted regular gravimetric sampling of ❯❯ Introducing pump and fan silencing fell to 36 in 2015 from 48 in 2014. respirable silica dust samples are methods and technologies carried out and evaluated at our The industry working group formed Tarkwa mine in Ghana. Controlling equipment cabin noise in 2014 to address issues relating to is another focus of our Ghanaian compensation and medical care for Diesel Particulate Matter (DPM) operation as a small percentage of occupational lung disease in the Gold Fields undertakes regular 160 machines assessed during 2015 South African gold mining industry, monitoring and analysis of the exceed the internal benchmark of had extensive engagements with a concentration of DPM at all of its 83dB(A). Continuous monitoring of wide range of stakeholders in 2015, operations. This issue is particularly the operator workstations as well as including government, organised material at Gold Fields’ underground a number of in-pit machines such as labour, other mining companies and mines in Australia and South Africa, drill rigs, excavators, dump trucks legal representatives of claimants due to the potential concentration of and graders are undertaken every six particulates in specific working areas. months. Engineering controls, such
71 The Gold Fields Integrated Annual Report 2015
4.3 Business optimisation – Strategic focus areas (continued)
While there are no regulatory limits, In Ghana, the exposure levels and ❯❯ Support: This includes doctor- the Australia region implemented a concentration of personal and area based primary healthcare, strategy in 2014 designed to reduce DPM samples obtained were psychological counselling and exposure to DPM with a focus on insignificant, approximately 200% social services for all employees fitting filters to equipment, refining below the OEL. The DPM monitoring and contractors maintenance schedules, ensuring the programme was therefore correct levels of ventilation and discontinued. In addition, and in recognition of the providing appropriate procedural potentially close relationship between controls. HIV/Aids HIV/Aids in the workplace and local HIV/Aids management is integrated communities, South Deep supports Sampling programmes during 2015 into Gold Fields' mainstream health a number of community-based HIV/ have indicated the success of this services to improve worker Aids projects. initiative with a dramatic decline in participation and minimise DPM levels underground, to a point stigmatisation. Voluntary Counselling In Ghana too, where the national where only 1% of samples (2014: and Testing (VCT) takes place during HIV/Aids rate is around 1.5%, 3 2%) have exceeded the 70mg/m regular employee health assessments. employees and contractors have target recommended by the This has the added benefit of directly access to a confidential VCT Australian Institute for Occupational addressing the interaction of HIV/Aids programme which employees receive Hygienists. Furthermore, a two-year with related health issues such as free of charge. During the year, about study on DPM exposure on drill-rig tuberculosis (TB) and other sexually 55% of employees of the Ghana operators at Granny Smith, showed transmitted infections (STIs). operations underwent the VCT a conclusive reduction in exposures programme. Anyone testing positive that are attributed to diesel Gold Fields' workforce in South is provided with free treatment in line particulate filters, ventilation Africa faces a particular risk of with the government's national HIV management and operator exposure to HIV/Aids, in a national treatment programme which supplies education. context where an estimated 19% of drugs free of charge. By year-end adults (aged 15 to 49) live with the 2015 Ghana had 19 employees on In South Africa, the Department of disease. Gold Fields is committed to HAART (2014:22). Gold Fields Mineral Resources has developed lowering the HIV/Aids prevalence at also implements community-based a draft regulatory framework to South Deep, where 69 employees HIV/Aids programmes in Ghana, establish a DPM OEL. This proposal, tested positive in 2015, compared including awareness-raising (via radio published in February 2014, with 54 in 2014. South Deep's and trained community health recommended a four-year ‘step-in- integrated HIV/Aids, STI and TB educators) and condom distribution. 3 approach’ starting at 350mg/m in strategy directly addresses 2015 and systematically decreasing interactions between these diseases. Malaria 3 to 160mg/m by January 2018. Gold It has four key pillars: Our workforce in Ghana faces a high Fields has over the years introduced ❯❯ Promotion: This includes regular risk of exposure to Malaria and the a range of measures to improve publicity campaigns and condom Company has a comprehensive monitoring and bring down the DPM distribution at all workplaces Malaria strategy in place, which exposure levels underground. These ❯❯ Prevention: VCT is provided to all incorporates education, prevention, include the acquisition of vehicles employees, contractors, their prophylaxis and treatment. It also and machines with more advanced partners and family members on a includes spraying accommodation engine technology as well as a new confidential basis. In 2015, the (both on-mine and employee housing fuel supply contract – started in Q3 mine’s VCT participation rate was within the community), provision of 2014 – through which South Deep around 17% mosquito repellent for workers, now receives only ultra-low sulphur ❯❯ Treatment: Free Highly Active support for community health content diesel (10ppm). This is Anti-retroviral Treatment (HAART) facilities and rapid diagnosis and having the desired impact – the 2015 is provided to HIV-infected treatment. 3 350ug/m DPM OEL was only employees through onsite, exceeded in 1.7% of samples last doctor-staffed clinics. In 2015, 50 In 2015, 523 employees (2014: 681) year compared with 4.5% in 2014 employees joined the HAART tested positive for malaria after 3,104 and 19.1% in 2011. The 2018 programme (2014: 58). This takes (2015: 2,686) individuals were tested 3 160ug/m OEM was exceeded in the total number of active at both of our mines. None of the 11.2% of samples in 2015 compared participants to 296 (2014: 262), treated cases proved fatal. with 25.8% in 2014 and 60.6% in with 480 cumulatively enrolled Employees and dependants who live 2011. South Deep is looking at since the HAART programme in the mine villages have their houses accelerating the research into the began in 2004. Employees’ sprayed as part of our Malaria Vector fitment of diesel particulate filters to dependants can also receive Control programme. Under this achieve further reductions. HAART via the Company's programme a total of 450 company medical aid schemes housing units were sprayed in 2015. 72 The Gold Fields Integrated Annual Report 2015
South Deep The team undertook an extensive developed to guide the change In South Deep’s evolution 2015 was recruitment drive of the identified process. The conversion from low a critical year and was very much a critical skills and by the end of 2015 profile vertical mining (2.5 metres year of two halves. We started off the had filled 164 of the 166 skills it was vertical height) to high profile vertical year by taking a step back and seeking. Importantly, most of the mining (5 metres vertical height) deciding to fix the basics at the mine core mining and engineering commenced in Q3 2015 and is before determining the new long- positions have now been filled. expected to simplify and derisk the term steady state profile. mining process. At the end of the In addition, in April 2015 South Deep year, all de-stress cuts at the mine As part of this process, we removed entered a three-year wage had been converted to high profile the previous long-term production agreement with its registered trade with the exception of corridor 1. and cost targets to afford the new unions to ensure that the About 70% of the mine is now South Deep management team the remuneration packages reflected the employing high profile de-stress with time to fix the base and determine specialised mechanised mining skills the transition for the remainder of the the way forward. In the absence of set required. mine set to continue until 2018. long-term production targets though, we stated that it was our aspiration During 2015, the fleet was optimised More details on South Deep’s to get to cash breakeven at the mine and a total of 24 Category 1 mining processes and by the end of 2016. In addition, we machines were delivered to the mine methodologies are on page 87. committed to providing a new during the year, with all machines, long-term plan in early 2017. except one, commissioned before There were marked operational and year-end. An additional 24 machines financial improvements in 2015. The first imperative was recruiting a will be acquired during 2016. The Comparing the second half with the new management team at the mine. maintenance capacity at South Deep first half of 2015, production at South To achieve this, we aggressively also improved during the year with Deep increased 64% to 123,000 handpicked a team of leading the implementation of a maintenance ounces, which resulted in an 37% mechanised mining specialists, contract with an Original Equipment decrease in AIC to US$1,279/oz. mostly from the South African Manufacturer (OEM) in Corridor 2, In addition, safety improved platinum sector. which accounts for 35% of total materially, with TRIFR falling by 8% mining at South Deep. We also over the period backfill placed 3 The new team developed 68 projects commissioned the 93 level increased 50% to 33,780m and to address the issues faced at South workshop, one of the largest secondary support increased 27% to Deep. These projects were underground workshops in South 614 metres. categorised into seven broad pillars: Africa. People; Safety and health; While the net cash outflow for the Mechanised fleet; Infrastructure; During the year, a marked year was R1 billion (US$80 million), Mining; Mine design and planning; improvement in the physical the operating improvements through Systems. In addition, a separate conditions of the underground the year and the higher Rand gold business improvement team was set infrastructure was achieved across price resulted in the Q4 2015 outflow up to work with the operating the mine. Further improvements are falling to R57 million. management team to implement the expected in 2016, particularly with range of improvement projects (p74). new underground roadway For 2016 we have provided the constructions and maintenance following guidance to the market: In addition to these seven pillars projects initiated in Q1 2016. 257,000 ounces at AISC of South Deep also strengthened its R550,000/kg (US$1,200/oz) and AIC energy and water teams as well as In 2013, we began a review of of R575,000/kg (US$1,250/oz). the Sustainable Development the de-stress mining method in Capital expenditure is estimated at department in view of the increasing collaboration with a team of leading R1 billion (US$71 million). We risk faced by the mine amid social international and local geotechnical maintain our target of achieving cash volatility in the Westonaria district, experts. A strategic mine design breakeven by the end of 2016 at our home to the mine (p114). change in the de-stress methodology planning gold price of R500,000/kg. was adopted in July 2015 with a detailed transition programme
73 The Gold Fields Integrated Annual Report 2015
4.3 Business optimisation – Strategic focus areas (continued)
South Deep’s base for future growth
9 1 8 Energy Stakeholders People Health and 2 and water and community safety 7 3 Finance and Fleet administration 6 4 Resource Infrastructure management 5 C Mining methods
Fix the base to support future growth
74 The Gold Fields Integrated Annual Report 2015
Growing a quality portfolio Of the various growth channels The resultant list is tested against of assets available – greenfields exploration, additional balance sheet criteria to Growth strategy brownfields exploration, acquisitions, develop a shortlist of assets for mine construction and targeted which the Group has both the Gold Fields’ definition of growth is portfolio management – Gold Fields appetite and capital available for underpinned by our focus on cash has selected those that align with our purchase. generation. Growing Gold Fields cash-focused strategy, our core does not necessarily imply a growth competence and our list of growth Gold Fields then undertakes a in geographical footprint or number criteria. Our strategy has informed prudent and phased investigation of operations. We define growth as the adoption of three growth pillars: that may ultimately result in ‘growth in cash flow per share, and ❯❯ Acquisitions: pursuing cash- acquisition. This process includes growth in average reserve life.’ generative acquisition approaching the current owner, opportunities that are aligned with conducting desktop and on-site due Over the past three years we have Gold Fields’ core competencies diligence; building the business case, made significant progress in terms of ❯❯ Near-mine (brownfields) both internally and externally and, if restructuring our portfolio so we can exploration: we ceased all early appropriate, entering the final deal achieve the targeted growth in the greenfields exploration activity, phase. average reserve life per operation which does not add to short- to and free cash flow per ounce. medium-term cash flow, and While no major acquisitions have Gold Fields’ portfolio is now shifted to low-risk, near-mine been made over the past two years characterised by modern, fully exploration the difficult market conditions in mechanised open-pit and ❯❯ Ongoing active portfolio the industry have made further underground mining, with diversified management to optimise our consolidation in the industry more production spread across three existing assets likely. We will take a disciplined continents. approach to any corporate activity These growth channels emerge as and will model it on our successful When growth is driven by such a the business follows a process to US$262 million acquisition of the strong focus on cash generation, the achieve sustainable growth in cash Yilgarn South assets from Barrick business may, in certain instances flow per share and growth in average Gold in October 2013. An acquisition where operations are not strategically reserve life. This process, outlined in like this will be impossible to replicate aligned or not contributing to our the diagram on page 76, starts with in terms of the price we paid for the cash generation imperative, dispose two courses of action, during which three mines in the Yilgarn portfolio at of assets in its quest for growth. We we assess: the time (Granny Smith, Darlot and have focused on disposing of growth 1. Potential future acquisitions Lawlers), but the structural benefits projects that are marginal, located in 2. The current mines and projects in and subsequent management efforts ‘higher-risk’ locations and/or are our portfolio of assets have given us a model to replicate. primarily focused on metals other than gold. This has resulted in a Assessing potential future The integration of the Yilgarn South short-term reduction in Gold Fields’ acquisitions assets with our existing mines in Mineral Resources – from 113 million Western Australia have: ounces in 2013 to 108 million In assessing potential acquisitions, Gold Fields looks broadly and ❯❯ Helped the Australia region expand ounces in 2014 and 102 million in its cash-generative production to 2015 (p82 – 87). In light of our globally at potential assets. Once a potential acquisition is identified, it is the point where it now contributes new focus, however, it is not only 45% of Gold Fields’ total produced acceptable but is expected that assessed against the Group’s five growth criteria: ounces every new ounce Gold Fields brings ❯❯ Paid for themselves by Q3 2015 into production will directly support ❯❯ Quality: All-in Costs ❯❯ Jurisdiction: the right address – a two-year payback that is the delivery of superior returns to almost unheard of in the industry current and future shareholders, and ❯❯ In-production: cash producing or upgrade our existing portfolio. near-production ❯❯ Life: minimum eight years, ideally 10 ❯❯ Scale: large enough to produce US$20 million – US$30 million free cash flow annually
75 The Gold Fields Integrated Annual Report 2015
- Target - Growth in the average reserve life per operation and free cash flow per ounce
WE ASSESS Current mines and projects Potential future in our portfolio acquisitions (Following optimisation through business strategic planning process)
Growth Criteria to screen current and potential future assets
Scale Quality (Large enough to produce (All-In Costs) US$ 30-40m FCF annually)
Jurisdiction Life (The (Minimum ‘right address’) 8 – 10yrs desirable)
In- Production (Cash producing)
Test potential asset ➙ Determine shortlist against balance way forward for each
sheet➠ criteria current asset ➠
Further categorise shortlist according to ‘price tag’
? ? ? $ Optimise Continue Divest
Following categorisation according to price tag, our shortlist of potential future Based on the outcomes of the strategic business planning process and the growth assets undergoes further refinement. Those potential assets that remain on the criteria screening, existing assets are further categorised into one of three groups. shortlist are categorised according to an action plan and timeframe for each. Gold Assets that have potential to deliver future value, or that are not deemed to Fields then undertakes a phased approach that may ultimately result in currently be delivering on their optimal potential, will be Optimised. This might acquisition. This includes approaching the current owner, conducting desktop and involve further investment and/or brownfields exploration. Those assets that are on-site due diligence; building the business case, both internally and externally performing optimally and delivering sustainable value to the Group, will Continue to and entering the final ‘deal phase’. be managed in line with current operational practices. Those assets that do not meet key components of the growth criteria and are not delivering sustainable value, will be considered for Divestment.
Quality of portfolio increased to deliver on business strategy
76 The Gold Fields Integrated Annual Report 2015
On an annual basis, all assets in Growth in 2015 US$1,300/oz planning price. If the our portfolio undergo the Group’s Existing portfolio price received for the year was Business Strategic Planning process. normalised to US$1,300/oz, then the Multiple scenarios are run for each During 2015 Gold Fields continued free cash flow margin would have operation, assessing various to focus on improving the cash- been 15% – in line with our stated operational options for how best to generation performance of its target. maximise cash flow, life and margin existing operations. This included: for each operation. After taking into ❯❯ Protecting the commercial At the South Deep mine in South account the Group’s capital profile, sustainability of its mines by Africa, we are targeting cash existing portfolio and current avoiding high-grading and breakeven by the end of 2016 with economic environment, a go-forward investing in ore development steady-state production metrics to option is made for each operation, on an ongoing basis (p78) be published early in 2017. Progress which feeds into our operational ❯❯ Brownfields exploration for at South Deep is discussed on planning cycle. life-of-mine extensions (p78) page 73. ❯❯ Production and strategic planning Thereafter, a five-year business plan based on the delivery of a healthy Sales and divestments and a detailed, annual operational FCF margin at prevailing gold prices As part of stringent evaluation of its plan are developed; looking at all assets Gold Fields has, since 2013, aspects of the operation and tested ❯❯ Extensive reviews of two of our more marginal mines – Damang in disposed of a range of projects that against the existing investment did not meet its long-term cash- criteria. Ghana and Darlot in Australia – to ensure that they will continue to generation criteria. In 2014, we disposed of our holdings in the Once this Business Strategic contribute in the long-term to the growth potential of Gold Fields. Chucapaca project in Peru, Yanfolila Planning process is complete, we in Mali and Talas in Kyrgyzstan. run our current mines and projects These reviews are ongoing ❯❯ Bringing South Deep into a through a screening filter of the same In 2015, we continued the five growth criteria used to screen position where it halts cash outflows on a continued basis programme of disposing of growth potential future acquisitions (outlined assets which did not meet the previously). Based on the outcome of Group’s strategic growth parameters. this exercise, the Group concludes a To ensure that our business has a strong future, we have made Gold Fields sold its 51% interest in way forward for each operation, the Woodjam copper-gold- deciding on how to: continued exploration and development of our mines’ molybdenum project located in ❯❯ Optimise the operation including, British Columbia (BC), Canada to its inter alia, through near-mine underground and surface ore bodies a strategic priority. These are among joint venture partner in the project, (brownfields) exploration Consolidated Woodjam Copper, as ❯❯ Continue running them in line with the last activities we would cut, even in a sustained low gold price it is not a majority gold project. As the current status quo as payment Gold Fields was issued with developed in the previous environment and costs associated with maintaining the integrity of our new Woodjam Copper shares to iteration or take its aggregate holding in ❯❯ Investigate potential divestment ore bodies is built into the mines’ cash flow models. Woodjam Copper from 1.1% to 19.9%. As in similar transactions Together, this process of assessing The strength of our portfolio is previously, Gold Fields will retain a existing assets and potential future future royalty in the project, in this assets has the effect of increasing evident in the continued free cash flow generation of our international case a 2% net smelter return (NSR) the quality of the portfolio in order to royalty over all unencumbered land deliver on the business strategy. mines in Australia, Ghana and Peru, which collectively generated a net owned by Woodjam Copper. This US$334 million during 2015, despite ensures that Gold Fields retains the average lower US$ gold price some upside to future production received. Furthermore, our portfolio’s in the project. FCF margin for 2015 was 8% despite the fact that, at US$1,140/oz The table on the next page shows the actual annualised gold price the status of our sales of holdings in received was 12% below the key projects over the past two years.
77 The Gold Fields Integrated Annual Report 2015
4.3 Business optimisation – Strategic focus areas (continued)
Gold Fields’ divestment 2014 – 2015 NSR Project Year Buyer Price royalty 85% of Yanfolila (Mali) (85%) 2014 Hummingbird Resources 19.9% in Hummingbird shares 0 51% of Chucapaca (Peru) 2014 Buenaventura US$81 million 1.5% US$10 million + Robust shares 100% of Talas (Kyrgyzstan) 2014 Robust Resources (since cashed out) 2% Consolidated 19.1% in Cons Woodjam 51% of Woodjam project 2015 Woodjam Copper Copper shares 2%
Gold Fields still retains 100% in the As well as adding to Gold Fields’ years on any particular deposit, they Arctic Platinum Project in Finland, Mineral Resource and Mineral can have significant vertical and but the project remains up for sale Reserve base, near-mine exploration: horizontal dimensions and ‘grow since it is a majority Platinum Group ❯❯ Extends the life of the Group’s volumetrically’ as extensional Metals operation. existing mines – whilst maintaining exploration and development and/or increasing their value advances. They can therefore Near-mine exploration ❯❯ Ensures each region can continue provide mines with long-lived, Gold Fields’ significant investment in to leverage its existing sustainable gold operations greenfields exploration over the last infrastructure particularly as orogenic ore bodies 15 years has not delivered any new are well understood geologically and mines. Instead, all new mines brought The benefits of effective near-mine are often large and of good grade. into the Company’s production exploration can be seen in the portfolio have been through historical sustainability of the Agnew In 2015, Gold Fields raised its total acquisition – with Gold Fields adding and St Ives mines. In 2002, at the near-mine exploration expenditure subsequent value through the time of their acquisition, the mines by 20% to US$72 million (2014: optimisation of their operations. had a combined Mineral Reserve US$60 million) in pursuit of this of 2.9 million ounces. Since then, strategy, the majority of which – Near-mine exploration therefore the mines have produced over US$68 million (A$91 million) – was offers one of the best opportunities 8.5 million ounces – and their at our four Australian mines. This for cash-generative growth for combined Mineral Reserves remain budget supported a total of Gold Fields. This is due to synergies mostly unchanged. Gold Fields 638,766 metres of near-mine drilling offered by: believes that most of its mines in (2014: 349,511 metres). For 2016 ❯❯ Knowledge of the mine’s ore Australia (which share similar we have budgeted for US$65 million bodies – which supports its ability orogenic ore bodies) will be able to in near-mine exploration of which to identify additional ore bodies repeat this success. Orogenic ore A$86 million (US$63 million) will be within common, nearby geological bodies offer a number of advantages at our Australian operations. systems in this respect, making this a priority ❯❯ Operational capabilities – including region for near-mine exploration. Much of this activity was focused on Gold Fields’ proven ability to the Australia and West Africa regions effectively develop and mine Orogenic ore bodies where the six mines in the Gold orogenic ore bodies Orogenic ore bodies are an Fields portfolio have strong growth ❯❯ Regional and operational important source of global gold potential. Following is a breakdown infrastructures – including its production. While known orogenic of the operations’ reserve and existing processing spare capacity reserves characteristically do not resource reconcilation for 2015. and regional management teams extend much further than several
78 The Gold Fields Integrated Annual Report 2015
St Ives Agnew Darlot Mineral Resource reconciliation Mineral Resource reconciliation Mineral Resource reconciliation (Gold – Moz) (Gold – Moz) (Gold – Moz) 4.0 3.0 0.30 3.51 (0.39) 2.57 (0.25) 0.33 2.66 0.26 (0.08) 0.08 0.26 0.02 3.14 3.0 2.0 0.20 2.0 1.0 0.10 1.0
0 0 0 Dec 2014 Depletion Growth Dec 2015 Dec 2014 Depletion Growth Dec 2015 Dec 2014 Depletion Growth Dec 2015
Mineral Reserve reconciliation Mineral Reserve reconciliation Mineral Reserve reconciliation (Gold – Moz) (Gold – Moz) (Gold – Moz) 0.09 (0.08) 2.0 1.80 (0.39) 1.0 0.09 1.8 0.87 (0.25) 0.08 1.6 0.13 1.54 0.8 0.05 0.67 0.07 1.4 0.06 1.2 0.6 0.05 1.0 0.03 0.04 0.8 0.4 0.04 0.6 0.03 0.4 0.2 0.02 0.2 0.01 0 0 0 Dec 2014 Depletion Replacement Dec 2015 Dec 2014 Depletion Replacement Dec 2015 Dec 2014 Depletion Replacement Dec 2015
2015 saw a reinvigoration of the Agnew saw strong focus on growth Darlot's 2015 focus was on self- St Ives exploration effort with through exploration in 2015. funded exploration programmes to expenditure increased to Exploration expenditure of replace production depletion and to A$43 million and 31.3km of drilling A$21 million delivered additional extend the life-of-mine. completed. This delivered near-mine reserves of 55,000 ounces 68,000 ounces of new reserves at Cinderella and total new resources Key successes in the underground to the Neptune deposit and of 367,200 ounces. The resource exploration programmes were the 34,000 ounces of new reserves at expansion came primarily from initiation of stoping in the Lords the North-West Palaeochannel. Cinderella with an increase of South Lower area with positive grade New resources were defined 116,000 ounces and at New Holland reconciliations. Incremental primarily at Invincible South with with 107,000 ounces. Maiden expansion options have also been an increase of 192,000 ounces, and resources were reported at Kath identified. Further upside potential at Invincible Underground with (94,500 ounces) and Himitsu exists for Darlot from ongoing in-mine 134,000 new ounces. Maiden (49,700 ounces). exploration drilling with the Centenary resources were defined at Incredible Oval area delivering a small maiden with 90,000 ounces and at North- Highly encouraging results were Inferred Resource in 2015. West Palaeochannel with observed from drilling in the 37,000 ounces. Further growth Waroonga North project in late 2015. Further Resource conversion drilling potential exists at all of these In 2016, resource definition drilling was well advanced by end-2015. In projects. will be accelerated from surface and addition there was a significant ramp an underground drill platform up of surface exploration activities, Encouraging results were returned established. inclusive of detailed structural and from broad gold intercepts in shallow geophysical targeting, aimed at drilling at the Retribution project. The exploration strategy at Agnew identifying hidden ore bodies at Extensive follow up drilling will be is to identify high potential targets depth analogous to the Centenary completed during 2016 to further outside the current Waroonga – New ore body. The increased exploration define the gold mineralisation and Holland mining complex but within budget in 2015 focused on both to define resources. the tenement package. To this end, underground and surface high-resolution magnetic data for the prospective areas. The exploration strategy at St Ives is Eastern Limb tenements was to continue to develop the exploration acquired and analysed during 2015. Direct exploration expenditure in pipeline and define further resources, This information, combined with 2015 amounted to A$10 million on with a priority on open pit resources. historic exploration results, has underground and surface drilling. A Resources defined during 2015 will be enabled definition of 15 early stage total of 50,278 metres of drilling was expanded and converted to reserves. targets to be tested in 2016. completed. 79 The Gold Fields Integrated Annual Report 2015
