Review of operations

Quarter ended June 2016 compared with quarter ended 31 March 2016

South Africa region

South Deep Project

      June
2016
  March
2016
 
Gold produced 000’oz   76.5   63.6  
  kg   2,378   1,978  
Yield – underground reef g/t   5.66   5.91  
AISC R/kg   615,697   600,563  
  US$/oz   1,268   1,183  
AIC R/k   627,233   616,706  
  US$/oz   1,293   1,215  

Gold production increased by 20 per cent from 1,978 kilograms (63,600 ounces) in the March quarter to 2,378 kilograms (76,500 ounces) in the June quarter due to higher volumes.

Underground tonnes milled increased by 26 per cent from 332,000 tonnes in the March quarter to 418,000 tonnes in the June quarter. Total tonnes milled increased by 11 per cent from 543,000 tonnes to 601,000 tonnes. Total tonnes milled in the June quarter included 24,000 tonnes of underground waste mined and 158,800 tonnes of surface tailings material compared with 23,000 tonnes of underground waste mined and 187,500 tonnes of surface tailings material in the March quarter. Underground reef yield decreased by 4 per cent from 5.91 grams per tonne to 5.66 grams per tonne due to higher development tonnes mined in lower grade areas.

Development increased by 38 per cent from 1,292 metres in the March quarter to 1,786 metres in the June quarter. New mine capital development (phase one, sub 95 level) increased by 6 per cent from 252 metres in the March quarter to 266 metres in the June quarter. Development in the current mine areas in 95 level and above increased by 46 per cent from 1,040 metres to 1,520 metres. Destress mining decreased by 5 per cent from 10,158 square metres in the March quarter to 9,687 square metres in the June quarter. High profile destress mining improved by 35 per cent from 4,517 square metres to 6,082 square metres. Low profile destress mining decreased by 36 per cent from 5,641 square metres to 3,605 square metres due to the strategic change in the mining method from low to high profile destress which commenced in the September 2015 quarter. The high profile and low profile methods contributed 63 per cent and 37 per cent, respectively, to total destress. All low profile destress was completed subsequent to quarter-end.

The current mine (95 level and above) contributed 66 per cent of the ore tonnes in the June quarter, while the new mine (below 95 level) contributed 34 per cent. The long-hole stoping method accounted for 39 per cent of total ore tonnes mined in the June quarter compared with 46 per cent in the March quarter. The decrease is due to the temporary loss of two drill rigs after a fall of ground incident.

Operating costs increased by 12 per cent from R924 million (US$59 million) to R1,034 million (US$69 million) mainly due to higher bonuses paid and consumable expenditure directly related to the higher production achieved. The electricity expenditure was higher than the previous quarter as a result of the start of the winter month tariffs in June 2016 and higher consumption related to the higher production achieved.

Capital expenditure increased by 60 per cent from R262 million (US$17 million) to R420 million (US$28 million) as a result of higher spending on fleet and the purchase of mining accommodation for employees. As part of the fleet renewal strategy, 17 category 1 units were commissioned during H1 2016, with an additional 11 units to be commissioned during the remainder of 2016. In the past 18 months, we have commissioned 51 new category 1 units out of a total of 114 units.

Sustaining capital expenditure increased by 71 per cent from R230 million (US$15 million) in the March quarter to R393 million (US$26 million) in the June quarter due to additional fleet and the purchase of mining accommodation for employees. Non-sustaining capital expenditure decreased by 16 per cent from R32 million (US$2 million) in the March quarter to R27 million (US$2 million) in the June quarter.

All-in sustaining costs increased by 3 per cent from R600,563 per kilogram (US$1,183 per ounce) in the March quarter to R615,697 per kilogram (US$1,268 per ounce) in the June quarter mainly due to increased operating costs and higher sustaining capital expenditure, partially offset by increased gold sold.

Total all-in cost increased by 2 per cent from R616,706 per kilogram (US$1,215 per ounce) in the March quarter to R627,233 per kilogram (US$1,293 per ounce) in the June quarter due to the same reasons as for all-in-sustaining costs.

West Africa region

GHANA

Tarkwa

      June
2016
  March
2016
 
Gold produced 000’oz   134.1   139.5  
Yield g/t   1.26   1.24  
AISC and AIC US$/oz   991   994  

Gold production decreased by 4 per cent from 139,500 ounces in the March quarter to 134,100 ounces in the June quarter due to lower throughput as a result of unplanned downtime.

