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GOLD 1286.47 -0.70%
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Gold Fields is a significant unhedged producer of gold with attributable annualised production of approximately 2.0 million gold equivalent ounces from six operating mines in Australia, Ghana, Peru and South Africa. Gold Fields also has an extensive and diverse global growth pipeline with four major projects at resource development or feasibility level. Gold Fields has total managed gold-equivalent Mineral Reserves of 64 million ounces and Mineral Resources of 155 million ounces. Gold Fields is listed on the JSE Limited (primary listing), the New York Stock Exchange (NYSE), NASDAQ Dubai Limited, Euronext in Brussels (NYX) and the Swiss Exchange (SWX). In February 2013, Gold Fields unbundled its KDC and Beatrix mines in South Africa into an independent and separately listed company, Sibanye Gold



Risk management

The ERM is based on the following process:

  • Workplace risk assessments: Line management carries out ongoing hazard identification and workplace risk assessments in accordance with international standards (e.g. AUS/ NZ4360 and SAMREC guideline)
  • Mine/region reviews: The Executive Committee of each operation and region conducts a risk review of the top risks and mitigating strategies on a quarterly basis
  • Presentation to Exco: The Mine Manager presents the top 10 risks and mitigation actions to members of the Exco during quarterly business reviews. The impacts of relevant mitigating actions are assessed in terms of their relevance and effectiveness
  • Compilation of Group Risk Register: The Group Risk Manager extracts all of the top risks from the regional and operational registers in line with the tolerance levels set by the Board, and compiles the Group Risk Register
  • Assessment and moderation: The risks are then assessed and moderated in a Group context by the relevant risk owners and Exco members
  • Exco Risk Meeting: A top risk register review is conducted and Group-wide mitigation strategies are set and monitored during the Exco Risk Meeting
  • Audit Committee review: A review of the top risks and mitigation strategies is conducted by the Audit Committee twice a year
  • Internal Audit review: An audit of mitigation strategies is carried out by Internal Audit

Click to expand/collapse the table Risk appetite and tolerance
 

Figure below indicates whether management are operating within the risk tolerance levels set for them by the Board. Tolerance levels are reviewed and reset every year as part of our annual risk management plan.

Risk performance (pre-unbundling)

  Risk area Risk appetite Tolerance level Targets C2009 C2010 C2011 C2012 x\√
OPTIMISING OUR OPERATIONS Safety Zero Harm Zero Harm FIFR2 – Zero 0.16 0.11 0.12 0.11 Tick
SIFR3 – 25% less 2.29 2.22 2.64 2.40 Tick
LTIFR4 – 25% less 3.91 4.39 4.69 5.161 Tick
DLIFR5 – 25% less 180 198 208 227 Tick
Health Zero Harm Zero Harm

Less than 5% 0,1 mg/m3

4.3% 3.2% 1.2% 4.7%
All Machinery < (110 dB(A)) 5.9% 3.0% 0.9% 0.8% Tick
Environment Zero Harm Zero – level 4
and 5 incidents
Zero Zero Zero Zero Zero
Gold delivery
5Moz/2015
Short-term NCE 20%
Long-term NCE 25%
 
95% compliance
 
 
NCE6 20%
 
3.58
20%
 
3.50
16%
 
3.49
25%
 
3.25
17%
 
Tick
Tick
 
GROWING GOLD FIELDS Capital
Projects
Project delivered on
time/budget as per
current schedule
 
7 – 10% overrun
 
 
South Deep
Chucapaca
Far Southeast
Arctic Platinum
 
 
Mergers and
Acquisitions
Proper assessment of risk returns
commensurate with
the risk
IRR 5% – Near-mine
IRR 10% Greenfields
As per IRR7 On track On track On track On track
Exploration Appropriate balance
between geological
potential and
political risk
Leaning towards greater geological potential in higher risk areas As per GBAR8 On track On track On track On track
SECURING OUR FUTURE Human
Resources
Pipeline of scarce and critical skills 60% – successor
cover ratio for top
250 employees
60% 54% 50% 70% 100%
Licence to
operate
Global leader in
sustainable gold mining
Full compliance with all legal and community
commitments
Full compliance 100% 100% 100% 100%
Ethics and
Corporate
Governance
Full compliance –
SOX and Substantial
compliance to King III
No material/
significant failures
Nil Nil Nil Nil Nil