4.3 Business optimisation – Strategic focus areas (continued)
Granny Smith Tarkwa Damang Mineral Resource reconciliation Mineral Resource reconciliation Mineral Resource reconciliation (Gold – Moz) (Gold – Moz) (Gold – Moz) 6.0 12.0 6.0 0.56 5.63 1.89 5.28 5.26 (0.20) 5.0 10.0 9.57 (0.63) 0.50 9.44 5.0 4.0 3.70 (0.31) 8.0 4.0 3.0 6.0 3.0 2.0 4.0 2.0 1.0 2.0 1.0 0 0 0 Dec 2014 Depletion Growth Dec 2015 Dec 2014 Depletion Growth Dec 2015 Dec 2014 Depletion Growth Dec 2015
Mineral Reserve reconciliation Mineral Reserve reconciliation Mineral Reserve reconciliation (Gold – Moz) (Gold – Moz) (Gold – Moz) 1.4 0.75 1.37 8.0 7.49 (0.63) 1.4 0.11 6.97 1.23 (0.20) 1.2 7.0 1.2 0.07 6.0 0.96 1.0 0.87 (0.25) 1.0 5.0 0.8 0.8 4.0 0.6 0.6 3.0 0.4 2.0 0.4 0.2 1.0 0.2 0 0 0 Dec 2014 Depletion Replacement Dec 2015 Dec 2014 Depletion Replacement Dec 2015 Dec 2014 Depletion Replacement Dec 2015
Increased exploration expenditure was Initial auger and diamond drilling was Although no greenfields exploration directed to co-ordinated work on a carried out at Tarkwa during 2015 at projects were carried out during range of activities from earliest stage a cost of around US$840,000. This 2015, a number of resource infill and target identification through to the was undertaken in areas identified extension drilling programmes were definition of extensions to the under the geochemical soil sampling conducted at the various pits that Wallaby deposit. A large number of programme, which was carried out encompass the Greater Damang ore target areas were uncovered that in 2014 to explore parts of the body, as well as the Amoanda pit. warrant a wide-ranging, early stage concession that previously had air-core drilling project involving limited exploration. The primary objectives of the year’s 57km of drilling across both the drilling campaign were to: land-based tenements and Lake Even though some good results were ❯❯ Enhance the understanding of the Carey – a large salt lake beneath returned in a number of framework geology and controls on grade which limited exploration work has holes, continuity and thickness still distribution in critical areas been conducted to date. need to be confirmed. These areas ❯❯ Increase confidence in the will be the focus for 2016, for which resource models Some targets identified by the early a budget of US$1.5 million has been ❯❯ Add Mineral Resources by the stage work, were tested with 16km allocated. further development of projects of reverse-circulation and diamond with infill drilling drilling. An intense programme, including 87km of extensional and The 2015 phase of reverse in-fill diamond drilling, targeted the circulation and diamond drilling Wallaby ore body to increase the which were completed at the Huni, reserves and resources around and Saddle, Juno and Juno South pits, ahead of the current production zones. have been included in the 2015 Damang resource model. The total The exploration programme was exploration expenditure for 2015 was successful, revealing promising US$1.7 million. prospects for further investigation in 2016 and, at Wallaby, resulting in net additions of 1,500,000 ounces in resources and 440,000 ounces in reserves. Overall a post-depletion increase of 43% in resources and 50% in reserves was achieved. 80 The Gold Fields Integrated Annual Report 2015
Update on growth projects Finally, a new Environmental Impact For Gold Fields to obtain a further Two advanced growth projects Declaration study was presented to 20% interest in the project, a justified continued inclusion in Gold the authorities in January 2016 and is Financial or Technical Assistance Fields’ growth portfolio. Salares currently under evaluation. Agreement (FTAA) is required from Norte in Chile meets all of the key the Philippine Government, and is criteria. It is in ‘the right address’, Although there are no indigenous dependent on obtaining the Free, offers the right metal and is ancestral lands present within the Prior and Informed Consent (FPIC) commercially sustainable. Far direct project area, the project team of the local Kankana-ey indigenous Southeast in the Philippines offers a is engaged with the surrounding people. In mid-2013 the Kankana-ey world-class copper-gold deposit with indigenous communities. During people voted in favour of the project the potential to deliver substantial 2015, the project made a total of and a formal Memorandum of strategic benefits to the Group in the US$40,000 contribution to social Agreement (MOA) was signed with long term. investment projects and will continue the Council of Elders in February supporting these communities during 2015. The MOA and supporting Salares Norte, Chile 2016. documentation are currently being considered by the National The Salares Norte advanced drilling Salares Norte offers significant Commission on Indigenous Peoples project is 100% Gold Fields owned potential in terms of future cash (NCIP) before issuance of a formal and is focused on a gold-silver generation, provided that the Certification Precondition, which will deposit in the Atacama region of requested water permits are granted. complete the FPIC process. northern Chile. Mineralisation is A project manager has been contained within a high-sulphidation appointed for Salares Norte Lepanto and FSGRI jointly applied for epithermal system – offering overseeing the work of a team the renewal of the mineral tenement high-grade oxides. The project is of 100 people. A budget of in June 2014, to pre-empt the located within a core 900ha US$56 million has been made expiration of the initial 25-year term concession area – and Gold Fields available for further drilling and of the mineral tenement in March enjoys an option to purchase two studies in 2016, following on the 2015. In February 2015, Lepanto adjoining concessions that would US$17 million spent in 2015. and FSGRI commenced arbitration add a further 2,100ha. proceedings against the Philippine Far Southeast, Philippines government on whether an FPIC is In December 2015, Gold Fields The Far Southeast project is a also required for the renewal of the updated the project's Mineral mineral tenement. In November Resources, reporting a total proposed underground mine located in northern Luzon province – 250km 2015, the arbitration panel issued an 26.8 million tonne Mineral Resource award that FPIC may not be validly of 3.3 million ounces of gold at a north of Manila. The 900 million tonne copper-gold porphyry ore imposed as a requirement for the grade of 3.9g/t, and 42.1 million renewal of the mineral tenement and ounces of silver at an average grade body has grades of approximately 0.7g/t gold and approximately 0.5% that it should be renewed. This of 48.9g/t. We upgraded 31% of arbitration is now under dispute by Mineral Resources from inferred copper. At the end of December 2012, it declared an Inferred Mineral the Philippine government. Similarly, to indicated status. Preliminary conversion of the mineral tenement indications, supported by Resource of 19.8 million ounces of gold and 9,921Mlb of copper. into an FTAA has been declined at metallurgical test work, suggest this stage by the mining regulator Carbon-in-Leach processing could and FSGRI is appealing the decision. deliver recovery rates of around 90% The project is held by Far Southeast for gold. Gold Resources (FSGRI) in which Gold Fields has a 40% interest, with Amid the legal and administrative delays, the holding costs of this Water security remains a challenge to an option to increase its stake to 60%, and is adjacent to an existing project have been reduced to project execution and operation. While approximately US$250,000 per Salares Norte has access to a nearby mining operation with established infrastructure. Lepanto Consolidated month, related mainly to community reservoir with sufficient supplies, the engagement work as well as project team is currently meeting with Mining of the Philippines holds the remaining 60% interest and manages activities to support the permitting officials from the Water Bureau and process. the Ministry of National Assets in the existing mining operation. In late dealing with the administrative 2015, Gold Fields impaired its investment in Far Southeast by Further material development of the applications that have been project will be dependent on Gold submitted. Gold Fields is also in the US$101 million from US$230 million to US$129 million, as determined by Fields obtaining the majority process of obtaining land access for ownership and receiving an FTAA. the project's development and is in an evaluation of Lepanto’s market negotiation with the state over the value on the Philippine Stock land valuation. Exchange. 81 The Gold Fields Integrated Annual Report 2015
4.3 Business optimisation – Strategic focus areas (continued)
Mineral Resource and Although the US Dollar gold price South African Code for the Reporting Mineral Reserve Statement used for the Mineral Reserves is of Exploration Results, Mineral Gold Fields’ Mineral Resource and close to the current spot price, the Resources and Mineral Reserves Mineral Reserve strategy is focused Group’s focus on strategically (SAMREC Code) and Industry Guide on realising each assets’ full potential positioning the operations to deliver 7 for reporting to the SEC. Other through appropriate funding and leading AIC, AISC and cash flow relevant international codes are technical investment in exploration, margins, underpins their resilience to recognised where geographically resource development and reserve gold prices periodically trending applicable. The first version of the growth to support operational lower. Business planning, over the SAMREC Code was issued in March flexibility and longer-term next five years, entails the selection 2000, updated in 2007 and again sustainability. Key deliverables are of cut-off grades, optimised pit amended in July 2009; the JSE cash flow, profitability and return on shells, pit staging and stope subsequently incorporated this new investment. The strategic priorities sequencing with the objective of version into its Listings and are to: ensuring that operations are Reporting Requirements. ❯❯ Build a quality portfolio of sustainable and cash generative in The respective operation-based productive mines through active the short to medium term at lower Mineral Resource Managers, portfolio management gold prices. The Group’s Technical Managers and relevant ❯❯ Grow through value-accretive commitment to ongoing exploration Project Managers have been acquisitions and near-mine and resource to reserve conversion designated as the Competent exploration aims to ensure a quality pipeline of Persons in terms of SAMREC and ❯❯ Grow Reserves to increase critical Mineral Reserves that will maintain take responsibility for the reporting of mass and improve flexibility per operational flexibility and assist in Gold Fields Mineral Resources and operation sustaining margins at varying gold Mineral Reserves. Corporate ❯❯ Minimise marginal mining at all prices going forward. Annual governance on the overall regulatory operations production alignment to relevant compliance of these figures has been ❯❯ Divest growth projects that are not Mineral Reserve mill-head grades overseen and consolidated by the fully aligned with our business shows that, notwithstanding our Gold Fields Group Competent objectives focus on cash flow margins, we Person, Tim Rowland, who consents ❯❯ Manage the environment ensure retention of the longer term to the disclosure of this Mineral responsibly life-of-mine (LOM) integrity. Resource and Mineral Reserve ❯❯ Build strong relationship and trust Statement. Mr Rowland is Vice- in the communities where we This section represents a condensed President, Mineral Resource operate and consolidated overview of Gold Fields’ Mineral Resources and Mineral Management and Mine Planning, Pri-Sci Nat No 400122/00, BSc This declaration is based on a Reserves. Full details are available in (Hons) Geology, MSc Mineral Mineral Resource gold price of the Gold Fields’ Mineral Resource and Exploration, GDE Mining Engineering US$1,500/oz (A$1,750/oz; Mineral Reserve Supplement to the and FSAIMM, FGSSA and GASA), R550,000/kg) and a Mineral Reserve IAR. The Supplement contains a with 30 years’ relevant experience price of US$1,200/oz (A$1,500/oz; comprehensive review of the Group’s in the mining industry. He is a R500,000/kg) for 2016 and 2017, Mineral Resources and Mineral permanent employee of Gold Fields. reverting to US$1,300/oz Reserves as at 31 December 2015, including additional detail on individual (A$1,550/oz; R500,000/kg) post In line with the Group’s commitment 2017. The initial gold price operations with respect to location, mine infrastructure, key operating to sound corporate governance, this (US$1,200/oz) used for the Mineral statement has been internally Reserve declaration is within the statistics, geology, mining, processing, projects and sustainable development. reviewed by regional and corporate guidelines of the US Securities and technical and financial experts and, Exchange Commission (SEC), as it is It is available on the Gold Fields website at www.goldfields.com/inv_ where applicable, also reviewed by lower than the three-year trailing leading independent mining rep_ar.php average price of US$1,280/oz. The consultancies. This declaration has copper price used for Mineral been found to fulfil the requirements Corporate governance Resource estimation is US$3.5/lb of the relevant reporting codes, and and for Mineral Reserves US$2.7/lb The reporting of Mineral Resources the procedure followed in producing for 2016 and 2017, reverting to and Mineral Reserves for Gold Fields the statement is aligned to the US$3.0/lb post 2017. operations and projects is guiding principles of the United undertaken in accordance with the States’ Sarbanes-Oxley (SOX) Act principles and guidelines of the of 2002.
82 The Gold Fields Integrated Annual Report 2015
The headline Mineral Resource and at South Deep), the sale of the Far Southeast (FSE) projects. Other Mineral Reserve Statement as at Woodjam project, as well as mining commodities and metal by-products 31 December 2015 is compared to depletion for the year, were primarily that are reported as part of the the 31 December 2014 declaration in responsible for the year-on-year Mineral Resource (platinum, the graphs on this page. The Mineral reduction in managed Mineral palladium, nickel and silver) are Resource and Mineral Reserve Resources (-6.7 million ounces gold), contained in the Mineral Resource figures are estimates at a point in while Mineral Reserves (-2.1 million and Mineral Reserve Supplement. time, and will be affected by ounces gold) decreased in line with fluctuations in the gold price, mining depletion (2.1Moz), while gold The South Africa region accounts for US Dollar currency exchange rates, lock-up from additional geotechnical 74% of the Group’s managed gold costs, mining permits, changes in pillars at South Deep were Mineral Reserves, West Africa 16%, legislation and operating factors. All counterbalanced by discovery and Australia 7% and the Americas 3%. metal commodities are reported modelling updates at the various separately and not as gold operations. The South Africa region accounts for equivalents. 56% of the Group’s managed gold The respective gold and copper Mineral Resources, West Africa 13%, Although all relevant permits may not Mineral Resource figures (December Australia 9%, the Americas 2% and be finalised and in place at the time 2015) are inclusive of all eight growth projects 20%. of reporting, there is no reason to operating mines, as well as the Arctic expect that these will not be granted. Platinum (APP), Salares Norte and However, the length of the approval process for such permits may have Managed gold Mineral Resources an impact on the schedules stated. (Moz) All financial models are based on current tax regulations at (0.34) Growth projects 24.27 31 December 2015. 23.93 (0.24) Americas region 3.02 2.78 All Mineral Resource and Mineral 1.30 Australia region 10.04 Reserve figures are on a managed 11.34 0.23 West Africa region 14.83 basis unless otherwise stated. 15.06 (7.61) Mineral Resources are reported South Africa region 76.05 inclusive of Mineral Reserves and 68.44 stability pillars when appropriate. The (20) 0 20 40 60 80 100 Moz estimated volumes are reported in Variance Dec 2014 Dec 2015 metric tonnes and rounding-off of figures may result in minor computational discrepancies, where Managed gold Mineral Reserves Mineral reserve change per region this happens, it is not deemed (Moz) (Moz) significant. (0.21) Americas region 1.76 At 31 December 2015, Gold Fields 1.54 (0.07) had total attributable gold and Australia region 3.63 3.55 copper Mineral Resources of (1.01) West Africa region 8.73 102.2 million ounces (December 7.72 2014: 108.3 million ounces) and (0.76) South Africa region 38.02 5,912 million pounds (December 37.26 2014: 6,873 million pounds), respectively. Attributable gold and (0.5) 0 5 10 15 20 25 30 35 40 Moz Variance Dec 2014 Dec 2015 copper Mineral Reserves are 46.1 million ounces (December 2014: 48.1 million ounces) and 532 million pounds (December 2014: 620 million pounds) respectively, net of mined depletion.
Mine design enhancements (including the implementation of a revised regional pillar reconfiguration
83 The Gold Fields Integrated Annual Report 2015
4.3 Business optimisation – Strategic focus areas (continued)
Gold Fields Mineral Resource Statement as at 31 December 20151, 2 Headline numbers Managed Mineral Resources Attributable ounces 31 Dec 31 Dec 31 Dec 2015 31 Dec 2014 2015 2014 Tonnes Grade Gold Tonnes Grade Gold Gold only (Mt) (g/t) (Moz) (Mt) (g/t) (Moz) Gold (Moz) Total operating mines – 856.6 3.54 97.609 903.9 3.58 103.925 90.157 96.187 Total projects – 1,127.0 0.66 23.933 1,164.6 0.65 24.271 12.053 12.104 Total operating mines & projects 1,983.5 1.91 121.542 2,068.5 1.93 128.196 102.210 108.291
Operational summary Managed Mineral Resources Attributable ounces 31 Dec 31 Dec 31 Dec 2015 31 Dec 2014 2015 2014 Tonnes Grade Gold Tonnes Grade Gold Gold (Mt) (g/t) (Koz) (Mt) (g/t) (Koz) Mineral Resource (Koz) Australia operations Agnew 16.3 5.05 2,656 13.8 5.79 2,570 2,656 2,570 Darlot 1.2 6.51 260 1.1 7.18 263 260 263 Granny Smith 30.4 5.40 5,279 17.4 6.61 3,696 5,279 3,696 St Ives 29.1 3.35 3,141 30.1 3.63 3,508 3,141 3,508 Total Australia region 77.1 4.57 11,336 62.4 5.00 10,037 11,336 10,037 South African operation South Deep 331.8 6.41 68,436 382.4 6.19 76,046 62,503 69,804 Total South Africa region 331.8 6.41 68,436 382.4 6.19 76,046 62,503 69,804 Peru operation Cerro Corona 109.2 0.79 2,777 115.2 0.81 3,015 2,764 3,001 Total Americas region 109.2 0.79 2,777 115.2 0.81 3,015 2,764 3,001 Ghana operations Damang 79.6 2.20 5,625 85.3 1.92 5,260 5,063 4,734 Tarkwa – open pits 192.2 1.38 8,511 193.7 1.39 8,679 7,660 7,811 Tarkwa – surface stocks 66.6 0.43 924 65.0 0.43 889 831 800 Total West Africa region 338.4 1.38 15,060 344.0 1.34 14,827 13,554 13,345 Gold only GFL Operations- Total Gold 856.6 3.54 97,609 903.9 3.58 103,925 90,157 96,187
Tonnes Grade Copper Tonnes Grade Copper Attributable (Peru) – Cerro Corona (Mt) (% Cu) (Mlbs) (Mt) (% Cu) (Mlbs) Copper (Mlbs) Copper Copper (Cu) only 102.0 0.41 914 108.0 0.42 1,006 910 1,001 1 Managed unless otherwise stated 2 Refer to the relevant mines for the historic grade and tonnage information
84 The Gold Fields Integrated Annual Report 2015
Gold Fields Mineral Reserve Statement as at 31 December 20151,2 Headline numbers Managed Mineral Reserves Attributable ounces 31 Dec 31 Dec 31 Dec 2015 31 Dec 2014 2015 2014 Tonnes Grade Gold Tonnes Grade Gold Gold only (Mt) (g/t) (Moz) (Mt) (g/t) (Moz) Gold (Moz) Total operating mines – 532.6 2.92 50.073 558.1 2.90 52.123 46.064 48.122 Total operating mines & projects 532.8 2.92 50.073 558.1 2.90 52.123 46.064 48.122
Operational summary Managed Mineral Reserves Attributable ounces 31 Dec 31 Dec 31 Dec 2015 31 Dec 2014 2015 2014 Tonnes Grade Gold Tonnes Grade Gold Gold (Mt) (g/t) (Moz) (Mt) (g/t) (Moz) Mineral Reserve (Koz) Australia operations Agnew 3.4 6.16 670 3.6 7.44 865 670 865 Darlot 0.2 5.63 34 0.4 7.36 85 34 85 Granny Smith 7.0 5.86 1,310 4.5 6.02 872 1,310 872 St Ives 17.6 2.72 1,542 17.8 3.14 1,803 1,542 1,803 Total Australia region 28.1 3.93 3,555 26.3 4.28 3,625 3,555 3,625 South African operation South Deep3 218.8 5.30 37,257 223.2 5.30 38,016 34,027 34,896 Total South Africa region 218.8 5.30 37,257 223.2 5.30 38,016 34,027 34,896 Peru operation Cerro Corona 53.1 0.90 1,543 60.5 0.90 1,757 1,535 1,749 Total Americas region 53.1 0.90 1,543 60.5 0.90 1,757 1,535 1,749 Ghana operations Damang 21.2 1.43 973 25.7 1.49 1,235 876 1,111 Tarkwa – open pits 144.8 1.25 5,822 157.4 1.30 6,601 5,240 5,941 Tarkwa – surface stocks 66.6 0.43 924 65.0 0.43 889 831 800 Total West Africa region 232.8 1.03 7,719 248.1 1.09 8,725 6,947 7,853 Gold only Total Gold 532.6 2.92 50,073 558.1 2.90 52,123 46,064 48,122
Tonnes Grade Copper Tonnes Grade Copper Attributable (Peru) – Cerro Corona (Mt) (% Cu) (Mlbs) (Mt) (% Cu) (Mlbs) Copper (Mlbs) Copper Copper (Cu) only 53.1 0.46 534 60.5 0.47 623 532 620 1 Managed unless otherwise stated 2 Refer to the relevant mines for the historic grade and tonnage information 3 South Deep Mineral Reserves are reported at head grade inclusive of ore and in-section waste tonnes, while the capital waste component is excluded
85 The Gold Fields Integrated Annual Report 2015
4.3 Business optimisation – Strategic focus areas (continued)
Gold Fields Mineral Resource Classification as at 31 December 2015 Measured Indicated Inferred Total Grade Grade Grade Grade Mt (g/t) Koz Mt (g/t) Koz Mt (g/t) Koz Mt (g/t) Koz Cerro Corona (Gold only) 82,565 0.86 2,282 23,317 0.58 434 3,335 0.56 60 109,217 0.79 2,777 Agnew 1,136 4.25 155 9,228 5.62 1,667 5,985 4.34 835 16,348 5.05 2,656 Darlot 0,688 6.67 148 0,553 6.31 112 1,241 6.51 260 Granny Smith 2,545 6.57 538 16,398 5.26 2,772 11,446 5.35 1,969 30,389 5.40 5,279 St Ives 4,236 1.97 268 17,905 3.41 1,961 6,981 4.06 912 29,122 3.35 3,141 Total Australia 7,917 3.77 961 44,218 4.61 6,547 24,965 4.77 3,829 77,100 4.57 11,336 South Deep 110,115 3.42 12,123 190,191 7.91 48,339 31,550 7.86 7,974 331,856 6.41 68,436 Damang 13,865 1.52 677 58,076 2.33 4,357 7,665 2.40 591 79,606 2.20 5,625 Tarkwa (excluding stockpiles) 70,439 1.47 3,324 117,029 1.33 5,015 4,752 1.13 172 192,220 1.38 8,511 Tarkwa (including stockpiles) 137,004 0.96 4,247 117,029 1.33 5,015 4,752 1.13 172 258,785 1.13 9,435 Total West Africa 150,869 1.02 4,924 175,105 1.66 9,372 12,417 1.91 763 338,391 1.38 15,060 Total Gold Fields 351,465 1.80 20,290 432,832 4.65 64,692 72,267 5.43 12,626 856,564 3.54 97,609
Americas silver, of which approximately 30% is Philippines. An Inferred Mineral Operations categorised in the Indicated Mineral Resource of 891.7Mt at 0.7g/t Au Resources category. and 0.5% Cu for 19.8 million ounces The Americas region has a declared of gold and 9,921Mlb of copper was managed gold Mineral Resource of Australia declared in September 2012 for the 2.8 million ounces at December 2015 Operations Far Southeast deposit – this remains (December 2014: 3.0 million ounces) unchanged as at December 2015. and a gold Mineral Reserve of The Australia region has a declared This resource is reported within an 1.5 million ounces (December 2014: managed gold Mineral Resource of optimised underground bulk mining 1.8 million ounces). In addition, it has a 11.3 million ounces (December shell that is derived using scoping managed copper Mineral Resource 2014: 10.0 million ounces) and a study mining, processing and cost and Mineral Reserve of 914 million gold Mineral Reserve of 3.6 million parameters and mining assumes an pounds (December 2014: 1,006 million ounces (December 2014: 3.6 million eventual non-selective, bulk pounds) and 534 million pounds ounces) and is 100% attributable to underground mining method. Gold Fields. These figures are net of (December 2014: 623 million pounds), 1.0 million ounces from mined respectively. The gold equivalent South Africa depletion in 2015, with replacement Mineral Resource and Mineral Reserve Operations occurring mostly at the underground equates to 4.9 million ounces and The South Africa region has a total Wallaby ore body at Granny Smith. 2.8 million ounces respectively. Of this, declared managed gold Mineral A strong emphasis on exploration 99.53% is attributable to Gold Fields. Resource of 68.4 million ounces funding and project pipeline These figures are net of 240,000 (December 2014: of 76.0 million development from the orogenic style ounces) and a gold Mineral Reserve ounces of gold and about 79 million mineralisation in the region continues of 37.3 million ounces (December pounds of copper from mined so as to maintain momentum on depletion in 2015. 2014: 38.0 million ounces), of which, discovery and resource development 91.3% is attributable to Gold Fields, opportunities to supply the next Salares Norte project in line with the agreed phase-in generation of open pit and participation of Black Economic Gold Fields holds a 100% interest in underground mines. Empowerment (BEE) partners over the Salares Norte project, which is 20 years. Ultimately the BEE situated in the Maricunga Belt, Far Southeast project partners’ stake will be 10%. These Atacama region, in northern Chile. Gold Fields holds a 40% interest in Mineral Resource and Mineral The project has a Mineral Resource the Far Southeast project, which is Reserve figures are net of of 26.8Mt, containing 3.3 million situated in the mining district of 198,0601 ounces from mined ounces gold and 42.1 million ounces Mankayan in Northern Luzon, depletion during 2015. 1 Reserves are at a head grade pre the processing recovery 86 The Gold Fields Integrated Annual Report 2015
During 2015, the mine successfully design layouts, Gold Fields is investment opportunities will be concluded studies on a new regional undertaking a holistic strategic tabled by mid-year. In the interim, the stability pillar configuration, which is review of the operation with the mine will revert to contractor mining endorsed by the South Deep objective of assessing longer-term at the end of Q1 2016 in alignment Geotechnical Review Board (GRB). optionality at the mine. The intent of with a reduced short term mining The new regional pillar design has this re-basing study is to select the footprint. The Mineral Reserve of been fully incorporated into the 2015 most appropriate business plan for 1.0 million ounces is based on the mine design and scheduling process, the mine that will guide South Deep current Operational and LOM plan. which informed the December 2015 forward to ensure delivery as a core Mineral Resource and Mineral franchise asset. This will be Tarkwa’s Mineral Resource of Reserve declaration. Due to the communicated to shareholders in 9.4 million ounces remained fairly reduced spacing between pillars the early 2017. The current life-of-mine, steady and the Mineral Reserve of mine will effectively operate within six which forms the anchor to the 6.7 million ounces decreased in line mining corridors compared to the re-basing project, is estimated to with mining depletion and updated be 80 years. previous four. resource modelling. On-site exploration opportunities are being West Africa A new de-stress mining method was considered and tested. developed in conjunction with the Operations GRB to improve safety, increase The West Africa region has a Projects for disposal mining productivities and simplify the declared managed gold Mineral Arctic Platinum project (APP) overall mining cycle. The conversion Resource of 15.1 million ounces from the historical low profile (December 2014: 14.8 million The total Mineral Resource figures de-stress methodology to the new ounces) and a gold Mineral Reserve for APP (100% attributable to high profile de-stress mining method, of 7.7 million ounces (December Gold Fields) remain unchanged has been rolled out across all the 2014: 8.7 million ounces), which are year-on-year. APP in Finland has a de-stress sections on the mine, with 90% attributable to Gold Fields. Mineral Resource of 786,000 ounces the exception of the mature 951W These figures are net of 754,0001 of gold, 2.4 million ounces of area, where the current de-stress ounces from mined depletion in platinum and 9.8 million ounces of method will be maintained until 2015. palladium – as well as 1,034 million completion. pounds of copper and 438 million The programme at Damang to pounds of nickel. The project has In addition to the new de-stress assess all relevant options that have been put up for sale as part of the mining method and revised the potential to deliver maximum commitment to divest growth geotechnical support regime with value from the asset to Gold Fields is projects that are not fully aligned with resultant enhancements to the mine ongoing and various alternative our business objectives.