Total tonnes mined, including capital stripping, increased by 3 per cent from 25.3 million tonnes in the March quarter to 26.0 million tonnes in the June quarter mainly due to improved equipment utilisation. Ore tonnes mined decreased by 6 per cent from 3.4 million tonnes to 3.2 million tonnes. Operational waste tonnes mined was similar at 8.6 million tonnes while capital waste tonnes mined increased by 7 per cent from 13.3 million tonnes to 14.2 million tonnes. Grade mined decreased from 1.41 grams per tonne to 1.36 grams per tonne. The strip ratio increased from 6.6 to 7.0.

The CIL plant throughput decreased by 6 per cent from 3.50 million tonnes in the March quarter to 3.30 million tonnes in the June quarter due to unplanned downtime mainly due to power outages. Realised yield increased by 2 per cent from 1.24 grams per tonne to 1.26 grams per tonne due to higher feed grades processed as a result of blending.

Net operating costs, including gold-in-process movements, was similar at US$78 million.

Capital expenditure decreased by 10 per cent from US$48 million to US$43 million mainly due to expenditure on mining fleet in the March quarter.

All-in sustaining costs and total all-in cost decreased marginally from US$994 per ounce in the March quarter to US$991 per ounce in the June quarter due to lower capital expenditure, partially offset by lower gold sold.

Damang

      June
2016
  March
2016
 
Gold produced 000’oz   30.2   41.7  
Yield g/t   0.97   1.25  
AISC and AIC US$/oz   1,427   1,139  

Gold production decreased by 28 per cent from 41,700 ounces in the March quarter to 30,200 ounces in the June quarter mainly due to lower tonnes processed and lower grades mined and processed.

Total tonnes mined, including capital stripping, increased by 15 per cent from 4.6 million tonnes in the March quarter to 5.3 million tonnes in the June quarter due to capital waste strip at Amoanda pit.

Ore tonnes mined decreased by 25 per cent from 0.8 million tonnes to 0.6 million tonnes. Total waste tonnes mined increased by 24 per cent from 3.8 million tonnes in the March quarter to 4.7 million tonnes in the June quarter. Head grade mined decreased by 6 per cent from 1.46 grams per tonne to 1.37 grams per tonne. The strip ratio increased from 4.5 to 8.1 due to capital waste strip at Amoanda pit.

Yield decreased by 22 per cent from 1.25 grams per tonne to 0.97 grams per tonne due to more low grade stockpiles processed. For the March quarter, 0.67 million tonnes of fresh ore and oxides were milled at an average grade of 1.56 grams per tonne and 0.37 million tonnes of stockpiles were milled at an average grade of 0.99 grams per tonne. This compared with 0.48 million tonnes of fresh ore and oxides milled at an average grade of 1.28 grams per tonne and 0.49 million tonnes of stockpiles milled at an average grade of 0.79 grams per tonne for the June quarter.

Tonnes processed decreased by 7 per cent from 1.04 million tonnes in the March quarter to 0.97 million tonnes in the June quarter mainly due to a tails line blockage which impacted production for 10 days caused by coarse grind and the fast settling nature of the ore.

Net operating costs, including gold-in-process movements, decreased by 32 per cent from US$44 million to US$30 million, in line with lower ore tonnes mined.

Capital expenditure increased by 900 per cent from US$1 million to US$10 million with the majority spent on capital stripping at Amoanda pit.

All-in sustaining costs and total all-in cost increased by 25 per cent from US$1,139 per ounce in the March quarter to US$1,427 per ounce in the June quarter mainly due to higher capital expenditure and lower gold sold, partially offset by lower net operating costs.

South America region

PERU

Cerro Corona

      June
2016
  March
2016
 
Gold produced 000’oz   35.7   34.8  
Copper produced tonnes   7,642   7,051  
Total equivalent gold produced 000’eq oz   64.6   62.9  
Total equivalent gold sold 000’eq oz   58.6   61.6  
Yield    – gold g/t   0.65   0.64  
            – copper per cent   0.45   0.42  
            – combined eq g/t   1.13   1.12  
AISC and AIC US$/oz   599   386  
AISC and AIC US$/eq oz   750   709  
Gold price* US$/oz   1,252   1,167  
Copper price* US$/t   4,742   4,656  
* Average daily spot price for the period used to calculate total equivalent gold ounces produced.