1 Including restricted work cases for Australia; 4.66 if work cases are excluded
2 Fatal Injury Frequency Rate
3 Serious Injury Frequency Rate
4 Lost Time Injury Frequency Rate
5 Days Lost Injury Frequency Rate
6 Notional Cash Expenditure
7 Internal Rate of Return
8 Global Business Area Rating system
Click to expand/collapse the table  Group heat map
 

The top 10 risks and mitigating activities on the website are the same as those reflected in the Annual Report.

The heat map below sets out the top 10 Group risks, as identified through our Enterprise Risk Management (ERM) process. This represents the Group’s top operational and strategic risks, based on our operation- and region-level risk registers as at the end of 2012.

Top 10 Group heat map

Click to expand/collapse the table  ERM combined assurance
 

We formalised a Combined Assurance approach following the approval of the Audit Committee in November 2012.

The approach is based on the application of three levels of assurance on all our significant risks:

  • Level 1: Management self-assurance
  • Level 2: Internal assurance
  • Level 3: Independent assurance

Combined Assurance aims to:

  • Provide appropriate levels of assurance on all significant risks facing the Company
  • Demonstrate due diligence by management
  • Monitor the relationships between various assurance providers and their activities

By adopting this approach, we are doing everything reasonably practical to give the Board assurance that we are executing effective control measures to avoid and/or mitigate our risks – thereby ensuring the continuity and sustainability of all our operations.

The process is monitored by our risk, internal control and compliance functions. Recommendations are made to management for additional assurance where required or to identify areas where assurance is duplicated.

The Combined Assurance approach is formally reviewed every year as part of our annual risk management plan.

Mitigation strategies for top-10 risks (pre-unbundling)

Risks   Mitigation strategies    
 
Reintegration of the cultural transformation and internal safety engagement pillars into the Safe Production Management Strategy
Enhanced safety enforcement measures, including increased resourcing
Introduction of a Safety, Health and Environment Committee at South Deep, chaired by the CEO
Engineering-out of safety risks, including fall of ground hazards
Establishment of a seismic task team and upgrading of secondary support standards
   
 
Engineering-out of health risks, including tip filters, mist sprays, settling agents and enhanced dust measurement
Enhancement of personal protective equipment performance through our Respiratory Protection Programme
Detailed preparation to determine potential litigation and liability – including consolidation of historical data
   
 
Portfolio Review to optimise cash generation and investment payback
Acceleration of destress mining at South Deep to support production ramp-up targets
New, high impact and strongly incentivised ‘24/7/365’ operating model at South Deep and development of new training and maintenance facilities
Stabilisation of production at Damang, through the upgrading of the processing plant and re-evaluation of existing Mineral Resource model
Consolidation and optimisation of owner-mining at our Australian and West African operations
   
 
Firm defence of the gold mining sector’s existing two-year Collective Wage Agreement – whilst bringing forward changes to job grades and entry level wages (p139)
Increased engagement with unions at regional and national levels
Strong emphasis on responsible security provision and the avoidance of violence
Close engagement with mining peers, unions and government to establish a mutually acceptable labour negotiation framework for the next formal wage negotiation in 2013
Increased focus on enhanced, direct communication with our workforce
   
 
Submission of a new, enhanced ‘second round’ Social and Labour Plan (SLP) for South Deep, including accelerated distribution of funds from the South Deep Education and Community Trusts with greater involvement from relevant outside stakeholders
Implementation of a comprehensive programme to upgrade accommodation, with a strong focus on the construction of family units, promotion of home ownership and dismantling of legacy hostel issues
Ongoing programmes addressing local procurement, broad-based transformation, training and skill development and enhanced community development programmes
Establishment of grass-roots Sustainable Development Forums and comprehensive stakeholder mapping/analysis in South Africa
   
 
Geographical diversification to broaden operational base and reduce overall risk
Enhanced political monitoring and government engagement (direct and indirect)
Establishment of Group-wide crisis management programme, including Corporate Crisis Management Support Team, Regional Incident Response Teams and Emergency Response Teams
   