❯ Drilling at Salares Norte, Chile 87 The Gold Fields Integrated Annual Report 2015
4.3 Business optimisation – Strategic focus areas (continued)
Technology and innovation applications, oil and gas, heavy around the world to develop an For the past few years, Gold Fields industry, autonomous cars and image algorithm that can classify ore was a fast adopter of best practice mining. Robotic vision is one the fast material in a gold mine as high, technology rather than a pioneer of growing and influential technologies medium or low-grade, or waste. research and development in areas on the world today. such as technology. The cost of Gold Fields offered A$12,500 developing and applying cutting In 2015, Gold Fields asked CMU to (US$9,000) in prizes to the top three edge practices was simply too spin out the technology for mining, entries. Almost 270 contestants expensive. with Gold Fields providing the initial participated and the winning US$3 million seed funding to create algorithms have been built into a However, recent advances in MVS. This gives Gold Fields a 10% geology software package, named digitisation, automation and share in MVS with a first right access Leap Frog, which allows mining data mechanisation make it critical that to technology developed by the to be converted into easy to use we develop strategies to implement company. software. This programme has been new technologies and partner with expanded to collect and evaluate IT and OEMs that are leaders in the Since then MVS has put in place data from new MVS sensors at our field. A number of technology 30 non-disclosure agreements with a St Ives mine. companies are working on software number of leading software providers advances in mining, which can be and equipment manufacturers and is Cyest – This South African grouped under the ‘Big Data’ in early conversations with another technology company is working at heading, where data is captured by 40 interested companies. our South Deep mine to scientifically various sources, digitised, analysed determine the capacity of the mine’s and finally leveraged for better MVS provides a system to collect full value chain. In addition, the firm is decision making. This has multiple mining data using cameras, sensors developing an advanced visualisation applications for mines, such as mounted on machinery and Light of South Deep, to convey the geological mapping, geotechnical Detection and Radar technology. complexity of the mining process to design, fleet tracking and operator (Lidar) This data can then be internal and external stakeholders. safety. We believe that such converted into meta-data, Cyest is using four different systems technologies will provide us with the compatible with most major mining and solutions at South Deep: edge to fundamentally change our software providers today. This data is ❯❯ Advanced simulation of the cost structure and improve safety. already being used to identify sequence of activities and geology, ore fragmentation, equipment interactions along We have appointed a new member convergence and is the basis for the underground value chain to our Executive Committee to geotechnical modelling and machine ❯❯ Validating and improving the oversee our progress in this area automation at our mines in Australia. mining schedule by modelling the and to oversee the development of Robotic vision is one of the fastest interaction of different mining three-year technology and innovation growing technology areas in the activities as a function of mine programmes in each of our regions. world today. layout, efficiencies and other factors Gold Fields has started embracing GlassTerra – This Australian ❯❯ Modelling the link between digital mining, advanced analytics start-up technology company, staffed operational drivers to identify and new software technologies and by geo-spatial software engineers what interventions are needed to during 2015, we started working with and mining experts, is tackling the achieve the desired financial a number of technology companies impending big data challenges facing results at our operations in Australia and global mining companies as the ❯❯ Using an advanced gaming South Africa to implement these amount of digital mining data platform to create a high fidelity technologies: available grows exponentially. visualisation of the ore body and the associated mining methods Mine Vision Systems (MVS) – In Gold Fields worked with GlassTerra 2007, Gold Fields started work with to run the Ore-X Challenge in August Carnegie Mellon University (CMU) in 2015. Ore-X was the world’s first the US to develop mining robots. open crowd-sourcing challenge to While the robots were ultimately solve operational problems in the unsuccessful, the robotic vision mining industry. Glass Terra made component from this programme Gold Fields’ 3D geo-spatial data went on to the used in military available and asked experts from
88 The Gold Fields Integrated Annual Report 2015
Social licence to operate5 5.1 Introduction p90 5.2 Strategic focus areas p92
❯ Energy and carbon p92
❯ Water p97
❯ Waste and tailings p102
❯ Mine closure p103
❯ Government relations p104
❯ Community relations p108
❯ Shared Value p117
❯ Human rights p120
❯ Tailing Storage Facility at Cerro Corona
89 The Gold Fields Integrated Annual Report 2015 5.1 Social licence to operate – Introduction
If not managed optimally, the These are: mine in South Africa and the environmental and social impacts ❯❯ Energy and carbon management Tarkwa mine in Ghana – were as associated with mining have the (p92) follows: potential to affect both the physical ❯❯ Water management (p97) ❯❯ South Deep, 24 August: The environment and our key ❯❯ Mine closure management (p103) mine noted ongoing exceedences stakeholders. Sustainable ❯❯ Community relations and of the authorised limits for ammonia development and social incidents stakeholder engagement (p108) nitrogen and suspended solids can materially impact Gold Fields’ during the daily discharge of treated ability to receive or renew its A summary of the Group guidelines sewage effluent into the Leeuspruit regulatory licences to operate as well can be found on the Gold Fields’ river (as authorised by South as societal acceptance of our website at www.goldfields.com/sus_ Deep’s water use licence) due to operations. The potentially adverse guide.php. These guidelines will help two of the aerators not operating. reputational impacts of such ensure the application of consistently The aerators were repaired incidents are also significant. good environmental management ❯❯ South Deep, 12 October: The practices across the Group while mine noted ongoing exceedences In our 2015 Group Performance allowing a degree of regional of the authorised limit for ammonia Scorecard (p12), we have grouped adaptation to suit local during the daily discharge of these issues under the topic of circumstances. treated sewage plant effluent into Social Licence to Operate, which the Leeuspruit, again due to a focus on the following material issues To ensure Group-wide conformance non-operational aerator. The to the business: with the guidelines, each operation aerator was repaired. In order to ❯❯ Environmental stewardship, conducted self-assessments to prevent a recurrence of aerator comprising Energy and Carbon ascertain the levels of conformance related issues, the planned management, Climate change, with the guidelines. Action plans maintenance schedule has been Water, Waste and Mine Closure have been put in place to address enhanced ❯❯ Societal acceptance, comprising any gaps during 2016. ❯❯ Tarkwa mine, 16 June: The left Stakeholder engagement, track of an excavator lifted a piece Community relations and Shared Operational level grievance of rock that struck the hydraulic Value and Human rights mechanisms as well as regular shut-up valve. About 1,544 litres of community relations and stakeholder hydraulic oil was spilled, which Environmental stewardship engagement forums allow was collected and all Gold Fields’ approach to environmental stakeholders to communicate contaminated material was management is determined by environmental issues and complaints disposed of in accordance with the relevant local legislation and regulations, against the Company. mines waste management our sustainable development procedures framework, as well as the ISO 14001 Environmental incidents ❯❯ Tarkwa mine, 8 October: international environmental Gold Fields reports environmental Approximately 2,939 litres of oil management standard, the ten incidents using a Level 1 (most minor) was spilled when an excavator’s principles of the International Council to 5 (most severe) scale1. Gold Fields hydraulic hose underneath the on Mining and Metals (ICMM) and the has not recorded any Level 4 or 5 counter-weight burst. This UN Global Compact. All the Group’s environmental incidents in the past occurred when the excavator got operations are certified to ISO 14001. five years thereby achieving our bogged down while working in a target of zero Level 4 and 5 incidents. pit. The oil and contaminated During 2015, the Group spent During 2015, we did, however, material was promptly cleaned up US$35 million on environmental experience 67 Level 2 environmental in accordance with the mines management (2014: US$27 million). incidents (2014: 58) and five Level 3 waste management procedures Total gross mine closure liabilities environmental incidents (2014: four). and the hose replaced in 2015 were estimated at Though we reduced the number of ❯❯ Tarkwa mine, 8 November: The US$353 million (2014: Level 3 incidents, we failed to meet right track of an excavator lifted a US$391 million) (p103). our 2015 target of reducing the piece of rock that perforated the fuel number of Level 3 incidents by 50%. tank of the excavator. About 1,200 In 2014 and 2015, we implemented These targets (zero Level 4 and 5 litres of fuel leaked into the ground four new Group-level guidelines, which incidents and 50% annual reduction and was trapped in an in-situ layer reflect the sustainable development in Level 3 incidents) have been of an impermeable dyke. The priorities for Gold Fields and are retained in 2016. The details of the contaminated soils were then dug discussed in detail in this section. Level 3 incidents – at our South Deep up for appropriate disposal
1 Levels 1 and 2 involve minor incidents or non-conformances, with negligible or short-term limited impact. A Level 3 incident results in limited non-conformance or non-compliance that result in ongoing but limited environmental impact. Level 4 and 5 incidents include major non-conformances or non-compliances, which could result in long-term environmental harm, with company or operation- threatening implications and potential damage to company reputation. 90 The Gold Fields Integrated Annual Report 2015
Group environmental performance 2015 2014 2013
Environmental incidents (Level 2) 67 58 49 Environmental incidents (Level 3) 5 4 3 Water withdrawal (Mℓ)1 35,247 30,207 30,302 Water discharge (Mℓ) 18,4922 11,620 2,5268 Gross closure costs (provisions) (US$m) 353 391 355 5,7 CO2 emissions (scope 1 and 2 ) ('000 tonnes) 1 323 1 258 1 235 5,7 CO2 emissions (scope 3 ) ('000 tonnes) 431 436 496 Electricity (MWh)1 1,322,353 1,338,074 1,382,105 Diesel (TJ)1 6,930 6,066 5,509 3 Carbon emission intensity (tonnes CO2-e/oz) 0.59 0.55 0.61 4 NOx, SOx and other emissions (tonnes) 21,073 20,084 17,942 Cyanide consumption (tonnes)6 7,820 10,660 13,660 Mining waste ('000 tonnes) 167,357 138,522 190,007 Materials ('000 tonnes) 145 144 176 ¹ The numbers disclosed only include our operations, as regional and the corporate head offices are not considered to be material ² Granny Smith has authorisation to discharge ground water into Lake Carey and the Tarkwa mine treats and discharges the water from its heap leach facilities into the environment. At Damang, water was pumped from the inactive Rex pit, treated via a series of ponds and trenches for pH adjustment before being discharged into an ambient water body ³ Scope 1 and 2 only 4 Numbers differ in comparison to what has been reported in previous years due to applying air emission conversion factors that are based on global averages as determined by the Environmental Protection Agency (EPA) 5 The CO2 emissions numbers include head offices 6 Reduction in cyanide consumption is due to campaign milling at St Ives, as well as change in ore type and business improvement initiatives at Tarkwa 7 Scope 1 emissions are those arising directly from sources managed by the company. Scope 2 emissions are indirect emissions generated in the production of electricity used by the company. Scope 3 emissions arise as a consequence of the activities of the company, such as air travel 8 No water was discharged at our St Ives and Agnew mines in 2013, while the closure of the South Heap Leach at Tarkwa also led to a drop in water discharged
Societal acceptance of our mines and projects. We In 2015, our total value distribution The success of our business is believe that we do indeed generate – reported according to World Gold critically dependent on our and share significant value for the Council methodology – was relationship with key external societies in which we operate. US$2.401 billion (2014: stakeholders that determines both US$2.650 billion), with 69% going to our regulatory environment and our Our total value distribution, businesses and suppliers (2014: social licenses to operate. These graphically depicted on page 10, 69%), 8% to governments (2014: stakeholders include governments at details the value creation at Group 7%), 17% to employees (2014: a national, regional and local level level as well as in our four countries 18%), 5% to capital providers and, above all, the communities that of operation. (2014: 5%) and 0.5% on Socio- host our mines. We, therefore, economic Development (SED) spend devote considerable resources and Despite a third year of considerably (2014: 1%) – mostly in host energies to securing and maintaining lower gold price environment, in communities. The slight decline in these licences. 2015, Gold Fields continued to the total value distribution was largely distribute a similar level of value due to a cutback in spending with This is not merely a compliance- (compared with the prior years) to a business suppliers and partners based approach but one that seeks wide range of stakeholders, including amid lower operational expenditures. to ensure that we secure the employees, host governments, host long-term support and acceptance communities, businesses and of governments and communities suppliers as well as the providers of through the sustainable development capital. 91 The Gold Fields Integrated Annual Report 2015 5.2 Social licence to operate – Strategic focus areas
Energy and carbon Strategy. This strategy seeks to Australian Dollar and the South The management of energy use and ensure energy security; decrease African Rand resulted in lower carbon emissions; explore immediate power and fuel costs, which are the related costs is a business and long-term energy efficiency denominated in US Dollars imperative for us, even more opportunities, and investigate and ❯❯ Total electricity consumption for challenging in the context of implement viable sources of the Group was steady at declining ore grades, dynamic mining renewable energy. 1,322,353 MWh compared with conditions and increasing energy 1,338,075 MWh in 2014, reflecting tariffs in our regions. As such, energy During 2015, all regions were tasked significant energy savings at our management (comprising both with developing and implementing Australian mines and a shift electricity and fuel) remains a top five-year energy security plans, with towards diesel- generated power priority – in terms of controlling both the South Deep and Ghanaian mines at our Ghanaian mines costs and carbon emissions as well being identified as facing the greatest ❯❯ Total energy consumption as ensuring security of supply. energy-security risks. But these increased by 7% from operations also present the most 10,465,746 GJ1 in 2014 to Group energy spending as a significant opportunities for 11,240,369 GJ1 in 2015 due to percentage of operating costs renewable energy integration. higher diesel usage increased to 22% in 2015 (2014: ❯❯ Total carbon emissions increased 21%), however this reflected mostly Gold Fields remains committed to by 3.4% (59,120 CO -equivalent the Group’s reduction in operating 2 renewable energy solutions at its tonnes) to 1,753,163 CO2- costs. Actual energy spend declined operations as well as new mine equivalent tonnes from 1,694,043 to US$312 million (2014: developments. During the year, we in 2014 CO2-equivalent tonnes US$361 million). initiated a renewable energy project at South Deep (p95) and installed With energy accounting for 22% of While Gold Fields mined more tonnes solar power at our head office in operating costs, Group-wide, energy in 2015 compared to 2014, mining Johannesburg to meet half our efficiencies and energy savings are intensity remained flat at 0.07 GJ/ electricity demand. For all new critical components of our cost tonnes-mined, while our energy projects, we have set a target of an savings initiatives. Energy savings intensity per ounce produced average of 20% renewable energy from initiatives are recognised for increased by 9% to 5.02 GJ/oz from generation for all new mine 36 months, after which they become 4.56 GJ/oz in 2014. This was largely developments – our Salares Norte part of the baseline. Rolling energy due to declining ore grades and the project in Chile is actively seeking savings performance targets are set increased use of diesel power renewable energy sources as part of at the beginning of each year, generators to ensure security of its ongoing activities. considering operational business supply at our Ghanaian operations. plans. For 2016 we are targeting Energy and carbon performance, savings of 6% on our initial energy Through energy efficiency and with a strong focus on costs savings, consumption estimate of 10,992 TJ. business optimisation initiatives, and energy security – including the Group cumulative energy savings evaluation of renewable energy Some of the most successful energy reached 777,914GJ between 2012 – were contained in the balanced savings initiatives during 2015 and 2015. This was a 7% scorecards of senior and line included: improvement on what we had management in 2015. ❯❯ Campaign milling2 initiative at budgeted for over that period, St Ives and Granny Smith resulting in US$30 million in Some of the salient features of the ❯❯ Throughput improvement on the cumulative cost savings and Group’s energy and carbon comminution circuit at Damang, performance during the year were: which led to improved energy avoidance of 109,000 CO2- equivalent tonnes in carbon ❯❯ Diesel consumption rose from crushing efficiencies emissions. 169,000 kℓ in 2014 to 193,000 kℓ ❯❯ Installation of polymer liner material amid among others, increased in the milling circuit at Cerro Integrated Energy and Carbon reliance on diesel generators at our Corona Management Strategy Ghanaian mines and declining ore ❯❯ An energy efficiency fans retrofit grades at a number of our programme at South Deep Gold Fields integrates energy and operations carbon management into all aspects ❯❯ Our diesel spend declined in line of its business through its Integrated with the lower oil prices, while the Energy and Carbon Management stronger US Dollar against the
1 The sum of direct and indirect energy consumption reflects a conversion factor used by Granny Smith and Darlot power stations. If the conversion factor is not applied, total energy consumption was 11,797,812 GJ in 2015 (2014: 10,997,560 GJ). 2 Campaign milling refers to the situation where the milling process is only in operation when sufficient ore has been provided for the mill to run for a prolonged period. Typically, a mine runs a mill for two weeks then shuts it down for the next two weeks until sufficient ore has been stockpiled. 92 The Gold Fields Integrated Annual Report 2015
Regional and Group energy and carbon performance 2015 2014 20131
Diesel consumption (kℓ) Americas 13,4553 9,939 13,127 Australia 76,867 75,034 32,709 South Africa 2,457 2,419 4,279 West Africa 99,739 81,423 102,829 Group 192,517 168,815 152,943 Electricity purchased (MWh) Americas 145,361 143,441 148,217 Australia 277,521 296,989 234,613 South Africa 484,256 476,767 549,788 West Africa 415,215 420,878 449,487 Group 1,322,353 1,338,075 1,382,106 Total energy consumption (GJ)2 Americas 1,012,363 876,812 1,009,890 Australia 3,250,575 3,285,225 2,056,610 South Africa 1,835,467 1,807,258 2,137,095 West Africa 5,141,964 4,496,451 5,365,150 Group 11,240,369 10,465,746 10,568,746 Energy intensity (GJ/oz produced) Americas 3.42 2.69 3.19 Australia 3.28 3.18 3.40 South Africa 9.27 9.01 7.07 West Africa 6.82 6.11 6.83 Group 5.02 4.56 5.26 Total energy costs (US$m) Americas 21.08 22.61 26.91 Australia 96.43 130.43 54.25 South Africa 31.00 33.11 40.56 West Africa 163.16 175.14 184.22 Group 311.67 361.29 305.94 Energy costs as % of Opex (%) Americas 15 14 17 Australia 18 18 10 South Africa 13 13 13 West Africa 31 32 29 Group 22 21 18 CO emissions (tonnes) (Scope 1 – 3)4 2 Americas 124,030 100,645 110,598 Australia 536,782 537,662 331,803 South Africa 531,078 539,057 611,248 West Africa 561,273 516,679 677,706 Group 1,753,163 1,694,043 1,731,355 Carbon emission intensity (tonnes CO -e/oz) 2 Americas 0.27 0.19 0.22 Australia 0.39 0.37 0.37 South Africa 2.73 2.48 1.85 West Africa 0.49 0.43 0.49 Group 0.59 0.55 0.62 1 Australia numbers exclude the Yilgarn South assets 2 The sum of direct and indirect energy consumption reflects a conversion factor used by Granny Smith and Darlot power stations. If the conversion factor is not applied, total energy consumption was 11,797,812 GJ in 2015 (2014: 10,997,560 GJ). 3 Higher diesel consumption at Cerro Corona is due to increased haulage distances because of the deepening of the pit 4 Incudes head offices 93 The Gold Fields Integrated Annual Report 2015
5.2 Social licence to operate – Strategic focus areas (continued)
Group direct and indirect correlated with key operational South Africa region energy consumption issues such as ore hardness and Given the rolling load shedding that (TJ) (Terajoules) hauling distances. Energy efficiency South Africa experienced in 2015 1200 initiatives saved the mine and the uncertainties with regard to US$3.2 million in 2015. 1000 the electricity prices, South Deep’s 4,760 4,976 4,817 800 energy plans aim to build resilience in Australia region its power supplies and manage the 600 Gold Fields’ Australian operations price risks. Eskom continues to face 400 7,037 6,180 5,593 have limited, but stable, power power supply constraints, due to: 200 supply options due to the remote ❯❯ Historical under-investment in 0 nature of their operations. Both generating capacity 2013 2014 2015 Agnew and St Ives have power ❯❯ Indirect Direct A maintenance backlog on the purchasing agreements (PPA) with ageing generation fleet of power BHP Nickel West, which will stations Group energy intensity guarantee energy supplies until 2019 ❯❯ Delays in the construction of the GJ (Gigajoules) and 2023 respectively. The PPAs are Medupi and Kusile coal-fired 6.0 based on gas-generated electricity, power stations 5.0 which will help reduce the carbon 5.26 4.0 5.02 intensity of these mines. This is also In this context, Eskom carried out 4.56 3.0 the case for Darlot. load-shedding across the national grid whenever its available 2.0 At Granny Smith all the necessary generation capacity could not meet 1.0 approvals for the construction of the national demand. South Deep has 0.07 0.05 0 0.07 2013 2014 2015 gas fired power station, along a new entered into a load-curtailment GJ/oz mined GJ/tonnes mined gas pipeline being constructed for programme with Eskom. This the nearby Tropicana mine, have requires South Deep to reduce been secured. Construction of the demand by up to 25% – depending gas pipeline has commenced and on the severity of the shortage – for a Regional energy performance commissioning of the power station specified period when the national and security is on track for April 2016. Gold Fields grid is unable to maintain its load. As has entered into a 10-year PPA. The South Deep is not yet operating at In 2015, we developed regional cost of the power station is full capacity, the mine has managed five-year energy security plans. Our estimated at A$4.5 million to carry out its principal mining regional operations face varying (US$3.3 million). Once completed activities without interruption, limiting degrees of energy supply we expect savings of around the impact on production and interruptions and tariff volatility. These A$1 million (US$730,000) a year at development during 2015. The mine factors as well as low-carbon energy current oil prices. also uses standby diesel generators availabilities were assessed in the for critical periods to ensure the development of the energy security In terms of energy efficiency, the safety of our employees, should plans. Australian operations performed well load-shedding become unavoidable. with total energy consumption down Americas region from 3.29 million GJ in 2014 to In March 2016, the National Energy Energy security is not an issue at our 3.24 million GJ, against a target of Regulator of South Africa (Nersa) Cerro Corona mine, which has an 3.20 million GJ, led by lower granted Eskom a tariff increase of electricity supply agreement with electricity usage. The energy 9.4% for 2016 on top of above- independent power provider (IPP) initiatives continued to be focused inflation hikes over the previous Kallpa until 2027. Since Kallpa uses on the reduction of electricity years. gas as its power-source it also consumption through campaign contributes to low carbon intensity. milling at Granny Smith and St Ives, As part of its five-year Energy as well as the shutdown of the Security Plan, South Deep is Cerro Corona has therefore focused Lawlers processing plant. This led to mitigating the impact of such price on energy management and from absolute energy savings of 9.6% rises through further energy efficiency 2016 onwards operational energy against a regional target of 10% for improvements and seeking performance targets will be 2015. This saved a cumulative alternative energy sources. These US$17.1 million in costs. form part of its five-year energy
94 The Gold Fields Integrated Annual Report 2015
security plan, whose implementation West Africa region An important mitigating strategy is a commenced early last year, with Tarkwa and Damang continue to PPA with independent US-based 25% of the plan completed by the source their power from the Volta power producer, Genser Energy. end of the year. River Authority (VRA) and the Implementation of this plan Electricity Company of Ghana (ECG). commenced in 2015 and permits An essential component of the plan Power supply in Ghana remains have been received from the is the use of solar power at the mine. severely constrained due to several Environmental Protection Agency After extensive techno-economic factors: (EPA) for the construction of two studies undertaken by the Richard ❯❯ Hydro-power schemes contribute Genser-owned gas turbine power Branson-sponsored Carbon War some 47% of Ghana’s power, but plants near the mines. The key features of the Genser agreement Room – Rocky Mountain Institute with dam levels still dropping are: (CWR-RMI1), South Deep last year rapidly, security of electricity supply ❯❯ It is a 20-year PPA for an initial issued an initial Expression of Interest remains under threat 40MW with 20MW of power being for a 40MW photovoltaic (PV) on-site ❯❯ Delays in the completion of Ghana’s planned gas processing provided from duel-fuel turbines solar electricity generation plant. (primarily gas, with an option for Since then 10 firm proposals were plants ❯❯ coal condensate) at both Tarkwa made by IPPs and we expect to Reduced gas imports due to growing domestic demand in and Damang. Both Tarkwa’s and make a final decision by mid-2016. Nigeria Damang’s 20MW installation are ❯❯ Maintenance challenges at thermal expected to be on-line by the Key requirements of the proposals power plants second half of 2016. An additional were: 20MW is planned for installation at ❯❯ Bidders had to include social As a consequence: Tarkwa by January 2018 initiatives in their proposals that will ❯❯ Daily load-shedding of between ❯❯ The plants will have sufficient benefit our host communities 25% – 30% of the mines’ on-site gas storage capacity to ❯❯ The pricing proposal had to trend electricity consumption was mitigate any gas supply in line with projected inflation rates introduced during Q4 2014 and disruptions. The Genser plants will and ideally meet Eskom grid price persisted throughout 2015 significantly improve the power parity (at estimated 2018 tariff ❯❯ The ECG increased tariffs during supply situation at Tarkwa, which levels) the year, while VRA tariffs were has a total load of 36MW, and ❯❯ Black economic empowerment reduced as a result of lower prices Damang, which has a total load ownership ❯❯ Power shortages are anticipated to of 17MW continue in the medium term as By January 2018, Genser should be South Deep will provide the land for electricity demand in Ghana is in a position to provide 100% of the the solar plant and consider entering expected to surpass generation capacity by 2020 power supply needs at these into a 25-year PPA in accordance operations. Surplus power with the selection criteria. To address the current load- produced by Genser could be shedding requirements, Tarkwa and wheeled to other consumers should At South Deep, energy consumption Gold Fields elect to do so. The plants per tonne processed has improved by Damang initiated a number of actions during 2015 as part of their were scheduled to be commissioned 10% between 2014 and 2015, though in February 2015, but were delayed overall energy consumption was up by five-year energy security plan: ❯❯ Making more extensive use of primarily due to financing delays 2% to 1.84 million GJ. Electricity experienced by Genser. accounts for 13% of operating diesel generators at Damang, amid relatively lower diesel prices expenses at South Deep, which is During 2015, energy spend at our below the Group average of 22%. We ❯❯ Reaching a power management agreement with the Power Ministry Ghanaian mines remained high at do not envisage a significant increase around 35% of operating expenditure in this share as the mine has a large for our Ghanaian mines to, when requested, reduce load at – the highest in the Gold Fields fixed component of energy Group. This was despite the relatively consumption. Energy efficiency Damang, which, as opposed to Tarkwa, is not running at full lower cost of diesel as this was offset initiatives achieved cost savings at by higher statutory fuel levies and a US$2.1 million in 2015. capacity.