Gold production increased by 3 per cent from 34,800 ounces in the March quarter to 35,700 ounces in the June quarter. Copper production increased by 8 per cent from 7,051 tonnes to 7,642 tonnes. Equivalent gold production increased by 3 per cent from 62,900 ounces to 64,600 ounces. The increase in gold and copper production was due to higher head grades treated, in line with the mining sequence and the planned production schedule for the June quarter. Gold head grade increased from 0.94 grams per tonne to 0.98 grams per tonne and copper head grade increased from 0.49 per cent to 0.51 per cent. Gold recoveries decreased from 68.5 per cent to 66.3 per cent and copper recoveries increased from 85.4 per cent to 88.0 per cent. As a result, gold yield increased from 0.64 grams per tonne to 0.65 grams per tonne and copper yield increased from 0.42 per cent to 0.45 per cent.

In the June quarter, concentrate with a payable content of 32,900 ounces of gold was sold at an average price of US$1,252 per ounce and 6,895 tonnes of copper was sold at an average price of US$4,028 per tonne, net of treatment and refining charges. This compared with 33,939 ounces of gold sold at an average price of US$1,133 per ounce and 6,982 tonnes of copper sold at an average price of US$3,847 per tonne, net of treatment and refining charges, in the March quarter.

Total tonnes mined decreased by 7 per cent from 3.91 million tonnes in the March quarter to 3.65 million tonnes in the June quarter. The Gold Fields H1 2016 Results 27 lower tonnes mined in the June quarter were as a result of the lower waste mined in line with the mine sequence. Ore mined increased by 2 per cent from 1.76 million tonnes to 1.80 million tonnes. Operational waste tonnes mined decreased by 14 per cent from 2.15 million tonnes to 1.85 million tonnes. The strip ratio decreased from 1.23 to 1.03 due to lower waste mined in the June quarter.

Ore processed increased by 2 per cent from 1.75 million tonnes in the March quarter to 1.78 million tonnes in the June quarter.

Net operating costs, including gold-in-process movements, decreased by 9 per cent from US$33 million to US$30 million mainly due to US$7 million gold-in-process credit to cost in the June quarter compared with a US$1 million charge to cost in the March quarter.

Capital expenditure increased by 60 per cent from US$5 million to US$8 million due to more construction activities at the tailings dam as a result of the dry season.

All-in sustaining costs and total all-in cost increased by 55 per cent from US$386 per ounce in the March quarter to US$599 per ounce in the June quarter mainly due to lower copper by-product credits and higher capital expenditure, partially offset by lower net operating costs. All-in sustaining costs and total all-in costs per equivalent ounce increased by 6 per cent from US$709 per equivalent ounce to US$750 per equivalent ounce mainly due to the same reasons as above.

Australia region

St Ives

      June
2016
  March
2016
 
Gold produced 000’oz   88.8   87.0  
Yield    – underground g/t   5.79   4.27  
            – surface g/t   2.42   2.49  
            – combined g/t   2.91   2.70  
AISC and AIC A$/oz   1,311   1,182  
  US$/oz   976   852  
* Heap leach produced nil ounces, rinsed from inventory (400 ounces was rinsed in the March quarter).

Gold production increased by 2 per cent from 87,000 ounces in the March quarter to 88,800 ounces in the June quarter.

Total tonnes mined decreased by 1 per cent from 11.2 million tonnes in the March quarter to 11.1 million tonnes in the June quarter.

At the underground operations, ore mined decreased by 15 per cent from 178,000 tonnes in the March quarter to 151,000 tonnes in the June quarter due to the Athena mine closure in February. The reduced tonnes were partially offset by a 4 per cent increase in head grade from 5.29 grams per tonne to 5.52 grams per tonne.

At the open pit operations, total ore tonnes mined increased by 23 per cent from 844,000 tonnes in the March quarter to 1,035,000 tonnes in the June quarter. Grade mined decreased by 16 per cent from 2.72 grams per tonne to 2.29 grams per tonne. The increased tonnes and lower grade were primarily due to increased ore from A5 open pit which is now complete. Mining at A5 was undertaken to supplement production while the higher grade Neptune pit was being stripped.