 
Development of a new Community Handbook and community engagement tools by the Sustainable Development department to ensure consistent, best practice approach across all operations and projects
Delivery of shared value through our Socio-Economic Development contributions
Minimisation of negative environmental impacts – with a focus on water quality and availability under our new Water Strategy
Review of the Ruggie Framework and other human rights standards to analyse human rights performance at Gold Fields and ensure best practice
   
 
More transparent communication with host governments on the state of the industry, cost structures and future outlook, with a view to fostering a better understanding of the sector’s challenges and competitive position
Enhanced measurement/communication of our local economic shared value contributions
Ongoing and constructive engagement with host government on a bilateral and multilateral basis (p52, 150)
   
 
Prioritisation of cash generation with respect to both current production and future growth – including Gold Fields Portfolio Review and delivery of full run rate at South Deep
Focus on leveraging the gold price for investors through the payment of strong dividends
Transparent measurement and communication of all-in costs using Notional Cash Expenditure
   
 
Continuous business process re-engineering to maximise efficiency
Portfolio Review to improve cash flow generation
Increased geographical and currency diversification
Strict application of stage gate process to ensure future growth projects contribute to cash generation
   

Click to expand/collapse the table  Operational risk management
 

Surveys are carried out at all our operations every year by IMIU – International Mining Industry Underwriters and ZURICH Risk Engineering Division. These survey reports carry substantial weight in the insurance markets. All our current insurers rely heavily on these surveys to assist with insurability decisions. The reports also provide executive management and the Board with independent assurance on operational safety and risk management.

Gold Fields is regarded as a good to excellent risk by the insurance market based largely on the physical evidence gathered during IMIU and ZURICH on-site surveys.

Gold Fields hasn’t claimed from the insurance market for over 10 years and we have one of the lowest insurance rates of all mining companies.

SURVEY RESULTS - INTERNATIONAL OPERATIONS

ZURICH CATEGORIES Tarkwa Damang Agnew St Ives Cerro Corona Average
  2010 2012 2013 2010 2012 2013 2010 2012 2013 2010 2012 2013 N/A 2012 2013 2010 2012 2013
Fire protection 102 91 84 110 97 70 71 67 48 60 33 35   75 64 74 73 60
Infrastructure Flexibility 95 60 57 98 64 44 100 84 82 100 72 70   94 88 98 75 68
Critical spares 96 74 63 96 54 57 53 66 28 53 33 30   45 31 75 54 42
Spare capacity 91 59 78 91 70 51 94 84 50 69 50 50   45 84 86 65 63
Average 96 71 71 99 71 55 79 75 52 71 47 46   65 67 86 66 58

All the international operations have shown a significant year on year improvement. The average rate reduced from 86 in 2010 down to 58 this year and is fast approaching the excellent category.

St Ives was rated as an excellent risk for the second consecutive year with a rating of 46.

This generally occurs when the fire protection systems are substantially compliant, when there is sufficient infrastructure flexibility in terms of pits, underground mines and critical machinery, when critical machines have the appropriate spares on site and when there is adequate redundancy in critical pump chambers and other relevant areas.

SURVEY RESULTS - SOUTH DEEP

IMIU 2005/6 2007 2008 2009 2010 2012 2013 
  %RR REN %RR REN %RR REN %RR REN %RR REN %RR REN %RR   REN
South Deep 76 108 77 62 78 42     81 21 81.6  51  82.1   32

IMIU Global average for %RR = 76,3% IMIU Global average for REN = 49

The IMIU survey principles are the same as ZURICH however they use a different rating system called Min Ram which was developed by them to show the relative attractiveness of the risk (REN). The %RR is a reflection of the quality of fire protection, infrastructure flexibility, critical spares and spare capacity, much the same as ZURICH.

The %RR shows South Deep as being in the top 10% of all mining companies surveyed by IMIU and is a reflection of the new infrastructure, best practice adoption and good housekeeping.  

The much improved REN is due to the 100% hoisting redundancy as a result of the commissioning of the Vent shaft and its ability to hoist similar tonnages as the Twin shaft.