1 The CWR was founded in 2009 as a global non-profit organisation by Sir Richard Branson and a group of like-minded entrepreneurs to accelerate the adoption of business solutions that reduce carbon emissions and to advance the low carbon economy. The RMI is an independent non-profit organisation founded in 1982, with the mission of transforming global energy use to create a clean, prosperous, and secure low-carbon future by accelerating the adoption of market-based solutions that cost-effectively shift from fossil fuels to efficiency and renewable energies. CWR merged with the RMI in 2014
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5.2 Social licence to operate – Strategic focus areas (continued)
downward revision in electricity their CO emissions remained 2 Group CO2 emissions – tariffs. Total energy consumption at relatively flat at 380,611 tonnes Scope 1, 2, 3 both mines rose from 4.49 million GJ CO2-equivalent for 2015 (2014: (million tonnes) 381,455 tonnes CO -equivalent) in 2014 to 5.14 million GJ in 2015 as 2 2.0 diesel consumption surged from the region achieved absolute energy 1.73 1.69 1.75 savings of 9.6% against a target 81,423 kℓ to 99,739 kℓ. 1.5 0.42 0.53
of 10%. 0.46 Energy efficiency initiatives yielded 1.0 0.81 cumulative savings of 186,514 GJ South Africa region 0.79 0.79 and emission reductions of 12,354 South Deep is at present exempt 0.5 0.50
tonnes of CO representing cost from setting performance targets due 0.44 0.43 2, 0 savings of around US$7.3 million. to being on ramp-up phase. 2013 2014 2015 Scope 1 n Scope 2 n Scope 3 West Africa region Energy performance and carbon The energy consumption at the Emission intensity emission targets Ghanaian mines increased by 12.5% (Scope 1 and 2 only)
(tonnes CO2-e/oz) During 2014, each region was to 5.14 TJ (2014: 4.49 TJ), CO2 required to establish energy and emissions increased by 12.96% to 0.8
carbon baselines and then set 364,376 tonnes CO2-equivalent 0.7 targets for reducing energy (2014: 317,142 tonnes CO2- 0.6 consumption and carbon emissions equivalent) while absolute energy 0.5 0.61 0.59 until 2016. From 2016 onwards savings of 6.26% were recorded 0.4 0.55 operational energy performance against a target of 1.7%. 0.3 budgets and targets will also be 0.2 consolidated at Group level 0.1 Carbon emissions 0 (measured in absolute GJ, GJ/tonne 2013 2014 2015 mined, GJ/oz, energy costs (US$) Carbon emissions and climate and absolute carbon emission change represent a material issue for For 2016 we are looking at intensifying our efforts for improved (tonnes CO2-equivalent)). Gold Fields. This is due to: ❯❯ The long-term risks posed by energy and carbon management Americas region climate change both to the Group’s through a number of new initiatives, In 2015, Cerro Corona did not have own operations and to wider ranging from deepening our energy performance targets, as it society understanding of energy drivers at our finalised the process of linking ❯❯ Growing efforts to regulate carbon mines to increased staff awareness projections of energy usage to emissions in a range of jurisdictions and training. physical operating conditions. ❯❯ The taxes increasingly attached by Cerro Corona achieved a reduction governments to non-renewable We will continue to investigate in electricity intensity of 3.43% energy consumption opportunities for low carbon energy (TJ MT processed), representing a supplies at a number of our operations, including South Deep 1.97% reduction in absolute electric Gold Fields’ total Scope 1 – 3 CO2 energy usage (by 145,361 MWh, emissions during 2015 amounted to (p95), Tarkwa and Damang (p95) as equivalent to 10.53 TJ) and a 6% 1,753,163 tonnes (2014: 1,694,043 well as Granny Smith. At the latter, increase in diesel intensity (TJ/MT tonnes), leading to a commensurate construction of a gas plant has mined), representing a 2.5% increase increase in our emission intensity begun, which has been registered with the Australian Emissions in diesel usage (by 328 KLT, from 0.55 CO2-equivalent tonnes/oz Reduction Fund (ERF) to achieve equivalent to 11.8 TJ). Total energy in 2014 to 0.59 CO2-equivalent spend reduced by US$4.42 million tonnes/oz in 2015. savings of around 13,000 CO2- attributable to lower diesel prices. equivalent tonnes a year once it is The increase in diesel usage Emission intensity varies widely from fully operational, which is expected in 0.27 CO -equivalent tonnes/oz in mid-2016. The ERF credits can be contributed to CO2 emissions 2 increasing by 0.053% to Peru, which relies on gas for the sold with the price depending on 77,579 tonnes CO -equivalent. All bulk of its energy requirements, to ruling auction prices – currently 2 estimated at around A$12/tonne. performance figures are against a 2.73 CO2-equivalent tonnes/oz in baseline year of 2013. South Africa, which relies almost Given that the total abatement will be exclusively on coal-powered electricity 91,000 tonnes, this could generate for its energy supplies. revenue of around A$1 million Australia region (US$730,000) over seven years. The energy consumption of our During 2015, Gold Fields’ total CO2 Australian mines decreased by emissions were 3.4% higher than in The South Deep energy efficient fans 1.52% to 3.24 TJ (2014: 3.29 TJ), 2014, largely due to the greater use of retrofit programme was registered against a target of 3.20 TJ. While diesel at our Ghanaian operations. with the UN Clean Development
96 The Gold Fields Integrated Annual Report 2015
Mechanism (CDM) in 2013. The ❯❯ The implementation of carbon Water programme will enter its first taxes is likely to be accelerated to Water management is a critical validation stage in 2016. enable countries to achieve their emission reduction targets. long-term issue for the mining During 2016, we will also be Gold Fields is facing carbon taxes industry for a number of reasons: undertaking risk-based climate change in South Africa, though their ❯❯ Water is an important vector for assessments at our operations to implementation is only likely from the potential spread of pollution identify the ones that are most 2017 onwards (whether as a result of an vulnerable to the impact of climate ❯❯ Chile, Peru and Ghana have immediate incident or the gradual change and develop short-term and proposed additional climate build-up and movement of long-term adaptation measures. adaptation measures, such as contaminants over time), making it reforestation, potentially presenting a critical compliance issue as well Carbon and climate change an opportunity for old mining land as being a risk to the environment reporting re-use ❯❯ All our operations will have to and human health if not Gold Fields responds on an annual responsibly managed basis to the international Carbon comply with greenhouse gas ❯❯ Mining can require large volumes Disclosure Project’s (CDP) climate reporting requirements, such change and water questionnaires. as the Australian National of water and often takes place in This information - along with that of Greenhouse and Energy Reporting locations that are already water- other organisations - is aggregated to (NGER) – already implemented – stressed produce the Carbon Disclosure and the South African National ❯❯ Poor water management can have Leadership Index (CDLI) and Carbon Atmosphere Emissions Inventory significant social and political Performance Leadership Index (CPLI). Systems (NAEIS), which is not yet consequences, where local legislated. communities are affected by, for In 2015, Gold Fields achieved a ❯❯ Countries have to review and update their Nationally Determined example, water scarcity, high levels disclosure score of 100% in the CDLI of agricultural activity and a lack of and a performance rating of A- in Commitments every five years sufficient water infrastructure the CPLI. Both are an improvement from 2020 to report on country on 2014, when the Gold Fields progress towards meeting the disclosure score was 96% and the emission reduction commitments. In this context, Gold Fields remains CPLI rating a B. The CDP in 2015 Companies are expected to align committed to responsible water also recognised consistent their reporting systems to be able stewardship, which enables shared performers between 2008 - 2015. to supply government with the benefits for our stakeholders and Gold Fields was recognised as one relevant data security of supply for our operations. ❯❯ Carbon pricing and a trading of four companies for being in the Key enabling factors to achieve CPLI for three or more years and one scheme were included in the agreement, though details were effective water stewardship include of seven companies for being in the publicly reporting our water usage CDLI for six or more years. not provided and material water risks and Global and national climate Following the COP 21 Paris engaging pro-actively with affected change initiatives Agreement, Gold Fields signed the stakeholders. Paris Pledge for Action to In the build up to the 2015 demonstrate our broad support for In addition, Gold Fields adopts Conference of the Parties (COP 21) the worldwide efforts to reduce global negotiations in Paris, the ICMM – of a catchment-based water carbon emissions. We believe, management approach. This means which Gold Fields is a member – however, that any regulatory understanding the social, cultural, released a statement in support of interventions have to be economically the negotiations and clarified the sustainable for the industry and any economic and environmental value position of the industry with regard revenues generated used to benefit of water at the catchment scale to to climate change. At the COP 21 the environment in general. identify material water stewardship negotiations, countries reached a risks and provide context for globally binding agreement that We have noted that the South African operational water management. At would seek to limit global draft Carbon Tax Bill, which was an operational level our mines are temperature increases over the next released in November 2015, is few decades. tasked with managing operational currently targeting only greenhouse water inputs (both qualitatively and gas emissions according to the quantitatively) and maximising Key implications for Gold Fields Intergovernmental Panel on Climate resource sustainability to achieve include: Change methodology. This would not ❯❯ Across all Gold Fields operating affect South Deep which does not yet operational flexibility and cost regions, governments have produce its own power from fossil savings. proposed stringent greenhouse fuel-based sources, except through a gas emission targets (pre-2020 potential pass through from Eskom, and in some instances post-2020), the state’s power utility that provides with increasing renewable energy the bulk of the mine’s power. and energy efficiency drives 97 The Gold Fields Integrated Annual Report 2015
5.2 Social licence to operate – Strategic focus areas (continued)
Water withdrawal across the Group Whether mines are water-positive, Gold Fields applies the following increased sharply to 35,247 Mℓ water-balanced or water-negative measures to manage the water (2014: 30,207 Mℓ), and water depends on a number of dynamic balance at its mines and to promote withdrawal per ounce produced was variables. These include climatic water stewardship: up from 13.16 kℓ in 2014 to 15.77 kℓ variables such as seasonal rainfall ❯❯ Regional application of the Group in 2015. The main reasons for the and evaporation rates, the volume of water management guideline (a increased water withdrawal were: water entering underground summary is available online at ❯❯ Higher usage at South Deep due workings or open pits (e.g. via www.goldfields.com/sus_guide. to the start-up of the water- aquifers and surface run-off php) – including the development intensive re-mining process and respectively) and the type of and implementation of water less water available from the return processing employed (e.g. heap management action plans dams due to the dry summer leach or Carbon-in-Leach ❯❯ Implementation of physical period processing). measures to manage stormwater ❯❯ Increased water withdrawal at St Ives due to opening up of the Group primary water withdrawal per ounce of gold produced Invincible, Neptune and A5 ore (kℓ/oz) bodies ❯❯ Higher levels of dewatering from 2015 15.77 the Waroonga pit at Agnew as mining at the operation is progressing deeper and into new 2014 areas. Furthermore, the dry hot 13.16 summer of 2015 increased evaporation rates from the processing circuit 2013 15.01 ❯❯ Water abstraction at Granny Smith by an outside company 10 12 14 16 18 20
Though more water was drawn into the system, water recycled and Group water withdrawal re-used improved by 1.64% (Mℓ) during 2015. 2015 35,247 Water resource management Each operation implements an Environmental Management System 2014 30,207 (EMS), through which it assesses, manages, monitors and reports on water use and quality – including 2013 30,302 discharges, where these occur.
0 10,000 20,000 30,000 40,000 50,000 All of Gold Fields' operations are required to have an operational and predictive water balance in place. Group water recycled/reused The water balance is a fundamental (Mℓ) tool for understanding current and future water management 2015 43,120.09 requirements. Water balances enable decision-making regarding the current and future security of our 2014 water supply, as well as other 42,409.00 operational and social concerns, such as modelling storm events to determine the impact on dam water 2013 33,452.50 levels and the potential risk of unplanned discharges. 0 10,000 20,000 30,000 40,000 50,000
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run-off – and keep clean water and tailings density is greater. In Nonetheless, in the context of mine water separate addition, the capital costs are likely broader historical AD legacy issues in ❯❯ Maintenance of water containment to be less in terms of both the Gauteng area, South Deep has capacity (including the construction and associated taken a proactive approach to containment of inflow surges) community relocation costs. In-pit long-term AD management through ❯❯ Water treatment – including tailings disposal has been in use at its comprehensive water reverse osmosis plants our operations in Australia and management plan. This involves ❯❯ Promote water reuse and recycling recently regulatory approval has ongoing water monitoring, and conservation initiatives been received for in-pit tailings containment of any AD generation Group-wide disposal at St Ives on the old tailings facilities and ❯❯ Treatment of nitrates in the pit water-treatment solutions that purify Water re-use, recycling and water at Damang mine, using surplus fissure and process water conservation floating mats of plants that absorb to a potable standard. Identifying opportunities to enhance the nitrates as nutrients water re-use, recycling and ❯❯ Development of a post-closure In 2015, additional technical studies conservation practices at all of Gold water management plan at South were initiated as a solution for Fields operations was a Group Deep, taking into consideration managing potential AD generation in balanced scorecard objective for our surrounding mines, whose the underground workings post- 2015 and beyond. Enhancement of underground water may enter the closure. Underground AD generation these practices can deliver multiple mine’s underground workings, is well managed during the benefits, including cost savings, after they have closed operational phase by ongoing reduced impact in water scarce ❯❯ Replacement of the two low- pumping to the surface of the areas, improved regulatory volume underdrainage capture underground water. compliance, identification and ponds with pumping wells at Cerro mitigation of water-related risks, Corona, which are more efficient in Other key water management reduction of mine closure liabilities capturing potential seepage from initiatives implemented in 2015 at and enhancing Gold Fields’ social the TSF South Deep include: licence to operate. ❯❯ Upgrading (where necessary) of all ❯❯ Plume mitigation measures have operational water balances to been piloted at the Doornpoort Across the Group, 20 initiatives have ensure they have dynamic and TSF and groundwater extraction been identified, of which 16 will be predictive capabilities by the end wells at the old TSFs implemented during 2016. The of 2016. This is also a Group ❯❯ Further revegetation of the mine’s remaining four initiatives require balanced scorecard objective two historic TSFs, which has further studies. Some of the most further reduced the generation of high-profile initiatives include: Acid mine drainage wind-blown dust to well below the legislated airborne dust level limits ❯❯ Use of in-pit tailings storage at our Gold Fields implements a range of ❯❯ The removal of the old South Shaft Tarkwa mine instead of building measures to prevent or contain Acid waste rock dump, which was a new above-ground tailings storage Drainage (AD)1 at its operations and potential source of AD and other facilities (TSFs). In-pit tailings takes effective remedial action where contamination, is almost complete. storage has a higher potential for incidents are identified. There were Rehabilitation of the footprint area recycling and re-use of water than no material cases of AD reported commenced in 2015 conventional tailings facilities as in 2015. there is less evaporation and the
1 AMD or acid rock drainage (ARD), collectively called acid drainage (AD) is formed when certain sulphide minerals in rocks are exposed to oxidising conditions, such as the presence of oxygen, combined with water. AD can occur under natural conditions or as a result of the sulphide minerals that are encountered and exposed to oxidation during mining or during storage in waste rock dumps, ore stockpiles or tailings dams. The acidic water that forms, usually contains iron and other metals if they are contained in the host rock
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5.2 Social licence to operate – Strategic focus areas (continued)
Cerro Corona’s tailings and waste had a serious impact on other proactively ensured that existing rock facilities were designed to avoid operators in the Cajamarca region. supply agreements have been and mitigate the risks of AD. In As such, Cerro Corona has extended to all its operations. This addition, the mines closure plan proactively implemented a range of work will continue into 2016. contains various strategies, which responsible water management are updated at least every two years initiatives, including: At St Ives, legal proceedings were as new technical information ❯❯ Rainwater storage and reuse: commenced in 2014 against Nickel becomes available. A more detailed Rainwater is stored at Cerro West, operated by BHP Billiton, post-closure water management Corona’s TSF within a closed- relating to the continued supply of plan will be developed during 2016 circuit water system, treated and potable water to the St Ives to add to the existing body of reused by the operation. This operations. In early 2015, agreement technical work. enhances the mine’s water supply, was reached to settle all outstanding while minimising both the amount disputes. St Ives has also entered AD issues have also been identified of water discharged and the into secondary water supply at the Damang mine, however these amount of local groundwater agreements with other parties are confined to one pit. Additional abstracted (including the Western Australian technical studies have been ❯❯ Community water supplies: Water Corporation) to meet its commissioned in 2016 to better Cerro Corona has committed to ongoing requirements. manage the AD at mine closure. providing local communities with additional, potable water during South Africa region Although Gold Fields has the dry season and has completed Water management is a sensitive commissioned various technical a number of projects focused on public issue in South Africa, studies to identify the steps required water provision to nearby particular in the Gauteng area (where to prevent or mitigate the potentially communities as well as improving South Deep is situated), which material AD impacts at its Cerro existing municipal water systems suffers from the historical Corona and South Deep operations, (p119) environmental legacy of more than a none of these studies has allowed ❯❯ Water monitoring: Cerro Corona century of intensive, deep-level gold Gold Fields to generate a reliable works closely with community- mining. This legacy means that there estimate of the total potential impact elected representatives to monitor are high levels of AD in and around on the Group. water quality and quantity at the Johannesburg – most of it caused by Las Tomas spring and authorised now-defunct companies and Immaterial levels of AD have been discharge points around the operations. identified at the Tarkwa and St Ives operation mines Whilst not contributing to local AD, there are concerns that South Such approaches have - in Deep’s long life will mean that the combination with effective mine is the ‘last man standing’ as Regional water initiatives community engagement practices Gauteng’s AD issues become more Americas region and the generation of shared local acute and social and regulatory Water security poses a significant value – played a key role in pressure to act on the issue grows. long-term challenge at Cerro Corona protecting Cerro Corona from the as the mine operates in a national kinds of social tensions affecting South Africa currently finds itself in a context of poorly developed water other nearby mining operations. drought cycle that is one of the worst infrastructure, water quality in 40 years and which, some experts degradation and serious water- Australia region indicate, could continue for between related activism at both a local and Water security poses a potentially three to five years. The implementation regional level. Although Cerro Corona significant challenge for the region’s of water re-use, recycling and has not as yet been materially mines – all of which are based in arid conservation practices is therefore particularly critical at the mine. affected by such activism – this has areas of Western Australia. During 2015, Gold Fields Australia
100 The Gold Fields Integrated Annual Report 2015
South Deep compiled a risk-based process water to reactivate the RO a significant amount of interaction water scarcity management plan in plants and reduce intake from the continues to take place between Q4 2015, which evaluates the key regional water utility. rainwater and the stacked ore. drought related risks and proposes a During 2015, stored contaminated variety of solutions to ensure that the In 2015, South Deep completed water was being recycled on the mine continues to obtain a secure the first phase of its stormwater South Heap Leach pads temporarily supply of water for its employees management plan. This included the to improve water quality, through the and production purposes, while construction of concrete channels to absorption of ions by the vegetative minimising the impact of its water separate clean stormwater in the cover (plants) on the heaps. use on the environment and other surrounding catchment from water water users in the catchment. In the running off the backfill plant area and A second response by the mine was short-term these measures include: surrounding areas. This has helped the construction of pipes and the ❯❯ Considering options to obtain to minimise the risk of unplanned, transportation of contaminated water water supplies from neighbouring off-footprint water discharges from from the South ponds to the North mines the old return water dams during the Reverse RO plant, since the South ❯❯ Further improving storage and rainy season due to the diversion of RO plant had been decommissioned distribution of recycled water clean stormwater away from the to save costs. The rinsing of the within the South Deep water dams. The next phase of the project North heaps with process water system – the upgrade and lining of the return continued. Excess water from the ❯❯ Investigating the potential of water dam at the old TSFs – is North heaps is treated at the North withdrawing underground water scheduled to commence in 2017. RO plant and discharged. from old workings behind South Deep plugs, that minimise the South Deep has signed a The operation of the RO plant, which inflows of water from memorandum of understanding with was established at the behest of interconnected mines a US-based technology company to Ghana’s Environmental Protection pilot an in-line continuous water Agency, produces concentrated The drought has also had an adverse monitoring system in 2016 that can brine, which is being temporarily impact on the three reverse osmosis provide real-time data on heavy stored on site in the TSFs. As part of (RO) plants installed at South Deep metals and other contaminants. The the investigation into the permanent over the past two years to treat technology will allow for significantly elimination of brine through plant process water and reduce the intake enhanced response times to any absorption, a 13 hectare test plot of of Rand Water supply. The plants water quality related issues, through rubber trees (one of the major tree have not been operational since an early warning detection system. species cultivated in the region) was October 2015, due to water established at the North Heap Leach shortages. West Africa region facility in Q4 2015, and is being Gold Fields’ Ghanaian operations irrigated with brine. This will be Before the stoppage, the three plants – and Tarkwa in particular – face monitored in terms of its suitability as had treated about 2 – 4 Mℓ/day, some challenges on water a long-term solution for brine thereby of processed water thereby management, including intense management. cutting the mine’s water purchase periods of precipitation, particularly costs by an estimated R120,000 to during southern Ghana’s two rainy In late 2014, Tarkwa submitted its R150,000/month. The RO plants seasons, and the significant footprint long term decommissioning plan of also have the benefit of increasing of the Tarkwa mine, meaning that the North and South heap leach the overall supply of water for other there is a large watershed to facilities to the regulator (EPA). local users as well as reducing the manage. Subsequent to the submission, the overall amount of water in the mine’s regulator requested technical studies system and the risk of dam overflows This footprint includes the extensive on the end use of the heaps. These during periods of heavy rains. South surface area of Tarkwa’s North and studies were completed in 2015 and Deep is currently engaging South Heap Leach facilities. While submitted to the EPA. We are neighbouring mines to secure more both facilities were closed in 2014, awaiting a formal response.
101 The Gold Fields Integrated Annual Report 2015
5.2 Social licence to operate – Strategic focus areas (continued)
Waste and tailings resulted in increased scrutiny of the replacement of existing ones. The most significant output materials industry’s tailings management Production activities are dependent of Gold Fields’ operations are tailings, practices, the ICMM initiated a global on a mine having sufficient TSF waste rock, chemical waste and review of TSF standards and critical capacity. Securing new TSF capacity hydrocarbon waste, all of which are control processes across its member can involve lengthy permitting responsibly managed. Gold mining companies. Gold Fields CEO Nick processes with local environmental requires large volumes of blasting Holland is acting as the CEO sponsor agencies – and can also require agents, hydrochloric acid, lime, for the review and Gold Fields also negotiations with local communities. cyanide, cement and caustic soda chairs the member company (sodium hydroxide), all of which it working-group. Gold Fields is In 2015, the Group took the following uses on an ongoing basis. Of these, committed to implementing any steps to ensure that its operations cyanide represents the most additional measures to improve TSF continued to enjoy a sustainable TSF potentially hazardous substance. All management that may emanate from pipeline to support future production: Gold Fields’ operations, except Cerro the review. ❯❯ In Australia, our St Ives mine Corona, are fully compliant with the received final environmental requirements of the International To date Gold Fields has applied the approval from the regulator for the Cyanide Management Code (ICMC). following measures at its operations proposed Leviathan in-pit tailings Cerro Corona produces ore to minimise the risks posed by TSFs facility, which is expected to realise concentrate and does not require to the environment, which include: around A$50 million (US$37 million) ICMC certification. ICMC certification ❯❯ Pollution containment facilities to in savings for tailings facility also extends to Gold Fields’ transport capture run-off water from the TSF construction and closure liabilities providers. surfaces, together with solution over the life-of-mine. In addition, trenches to capture shallow operational cost reductions are All Gold Fields’ operations have groundwater seepage estimated to total up to A$5 million tailings management plans in place, ❯❯ Recycling systems to allow the (US$3.7 million) a year. including closure and post-closure reuse of tailings water in Construction started in Q1 2016 management plans. All TSFs and metallurgical processes ❯❯ In 2014, Gold Fields concluded associated pipeline and pumping ❯❯ Monitoring of groundwater plume lengthy negotiations with the EPA infrastructure are subject to quality and migration (where over the development of future ISO 14001 certification, external applicable) and, where pollution is TSFs at Tarkwa. This resulted in tailings audits, as well as regular detected, installing measures to Gold Fields securing formal, written inspection and formal annual contain plumes permission to raise two of the reporting. TSFs are also subject ❯❯ Planting vegetation, installing existing TSFs at Tarkwa (TSF1 and to Group-wide inspection by netting and applying chemical TSF2). During 2015, the wall raise independent experts at least once suppressants on slope faces to at TSF1 was completed, while every three years - or more frequently control dust and erosion construction at TSF2 is nearing where required by local completion. These extensions will circumstances or regulations. More broadly, Gold Fields is taking provide the mine with adequate proactive steps to anticipate tailings capacity for the next two Gold Fields’ last Group-wide TSF constraints relating to the years. TSF3 has been earmarked audit was conducted in 2014, which development of future TSFs and the for closure in 2017. These three included all 15 operational and 10 dormant TSFs, by an independent, expert consultancy and Group mining waste found that all facilities were well- (million tonnes) managed and were either already aligned with global good practice, or 129.9 have plans in place for alignment. 2015 30,207 37.4 The audit found that the Gold Fields TSFs were within the top quartile of 100.2 2014 industry leading practice in terms of 38.4 design, operation, and management. 153.3 2013 36.7 In response to the recent high profile tailings dam failures at Mount Polley (4 August 2014) and Samarco 0 20 40 60 80 100 120 140 160 180 (5 November 2015), which have Waste rock Tailings 102 The Gold Fields Integrated Annual Report 2015
TSFs currently provide the mine Mine closure ❯❯ A significant decrease at Cerro with capacity for tailings storage of The total gross mine closure liability Corona Mine (US$6 million), which 13.5 million tonnes per annum for Gold Fields has decreased by resulted from a change in ❯❯ To cater for its longer-term 10% from US$391 million in 2014 to methodology for closing the production profile Tarkwa has been $353 million in 2015. This decrease tailings facility in talks with the EPA about two can be attributed to a range of new TSFs – TSF5 and TSF6. In factors including: The funding methods used in each late 2015 the mine received verbal ❯❯ Significantly weaker Australian region to make provision for the go-ahead for site clearing and Dollar and South African Rand mine closure cost estimates are: ❯❯ preparation of TSF5. This work exchange rates against the Ghana – reclamation bonds commenced in January 2016, US Dollar. In Rand terms, the underwritten by banks and while the environmental review and South Deep estimate increased by restricted cash ❯❯ approval processes are ongoing. 17%, however, with the South Africa – contributions into TSF 6 is in pre-feasibility stage conversion to US Dollars, the environmental trust funds and ❯❯ During 2015, Damang completed amount shows a 10% reduction guarantees ❯❯ the wall raising at the East TSF, against the prior year Australia – existing cash resources ❯❯ which will provide adequate ❯❯ For Gold Fields Australia, in Peru – bank guarantees capacity until 2017. A decision to addition to the decrease resulting commission the new Far East TSF from the conversion of Australian Going forward, Gold Fields is will depend on the current Dollars to US Dollars, the final planning to further enhance its investigation into the mine’s closure cost shows a drop of integrated approach to mine closure longer-term operational future. A$5.6 million as a result of management with a focus on social ❯❯ At Cerro Corona the Las Tomas obtaining approval from the closure and post-closure water spring was relocated to allow for regulator to combine the Agnew management. The programme is the expansion of the TSF after the and Lawlers closure plans currently being developed and relevant approvals were received. implementation is scheduled for An audit by the regulator in August 2016 and 2017. 2015 found that the relocation had been carried out in line with the approvals requirements The percentage contribution to the total gross closure liability per region as well as Meanwhile, both underground and the percentage secured through the above-listed mechanisms for 2015 are: open-pit operations produce Amount substantial volumes of waste rock. Region % of Group Total (US$) secured (US$) % secured This is kept in managed waste rock dumps, which are subject to Australia1 53% 186,007,171 0 0%1 comprehensive rehabilitation through South Africa 8% 28,959,039 28,959,039 100% the application of cover material, West Africa 26% 91,519,303 64,117,934 70% usually topsoil and vegetation, once Americas 13% 46,663,873 20,998,743 38% they are no longer in use. Totals 100% 353,149,387 114,075,716 29% South Deep commenced the 1 Due to legislative changes in Western Australia that came into effect in July 2014, there is removal of the old South Shaft waste no longer a legal obligation to have unconditional performance bonds in place for mine rock dump in early 2015. While closure liabilities. Companies are now required to pay a levy to the state based on the total tailings output was stable, there was mine closure liability. This levy is 1% of the total liability per mine, paid annually. This levy goes into a state administered fund known as the Mine Rehabilitation Fund and is similar an increase in waste rock across the to the US Superfund where monies and interest from the fund will be used to rehabilitate Group largely due to increased legacy sites or sites that have prematurely closed or been abandoned. Company specific stripping at the Invincible, Neptune liabilities for active mines are therefore unfunded and A5 open pits at St Ives.
103 The Gold Fields Integrated Annual Report 2015
5.2 Social licence to operate – Strategic focus areas (continued)
Government relations Fiscal challenges in Ghana would significantly improve fiscal As the issuer of mining licences, In Ghana, Gold Fields continues to predictability for the Ghanaian mining developers of policy and overseers of remain disproportionately exposed to sector, which is critical for long-term regulation, host governments are the consequences of a heavier fiscal investment planning. among Gold Fields’ most important regime for the mining sector. This stakeholders. Engagement with follows a range of fiscal measures Royalties in Australia national governments typically takes taken in recent years to address During 2015, Gold Fields joined with place on a collective basis through public budgetary challenges. These its peers in Western Australia to local chambers of mines. Gold Fields include: campaign against a review of the also regularly engages with regional ❯❯ Increased corporate income tax royalties charged on mining, which regulatory authorities and local rates and royalties had been proposed by the government in its host communities. ❯❯ A much reduced capital allowance government of the state. The Gold Fields does not provide ❯❯ Increased customs duties on campaign, entitled ‘Heart of Gold’, financial contributions to political mining items highlighted the industry’s contribution parties and lobby groups unless ❯❯ Increased ‘stool tax’ – a local tax to the economy and job creation. In explicitly approved by the Gold Fields calculated on the size of all March 2015, the government Board of Directors. exploration and mining lease areas announced that there would be no increases to the royalties on Taxation and the maximisation In 2015 Gold Fields was the second gold mining. of national mineral benefits largest corporate contributor to It is natural and right that public revenues in Ghana – paying Fiscal uncertainty in South governments seek to maximise the US$86 million in direct taxes, Africa social benefits that accrue from the royalties and dividends. Whilst proud Gold Fields’ operation in South Africa extraction of finite natural resources. of making such a substantive is guided primarily by the Mineral and As a matter of policy Gold Fields fully contribution to national development, Petroleum Resources Development complies with the fiscal and taxation this contribution continues to be Act (MPRDA) of 2002. In 2013 regulations and laws of the countries disproportionate to that of its critical amendments to the MPRDA it operates in, understanding that in-country peers. were tabled by the government in the these fiscal contributions are critical MPRDA Amendment Bill, but the bill to fund governments, its employees These commercial pressures – in was sent back to Parliament for and public sector infrastructure and combination with the low gold price consideration. A change of minister projects. – are having a direct impact on Gold and director general in the Fields’ expansion plans. In 2014, we Department of Mineral Resources Nonetheless, attempts to secure reduced our exploration activities in (DMR) in 2015 and differing policy these benefits through higher levels Ghana to near-mine activities only, priorities by various government of targeted taxation can in the long and the fiscal framework will be a key departments, have also created term have the opposite effect. consideration as we ponder the significant uncertainty for current Indeed, the weak commodities future of our Damang mine. and potential investors. market – including the low price of gold – is throwing into sharp focus Gold Fields continues to One of the key requirements of the just how damaging short-term constructively engage with the MPRDA is to facilitate meaningful attempts to secure a greater Government of Ghana regarding the and substantial participation of proportion of companies’ earnings potential introduction of an Historically Disadvantaged South can be. Mining investment is falling, investment framework that would be Africans (HDSAs) in the mining new growth projects are being left equally applicable to all gold mining industry. To provide guidance on this undeveloped and existing projects companies. The latest formal open-ended requirement, the Mining are facing closure – even without engagements with the government Charter, as revised in 2010, was additional fiscal uncertainty. The in terms of a new investment published providing for a range of implications for longer-term national agreement have been ongoing since empowerment actions and a and host community development late 2014 but have yet to give us a corollary time frame. All mining rights are obvious. satisfactory level of assurance. A holders (including South Deep as the level playing field with a supportive mining rights holder) are required to and globally competitive tax regime submit an annual compliance
104 The Gold Fields Integrated Annual Report 2015
assessment to the DMR on progress Consideration of the implementation The Chamber is also engaging with made against meeting the annual of the Department of Trade and government directly on the long term targets in the Charter. Gold Fields Industry’s amended Codes of Good sustainability of the industry and a continues to comply with this Practice (CoGP) on the mining number of other issues confronting process. industry is also important, specifically the sector. A tripartite forum, called alignment between the Mining Project Phakisa – comprising Government had indicated that the Charter and the CoGP. In October industry, government and organised Mining Charter would be reviewed 2014, the Broad-Based Black labour – was established during during 2015 but a number of Economic Empowerment Act of 2015 followed by extensive important aspects of the Charter 2003, as amended (B-BBEE Act), engagement programmes to map remain to be finalised, key of which is which gives effect to the CoGP, was out future growth and empowerment the Black Economic Empowerment amended introducing a ‘trumping’ of the South African mining industry. (BEE) ownership of mining clause to bring about alignment to companies and the evaluation of the B-BBEE Act for all disparate Gold Fields is fully in support of these previous BEE transactions carried legislation regulating the efforts and has actively participated out by the industry. The Chamber of measurement of BEE. On in Project Phakisa. However, amid Mines, representing the vast majority 30 October 2015, the DMR the continued regulatory uncertainty of mining companies in South Africa, announced that the mining industry it is difficult to envisage strong has applied to the High Court of will be exempt for 12 months from investor support for the industry, South Africa for a declaratory order. the provisions in the B-BBEE Act, which is essential if the investment The matter was set down for March while alignment between the Mining is to be forthcoming to fund an 15 and 16. For an update see the Charter and CoGP is being sought. expansion of the sector. AFR on page 41.
❯ Citrus farming on rehabilitated mine land at Damang 105 The Gold Fields Integrated Annual Report 2015
5.2 Social licence to operate – Strategic focus areas (continued)
❯ Element ❯ Description
Mining Charter Scorecard ❯ Reporting Report on the level of compliance with the Revised Documentary proof of receipt from the Annually Target met (Annual Submission) Charter for the calendar year DMR All mining rights holders (including South Deep as the mining rights ❯ Ownership Minimum target for effective HDSA ownership Meaningful economic participation 26% 35% holder) are required to submit an Conversion and upgrading hostels to attain the Hostels: South Deep has completed 100% of the planned hostel occupancy rate of one person per room Percentage reduction of occupancy rate Occupancy rate of one upgrades. At the end of December 2015, the occupancy rate annual compliance assessment to towards 2015 target person per room averaged one person per room, thus meeting the Mining Charter the South African Department of ❯ Housing and compliance scorecard target Mineral Resources (DMR) on living costs Conversion and upgrading hostels into family units Family units: At the end of 2014 South Deep had completed the progress made against meeting the Percentage conversion of hostels Family units established establishment of family accommodation at its hostels (100% into family units complete). South Deep remained compliant with this target in annual targets in the Charter. 2015. Capital goods 40% 88% Gold Fields had submitted its 2012 Procurement spent on BEE entity Services and 2013 annual assessment report 70% 79% in accordance with these ❯ Procurement and Consumable goods 50% 84% requirements. In early 2015, the enterprise 0% DMR requested all mining rights There remains an industry-wide lack of clarity on this requirement development Annual spend on procurement from holders (including Gold Fields’ South 0.5% of procurement value in the absence of guidance from the DMR. However, over and Multi-national suppliers’ contribution to the social multi-national suppliers above its SLP commitments, South Deep commenced several Deep Mine) to re-submit the 2012 fund projects in 2015 focused on enhancing host community and 2013 compliance assessments procurement, employment and skills development. and submit its 2014 compliance Top management (Board) 40% 50% assessment onto an on-line template Senior management1 40% 50% (designed by the DMR). On Diversification of the workplace to reflect the country’s ❯ Employment equity Middle management 40% 57% 15 March 2016 the DMR extended demographics to attain competitiveness the statutory deadline for the 2015 Junior management 40% 54% submission from 31 March 2016 to Core and critical skills2 40% 70% 30 April 2016. Developing requisite skills, including support for South Africa-based research and development Human resources development ❯ Human resources expenditure as a percentage of total initiatives intended to develop solutions in exploration, 5% 10.5% Gold Fields submitted the development annual payroll (excluding mandatory skills information online as requested. mining, processing, technology, mining, beneficiation development levy) as well as environmental conservation. Implement approved community projects Up-to-date project As part of South Deep’s Social and Labour Plans (SLP), the mine is Amid the absence of new criteria, implementation involved in a number of community development projects focused Gold Fields has updated its Mining on infrastructure development, job creation and poverty alleviation, Charter performance and with particular emphasis on enterprise development. Despite being ❯ Mine community Conduct ethnographic community consultative and in a loss-making position due to South Deep being in a ramp-up compliance in line with this collaborative processes to delineate community phase, the mine and the South Deep Community and Education scorecard. The 2015 scorecard development needs Trusts spent a combined R46.4 million on approved socio- follows on this page. economic development projects in 2015. 8% of SED spend (or R3.16 million) was spent on implementation of community projects (LED projects), approved in the SLP. In 2015, 76% of these LED Gold Fields’ BEE ownership projects were implemented. transactions are detailed on our ❯ Improvement of the industry’s environmental ❯ Implementation of approved 100% 100% website at www.goldfields.co.za/ management environmental management reports/annual_report_2013/ programmes (EMPs) ❯ Improvement of the industry’s mine health and ❯ integrated/sec-ethics.php. ❯ Sustainable Implementation of tripartite action plan 100% 69% safety performance (TAP) on health and safety 100% implementation was achieved on three of the five pillars for the development TAP. Further work is being undertaken on the remaining two pillars: and growth training of Occupational Health and Safety (OHS) representatives as well as implementing the cultural transformation framework standards in 2016 towards fully achieving this target. ❯ Utilisation of South African-based research facilities ❯ Percentage of samples in South African for analysis of samples across the mining value chain facilities 100% 100% Current regulations and guidelines are not clear in relation to the baseline levels and targets. However, Gold Fields has made a capital- intensive investment in our smelting facility at South Deep, which adds significant value to the gold being mined as well as creating jobs. Gold Fields also owns 2,76% of Rand Refinery, which has established the ‘Gold Zone’. The aim is for the Gold Zone to become a major hub for precious metals fabrication in South Africa Added production volume contribution to Section 26 of MPRDA for global export, while at the same time assisting local communities ❯ Contribution towards beneficiation Beneficiation local value addition beyond the baseline (% of above baseline) with skills development (including beneficiation). Two socio-economic development projects currently located at the Gold Zone are: (1)The Intsika Project, which provides jewellery design and manufacturing training to formerly unemployed young black women over an 18‑month period; and (2) The Ekhurhuleni Jewellery Project, which is a Small to Medium Manufacturing Enterprise/Black Economic Empowerment incubator for qualified emerging young black jewellery manufacturers.
106 The Gold Fields Integrated Annual Report 2015
Mining charter compliance ❯ How we measured up ❯ ❯ Progress against 2015 mining charter target target by 2015
❯ Reporting Report on the level of compliance with the Revised Documentary proof of receipt from the Annually Target met (Annual Submission) Charter for the calendar year DMR ❯ Ownership Minimum target for effective HDSA ownership Meaningful economic participation 26% 35% Conversion and upgrading hostels to attain the Hostels: South Deep has completed 100% of the planned hostel occupancy rate of one person per room Percentage reduction of occupancy rate Occupancy rate of one upgrades. At the end of December 2015, the occupancy rate towards 2015 target person per room averaged one person per room, thus meeting the Mining Charter ❯ Housing and compliance scorecard target living costs Conversion and upgrading hostels into family units Family units: At the end of 2014 South Deep had completed the Percentage conversion of hostels Family units established establishment of family accommodation at its hostels (100% into family units complete). South Deep remained compliant with this target in 2015. Capital goods 40% 88% Procurement spent on BEE entity Services 70% 79% ❯ Procurement and Consumable goods 50% 84% enterprise 0% There remains an industry-wide lack of clarity on this requirement development Annual spend on procurement from 0.5% of procurement value in the absence of guidance from the DMR. However, over and Multi-national suppliers’ contribution to the social multi-national suppliers above its SLP commitments, South Deep commenced several fund projects in 2015 focused on enhancing host community procurement, employment and skills development. Top management (Board) 40% 50% Senior management1 40% 50% Diversification of the workplace to reflect the country’s ❯ Middle management Employment equity demographics to attain competitiveness 40% 57% Junior management 40% 54% Core and critical skills2 40% 70% Developing requisite skills, including support for South Africa-based research and development Human resources development ❯ Human resources expenditure as a percentage of total initiatives intended to develop solutions in exploration, 5% 10.5% development annual payroll (excluding mandatory skills mining, processing, technology, mining, beneficiation development levy) as well as environmental conservation. Implement approved community projects Up-to-date project As part of South Deep’s Social and Labour Plans (SLP), the mine is implementation involved in a number of community development projects focused on infrastructure development, job creation and poverty alleviation, with particular emphasis on enterprise development. Despite being ❯ Mine community Conduct ethnographic community consultative and in a loss-making position due to South Deep being in a ramp-up collaborative processes to delineate community phase, the mine and the South Deep Community and Education development needs Trusts spent a combined R46.4 million on approved socio- economic development projects in 2015. 8% of SED spend (or R3.16 million) was spent on implementation of community projects (LED projects), approved in the SLP. In 2015, 76% of these LED projects were implemented. ❯ Improvement of the industry’s environmental ❯ Implementation of approved 100% 100% management environmental management programmes (EMPs) ❯ Improvement of the industry’s mine health and ❯ ❯ Sustainable Implementation of tripartite action plan 100% 69% safety performance (TAP) on health and safety 100% implementation was achieved on three of the five pillars for the development TAP. Further work is being undertaken on the remaining two pillars: and growth training of Occupational Health and Safety (OHS) representatives as well as implementing the cultural transformation framework standards in 2016 towards fully achieving this target. ❯ Utilisation of South African-based research facilities ❯ Percentage of samples in South African for analysis of samples across the mining value chain facilities 100% 100% Current regulations and guidelines are not clear in relation to the baseline levels and targets. However, Gold Fields has made a capital- intensive investment in our smelting facility at South Deep, which adds significant value to the gold being mined as well as creating jobs. Gold Fields also owns 2,76% of Rand Refinery, which has established the ‘Gold Zone’. The aim is for the Gold Zone to become a major hub for precious metals fabrication in South Africa Added production volume contribution to Section 26 of MPRDA for global export, while at the same time assisting local communities ❯ Contribution towards beneficiation Beneficiation local value addition beyond the baseline (% of above baseline) with skills development (including beneficiation). Two socio-economic development projects currently located at the Gold Zone are: (1)The Intsika Project, which provides jewellery design and manufacturing training to formerly unemployed young black women over an 18‑month period; and (2) The Ekhurhuleni Jewellery Project, which is a Small to Medium Manufacturing Enterprise/Black Economic Empowerment incubator for qualified emerging young black jewellery 1 Includes members of the SA Regional Executive Committee and the South Deep manufacturers. mine Executive Committee 2 Core skills include A, B and C graded employees in the miner and artisan categories as well as officials with core skills for mining and/or working in a core mining area(s) 107 The Gold Fields Integrated Annual Report 2015
5.2 Social licence to operate – Strategic focus areas (continued)
Community relations and (see p117 – 119) is particularly ❯ The UN Global Compact’s Shared Value important as it shifts the focus from 10 Principles Social licence to operate spending to the delivery of positive ❯ The AA1000 Stakeholder social and business impacts. Engagement Standard Many mining companies face increasing pressures over their social In this context, Gold Fields actively All of our operations are required to licence to operate – i.e. the acceptance identifies and engages with the implement culturally appropriate or approval of their activities by local representatives of the following groups stakeholder engagement plans for stakeholders. Whilst formal permission on a regular basis - both formally and all stages of the life-of-mine. to operate is ultimately granted by host informally: governments; the practical reality is ❯ Central, regional and local It is a Gold Fields requirement that all that many operations also need the government and their agencies mines establish mechanisms through permission of host communities and ❯ Community-based organisations which communities can voice their other influential stakeholders to carry ❯ Traditional authorities grievances and complaints about the out their operations effectively and ❯ NGOs Group, its behaviour or that of its profitably. ❯ Civil society employees on social and ❯ Organised labour environmental issues, and have these As such, Gold Fields believes it is ❯ Local businesses issues assessed and resolved. important to avoid, minimise and manage the negative impacts of its Such engagement is guided by: Our community policy, charter and our operations on stakeholders while also ❯ Applicable legislation and regulation community relations and stakeholder maximising the positive benefits. In ❯ The Mining Charter and South engagement guidelines can be found current market conditions – which Deep’s mandated Social and Labour at https://www.goldfields.com/sus_ have the potential to curtail the ability Plan (SLP) society.php of Gold Fields to deliver local benefits ❯ The ICMMs 10 Principles and – active stakeholder engagements, in Community Development Toolkit combination with the Company’s – and Position Statement on Shared Value development approach Indigenous Peoples
Gold Fields Social Performance Framework
❯ Community profile Build ❯ Stakeholder identification, mapping and analysis relationships ❯ Stakeholder engagement strategy and plan ❯ Grievance mechanism
Standards 1, 2 & 3 ❯ Local society pact Measure delivery and action improvement Measure delivery ❯ Free, prior and informed consent to align delivery with commitment to align delivery
❯ Community investment strategy and plan Share ❯ Shared Value projects Value ❯ Community development projects Standard 4 ❯ Social and labour plan projects ❯ Partnerships/Alliance/Foundation/Trusts
❯ Social impact assessment
Informed by baseline + impact risk needs Manage ❯ Social management plan impacts ❯ Resettlement action plan ❯ ASM strategy
Standards 5,6,7,8 & 9 ❯ Closure plan
❯ Social management system 108 The Gold Fields Integrated Annual Report 2015
Socio-economic development business suppliers and contractors. Nevertheless, Gold Fields’ ability to (SED) spend Gold Fields is increasingly seeking recruit such workers can be Gold Fields recognises that not all of to ensure employment and constrained by the limited availability the value it creates at a national level procurement is channelled to local of skills at the host community-level through royalties and taxes benefits communities and as a result in the first place – underlining the its host communities. To address this stimulate local employment with need for Gold Fields to also support deficit – and to maintain its social specific targets being developed by local education and skills licence to operate – the Group all of our operations over the development. focuses on SED initiatives and next year. Shared Value projects in its host In South Deep, for example, many of communities. Shared Value projects SED and wider community spend is our workers recruited for lower (p118 – 119) are sustainable projects focused on the delivery of benefits to skilled jobs have been recruited from that support Gold Fields’ own host and labour sending the mine’s community-focused Adult business objectives, whilst also communities. These include: Basic Education and Training generating positive socio-economic ❯❯ Host community employment courses. Similarly, at Cerro Corona in impacts for host communities by ❯❯ Host community procurement Peru, local employees were addressing their priority needs of ❯❯ Skills development employed as part of our early and employment, skills and enterprise ❯❯ Educational investment successful efforts to integrate development as well as ❯❯ Health investment members of the host communities environmental rehabilitation and ❯❯ Infrastructure support into our workforce. water supplies. Details of these initiatives in each The number of host community At first glance, the spending on SED region follow on pages 110 – 119. members – including both programmes – US$14 million in 2015 employees and contractors – – appears small given that this Host community employment working at each of Gold Fields’ reflects our traditional community Gold Fields is committed to regions is set out on the next page. social investments (CSI) spend in employing host community members All our operations have been tasked host communities. However, there at all its operations – where this is with developing plans that is no doubt that a significant amount feasible. By doing so, we are able to encourage host community of our salaries and wages paid to align the interests of host procurement and employment as employees finds their way back into communities to those of our mines, well as setting three-year targets these communities. A significant part maximise local value generation and in 2016. SEDof our contributions spending isby also type with 2015 local (US$m) build up its local skills pools.
SED contributions by type 2015 SED contributions by region 2013 – 2015 (US$m) (US$m)
1.70 8.00 2015 3.70 0.30 3.39 8.29 2014 4.20 1.49 3.50 9.35 2013 3.60 0.70
0 2 4 6 8 10 n Local environment 1.11 n Infrastructure 4.56 West Africa South America South Africa Australia n Education and training 2.57 n Health and wellbeing 1.00 n Economic diversi cation 1.62 n SLPs (South Africa) 0.88 n Community Trusts (South Africa) 1.92
109 The Gold Fields Integrated Annual Report 2015
5.2 Social licence to operate – Strategic focus areas (continued)
Host community procurement Within this figure, US$514 million, or Three-year local procurement and Where possible, Gold Fields seeks to 35% of total expenditure, was spent employment strategies and plans for procure goods and services from its on suppliers and contractors from South Africa, Ghana and Peru will be countries of operation, and, where mine host communities (2014: developed in 2016 to support the feasible, its host communities. This US$600 million / 39%). Host delivery of targets to be set at the serves to: procurement numbers are dominated same time. The targets will also be ❯❯ Enhance the national and local by our Australian operations – included in the balanced scorecards supply base, which is vitally US$439 million in 2015 – as the of managers responsible for their important given the remote nature entire region of Western Australia is implementation. of some mines classified as a host community due ❯❯ Generate employment to the extremely remote nature of this Skills development opportunities for local people region and the fact that many employees fly into the operations Gold Fields recognises that skills from Perth. development is critical for integrating Of the total 2015 procurement members of its host communities into expenditure, US$1.27 billion, or In addition, Gold Fields works with its workforce or that of its suppliers. 76%, was spent on businesses Similarly, Gold Fields supports the based in countries where Gold Fields communities and governments to develop broader, more diversified development of small- and medium- has operations (2014: sized local businesses by helping US$1.41 billion / 76%). local economies – primarily by helping local people start and community members attend courses consolidate their own businesses. in practical business skills to achieve portable skills as well as business law, financial management, marketing, ethics and entrepreneurship.
Host community employment and procurement Number of employees Number of workforce2 from host community from host community (as a % of total employees) (as a % of total workforce) Region 2015 2014 2015 2014
Peru 19% 22% 29% 24% Ghana 46% 48% 67% 66% Australia1 89% 91% 90% 94% South Deep 48% 46% 50% 47% Group 51% 52% 59% 57%
Local (in country) procurement Host community procurement Region 2015 2014 20133 2015 2014 20133
Peru 87% 88% 91% 7% 5% 6% Ghana 64% 72% 68% 9% 6% 6% Australia1 97% 99% 99% 66% 69% 72% South Deep 100% 100% 100% 10% 9% 4% Group 85% 91% 86% 35% 39% 31% 1 Host communities are those communities living in settlements within an operation’s direct area of influence. For Gold Fields Australian operations, Western Australia is classified as a host community due to the extremely remote nature of this region and the fact that many employees fly into the operations from Perth. Hence the high host community employment percentages relative to the other regions. 2 Workforce is the total of employees and contractors 3 Excludes Yilgarn South assets
110 The Gold Fields Integrated Annual Report 2015
Education investment Regional programmes The following projects in 2015 Gold Fields recognises that Americas region supported this ambition: ❯❯ Towards the end of 2015, Cerro education is critical for the social and Despite ongoing friction between Corona started the construction of economic development of its host local communities and other mining the Coymolache drinking water communities, the improvement of its operators in the Cajamarca region, system to provide water operating environments and the Gold Fields’ Cerro Corona mine so connections to 35 families. The long-term integration of host far remains largely unaffected. This project is scheduled for completion community members into its is mainly due to the strength of the in April 2016 workforce. Relevant educational mine’s relations with the local ❯❯ The completion of the rehabilitation initiatives range from equipping early community, which is supported by: of the main infrastructure that learning centres and schools, extra ❯❯ Ongoing implementation of a provides potable water to lessons and bridging programmes well-established engagement Hualgayoc City for students, teacher training and framework with the communities in ❯❯ The completion of the first phase bursaries for students to the Hualgayoc that helps identify and of the Cuadratura drinking water sponsorship of mining universities. address host community system, benefiting 85 families development priorities, including ❯❯ The replacement of 18 km of local Health investment the availability of potable water, water pipeline systems, including Many of Gold Fields workers are management of our environmental enhancement of water collection drawn from host communities, and social impacts and points. This water pipeline system resulting in a high degree of employment generation will benefit 18 hamlets in the area interaction between the workforce ❯❯ Gold Fields’ participation in the and will cost an estimated and the local community. The ‘Mesa de Dialogo y Concertacion US$4.5 million. Work started in promotion of community health is de Hualgayoc’ (a community- September 2015 and is scheduled therefore not only important from the based, multi-stakeholder for completion in October 2016 perspective of local socio-economic roundtable focused on regional development - but also employee development projects) Other key SED projects undertaken wellbeing and operational continuity. ❯❯ Joint water monitoring with the by Cerro Corona during 2015 For example, at Tarkwa Gold Fields host community, to provide included: manages a local hospital that assists assurance around the mine’s water ❯❯ Gold Fields provided financial and community members in addition to impacts – a key focus point for practical support to 813 small employees, while the mine also communities in conflict with other farmers in the district of Hualgayoc sponsors public health programmes mining operators in the area to plant 614 pastures. These in adjacent communities. ❯❯ Support for the organisations pastures will assist with increasing responsible for the management of milk sales in 2016 as the dairy the Tingo and Maygasbamba Infrastructure support industry is the second biggest rivers to improve irrigation Some of Gold Fields’ areas of economic activity in the Hualgayoc infrastructure operation suffer from a severe lack district after mining ❯❯ Visible benefits to the host of infrastructure, such as roads, ❯❯ Gold Fields embarked on a community through the electricity supply and social services, voluntary programme to employment of community including schools and medical reconstruct five houses at risk of residents and targeted SED facilities. This not only impacts the collapse in Hualgayoc City. Work projects development of host communities on another four houses is but can also, in certain cases, impact scheduled for 2016 to prevent The most critical community projects Gold Fields’ own operations. As them from collapsing in Cerro Corona are linked to the such, infrastructure development ❯❯ Construction and equipping of the represents a key area of focus. In communities' top priorities and Hualgayoc Health Centre was 2015, Gold Fields spent a total of include water provision for completed by Gold Fields in 2015 US$4.5 million on host community surrounding communities, job at a total cost of US$2.4 million. It infrastructure initiatives, the largest creation and local supplier is managed by the regional slice of its SED spend. development and houses at risk of government and considered one collapse. Cerro Corona’s water of the most modern health facilities management programme – which is in the region also a Shared Value project (p119) – aims to bring drinking water to more than 90% of the families of Hualgayoc by 2017.
111 The Gold Fields Integrated Annual Report 2015
5.2 Social licence to operate – Strategic focus areas (continued)
Australia region West Africa region Key community issues in 2015 The remote location of Gold Fields’ In light of local socio-economic included: mines in Australia – as well as strong realities at our Ghanaian operations, ❯❯ Compensation of farmers at local socio-economic conditions – community relations are a major Kottraverchy, Tarkwa: Despite mean that stakeholder engagement, focus for the Damang and Tarkwa 400 farmers previously accepting which is driven by a current mines. However, the mines’ lower crop compensation, in 2014 a stakeholder engagement plan, is production over the past two years small group of farmers challenged largely focused on local indigenous has resulted in lower levels of funding the value of the compensation. groups. This includes engagement for the Gold Fields Ghana Gold Fields is participating in a around native titles on Gold Fields’ Foundation (Gold Fields’ main SED mediation process with the licence areas, land access for vehicle in the country, which receives farmers, overseen by the near-mine drilling and the US$1 per ounce of gold sold and 1% Environmental Protection Agency preservation of indigenous heritage. of pre-tax profits). (EPA) and an independent evaluator has been appointed The Gold Fields Australia Foundation As a result, Gold Fields has been ❯❯ Relocation of Ainoo residents, is responsible for investments in carrying out targeted engagement Damang: After raising concerns community projects and during 2015 with key host community about the health and safety spent A$300,000 (US$216,000) in stakeholders to minimise the impacts implications of their proximity to supporting a number of initiatives in on both the affected individuals the Lima South Pit, six residents support of indigenous groups, themselves and host communities were successfully rehoused at a including bursaries to children from more broadly. Furthermore, cost of around US$500,000. these communities relationship assessment work – Our actions were guided by the similar to that used at our South Gold Fields practice guide on Under Gold Fields’ Community Deep mine (p114) – was completed resettlement as well as guidelines Policy, the Company is committed in 2015 and its findings and developed by the World Bank’s to working to obtain the consent of mitigating actions implemented in International Finance Corporation indigenous peoples for new projects 2016. (and changes to existing projects) The Gold Fields Ghana Foundation – where they are located on lands This is in addition to ongoing – which has Company and external traditionally owned by or under engagement that took place through trustees – spent just over customary use of indigenous the mines’ well-established US$1 million on projects during peoples – and that are likely to have consultation channels, including 2015. The most important ones significant adverse impacts on their: were: indigenous peoples. ❯❯ Broad-based mine consultative ❯❯ An information technology and committees early childhood development Gold Fields’ St Ives mine is currently ❯❯ Formalised, regular engagement centre at New Atuabo involved in a native title claim made with local chiefs ❯❯ Artisan training and the supply by the Ngadju People for the ❯❯ Regular community committee of tools at Tarkwa recognition of their Native Title rights meetings ❯❯ Additional classrooms at over a large parcel of land, including ❯❯ Direct community forums Gold Fields supported schools tenements held by St Ives. Details ❯❯ Continual informal engagement near Tarkwa of the legal case are on page 40 of ❯❯ Continuation of our scholar bursary the AFR. schemes for 166 pupils at Tarkwa and 42 pupils at Damang
112 The Gold Fields Integrated Annual Report 2015
South Africa region Westonaria municipality – home to shifted materially from one focused Under the 2002 Mineral and our South Deep mine – Gold Fields on compliance to one focused on Petroleum Resources Development set out to assess and understand the good practice. The South Deep Act, mining companies must submit community expectations amid the community relations team was a SLP as a prerequisite for the ever-growing risk that the social strengthened and a range of new granting of mining or production volatility will spread to the mine. strategies, programmes and projects rights. Each SLP requires the have been developed and Company in question to implement, South Deep’s journey from implemented, as outlined in the amongst others: compliance to its future focus is infographic. These initiatives were ❯❯ Employee development outlined in the infographic on the undertaken in addition to the SLP programmes, with an emphasis on following two pages. and Shared Value projects (p118) BEE already undertaken by South Deep: ❯❯ Local Economic Development The use of the Relational Proximity (LED) programmes – with a focus Indicator tool to measure the strength Gold Fields and Sibanye Gold on host communities and labour- of community relationships at South Alliance sending areas Deep has been ongoing since An alliance was formed in 2015 ❯❯ Employee accommodation and Q2 2014 and all 10 of our host between Gold Fields and Sibanye housing programmes (p131) communities in Westonaria were Gold, the other mining house hosted assessed by the end of 2015. These by the Westonaria communities, to As such, the LED element of the SLP assessments have revealed a join forces building sustainable host provides the regulatory framework significant gap in South Deep’s communities. Service providers were for Gold Fields’ engagement with community investment programme appointed during Phase 1 of a host community stakeholders in and its ability to positively impact programme with the aim of building South Africa. Since the 2010 Mining community perceptions. The an agricultural economy organised Charter took effect Gold Fields has community raised unemployment, by the community itself. An eight substantially complied with its education, skills development and week workshop was held as a part requirements including those agreed the mining companies’ social and of Phase 1 that established a to under the 2010 approved SLP economic obligations as the key number of enterprises in agriculture, and the 2013 SLP, yet to be issues that need to be addressed. sewing, construction, landscaping, approved. security services and waste With a more comprehensive recycling, creating around 200 jobs However, in 2014, amid continued understanding of the risk, community in the area. The second phase social unrest and rising poverty and needs and community perceptions, commenced early in 2016. unemployment levels in the last year South Deep’s approach Continued on page 116
❯ Sewing project supported by South Deep 113 The Gold Fields Integrated Annual Report 2015
5.2 Social licence to operate – Strategic focus areas (continued)
South Deep’s Social Licence to Operate journey Focus on compliance Assessment and understanding
Compliance with regulation rather than Assessment and understanding of community expectations community expectations
South Deep focuses on implementing South Deep undertakes a project to measure the strength, quality and challenges employee and local economic development to community expectations with ‘relational proximity’ studies in 10 adjacent plans in host communities and labour- communities. These assessments reveal a significant gap in South Deep’s sending areas, in line with the requirements community investment programme and its ability to positively impact community of the SLP perceptions
Community Investments South Deep Community Risk Assessment
US$3m (R29m) 1 Poor relations between mine 6 Local government elections construction of 163 new and stakeholders homes in Westonaria and 7 Socio-economic landscape in Poortjie 2 Stakeholder perceptions Westonaria
3 Insufficient planning for mine 8 Expansion of Thusanang US$200,000 (R2,4m) closure community
opening a new bakery run by 4 Community protest 9 Theft of mine property and gold community members 5 Stakeholders communicating 10 Lack of benefit from South on behalf of mine Deep & Trusts
Host communities and their perceptions of South Deep 43 23 US$340,000 (R3,5m) restoration of the Venterspos 37 Healdtown College in the Eastern Cape Bekkersdal
US$100,000 (R1,1m) invested in Thusanang 21 65 Zuurbekom - Community Clinic Simunye Water Works Planning and infrastructure for the Simunye Westonaria High School upgrade 20 Hillshaven 22 Socio-economic realities Thusanang 35 Despite the investment by South Deep and other South Deep Mining mining companies, Westonaria continues to be Licence Area Jachtsfontein characterised by: 43
High youth unemployment Relational Poortjie Assessment Score 22 Poverty (undertaken by KPMG and Relational Analytics) Kalbasfontein Poor delivery of social services 0 = Poor perception Social unrest of South Deep 100 = Excellent perception of South Deep
2010 2014 2015 ➤ 114 The Gold Fields Integrated Annual Report 2015
Moving towards good practice Future focus
Addressing the Social Licence to Operate risks in an integrated and Responsible social management sustainable way with sustainability integrated into the business
With a more comprehensive understanding of the risks, community needs and community The future focus will be on driving societal perceptions, South Deep’s approach moves from one focused on compliance to one acceptance and further integrating sustainability focused on good practice into the business’ operating practice
Societal acceptance driven through the The following key initiatives are launched: following initiatives:
South Deep Community Relations The South Deep community relations team has been Implement the community relations and capacity, strategy and planning strengthened with the appointment of new staff. This facilitates greater engagement with the community. A stakeholder engagement strategy and plan consultancy is assisting in preparing a five-year strategy and implementation plans. Further develop the team’s community relations capacity Implement Phase 2 of the Gold Fields and Community Shared Value Two new Shared Value projects currently being Sibanye Gold Alliance programme to restore implemented focus on additional Maths and Science the agricultural economy in Westonaria projects education for local learners, and local community procurement. Implement the procurement and local employment plan Implement the plan to address social risks at Gold Fields and An alliance is established between the two companies, Thusanang and partners with the Seriti Institute and AfriGrow Sibanye Gold Alliance Development to ‘restore the agricultural economy in Implement an integrated stakeholder Westonaria’– with the full backing of these communities. communication plan An organisational workshop with around 350 participants is conducted. Re-measure community relationships Measure the value of community investments
Local community This initiative focuses on community procurement, with Integrated thinking procurement plans to increase current local spend significantly and reduce unemployment. So far 500 enterprises and 4 900 people have been registered as potential suppliers. Facilitate business-wide integration of sustainability and enhance societal acceptable through communication of Gold Fields’ – and the mining industry’s Thusanang informal settlement The Thusanang settlement, situated directly on the – approach to sustainability border of the mine, is growing rapidly and a study highlights the risks this poses. A plan to address these will be rolled out in 2016.
Reinvigorating the Input and support is provided to the Trustees and South Deep Trusts Administrators, who are independently developing a strategy and implementation plan. The three trusts are indicated below:
Westonaria South Deep South Deep Community Education Community Trust Trust Trust
Payments to date: Payments to date: Payments to date: R14.6m R43.8m R6.9m Key projects: Key projects: Key projects: Sedibeng College Sedibeng College Seriti Institute Westonaria Technical Edumap College AfriGrow Development College Seriti Institute High School bursaries Philani AfriGrow Development University of the Western ➤ end 2015 2016 onwards ➤ Thembekile Mandela Cape Foundation Lapdesk 115 The Gold Fields Integrated Annual Report 2015
5.2 Social licence to operate – Strategic focus areas (continued)
Community trusts Local procurement with the findings and In 2015, South Deep began The local procurement project was recommendations of a community collaborating with the trustees of the initiated in 2015, with the aim of profiling exercise, forms the basis of South Deep Education Trust, the increasing the ability of local an action programme to be started in South Deep Community Trust and community entrepreneurs to provide early 2016. A key focus of the first the Westonaria Community Trust to goods and services to South Deep phase of this plan is to prevent any facilitate more effective delivery of and, potentially, other businesses in further growth in the Thusanang project benefits to host communities. the area and consequently stimulate settlement, thereby giving South During Q4 2015, a strategy local job creation. Entrepreneurs in Deep the opportunity to develop document, informed by host communities were interviewed alternative economic scenarios in engagements with key community and around 500 enterprises and co-operation with local stakeholders. stakeholders, was ratified by the 4,900 individuals were recorded as trustees of the South Deep potential suppliers to South Deep. SLP projects Education and Community trusts. This list will be further analysed In parallel to the development of the through a business diagnostics extended community investment During the year, there has been a exercise to be undertaken early in strategy for Westonaria, South Deep significant acceleration of funding by 2016 by a business incubator firm. continued to invest in its SLP the three South Deep trusts with a projects during 2015. The most particular focus on educational Thusanang community important projects were: initiatives, such as supporting two The informal settlement of ❯❯ The restoration of the historic tertiary technical institutions and Thusanang, which is located 1km Healdtown College in the Eastern Early Childhood Development near from South Deep, is the mine’s Cape completed in early 2015 South Deep and allocation of closest host community and one ❯❯ The building of the Thusanang bursaries to high school and that has grown from about Community Clinic in our closest university students in the Eastern 370 households in 1999 to about host community with the facility set Cape and KwaZulu-Natal, two of the 3,500 households in 2015. Only to be handed over to the major labour-sending areas of the about 10% of these households Department of Health in early 2016 mine. During 2015 the South Deep have a member working, some of ❯❯ The completion of a bakery at trusts spent a combined R12 million them at South Deep, the remainder South Deep, with the mine’s (US$1 million) and the Westonaria are unemployed. This presents a hostels acting as anchor clients. Community Trust R12.3 million significant risk to South Deep. The bakery became fully (US$1 million) on community and A relationship assessment was operational in February 2016, education projects. undertaken last year, and together employing five people
❯ Independent bakery funded by South Deep 116 The Gold Fields Integrated Annual Report 2015
Shared Value sustainable community development. the projects listed on the following What is Shared Value? In this context Gold Fields introduced pages were either started in 2015 or Shared Value to the business in 2012. continued from 2014. The Damang Shared Value is created when Quarry project, which was started companies take a proactive role in Implementation of Shared Value also as a Shared Value project in 2014, simultaneously addressing business remains an imperative for Gold Fields stalled in 2015 as a result of the and social needs. Shared Value goes as a key component of maintaining company planning to run the quarry beyond mitigating the potential harm and strengthening our social licence to business encountering financial in a company’s value chain - it is operate. The Shared Value projects we constraints. A similar project about identifying new opportunities for have implemented are aimed largely at involving waste rock crushing and economic success by incorporating addressing the priority needs of our screening was planned for Tarkwa social priorities into business strategy host communities which include mine in 2015. This project has been and working collaboratively with employment, procurement, skills and slow to start as a result of licencing multiple stakeholders to find solutions access to water. constraints experienced by the to various socio-economic and independent business partner. environmental issues. A key Our Shared Value approach is based component of this approach is to on four key pillars: An additional Shared Value project is ensure that the value created is 1. Strategic interventions, to to establish a strong local supplier shared by the business and the proactively address socio- base among our host communities community. Strong local businesses economic challenges that can at South Deep. This is detailed on and skilled individuals contribute to the drive community tensions, page 116. overall economic upliftment and non-governmental organisation sustainability of communities while activism or more restrictive Gold Fields’ will actively pursue the delivering the goods and services that regulations listed Shared Value projects below Gold Fields needs to develop and 2. Integration to proactively address but we are also finding that operate its mines. socio-economic challenges increasingly our SED spend is 3. Participation in collaborative channelled into projects that by their Shared Value at Gold Fields action with other stakeholders nature benefit both the community The relatively low gold price and the 4. Transparency regarding Gold and our business. Since Shared restructuring of Gold Fields’ key Fields’ economic contributions to Value is becoming more integrated operations has made maintaining its host societies in line with World and embedded there is no need to historical levels of SED spending a Gold Council guidelines delineate new projects – rather our challenge. Furthermore, it is not clear normal community investment spend whether SED spending is the most Building on the Shared Value will offer similar benefits both to effective way to support long-term, projects that were initiated in 2014 communities and Gold Fields.
❯ Skills development training at South Deep 117 The Gold Fields Integrated Annual Report 2015
5.2 Social licence to operate – Strategic focus areas (continued)
Shared Value projects
Tarkwa and Damang mine Road rehabilitation (Ghana)
❯ Project Gold Fields Ghana, in partnership with the government of Ghana is upgrading the 33km road between Tarkwa and Damang and paving the road surface in bitumen. The total cost of this project is estimated at US$15 million over two years, of which Gold Fields will pay an estimated 35%. Contractors who will be building the road will be asked to prioritise local employment as part of their recruitment policy. Contracts are expected to be awarded in early 2016.
❯ Benefit to the community During construction of the road, job opportunities will primarily go to workers from our impacted communities. The improved road infrastructure will benefit all public road users as travel times, vehicular accidents and vehicle maintenance costs will be reduced. Roadside communities will no longer experience dust emissions since the road will be surfaced.
❯ Benefit to Gold Fields Gold Fields will save on the cost of transport as the maintenance of vehicles transporting labour, goods and materials will be reduced. Road maintenance costs will also be reduced. The improved infrastructure will also reduce employees’ travel time by 35 minutes per journey, could limit driver fatigue and will enable emergency services to operate more efficiently.
South Deep (South Africa) Education and skills development
❯ Project In 2014, Edumap College partnered with South Deep to help post-matric students who had not achieved university exemption or had not been able to qualify for entrance into tertiary institutions, to improve their grades in Mathematics and Science. They received extra tuition and life skills training, and re-wrote matric at the end of the year. The project was continued in 2015 through the South Deep Education Trust and a new intake of students was enrolled in Edumap College. Further components were added to the project in 2015 - South Deep, in partnership with Sci-Bono, provided extra lessons in Mathematics, Science and Accountancy for selected matric students from all schools in the local community. The mine also partnered with the Provincial Department of Education in preparing Grade 12 students for their final examinations via a residential camp providing motivational talks and career guidance. South Deep is currently looking at expanding this Shared Valve project to include the mine’s sponsorship of the Wits University Mining Engineering School as well as working more closely with the South Deep Education and Community Trusts, which are independently supporting a range of early childhood development, secondary and tertiary education projects.
❯ Benefit to the community Apart from the obvious benefit derived by the individual students, the broader community benefits from the fact that an increased proportion of their youth is likely to receive tertiary education and ultimately find employment. This is significant, given the fact that a single employed individual in the mining industry supports on average eight dependants.
❯ Benefit to Gold Fields The programme provides Gold Fields with a much-needed local skills pipeline of individuals with mathematics and science-related degrees.
118 The Gold Fields Integrated Annual Report 2015
Cerro Corona mine Water and the environment (Peru)
❯ Project This is a four-year programme started in 2014 to improve water quality and access to communities of Hualgayoc in the mine’s direct area of influence and to promote, in partnership with government, remediation of legacy mining activities (not associated with Gold Fields). The programme involves building new potable water systems through the construction of a water pipeline from a well at Cerro Corona, a programme to identify and repair water leaks in the existing water infrastructure, and remediation of environmental liabilities that are contaminating a local stream. More details can be found on page 100.
❯ Benefit to the community Close to 90% of households in Hualgayoc now have access to sufficient clean running water. Those families whose homes are situated at an altitude too high to be connected to the water pipeline previously received water tanks from Gold Fields, and will now receive water supply from a well located at Cerro Corona. Apart from strengthening relationships between Gold Fields, the regulator and our host communities, the remediation of legacy mining sites near Cerro Corona will significantly improve the quality of the water in the El Tingo river, on which communities depend for various uses.
❯ Benefit to Gold Fields Strengthens our social licence to operate in a region in which other mining companies have experienced water-related conflict with local communities. It also reduces the cost of trucking our water to the community.
Cerro Corona mine Local suppliers (Peru)
❯ Project A three-year project, in partnership with SwissContact, was started in 2014 to build the competitiveness of local suppliers. Fifty local businesses have been identified and are undergoing business diagnostics and benefiting from an individual improvement plan and technical training. A local supplier management system has been designed.
❯ Benefit to the community Individual local suppliers will derive long-term benefit from targeted plans to help them improve their competitiveness and diversity their customers while the broader community will experience economic upliftment and employment opportunities from having stronger, sustainable local businesses.
❯ Benefit to Gold Fields Gold Fields will be able to obtain a better service at more competitive prices from local suppliers.
119 The Gold Fields Integrated Annual Report 2015
5.2 Social licence to operate – Strategic focus areas (continued)
Human rights and address legitimate complaints. rights training during induction – Gold Fields applies a formal Human Employees can also raise concerns based on local legal requirements, Rights Policy statement, both in via independent counsellors as part as well as national and international dealing with its employees as well as of Gold Fields Employee Assistance human rights best practice, including external stakeholders. The policy Programme. the Voluntary Principles on Security statement is aligned to the relevant and Human Rights. Gold Fields is ICMM Principles on Human Rights Externally also a signatory to the International and the United Nations’ ‘Protect, Under the United Nations’ ‘Protect, Code of Conduct for Private Security Respect and Remedy’ Framework. Respect and Remedy’ Framework – Service Providers and the United Under the policy statement, Gold and the associated Guiding Nations Global Compact. There were Fields commits to: Principles on Business and Human no formal complaints made against ❯❯ Not interfering with or curtailing Rights – it is incumbent on Gold Gold Fields’ internal or external other’s enjoyment of human rights Fields to carry out human rights due security providers in 2015 in relation ❯❯ Defending (where possible) diligence not only on its own to human rights violations. employees and third-party activities, but also on its business individuals and groups (as defined relationships. Materials stewardship in our Community Policy) against As part of its efforts to improve human rights abuses Contractors and suppliers human rights performance within its ❯❯ Taking positive action to facilitate Gold Fields’ business relies on broader value chain, to protect the the entrenchment and enjoyment multiple contractors and suppliers to reputation of its core product and to of human rights carry out mining, development, maximise the societal benefits of its construction and other forms of work activities, Gold Fields is committed to Given the nature of Gold Fields’ on its operations. All contractors are responsible materials stewardship. In footprint, activities and relationships, included in Gold Fields’ own health this context, Gold Fields supports the human rights policy places and safety management systems, to global efforts to tackle the use of specific emphasis on: help ensure that contractor newly mined gold to finance conflict. ❯❯ Community engagement employees benefit from safe and There is currently only a minimal risk ❯❯ Indigenous rights healthy working conditions. of externally derived conflict gold ❯❯ Resettlement entering Gold Fields’ value chain. ❯❯ Security and human rights All contractor employees wishing to This is because: report human rights violations are ❯❯ None of Gold Fields’ mines are Internally able to make use of Gold Fields’ located in conflict-affected Gold Fields upholds the highest confidential, third-party countries ❯❯ standards of human rights within its whistleblowing hotline. Where such All gold produced originates from workforce, including: complaints are made, Gold Fields will Gold Fields’ own operations ❯❯ ❯❯ Freedom from child labour pursue the matter appropriately. No gold is purchased from ❯❯ Freedom from force or compulsory artisanal miners labour Gold Fields does not currently carry ❯❯ Freedom from discrimination (while out human rights due diligence on its Gold Fields has voluntarily adopted recognising the need to address suppliers. Nonetheless, the Group the Conflict-Free Gold Standard of the legacy of historical injustices in has developed an external party the World Gold Council (WGC). This South Africa) screening solution to establish risk has led to the standard being applied ❯❯ Freedom of association and profiles of external suppliers and at all relevant locations through full collective bargaining contractors. Among other criteria, assurance audits. This is a the tool screens new and existing requirement of London Bullion All induction training (including that contractors and suppliers for human Market Association (LBMA) provided by Gold Fields’ internal rights and related violations and/or accredited refineries. In addition, the protection services team) includes transgressions (p38). company reports in accordance with key human rights elements – and the the WGC guidelines on value Group's internal grievance Security providers creation and distribution. Although Gold Fields withdrew its WGC mechanisms help ensure employees Gold Fields’ protection services team membership in 2014, it has and will and contractors can raise human works with both private and public continue to apply both the Standard rights concerns. All grievances are security providers – for the effective and guidelines. handled by Gold Fields Human and responsible protection of Resources departments, which use a workers and assets. All private defined process to record, evaluate security contractors receive human
120 Focus on people 6 6.1 Driving a high-performance culture p122 6.2 Strategic focus areas p126
❯ Talent management p126
❯ Performance management p128
❯ People management p129
❯ Communication and engagement p129
❯ Supportive work environment p130 6.3 Remuneration and benefits p132
❯ Twin shafts and winder house at South Deep
121121 The Gold Fields Integrated Annual Report 2015 6.1 People – Driving a high- performance culture
Overview
Group human resources performance Category 2015 2014 2013 20125 Total employees (excluding contractors) 9,052 8,954 10,167 9,684 Contractors 7,798 6,486 6,685 8,961 HDSA employees in South Africa (%)¹ 71 71 70 68 HDSA employees in South Africa (%) - Senior management¹ 48 47 44 31 National employees in Ghana (%) excluding contractors 99 99 99 98 Minimum wage ratio² 1.50 1.70 3.00 3.00 Female employees (%) 14.00 14.00 10.90 12.00 Ratio of basic salary men to women 1.09 1.10 1.20 1.43 Employee wages and benefits (US$m) 410 468 595 780 Average training (hours per employee) 240 181 97³ 142³ Employee turnover (%)4 8.00 20.20 10.00 8.00 1 Excluding foreign nationals, but including white females and corporate office staff; HDSAs – Historically Disadvantaged South Africans, according to the Employment Equity Act definition 2 Entry level wage compared to local minimum wage. The narrowing of the ratio reflects a sharp rise in the minimum wage in Ghana 3 Figures do not include Yilgarn South assets 4 Includes voluntary and involuntary turnover 5 Excludes Sibanye Gold
The profile of our workforce was incentivised to deliver against clearly 5. Supportive work environment: profoundly impacted during the defined performance targets. To ensuring employees have the initial years of our Group-wide ensure our People Strategy supports environment and tools needed to transformation journey (2012 – 2014) our business objectives, the function optimally, taking into with large-scale reductions in the following five focus areas have been account their holistic wellbeing, number of employees and identified, of which the first four are so that we have a safe, healthy, contractors. However, since then our incorporated into the Group balanced and productive human resource base has stabilised balanced scorecard: workforce. with 9,052 employees and 7,798 contractors on our books 1. Talent management: ensuring Critical to the success of the new at the end of 2015. Since the we have the right people in the People Strategy is the launch of a restructuring our smaller, yet more right jobs at the right time new centralised electronic human skilled, workforce has ensured that 2. Performance management: resources platform, called Gold Fields works more efficiently measuring, incentivising and ‘SuccessFactors’, which replaces within more constrained budgets motivating people to expend the different software systems used and we believe that the size and discretional effort to deliver high- by the regions. It houses a full suite skills level of the workforce is performance results of modules across the HR value- appropriate to successfully deliver 3. Communication and chain – for the first time the balanced our business strategy. engagement: ensuring scorecard, talent reviews, employees have the information succession planning, learning Gold Fields’ People Strategy focuses and two-way engagement management, recruitment and on building a high-performance platforms they need to compensation will be integrated on a culture that ensures our people understand and operationalise single user-friendly platform. It deliver on the business strategy of the business strategy provides real-time HR information to creating shareholder value through 4. Great people managers: managers, as it is integrated to our cash generation from a portfolio of building strong people payroll system, and also facilitates largely mechanised assets. management skills in line two-way feedback from employees. managers, and empowering them Today our business requires a with the tools and processes smaller, highly skilled workforce that necessary to understand, attract, can work more efficiently, within motivate and manage a diverse leaner budgets, and that is workforce
122 The Gold Fields Integrated Annual Report 2015
Total workforce by region Total Permanent 2015 workforce employees Contractors
Americas 2,044 375 1,669 Australia 2,206 1,549 657 South Africa 5,837 3,699 2,138 West Africa 6,670 3,336 3,334 Corporate Office 93 93 – Total 16,850 9,052 7,798
Proportion of Nationals per region 2015 2014 2013
Peru 99.5% 99.2% 99.9% Australia 98.0% 98.0% 97.0% South Africa1 81.0% 84.0% 83.0% Ghana 99.0% 99.0% 99.0% 1 Nationals includes all South Africans and excludes all foreign nationals
❯ Underground employee at our Australian operation 123 The Gold Fields Integrated Annual Report 2015
6.1 People – Driving a high-performance culture (continued)
What we achieved in 2015 Ensuring employees have the information and two-way 1. Talent management engagement platforms they need to understand and We continued to enhance talent management by: operationalise business ❯❯ Evolving our talent review process to align to the strategy business’ talent needs ❯❯ Rolling out a talent pipeline strategy for each region, to take emerging talent through a structured career Communication development path and engagement ❯❯ Strengthening our recruitment practices by introducing more robust psychometric tests
2. Performance management 3 Progress in performance management was achieved by: ❯❯ Refining the Balanced Scorecard (BSC) pillars to focus on Financial, Business Optimisation, Social Licence to Operate and People ❯❯ Linking each BSC pillar to smaller, achievable, directly linked objectives ❯❯ Cascading Group objectives to regional, operational, departmental and individual scorecards ❯❯ Providing line managers with targeted training to Performance conduct performance conversations management ❯❯ Maintaining the clear link between incentives and performance 3. Communication and engagement Measuring incentivising and 2 motivating people to expend A compelling Steps to improve communication and engage employees discretionary effort to deliver included: high-performance results value proposition ❯❯ Approving and implementing a Group-wide internal to drive communications strategy ❯❯ Adopting various internal engagement tools to an engaged facilitate two-way communication with employees workforce ❯❯ Conducting a series of roadshows, hosted by our CEO, addressing employees in each region ❯❯ Sharing of operational and Group results by regional management 4. Great people managers
Achievements in people management included: ❯❯ Achieving positive participation in our management development programme ❯❯ Finalising our expanded suite of leadership training programmes ❯❯ Tracking our capabilities, enhancing training, and directly linking people management and incentives Talent management
5. Supportive work environment Ensuring we have the right people in the right jobs at We continued to build a supportive work environment 1 through: the right time ❯❯ Focusing on our comprehensive regional wellness programmes centred on employees’ specific needs ❯❯ Rolling out our Employee Value Proposition as part of the Gold Fields DNA training
124 The Gold Fields Integrated Annual Report 2015
Focus areas for 2016
1. Talent management
With a longer-term view of talent and development, we will focus on: ❯❯ Redefining team and leadership competencies ❯❯ Implementing an increasingly integrated and purposeful succession planning programme ❯❯ Enhancing the alignment between career and succession plans ❯❯ Linking learning to competency gaps ❯❯ Increasing talent segmentation through more rigorous performance management
2. Performance management
Looking beyond key performance indicators, we will focus on: ❯❯ Continuing to assess how line managers enable performance and undertaking further training to fill the gaps ❯❯ Increasing our focus on managing poor performers ❯❯ Ensuring ongoing communication to strengthen the link Great people between strategy and performance measures managers ❯❯ Harnessing trend data and metrics related to high and low performers through Success Factors
Building strong people 3. Communication and engagement 4 management skills in line managers, and empowering We will continue to improve communication through: them with the tools and ❯❯ Focusing on making the business strategy relevant to our processes necessary to regions, operations and individuals understand, attract, ❯❯ Launching new communications training for line motivate and manage a management ❯❯ Introducing new ways of cascading messages to all diverse workforce employees ❯❯ Revitalising the Gold Fields DNA, Values and Vision in line with Gold Fields’ evolution ❯❯ Integrating all internal communications into our Success Factors platform to enhance two-way engagement 4. Great people managers
Steps to improve people management will include: ❯❯ Identifying hurdles to successful people management and rolling out targeted training to address the gaps ❯❯ Refining people management objectives in the BSC Supportive work ❯❯ Investigating incentives for better people management environment ❯❯ Enabling managers to celebrate team members’ achievements on recognition platforms
Creating an environment for 5 employees to function 5. Supportive work environment optimally and taking into account the holistic wellbeing We will build a supportive work environment by: ❯❯ Continuing to refine and communicate our Employee of employees to ensure Value Proposition a safe, healthy, balanced, ❯❯ Focusing on wellness issues specific to regional needs, productive workforce including: ❯❯ The mental health of Fly-In-Fly-Outs (FIFOs) in Australia ❯❯ Financial wellness and malaria management in Ghana ❯❯ Sports and nutrition in Peru ❯❯ The provision of housing, lifestyle disease management and financial wellness in South Africa
125 The Gold Fields Integrated Annual Report 2015 6.2 People – Strategic focus areas
Talent management Certain Group-wide strategies, Approach policies and structures are in place to drive the talent management agenda. The provision of world-class training, skills development and management The talent acquisition strategy and training is central to driving a high-performance culture. It enables the Group to the training and development attract and retain the best talent; enhance employee productivity and safety; strategy take into account Gold and achieve its strategic objectives. Fields’ immediate and long-term talent requirements, while the In 2015, approximately US$12.4 million was spent on training and skills performance management system development across the Group (2014: US$13.4 million). This was invested seeks to reward and retain top chiefly in the delivery of fit-for-purpose technical training, comprehensive performing talent. leadership development programmes and training to ensure global alignment with the new Gold Fields culture. There is flexibility in how the regions approach talent acquisition and Having ‘the right people in the right jobs at the right time’ can be further defined management. This helps ensure that as follows: regions are able to determine the best approach to meeting the specific requirements of their operations.
Group-level talent management The right people in 2015 People with technical and Evolving the talent review leadership competencies that are process aligned to the business strategy, Historically, the talent review has who embody the Gold Fields focused only on high-potential D-band and above employees, who Values and are able to deliver represent the future leadership of sustained levels of high the business. However, a large performance proportion of our high-performing employees are skilled specialists in their field who may not have leadership aspirations but are nevertheless critical to the at the right time organisation. Their wealth of skill and experience makes them difficult and Ensuring our talent in the right jobs costly to replace, and they form the pipeline serves the business’ very core of the high-performance talent needs, Making sure that we match culture we are trying to build. now and in the future. our talent to roles that are informed by strategically A targeted programme is required to aligned organisational design. engage them and understand their needs and drive their growth and development. For this reason, talent councils are being established in each region in 2016 to identify high potential and high performing talent. Each region is tasked with developing relevant programmes for their operations.
Australia In Australia, the Fly-In Fly-Out (FIFO) working arrangements are better suited to our operations in remote areas where employees are either required to live in camp or fly in and fly out. Only the St Ives mine offers
126 The Gold Fields Integrated Annual Report 2015
full-time residential opportunities, therefore recruited an additional industry, tertiary institutions, though it does not have quality high 146 skilled employees during 2015, equipment suppliers and other school facilities or major tertiary mostly from the platinum sector, external players to develop a strong educational institutions. This makes which has a similar mechanised skills development capacity and it difficult to retain individuals when mining skills set. The three-year adopt leading practices. they eventually settle down and start wage agreement with South Deep’s families or their children need to go trade unions, signed in April 2015, Gold Fields is committed to to high school. This, along with the sets the remuneration framework employing HDSA, where possible, as challenge of attracting permanent, which facilitates the recruitment and this maximises the impact of South skilled people to work on remote retention of the required mining skills. Deep in terms of economic value mines, accounts for the higher generation and skills transfer. It is employee turnover in Australia However, our strategy remains to also in line with the aims and targets particularly among younger staff grow the majority of our own people set out by relevant employment (15% in 2015, down from 18% in through focused internal training. equity regulations. At the end of 2014). During the year, we provided training 2015 69% of South Deep’s total programmes to 47 artisans, working employees were HDSA (as defined Talent management strategies on our fleet of equipment as well as by the Mining Charter) and 50% of employed 15 junior managers, mine its senior management team. Across all Australian operations, supervisors and mine overseers, to we run internal technical training, equip them with critical mechanised West Africa leadership development training and mining and engineering skills. There Education levels among young, training in contractor management. was also a focus on management urban Ghanaians are high but there Where opportunities for growth and and other leadership skills. is intense competition for promotion are not readily available, employment opportunities. While this the region has created opportunities Since South Deep is at a critical makes it easier for the Company to for employees to gain development juncture in bringing the mine up to build a talent pipeline from the through other channels. The talent higher production levels, this has ground up and, to meet its review process also identifies necessitated a fine balancing act localisation targets, it also means individuals who will benefit from with the need to implement that the Company has to keep exposure to other sites in the region. comprehensive skills development employees well rewarded and plans. For example, to address the engaged to retain them. South Africa upskilling of our artisans, a two-year agreement was reached with In South Africa, socio-economic Talent management strategies AtlasCopco, one of South Deep’s employed factors drive an extremely high original equipment manufacturers unemployment rate among young (OEM). Under the agreement, all The key talent management focus people and there is significant artisans and foremen at a segment areas are localisation and pressure on mining companies to of the mine have been redeployed to employment of people from host create employment opportunities. new working areas and will undergo communities; retaining high potential However, poor standards of a comprehensive training programme employees; and skills development education and lack of opportunity to to bring their skills up to the level of operators. study at a tertiary level, means many required by the mine. While they are unemployed South African youth do receiving this training, the OEM Bursary programmes benefit youth not have the education and skills contractors will maintain the in local communities, but there are required by our South Deep machinery used in the trackless currently few opportunities to create operation, which relies on specialist environment. Once the two-year on-mine employment for them due and currently rare skills in period is up, artisans and foremen to the depressed mining market. On mechanised mining. will have the opportunity to return the localisation front, around 95% of to their original workplaces, and managerial positions are held by Talent management strategies machine maintenance will again be locals, as Ghana has a employed managed internally. comprehensive skills transfer and As South Deep, we have found that mentoring programme in place which the existing skills base of our miners, Literacy levels on the mine remain an ensures that expat employees are largely recruited from conventional ongoing skills challenge, which we paired with potential local gold mines in South Africa, is not continue to address through a successors. sufficient for the mechanised mining targeted training programme. A key equipment and machinery required focus of the people pillar in South Some employees have been sent on at the project. To augment the Deep’s new operational plan is to short-term assignments outside of current skills base, South Deep collaborate with the wider mining the Company to offer them exposure
127 The Gold Fields Integrated Annual Report 2015
6.2 People – Strategic focus areas (continued)
to growth opportunities and keep Corona invested US$330 000 in Introducing a new production them engaged and motivated. Other dedicated technical training bonus system at South Deep training programmes during the year programmes. Successful progress Bargaining unit employees at our have focused on improving operator through training stages are linked South Deep operation are measured efficiency and certification, short- to salary increases and bonuses and rewarded through a production term assignments for high-potential commensurate with their enhanced bonus system, instead of the BSC. employees, and on-the-job coaching skills levels. Following issues raised in 2014 by and training. trade unions, the mine introduced a new production bonus system in It is important to note that high Performance management 2015, ensuring that the behaviours quality education does not Approach being driven and rewarded on the necessarily reach young people in The performance management mine support the achievement of the host communities around our system, driven through the South Deep’s business objectives mines in Ghana, South Africa and Balanced Scorecard (BSC) for D and entrenching the high- Peru and that many of the skills and E-band (middle- to senior performance culture necessary come from other parts of the country. management and professional) to the success of this critical But since our social licence to employees, ensures we identify, operation. operate is tied to expectations from incentivise, reward and thereby these communities there is a strong retain top performers, and identify The following bonus parameters focus on implementing programmes skills gaps among low-performers have been incorporated in the new that educate and upskill young that could be addressed through bonus system: gold produced, people in the communities adjacent training and development metres/tonnes produced, and to these operations. programmes. safety performance. Gold produced and delivered out of the plant Americas The BSC is structured around four serves as a qualifier, which means Contextual challenges key business pillars: financial, that the mine must first produce In Peru, we have a highly skilled business optimisation, people and gold before any bonus parameter workforce, which means that the social licence to operate. Within kicks in. Company needs to deliver strong each of these pillars, key focus remuneration and other benefits as areas are identified, and matched The performance of individual well as growth opportunities to to goals and, finally, metrics for crews – not whole corridors – is ensure it keeps its employees delivery. measured, ensuring greater engaged and motivated. accountability is devolved to the Through a structured cascading level of small teams and individuals. Talent management strategies model, the Group BSC informs the All teams are now measured on employed BSCs for each of our regions, which tonnes or metres advanced – in line with mine design. The new The key talent management focus in in turn drive operational, production bonus system also now Peru is on developing leadership departmental and then individual includes all employees on the mine, skills. Peru continued to run the BSCs. An employee’s BSC rating is which rallies employees around the Young Talent programme that invests a 35% determining factor in their achievement of a single, common in top university students studying in annual bonus calculations, with the goal. a range of industry-related fields. A Group’s performance determining three-year work-back arrangement the remaining 65% portion. This Safety remains a key metric in forms part of the agreement and percentage varies based on the the new production bonus system involves a full career development position of the employee. and accounts for 30% of every plan that includes mentoring. In employee’s production bonus. A 2015, 10 people benefited from the Performance management leading safety indicator has been programme. In the year ahead, the initiatives during 2015 added to ensure employees are programme will be expanded to The BSC itself is reviewed and rewarded for behaviours that include students who are studying refined on an annual basis. The four proactively work to prevent safety degrees in the technical fields of pillars for 2015 were adopted to incidents – and not simply penalised mining. ensure greater alignment with for accidents. The safety score is Group business objectives and the now split evenly between lead and The region’s career path programme number of objectives reduced to a lag indicators. also focuses on further developing smaller, more focused group. The the skills of operational and technical BSC was again adjusted around the employees and during the year Cerro same four pillars for 2016 (p26).
128 The Gold Fields Integrated Annual Report 2015
Finally, South Deep introduced a communication that created a During the year, Peru developed quarterly gold sharing scheme in clearer link between Group and and rolled out a structured addition to the monthly production regional strategy, and the role of communication model that provides bonus. This scheme benefits each employee. As a result, the line managers with an easy-to-use employees in core production and internal and external toolkit to systematically cascade core support jobs, further communications functions were important messages to their teams. incentivising and rewarding them for split and internal communications This tool will be adapted for other gold produced over the quarter. was moved from corporate affairs regions and operations during to human resources, where an 2016. People management in-depth understanding of the Approach employee audience is housed. Group leadership continued to drive the communication agenda during Closely linked to performance Communication focus during the year. In Peru, Australia and management is our emphasis on 2015 Ghana, regional Executive Vice- building strong people management Presidents or mine General skills in line management. We have Communicating strategy and Managers held formal a contingent of technically skilled purpose communication sessions with individuals, but these competencies During 2015, a new Group internal employees at least on a quarterly are not necessarily matched by communications strategy was basis. The new management team strong people management skills. approved. It drives consistent, at South Deep will adopt similar Line managers are the link between improved communication – practices in the year ahead. the organisation and its people, and informed by business strategy and it is imperative that line managers goals – from the Group to Understanding what employees are empowered with the skills and employees, and seeks to develop think and feel tools to engage, motivate and drive effective, cascading two-way performance in their teams. As such engagement platforms so that Comprehensive employee surveys a people pillar was included in the employees can communicate with provide a holistic view of employee BSC as a first step in measuring the Group. concerns, and Gold Fields will and incentivising the people continue to run them every second management capability of line One of the key focus areas during year with shorter surveys taken managers. the year was the standardised annually. communication of the Group-wide The majority of our management strategy, key strategic objectives for A user-friendly digital survey team participates in the Group’s the year, and how the Group is software package was purchased Management Development performing against these objectives during the year to facilitate the Programme. We also finalised an on a quarterly basis. A variety of roll-out of shorter, more frequent expanded suite of leadership communication channels were ‘pulse surveys’. It was used to great training programmes to equip used, including video, poster effect in rolling out a follow-up managers with the tools to have campaigns and on-site survey to the 2014 climate survey, meaningful, targeted performance presentations at a regional and which focused on the four lowest- conversations with team members. operational level. Our new scoring areas: performance interactive communication system, management, recognition, training Refined leadership competencies housed in the SuccessFactors and development; and expected of Gold Fields managers platform, also facilitates improved communication and engagement. and leaders together with the two-way communication between introduction of more robust the Group and employees. Wage gap psychometric assessments, will Executive remuneration remains a ensure that our recruitment In many operations line sensitive issue, globally. However, practices support the selection of management engages with the companies in development the right kinds of people managers. workforce on a regular basis, countries, like South Africa, face an but this is often driven by the added complexity. Scarce skills and Communication and communication skills and aptitude talent retention remain a challenge engagement of individual managers. There is a but this has to be countered by the Communication and engagement clear need to build standardised need to remain globally competitive was one of the areas rated below- structures that ensure that line against countries with cheaper par by employees in a 2014 internal management have the tools, labour rates. climate survey. Employees training, platforms and material highlighted the need for to engage with their teams.
129 The Gold Fields Integrated Annual Report 2015
6.2 People – Strategic focus areas (continued)
Balancing these challenges places trade union, but this is exclusively at a ground-breaking three-year wage wide-ranging responsibilities on one of our major contractors. While deal with unions that allowed it to executives. Furthermore, we value and will continue to drive avoid industrial action seen at other heightened disclosure of executive direct engagement with employees, mining companies during the year. pay has required remuneration we recognise the important role that The details of the agreement, which committees to ensure that their unions play in representing the seeks to accommodate the different executives’ wage packages are not interests of the workforce skills set required at South Deep out of line with those in their peer compared with other gold mines in group. Ghana South Africa, are discussed in detail Over the past three years Ghana under Remuneration on page 132. The wage gap – broadly defined as has made considerable progress in the difference between executive strengthening the relationship with In 2016, the internal pay and earnings of those working unions. This has been helped by communications strategy will be at the lowest levels of a company a salary benchmarking and augmented with policies and – has become a controversial issue adjustment exercise that now structures that include the in South Africa. Socio-economic places Gold Fields Ghana’s salaries introduction of a standardised, tensions and widespread labour among the most competitive in the Group-wide cascading model. Line unrest are partially attributable to industry. managers will receive targeted perceived pay disparities and communication training, and a disclosures of executive pay levels. During the year, declining central automated communication production at our Damang platform will be rolled out across For most of the past decade operation necessitated a review of the Group as the central executive pay hikes have exceeded employee numbers. Constructive communication hub. those of lower level employees. engagement with the unions However, despite the global upward resulted in a Memorandum of Supportive work pressure on executive pay levels, Understanding being signed for environment the wage differential has narrowed Damang to retrench 401 employees Gold Fields strives to create an in recent years amid higher annual by the end of March 2016, the environment that allows employees increases awarded to employees majority of whom will be employed to function optimally, taking into represented by organised labour. by the contractor. account their holistic wellbeing to ensure a safe, healthy, balanced This has certainly been the case at In early 2016, we also completed and productive workforce. This our South Deep mine in South wage negotiations with the Ghana includes taking an integrated view Africa where we struck an Mineworkers Union for 2015. Wage of the employee, both during and agreement in April 2015 with negotiations for 2016 could take outside of work hours, including workers in the bargaining units that place through centralised bargaining their financial, mental and physical will result in an average salary via the Ghana Chamber of Mines. wellbeing, as well as things like increase of over 10% in each of the nutrition, housing and living next three years. At entry levels the Details are discussed in the conditions, stress and fatigue annual increase was as high as Remunerations section on management and optimal job fit. 20.9%. page 132. The wellbeing needs of employees This has and will continue to South Africa differ between regions and contribute to significantly closing In South Africa, the relationship with programmes are therefore the wage gap between our CEO the unions has historically been a implemented at a regional level and workers at entry level. difficult one, and in the context of to deal with challenges specific to each employee group. Union engagement repeated changes in South Deep management it has been a In South Africa and Ghana, unions challenge to cement a sustained All regions have comprehensive are a vital stakeholder at our positive relationship. However, a wellness programmes in place. In operations with 93% and 96% of great deal of work has been done 2015, Peru invested US$600,000 employees respectively holding engaging with the unions over the upgrading camp facilities at Cerro union membership in those past year, and the relationship has Corona. This included the countries. In Peru 10% of our improved considerably. This is construction of expanded gym workforce are represented by a evidenced by South Deep’s signing facilities, an indoor sports centre,
130 The Gold Fields Integrated Annual Report 2015
a recreation area with barbeque element of our wellness strategy in seeks to assist employees to rent facilities and construction of Australia last year and St Ives these homes or buy them at a additional rooms. Peru also offers changed its working hours to discounted purchase price. employees a range of extramural reduce the fatigue risk at the mine. activities and classes. The scheme benefits employees in In South Africa, accommodation for the C-band and below, providing In Ghana, a new staff recreation mine employees is regulated under them with a R3,000 per month centre was constructed at Tarkwa the Mining Charter. We have met all housing allowance for the first two to benefit all employees, while the the relevant conditions including a years of the agreement, with an staff hospital at Tarkwa, which is requirement that each South Deep increase to R3,500 per month in the also used by community members, employee resident in our hostels third year. This housing allowance was refurbished and placed under a must have his or her own room – can be used to pay rent in a South new local management company. this was achieved in December Deep-owned or approved house 2014 after a R150 million within a 50km radius of the mine, or In Australia, supportive work investment in a hostel upgrade to service a bond should they wish arrangements focus both on the programme creating 848 single to purchase a house. camps in which employees live as accommodation and 203 family well as the fly in and fly out units. We are also finalising a The Tswelopele scheme offers a arrangements. While the roster housing acquisition and R100,000 interest-free loan to arrangements have remained stable development programme – at a qualifying employees to assist them over the past few years – for most cost of around R346 million – in securing a bond. The scheme employees that is 14 days at work through which around 850 houses also supports employees through and 10 days off – or eight days at in neighbouring districts will be financial literacy training, borrower work and six days off, Gold Fields made available to employees to education, negotiation with banks has successfully negotiated better purchase or lease. for favourable bond interest rates, flight arrangements and aircraft at assistance with completion and some of its sites. Similarly, the camp A new home ownership scheme – submission of forms among others. sites have been upgraded and Wi-Fi Tswelopele – was launched access rolled-out at all camps. following the finalisation of the Fatigue management was a critical South Deep wage agreement. It
❯ South Deep plant 131 The Gold Fields Integrated Annual Report 2015 6.3 People – Remuneration and benefits
Introduction ❯❯ A GHS 1,000 (US$250) one-off, performance targets for the The remuneration and benefits development reimbursement delivery of reward-based variable ❯❯ offered to employees play a central A 30% rent allowance for short-term and long-term incentive role in attracting and retaining key employees not accommodated by plans for its executive directors talent. These are discussed in the the Company and senior management ❯❯ Remuneration Report on pages Motivate and reinforce individual, 43 – 62 of the Annual Financial The Ghana Chamber of Mines has team and business performance in Report (AFR). proposed collective bargaining with the short, medium and long term. the GMWU for the 2016 wages and During 2015, the South Deep wage working condition negotiations. The The remuneration strategy is and Ghana wage negotiations were GMWU has not consented to this underpinned by sound remuneration the most notable remuneration and and by March 2016 negotiations had management and governance benefits events and are discussed not commenced. principles, and comprises the below. following key elements: Summarised Remuneration ❯❯ Guaranteed pay South Deep wage agreement Report ❯❯ Benefits This is a summarised version of the ❯❯ Short-term incentives (STI), i.e. South Deep’s bargaining unit annual performance bonuses employees received an average 10% Remuneration Committee’s Remuneration Report, the full version ❯❯ Long-term cash incentive salary increase over the three-year instrument i.e. as detailed in the period of the wage agreement that of which can be found on pages 43 – 62 of the AFR. Long-Term Cash Incentive Plan came into effect in April 2015. (LTIP). However, the agreement varies The key principles of Gold Fields’ depending on the employee category Gold Fields’ remuneration philosophy and goes beyond wage increases to remuneration policy are to: ❯❯ Ensure that the Group’s executive aims to attract and retain motivated, provide employees with a range of high-calibre employees, whose benefits. These include: remuneration policy encourages, reinforces and rewards the delivery interests are aligned with those of ❯❯ A scarce skills allowance of our shareholders. This is achieved R4,000 per month in the first year, of sustainable shareholder value ❯❯ through a balance of guaranteed and escalating by R500 per annum Provide competitive rewards to encourage ownership in the performance-based remuneration over the next two years, for (variable pay). TM3 artisans and Category 1 business, as well as setting stretch machine operators ❯❯ A retention allowance of R1,000 per month for Category 2 The pay components for our executives are displayed below: machine operators and artisans in the plant, backfill, shafts as well as tramming and recovery areas, for Total remuneration actual outcomes for 2015 (US$’000) (An average exchange rate of US$1= R12.68 for 2015 was used) each of the three years covered by the agreement ❯❯ An increase of 20,96%, 14,29% and 12,5%, respectively in each of CEO actual 1,081 619 1,133 the three years, for Category 4 – 8 employees and an 8% increase per year for miners, CFO actual 571 617 568 artisans and officials ❯❯ A housing allowance to replace the current living out allowance over EVP actual 484 442 247 the three-year period (p131).
Ghana wage agreement 0 1,000 2,000 3,000 Gold Fields Ghana concluded 2015 wage negotiations with the Ghana Gross remuneration package Annual performance bonus Mineworkers’ Union (GMWU) for the Long-term incentives bargaining units in early 2016. The outcomes included: ❯❯ A 5% increase on basic pay 132 The Gold Fields Integrated Annual Report 2015
Guaranteed pay and benefits fulfilment of certain targets set by the individual and strategic performance (Remuneration package) Board of Directors; and an expense objectives as well as wider Group allowance. objectives. The annual bonus could Gold Fields’ policy is to reward its increase above 60% and 65% people fairly and consistently In 2015, the ratio of average respectively if the stretch target according to their role and their executive director compensation vs is achieved. individual contribution to the Company average employee compensation and its performance. As a global was 21.3. The Remuneration Committee sets Company, with the majority of our targets for annual bonuses. In the operations now outside South Africa, This ratio has reduced from 25.02 in case of the CEO and CFO, 65% of we expect our senior executives to 2014 as a result, among others, of the performance bonus is based on have global experience. We therefore the above inflationary wage increases Group objectives and the remainder compete for talent in a global received by our employees in is based on individual strategic marketplace, and our approach to South Africa in terms of three wage objectives. For the regional Executive remuneration takes account of the agreement reached in 2015 (p129). Vice-Presidents, bonuses are judged need to be competitive throughout the against Group, regional and various jurisdictions in which the Short-term incentives (Annual operational objectives. Group operates. bonus) The on-target annual bonus To achieve external equity and Executive directors are eligible to parameters for the CEO, CFO and competitive remuneration, Gold earn performance bonuses of 60% executive vice-presidents are set out Fields uses surveys of peer group of GRP for the CFO and 65% of below. mining companies. During the year, GRP for the CEO for on-target Gold Fields contracted Mercer performance, which comprise both Consulting South Africa to provide a comprehensive analysis of the Group Target earning potential Bonus cap (stretch Executive Committee’s remuneration. as % of guaranteed earning potential) as % of The study confirmed that the Role remuneration guaranteed remuneration compensation of executives is in line with Gold Fields’ position in the CEO 65 130 basket of comparative companies. CFO 60 120
Gold Fields also provides, where Executive 55 110 appropriate, additional elements of vice-presidents compensation, including retirement savings, healthcare assistance, life The bonus parameter objectives will be based on the drivers below and support and disability insurance, housing and the Group scorecard as reflected above. Other elements of the Group personal accident cover. scorecard, not described below, are captured in the personal scorecards.
The 2016 annual gross remuneration Group scorecard parameters packages, or GRP, payable to the Safety 20% CEO, Nick Holland, and the CFO, Total gold production 20% Paul Schmidt, as determined the Remuneration Committee, were as All-in Cost (AIC) per ounce 40% follows: Development or waste mined 20% ❯❯ Nick Holland: R10,252,100 plus US$390,000 ❯❯ Paul Schmidt: R6,478,000 plus US$119,000.
In addition to the GRP, each executive director is entitled, among other things, to benefits that comprise participation in the Gold Fields Long-Term Cash Incentive Plan; consideration of an annual incentive bonus based on the
133 The Gold Fields Integrated Annual Report 2015
6.3 People – Remuneration and benefits (continued)
The CEO’s 2016 annual performance bonus is made up of the bonus parameter objectives (65%) as stated in the table on the previous page and personal performance objectives (35%) as stated in the table below: 2016 performance scorecard for Gold Fields CEO Nick Holland Objective Weighting Measurement 1. Group free cash flow 10% Deliver free cash flow margin of 5% based on a gold price of US$1,100/oz and exchange rates of A$0.73/US$ and R14.14/US$ 2. South Deep cash flow 15% Cash breakeven by year-end 3. South Deep rebase plan 25% Conclude the rebase life-of-mine plan 4. Portfolio decisions on Damang and Darlot 20% Decision on Darlot and Damang 5. Technology and innovation 10% Technology and innovation strategy approved 6. Improve the quality of assets in the Gold Fields 20% Grow mineable resources that maintain growth in FCF/oz portfolio and average reserve life per operation, through a combination of brownfields exploration and portfolio management (acquisition, joint venture and/or disposal)
Individual performance targets In particular the LTIP is designed to: Threshold must be achieved for The CEO and CFO were also ❯❯ reward key senior managers for pay-out of any portion of the award assessed on individual, strategic their performance and contribution to be triggered. objectives (the CEO’s performance to long-term sustainable financial scorecard is included in full in the results that drive shareholder The Gold Fields Limited 2014 LTIP is Remuneration Report). value; and set to be replaced with the revised ❯❯ increase the alignment of Gold Fields Limited 2012 Share Plan, The CEO received a personal executives and shareholders with which requires shareholder approval performance score of 4.2 out of the future growth and profitability at the 2016 Annual General Meeting. 5 and the CFO received a personal of Gold Fields. performance score of 4.5 out of 53. On approval of the changes to the The aggregate bonus paid to During 2015 the long-term incentives revised 2012 Share Plan, no new members of the executive team in were governed by the 2014 LTIP – awards will be made under the 2014 February 2016 was 109% of annual the salient features of this plan are: LTIP. In the event that the 2012 salary. For the CEO it was 111%¹ ❯❯ The LTIP is a three-year Share Plan is not approved, annual and the CFO 106%² of annual salary. performance plan. long-term incentives will revert to the ❯❯ Each performance cycle starts on terms of the 2014 LTIP, with revised 1 CEO bonus = (65% x 170%) + (35% x 1 January of the first year and corporate performance conditions. 172%) x 65% = 111% ends on 31 December of the 2 CFO bonus = (65% x 170%) + (35% x third year. Minimum shareholding 190%) x 60% = 106% ❯❯ Annual awards will be made to requirement for executives 3 Gets converted into a percentage with eligible participants. 3 = 100% and 5 = 200%. 4.2 = 172%, In line with best practice and in 4.5 = 190% ❯❯ Allocations will be based on the response to shareholder input, the formula: Annual salary x applicable Company has adopted a Minimum % by grade x personal Shareholding Requirement policy Long-term incentives performance. that will become mandatory for The Company operates a long-term ❯❯ Vesting will be based on two executives. The policy requires Incentive Plan (LTIP) designed to corporate performance conditions executives to hold a specific encourage senior and key employees equally being met: percentage of shares in the to identify closely with the long-term • Free cash flow margin 50% Company. The proposed target objectives of Gold Fields and allow weighted shareholdings of vested and them to participate in the future • Total shareholder return 50% unencumbered shares for the financial success of the Company. weighted relevant executives is: ❯❯ CEO: 200% of annual Guaranteed Remuneration Package (GRP); and ❯❯ CFO and other executives: 100% of annual GRP 134 The Gold Fields Integrated Annual Report 2015
The table below provides details of the remuneration of executive directors and prescribed officers in 2015, in terms of US Dollar values. An average exchange rate for the 12-month period ended 31 December 2015 was used: i.e. US$1 = R12.68 to convert to US Dollar values.
Non-executive directors’ fees and executive directors’ and prescribed officers’ remuneration The directors and prescribed officers were paid the following remuneration (US$ terms) for the year ended 31 December 2015: Fees and remuneration in US Dollars
Total realised Pre-tax earnings share for the For the proceeds 12-month 12-month Pension for shares period period Board fees scheme awarded in ended ended All figures stated in Directors’ Committee contri- Annual previous 31 December 31 December US$’000 fees fees Salary¹ bution bonus² Sundry Subtotal years 2015³ 2014 Executive directors Nicholas J Holland – – 935.7 145.3 618.910 – 1,699.8 1,132.5 2,832.4 2,603.5 Paul A Schmidt – – 512.2 58.4 616.5 – 1,187.0 568.2 1,755.3 1,602.7 Prescribed officers Ernesto Balarezo4 – – 622.4 – 425.7 414.8 1,463.0 109.4 1,572.4 1,970.4 Alfred Baku5 – – 688.9 158.5 572.0 298.8 1,718.2 220.5 1,938.7 1,889.2 Richard Weston – – 560.9 64.5 482.0 – 1,107.4 688.6 1,796.0 1,506.5 Naseem A Chohan – – 283.0 53.1 306.9 – 643.0 221.4 864.4 726.6 Brett Mattison – – 347.1 38.4 379.3 – 764.8 207.7 972.6 851.3 Lee-Ann Samuel – – 307.7 33.8 322.1 – 663.6 175.4 839.0 807.1 Taryn Harmse – – 265.2 65.3 322.4 – 652.9 106.6 759.6 673.8 Nico Muller6 – – 412.8 45.0 423.5 197.2 1,078.5 – 1,078.5 403.6 Avishkar Nagaser7 – – 210.6 23.4 208.5 – 442.5 – 442.5 – Willie Jacobsz8 – – – – – – – – – 1,034.4 Michael D Fleischer9 – – – – – – – – – 510.7 Kgabo FL Moabelo9 – – – – – – – – – 727.1 Non-executive directors Cheryl A Carolus 203.8 – – – – – 203.8 – 203.8 232.3 Alan R Hill 66.9 43.3 – – – – 110.2 – 110.2 125.6 David N Murray 66.9 33.8 – – – – 100.8 – 100.8 114.9 Richard P Menell 66.9 46.4 – – – – 113.3 – 113.3 127.5 Gayle M Wilson 66.9 52.6 – – – – 119.5 – 119.5 136.2 Donald MJ Ncube 66.9 46.4 – – – – 113.3 – 113.3 129.2 Kofi Ansah 66.9 18.9 – – – – 85.8 – 85.8 97.8 Total 605.3 241.4 5,146.5 685.7 4,677.9 910.8 12,267.6 3,430.5 15,698.1 16,270.4
Average exchange rates were US$1 = R12.68 for FY2015 and R10.82 for FY2014 respectively ¹ The total US$ amounts paid for 2015, and included under salary, were as follows: Nick Holland US$356,000, Paul Schmidt US$100,000 ² The annual bonus accruals for the 12-month period ended 31 December 2015, paid in February 2016 ³ These amounts reflect the full directors’ emoluments for comparative purposes. The portion of executive directors’ emoluments payable in USD is paid in terms of agreements with the offshore subsidiaries for work done by directors offshore for offshore companies. The total realised earnings for 2015 for Nick Holland in ZAR = R35,914,615 and for Paul Schmidt = R22,256,668 4 Ernesto Balarezo – Sundry payment relates to legislated bonuses 5 Sundry payment for Alfred Baku relates to relocation/leave allowance and encashment of excess leave 6 Nico Muller – Sundry payment relates to pro rata sign-on bonus 7 Avishkar Nagaser – Appointed on 1 January 2015 8 Willie Jacobsz – Prescribed officer until 31 December 2014 9 Michael Fleischer and Kgabo Moabelo – Resigned during 2014 10 Nick Holland elected, prior to the determination of the annual performance bonus for FY2015 and in line with the Rules of the Minimum Shareholding Requirement Policy, to convert 50% of his cash bonus into Gold Fields Shares (US$618,900) which will be held in escrow for a five-year restricted period.
135 The Gold Fields Integrated Annual Report 2015
6.3 People – Remuneration and benefits (continued)
The directors and prescribed officers were paid the following remuneration (Rand terms) for the year ended 31 December 2015: Fees and remuneration in Rands
Total realised Pre-tax earnings share for the For the proceeds 12-month 12-month Pension for shares period period Board fees scheme awarded in ended ended All figures stated in Directors’ Committee contri- Annual previous 31 December 31 December R’000 fees fees Salary¹ bution bonus² Sundry7 Subtotal years11 2015³ 2014 Executive directors Nicholas J Holland – – 11,864.8 1,841.9 7,847.410 – 21,554.1 14,360.6 35,914.6 28,169.4 Paul A Schmidt – – 6,494.2 740.1 7,817.4 – 15,051.7 7,205.0 22,256.7 17,341.7 Prescribed officers Ernesto Balarezo4 – – 7,892.6 – 5,398.3 5,260.0 18,550.9 1,387.2 19,938.1 21,319.2 Alfred Baku5 – – 8,735.5 2,009.3 7,252.8 3,789.0 21,786.5 2,795.7 24,582.2 20,440.5 Richard Weston – – 7,112.1 817.9 6,112.1 – 14,042.1 8,731.8 22,773.9 16,296.9 Naseem A Chohan – – 3,588.2 673.3 3,891.9 – 8,153.4 2,807.5 10,961.0 7,861.1 Brett Mattison – – 4,401.3 487.1 4,809.8 – 9,698.2 2,634.0 12,332.2 9,212.1 Lee-Ann Samuel – – 3,901.1 429.2 4,084.0 – 8,414.3 2,224.3 10,638.5 8,732.3 Taryn Harmse – – 3,362.5 828.3 4,088.3 – 8,279.1 1,352.2 9,631.3 7,290.7 Nico Muller6 – – 5,234.5 570.8 5,370.4 2,500.0 13,675.8 – 13,675.8 4,366.3 Avishkar Nagaser7 – – 2,670.8 296.7 2,643.3 – 5,610.8 – 5,610.8 – Willie Jacobsz8 – – – – – – – – – 11,191.9 Michael D Fleischer9 – – – – – – – – – 5,525.6 Kgabo FL Moabelo9 – – – – – – – – – 7,867.3 Non-executive directors Cheryl A Carolus 2,584.1 – – – – – 2,584.1 – 2,584.1 2,513.6 Alan R Hill 848.5 548.9 – – – – 1,397.4 – 1,397.4 1,359.3 David N Murray 848.5 429.1 – – – – 1,277.6 – 1,277.6 1,242.8 Richard P Menell 848.5 588.5 – – – – 1,437.0 – 1,437.0 1,379.2 Gayle M Wilson 848.5 666.6 – – – – 1,515.1 – 1,515.1 1,473.8 Donald MJ Ncube 848.5 588.5 – – – – 1,437.0 – 1,437.0 1,397.9 Kofi Ansah 848.5 239.7 – – – – 1,088.2 – 1,088.2 1,058.5 Total 7,675.1 3,061.3 65,257.5 8,694.6 59,315.7 11,549.0 155,553.1 43,498.2 199,051.3 176,040.1
Average exchange rates were US$1 = R12.68 for the FY2015 and US$1 = R10.82 for the FY2014 respectively ¹ The total US$ amounts paid for 2015, and included in Salary, were as follows: Nick Holland US$356,000, Paul Schmidt US$100,000 ² The annual bonus accruals for the 12 month period ended 31 December 2015, paid in February 2016 ³ These amounts reflect the full directors’ emoluments for comparative purposes. The portion of executive directors’ emoluments payable in US$ is paid in terms of agreements with the offshore subsidiaries for work done by directors’ offshore for offshore companies 4 Ernesto Balarezo – sundry payment relates to legislated bonuses 5 Alfred Baku – sundry payment relates to relocation / leave allowance and encashment of excess leave 6 Nico Muller – sundry payment relates to pro rata sign-on bonus 7 Avishkar Nagaser – appointed on 1 January 2015 8 Willie Jacobsz – Prescribed Officer until 31 December 2014 9 Michael Fleischer and Kgabo Moabelo – resigned during 2014 10 Nick Holland elected, prior to the determination of the annual performance bonus for FY2015 and in line with the Rules of the Minimum Shareholding Requirement Policy, to convert 50% of his cash bonus into Gold Fields Shares (R7,847,652) which will be held in escrow for a five-year restricted period
136 The Gold Fields Integrated7 Annual Report 2015 Assurance
7.1 First party: Internal Audit statement p138 Independent Assurance Provider’s Report to 7.2 p139 the Directors of Gold Fields Limited 7.3 Key sustainability performance data p143
❯ Development work on Lake Lefroy at St Ives
137 The Gold Fields Integrated Annual Report 2015 7.1 First party: Internal Audit statement
Gold Fields Internal Audit (GFIA) is an Group Head of Internal Audit management, internal financial independent assurance provider to provides quarterly feedback to the controls as well as the IT control the Gold Fields Audit Committee Audit Committee and has a framework. It is GFIA’s opinion that onthe effectiveness of the risk functional reporting line to the Audit the internal control environment and management, control and Committee Chair. risk management processes are governance processes within Gold adequate within the Gold Field Fields. The risk-based annual audit GFIA follows a risk-based audit business and provide reasonable plan covers the breadth and depth methodology, which is in compliance assurance that the objectives of Gold of the Gold Fields value chain, and is with the Institute of Internal Auditors Fields will be met. This GFIA approved by the Audit Committee (IIA) and the International Standards assessment forms one of the bases annually. for the Professional Practice of of the Audit Committee’s Internal Auditing. Furthermore, GFIA recommendation in this regard to the Internal audit activities are conducted operates a quality assurance Board. in terms of the annually approved programme that involves performing mandate provided by the Audit detailed quality review assessments Shyam Jagwanth Committee and executed either by a at an activity and functional level. Vice-President and Group Head of team of appropriate, qualified and Internal Audit experienced internal auditors, or Based on the work performed by through the engagement of external GFIA during the year, the Vice- Johannesburg practitioners on specified and agreed President and Group Head of Internal South Africa terms. The Internal Audit team is Audit have presented the Audit based in South Africa and services Committee with an assessment of 22 March 2016 all the Gold Fields operations the effectiveness of the Company’s globally. The Vice-President and systems of internal control and risk
138 The Gold Fields Integrated Annual Report 2015 7.2 Independent Assurance Provider’s Report to the Directors of Gold Fields Limited
Report on Selected Sustainability Performance Information We have undertaken an assurance engagement on selected sustainability performance information, as described below, and presented in the Integrated Annual Report of Gold Fields Limited (Gold Fields) for the year ended 31 December 2015 (the Report). This engagement was conducted by a multi-disciplinary team of health, safety, social, environmental and assurance specialists with extensive experience in sustainability reporting.
Subject matter (presented in compliance with subject matter 4 of the International Council of Mining and Metals’ (ICMM) Sustainable Development Framework: Assurance Procedure).
We are required to provide reasonable assurance on the selected sustainability performance information set out in the table below. The selected sustainability performance information described below has been prepared in accordance with Gold Fields’ reporting criteria that accompanies the selected sustainability performance information on pages 143 to 146 (the accompanying Gold Fields reporting criteria).
Reasonable Assurance (RA) Unit Environment
Total CO2 equivalent emissions, Scope 1 – 3 Tonnes CO2e Total energy consumed (GJ)/ounce of gold produced Total GJ of energy consumed per ounce of gold produced Total energy consumed (GJ)/total tonnes mined Total GJ of energy consumed per tonne mined Number of environmental incidents – Level 3 and above Number Electricity MWh Diesel kℓ Total water withdrawal mℓ Total water recycled/re-used per annum mℓ Water intensity kℓ withdrawn per ounce of gold produced Health Number of cases of silicosis reported Number of cases Number of cases of noise induced hearing loss reported Number of cases Number of new cases of cardio respiratory tuberculosis Number of new cases reported Number of cases of malaria tested positive per annum Number of positive cases Number of South African and West African employees in the Number of employees highly active anti-retroviral therapy (HAART) programme Percentage of South African and West African workforce on Percentage of workforce the voluntary counselling and testing (VCT) programme Safety Total recordable injury frequency rate (TRIFR) Rate Number of fatalities Number Social Total socio economic development (SED) spend in US dollars US Dollars
139 The Gold Fields Integrated Annual Report 2015
7.2 independent Assurance Provider’s Report to the Directors of Gold Fields Limited (continued)
Reasonable Assurance (RA) Unit Mining Charter Percentage historically disadvantaged South Africans (HDSA) Top management % in management who are classified as designated groups and Senior % who are employed at management levels (top management Middle % (Board), senior, middle, junior, core skills and total), including and excluding corporate and including and excluding white Junior % females Core % Total % Number of houses built as part of home ownership scheme Number of houses Maintenance of the conversion rate of hostels to ensure an Number of people per room occupancy rate of one person per room Percentage conversion of hostels to family units Percentage Human Resource Development (HRD) Expenditure as a Percentage percentage of total annual payroll (excluding mandatory skills levy) Number of bursaries/scholarships provided Number of bursars/scholars Research and Development initiatives supported (total Number number, percentage of South African Institutions in the total Percentage and expenditure) Rand value Rand value spent on Local Economic Development (LED) Rand value projects in the SLP in the current reporting year Total procurement spend from BEE entities (BBSEEC, 2010) Rand value Procurement spend from BEE entities (in line with the Mining % Capital goods Charter categories of capital goods, services & consumable % Services goods) % Consumable goods Annual spend on procurement from multi-national suppliers: Percentage Contribution to the social fund Percentage of samples sent to South African facilities Percentage Implementation of approved Environmental Management Percentage Plans (EMPs) (defined as per the categories contained in the on-line Mining Charter submission template to the DMR) Implementation of the tripartite action plan on health and Percentage safety (defined as per the categories contained in the on-line Mining Charter submission template to the DMR)
140 The Gold Fields Integrated Annual Report 2015
Directors’ responsibilities Standards Board. That Standard information systems relevant to the The Directors are responsible for requires that we plan and perform sustainability reporting process. the selection, preparation and our engagement to obtain Inspecting documentation to presentation of the selected reasonable assurance about whether corroborate the statements of sustainability performance the selected sustainability management and senior information in accordance with the performance information is free from executives in our interviews. accompanying Gold Fields reporting material misstatement. ❯❯ Testing the processes and systems criteria. This responsibility includes to generate, collate, aggregate, the identification of stakeholders and A reasonable assurance engagement monitor and report the selected stakeholders’ requirements, material in accordance with ISAE 3000 sustainability performance issues, for commitments with involves performing procedures to information. respect to sustainability performance obtain evidence about the ❯❯ Inspecting supporting and for the design, implementation quantification of the selected documentation and performing and maintenance of internal control sustainability performance analytical procedures on a sample relevant to the preparation of the information and related disclosures. basis to evaluate the data Report that is free from material The nature, timing and extent of generation and reporting misstatement, whether due to fraud procedures selected depend on the processes against the reporting or error. practitioner’s judgement, including criteria. the assessment of the risks of ❯❯ Undertaking physical site visits to Our independence and quality material misstatement, whether due Gold Fields’ South Deep, Tarkwa control to fraud or error. In making those risk and Damang operations and assessments we considered internal remote reviews of the Granny We have complied with the Code of control relevant to Gold Fields’ Smith, St Ives, Agnew/Lawlers, Ethics for Professional Accountants preparation of the selected Darlot, and Cerro Corona issued by the International Ethics sustainability performance operations. Standards Board for Accountants, information. A reasonable assurance which includes independence and engagement also includes: We believe that the evidence we other requirements founded on ❯❯ Assessing the suitability in the have obtained is sufficient and fundamental principles of integrity, circumstances of Gold Fields’ use objectivity, professional competence appropriate to provide a basis for our of the accompanying Gold Field and due care, confidentiality and opinion. Reporting criteria as the basis for professional behaviour. preparing the selected Opinion sustainability performance KPMG Services Proprietary Limited In our opinion, the selected information; applies the International Standard on sustainability performance ❯❯ Evaluating the appropriateness Quality Control 1 and accordingly information set out in the subject of quantification methods and maintains a comprehensive system matter paragraph for the year ended reporting policies and internal of quality control, including 31 December 2015 is prepared, in all guidelines used, and the documented policies and procedures material respects, in accordance with reasonableness of estimates made regarding compliance with ethical the accompanying Gold Fields by Gold Fields; and requirements, professional standards reporting criteria. ❯❯ Evaluating the overall presentation and applicable legal and regulatory of the selected sustainability requirements. Comparability performance information and whether the information presented Our report includes the provision of Our responsibility in the Report is consistent with our assurance on the Research and Our responsibility is to express an findings, overall knowledge and Development initiatives supported opinion on the selected sustainability experience of sustainability (Total Number, Percentage of South performance information based on management and performance at African Institutions in the total and the evidence we have obtained. Gold Fields. Expenditure), Annual spend on We have conducted our engagement procurement from multi-national in accordance with the International Our work included the following suppliers: Contribution to the social Standard on Assurance evidence-gathering procedures: fund (percentage), Implementation of Engagements (ISAE) 3000 (Revised), ❯❯ Interviewing management and Approved EMP’s (percentage), Assurance Engagements Other than senior executives to obtain an Implementation of the tripartite action Audits or Reviews of Historical understanding of the internal plan on health and safety Financial Information, issued by the control environment, risk (percentage), and Total Energy International Auditing and Assurance assessment process and Consumed (GJ)/Total Tonnes mined. 141 The Gold Fields Integrated Annual Report 2015
7.2 independent Assurance Provider’s Report to the Directors of Gold Fields Limited (continued)
We were previously not required to assurance engagement on the ICMM Assurance Procedure’ to the provide assurance on this selected selected sustainability performance Directors of Gold Fields in sustainability performance information set out in the subject accordance with the terms of our information. matter paragraph in our ‘Report on engagement, and for no other Selected Sustainability Information’ purpose. We do not accept or Report on the ICMM on pages 139 and 140. assume liability to any party other assurance procedure than Gold Fields, for our work, for We are required to report our findings Findings this report, or for the conclusions we on the International Council of Mining Based on our evidence gathering have reached. and Metals’ (ICMM) Sustainable procedures in our assurance Development (SD) Framework: engagement for the year ended Assurance Procedure (ICMM 31 December 2015 on the subject KPMG Services Proprietary Assurance Procedure) in respect of: matter set out in our ‘Report on Limited ❯❯ The alignment of Gold Fields’ Selected Sustainability Information’ sustainability policies to the ICMM 139 and 140, nothing has come to 10 SD Principles and any our attention that causes us to mandatory requirements set out in believe that: ICMM Position Statements (ICMM ❯❯ Gold Fields’ sustainability policies Per PD Naidoo Per C Basson Subject Matter 1). are not aligned with the ICMM Director Director ❯❯ The reporting of Gold Fields’ 10 SD Principles and any material sustainable development mandatory requirements set out in 22 March 2016 22 March 2016 risks and opportunities based on a ICMM Position Statements. review of its business and the ❯❯ Gold Fields has not reported views and expectations of its material sustainable development KPMG Crescent stakeholders (ICMM Subject risks and opportunities based on a 85 Empire Road Matter 2). review of its business and the Parktown ❯❯ The implementation of systems views and expectations of its Johannesburg and approaches that Gold Fields is stakeholders. 2193 using to manage its material safety ❯❯ Gold Fields has not implemented risks and opportunities (ICMM systems and approaches to Subject Matter 3). manage its material safety risks and opportunities. Directors’ responsibilities The Directors are responsible for: Other matters ❯❯ The alignment of Gold Fields’ The maintenance and integrity of the sustainability policies to the ICMM Gold Fields website is the 10 SD Principles and any responsibility of Gold Fields mandatory requirements set out in management. Our procedures did ICMM Position Statements. not involve consideration of these ❯❯ The reporting of Gold Fields’ matters and, accordingly we accept material sustainable development no responsibility for any changes to risks and opportunities based on a either the information in the Report review of its business and the or our independent assurance report views and expectations of its that may have occurred since the stakeholders. initial date of presentation on the ❯❯ The implementation of systems Gold Fields website. and approaches that Gold Fields is using to manage its material safety Restriction of liability risks and opportunities. Our work has been undertaken to enable us to express the opinions on Our responsibility the sustainability performance Our engagement included reporting information set out in the subject on the ICMM Assurance Procedure matter paragraph in our ‘Report on in respect of 1, 2 and 3 above based Selected Sustainability performance on the knowledge obtained in our Information’ together with findings on evidence gathering procedures in our 1, 2 and 3 in our ‘Report on the
142 The Gold Fields Integrated Annual Report 2015 7.3 Key sustainability performance data
The following key sustainability performance information was selected by Gold Fields, for assurance by KPMG in 2015 which have been reported in accordance with the criteria listed in the table below.
Parameter Level of Management figure assurance
Selected sustainability performance information presented in accordance with Subject Matter 4 of the International Council of Mining and Metals’ (ICMM) Sustainable Development Framework: Assurance Procedure (ICMM Assurance Procedure), and prepared in accordance with the Global Reporting Initiative (GRI) G4 Guidelines as well as Gold fields own internal Guidelines:
Environment
Total CO2 equivalent emissions, scope 1– 3 (in tonnes) Reasonable 1 753 163 tonnes Electricity (MWh) Reasonable 1 322 353 MWh Number of environmental incidents – Level 3 and above Reasonable 5 incidents
Total water withdrawal (mℓ) Reasonable 35 247 mℓ Diesel (kℓ) Reasonable 192 517 kℓ Total water recycled/re-used per annum (mℓ) Reasonable 43 120 mℓ Water intensity (kℓ withdrawn per ounce of gold produced) Reasonable 35 247 100 kl/2 235 560 = 15.77 Total energy consumed (GJ)/total tonnes mined Reasonable 11 240 369/165 787 013 = 0.07 Total energy consumed (GJ)/ounce of gold produced Reasonable 11 240 369/2 235 560 = 5.02 Health Number of cases of silicosis reported Reasonable 9 cases Number of cases of noise induced hearing loss reported Reasonable 6 cases Cardio respiratory tuberculosis (number of new cases reported) Reasonable 36 cases Number of cases of malaria tested positive per annum Reasonable 532 positive cases Number of South African and West African employees in the Reasonable 315 HAART programme (cumulative) Percentage of South African and West African workforce on the Reasonable 4 675 people on VCT/12 600 voluntary counselling and testing (VCT) programme people = 37%
143 The Gold Fields Integrated Annual Report 2015
7.3 Key sustainability performance data (continued)
Parameter Level of Management figure assurance
Safety TRIFR1 Reasonable 174 TRIs/51 198 901 man hours = 3.40 Number of fatalities Reasonable 32 Social Total socio-economic development (SED) spend in US Dollars3 Reasonable US$13 655 549
1 Per million hours worked, including employees and contractors 2 In addition to the three mining related fatalities, on 7 August 2015 a G4S Security Services Contractor, Sbongiseni Cornwell Ngqoleka, was tragically killed during what appears to have been an armed robbery targeting copper cable at South Deep Mine. 3 Our SED definition has been aligned to the World Gold Council definition, which excludes employee-related SED spend, and includes the SED spend from the South Deep Education and Community Trusts as well as the Community Westonaria Trust.
Parameter Level of Management figure assurance
The following key sustainability performance information was selected by Gold Fields, for assurance by KPMG in 2015, which have been reported in accordance with the following criteria: 1) Selected Mining Charter elements prepared in compliance with the Broad-Based Socio-Economic Empowerment Charter for the South African Mining and Minerals Industry (BBSEEC) (2002) and related Scorecard (2004); and 2) Selected Mining Charter elements prepared in compliance with the Amendment to the BBSEEC (2010) and related scorecard (2010) for the South African Mining and Minerals Industry. Mining Charter Employment Equity Percentage HDSA in management4 Reasonable Including corporate and Excluding corporate and who are classified as designated including white females including white females7 groups and who are employed at Top: 42%5 Top: 50% management levels: top management Senior: 47% Senior: 50%6 (Board), senior, middle, junior, core Middle: 60% Middle: 57% skills and total. Core skills include A, Junior: 56% Junior: 54% B and C graded employees in the Core: 69% Core: 70% miner and artisan categories as well Total: 67% Total: 69% as officials that are deemed to have Excluding corporate and Including corporate and core skills in mining excluding white females excluding white females Top: 50% Top: 33%8 Senior: 40%6 Senior: 35% Middle: 51% Middle: 45% Junior: 51% Junior: 50% Core: 67% Core: 66% Total: 66% Total: 64% 4 Excludes contractors. 5 Includes the Gold Fields Ltd and South Deep joint venture Board members. 6 Includes both SA regional ExCo (RexCo) members and the South Deep mine executive members (ExCo). 7 Reportable in terms of the BBSEEC (2010). 8 Includes the Gold Fields Ltd and South Deep Joint venture Board members.
144 The Gold Fields Integrated Annual Report 2015
Parameter Level of Management figure assurance Housing and Living Conditions Maintenance of the conversion rate of Reasonable 1 person per room hostels to ensure an occupancy rate of 1 person per room Number of houses built as part of Reasonable 09 home ownership scheme % conversion of hostels into Reasonable 100% family units 9 The Home Ownership Scheme embraces facilitating access to accommodation for our employees. Construction of 150 houses is progressing well and will be completed by end Q2 2016. South Deep owns 258 houses and purchased 198 from Sibanye in 2014 (transfer still in progress) and 489 have been rented from third parties by Gold Fields for our employees. The mine will make available 102 of the South Deep owned houses during Q2 2016, to be sold to employees. Furthermore, South Deep’s compliance with the Mining Charter Scorecard element for ‘Housing and Living Conditions’, ensured the conversion of hostels to one occupant per room and created availability of 203 family units in 2014.
Skills and Development HRD expenditure as a percentage of Reasonable 10.50% total annual payroll (excluding mandatory skills development levy) Number of bursaries/scholarships Reasonable 21 provided Research and development initiatives 010 supported (total number, percentage of South Africa institutions in the total and expenditure) Local Economic Development Rand value spent on LED projects in Reasonable R3 160 657 the SLP in the current reporting year Procurement and Enterprise Development Procurement spend from BEE entities Reasonable Capital goods: 87.7% (in line with the mining charter Services: 78.6% categories of capital goods, services Consumable goods: 84.0% & consumable goods) Total procurement spend from BEE Reasonable Total procurement spend: entities (BBSEEC, 2010) R1 993 284 157 BEE procurement spend: R1 667 868 613 Annual spend on procurement from Reasonable 011 multi-national suppliers: Contribution to the social fund 10 There were no reportable Research and Development Initiatives supported during 2015. 11 There remains an industry-wide lack of clarity on this requirement in the absence of guidance from the DMR. Although no annual spend, in terms of multi-national’s contributions to a social fund is reportable, South Deep has commenced and implemented several projects in 2015 focused on enhancing host community procurement, employment and skills development.
145 The Gold Fields Integrated Annual Report 2015
7.3 Key sustainability performance data (continued)
Parameter Level of Management figure assurance Sustainable Development and Growth Percentage % of samples in South Reasonable 100% African facilities Implementation of approved EMP’s Reasonable 100% (defined as per the categories contained in the on-line Mining Charter submission template to the DMR) Implementation of the tripartite action Reasonable 69%12 plan (TAP) on health and safety (defined as per the categories contained in the on-line Mining Charter submission template to the DMR) 12 100% implementation was achieved on three of the five pillars of the TAP. Further work is being undertaken on the remaining two pillars: training of occupational health and safety representatives as well as implementing the cultural transformation framework standards in 2016.
146 The Gold Fields Integrated Annual Report 2015 Administration and corporate information
COMPANY Secretary Investor enquiries Lucy Mokoka Avishkar Nagaser Tel: +27 11 562 9719 Tel: +27 11 562 9775 Fax: +27 11 562 9829 Mobile: +27 82 312 8692 email: [email protected] email: [email protected]
Registered office Media enquiries Johannesburg Sven Lunsche Gold Fields Limited Tel: +27 11 562 9763 150 Helen Road Mobile: +27 83 260 9279 Sandown email: [email protected] Sandton, 2196 Transfer secretaries Postnet Suite 252 South Africa Private Bag X30500 Computershare Investor Services (Proprietary) Limited Houghton, 2041 Ground Floor Tel: +27 11 562 9700 70 Marshall Street Fax: +27 11 562 9829 Johannesburg, 2001
Office of the United Kingdom secretaries PO Box 61051 London Marshalltown, 2107 St James Corporate Services Limited Tel: +27 11 370 5000 Suite 31, Second Floor Fax: +27 11 688 5248 107 Cheapside London EC2V 6DN United Kingdom United Kingdom Tel: +44 20 7796 8644 Capita Asset Services Fax: +44 20 7796 8645 The Registry 34 Beckenham Road American depository receipts transfer Beckenham Kent BR3 4TUEngland agent Tel: 0871 664 0300 Bank of New York Mellon [calls cost 10p a minute plus network extras, BNY Mellon Shareowner Services lines are open 08h30 – 17h00 Mon-Fri] or [from overseas] P O Box 358516 +44 20 8639 3399 Pittsburgh, PA15252-8516 Fax: +44 20 8658 3430 US toll-free telephone: +1 888 269 2377 email: [email protected] Tel: +1 201 680 6825 email: [email protected] Sponsor JP Morgan Equities South Africa (Pty) Ltd Gold Fields Limited Incorporated in the Republic of South Africa DIRECTORS Registration number 1968/004880/06 CA Carolus (Chair) ° RP Menell (Deputy Chair) ° Share code: GFI NJ Holland *• (Chief Executive Officer) Issuer code: GOGOF PA Schmidt • (Chief Financial Officer) K Ansah # ISIN – ZAE 000018123 AR Hill ≠° DN Murray ° DMJ Ncube ° SP Reid ^ GM Wilson °
Website ^ Australian * British # Ghanaian ≠ Canadian www.goldfields.com ° Independent Director • Non-independent Director
LISTINGS JSE/NYSE/GFI SWX: GOLI
147 The Gold Fields Integrated Annual Report 2015 Forward looking statements
This report contains forward looking statements within the meaning of section 27A of the U.S. Securities Act of 1933, as amended, or the Securities Act, and section 21E of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, with respect to Gold Fields’ financial condition, results of operations, business strategies, operating efficiencies, competitive position, growth opportunities for existing services, plans and objectives of management, markets for stock and other matters.
These forward looking statements, including, among others, those relating to the future business prospects, revenues and income of Gold Fields, wherever they may occur in this report and the exhibits to the report, are necessarily estimates reflecting the best judgement of the senior management of Gold Fields and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward looking statements. As a consequence, these forward looking statements should be considered in light of various important factors, including those set forth in this report. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward looking statements include, without limitation: ❯❯ overall economic and business conditions in South Africa, Ghana, Australia, Peru and elsewhere; ❯❯ changes in assumptions underlying Gold Fields’ mineral reserve estimates; ❯❯ the ability to achieve anticipated efficiencies and other cost savings in connection with past and future acquisitions; ❯❯ the ability to achieve anticipated cost savings at existing operations; ❯❯ the success of the Group’s business strategy, development activities and other initiatives; ❯❯ the ability of the Group to comply with requirements that it operate in a sustainable manner and provide benefits to affected communities; ❯❯ decreases in the market price of gold or copper; ❯❯ the occurrence of hazards associated with underground and surface gold mining or contagious diseases at Gold Field’s operations; ❯❯ the occurrence of work stoppages related to health and safety incidents; ❯❯ loss of senior management or inability to hire or retain employees; ❯❯ fluctuations in exchange rates, currency devaluations and other macroeconomic monetary policies; ❯❯ the occurrence of labour disruptions and industrial actions; ❯❯ power cost increases as well as power stoppages, fluctuations and usage constraints; ❯❯ supply chain shortages and increases in the prices of production imports; ❯❯ the ability to manage and maintain access to current and future sources of liquidity, capital and credit, including the terms and conditions of Gold Fields’ facilities and Gold Fields’ overall cost of funding; ❯❯ the adequacy of the Group’s insurance coverage; ❯❯ the manner, amount and timing of capital expenditures made by Gold Fields on both existing and new mines, mining projects, exploration project or other initiatives; ❯❯ changes in relevant government regulations, particularly labour, environmental, tax, royalty, health and safety, water, regulations and potential new legislation affecting mining and mineral rights; ❯❯ fraud, bribery or corruption at Gold Field’s operations that leads to censure, penalties or negative reputational impacts; and ❯❯ political instability in South Africa, Ghana, Peru or regionally in Africa or South America.
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 report or to reflect the occurrence of unanticipated events.
148 BASTION GRAPHICS Gold Fields Integrated Annual Report for the year ended 31 December 2015