Operational waste tonnes mined increased by 94 per cent from 1.6 million tonnes in the March quarter to 3.1 million tonnes in the June quarter. Capital waste tonnes mined decreased by 19 per cent from 8.6 million tonnes to 7.0 million tonnes. The strip ratio decreased from 12.1 to 9.6. Total material movements at the open pits remained consistent at 11.1 million tonnes with a move from capital stripping to ore and waste movement as the A5 pit moved to completion and the Neptune pit advanced into the early stages of ore production.

Throughput at the Lefroy mill decreased by 5 per cent from 997,000 tonnes in the March quarter to 950,000 ounces in the June quarter with the mill closed for the last week of the June quarter for the installation of a new electrical control block for the Sag mill. Yield increased from 2.70 grams per tonne to 2.91 grams per tonne due to a drawdown of gold-in-circuit in the June quarter as opposed to a build-up of gold-in-circuit in the March quarter. Gold production from the Lefroy mill increased from 86,600 ounces to 88,800 ounces.

Residual leaching and irrigation of the heap leach pad contributed 400 ounces to production in the March quarter. Residual leaching has now ceased being economic and the heap leach is being closed.

Net operating costs, including gold-in-process movements, increased by 20 per cent from A$49 million (US$35 million) to A$59 million (US$44 million) mainly due to the transition from primarily pre-strip mining to operating waste and ore mining in the open pits.

Capital expenditure increased by 9 per cent from A$45 million (US$33 million) to A$49 million (US$37 million) mainly due to acceleration of the exploration programme with expenditure increasing from A$9 million (US$6 million) in the March quarter to A$13 million (US$10 million) in the June quarter.

All-in sustaining costs and total all-in cost increased by 11 per cent from A$1,182 per ounce (US$852 per ounce) in the March quarter to A$1,311 per ounce (US$976 per ounce) in the June quarter due to higher net operating costs and capital expenditure, partially offset by increased gold sold.

Agnew/Lawlers

      June
2016
  March
2016
 
Gold produced 000’oz   57.2   52.1  
Yield g/t   6.30   5.70  
AISC and AIC A$/oz   1,383   1,536  
  US$/oz   1,034   1,106  

Gold production increased by 10 per cent from 52,100 ounces in the March quarter to 57,200 ounces in the June quarter.

Ore mined from underground increased by 11 per cent from 252,000 tonnes in the March quarter to 279,000 tonnes in the June quarter due to higher tonnes mined from New Holland. Head grade mined decreased marginally from 6.45 grams per tonne to 6.42 grams per tonne.

Tonnes processed decreased by 1 per cent from 284,000 tonnes in the March quarter to 282,000 tonnes in the June quarter. The March quarter processing included net 32,000 tonnes of ore carried over from the December quarter but processed in the March quarter. The combined yield increased by 11 per cent from 5.70 grams per tonne to 6.30 grams per tonne due to lower grade ore mined in the December quarter, but processed in the March quarter (as described in the preceding sentence) and a drawdown of 2,600 ounces produced in the March quarter during the June quarter.

Net operating costs, including gold-in-process movements, decreased by 2 per cent from A$48 million (US$35 million) to A$47 million (US$35 million) mainly due the cost improvement initiatives implemented across the site.

Capital expenditure was similar at A$27 million (US$20 million). The capital expenditure was primarily on capital development associated with opening up of the Fitzroy Bengal Hastings (FBH), Waroonga North exploration drive and Cinderella ore body and on exploration across the site.

All-in sustaining costs and total all-in cost decreased by 10 per cent from A$1,536 per ounce (US$1,106 per ounce) in the March quarter to A$1,383 per ounce (US$1,034 per ounce) in the June quarter due to increased gold sold and lower net operating costs.

Darlot

      June
2016
  March
2016
 
Gold produced 000’oz   18.5   18.7  
Yield g/t   4.42   5.84  
AISC and AIC A$/oz   1,574   1,534  
  US$/oz   1,167   1,105  

Gold production decreased marginally from 18,700 ounces in the March quarter to 18,500 ounces in the June quarter due to lower grade mined.

Ore mined from underground increased by 4 per cent from 100,300 tonnes to 104,500 tonnes. Head grade mined decreased from 5.94 grams per tonne in the March quarter to 5.78 grams per tonne in the June quarter. A further 20,000 tonnes at 0.87 grams per tonne were sourced from a surface oxide trial during the June quarter contributing approximately 500 ounces to production. In the March quarter 5,600 tonnes of oxide material at 3.05 grams per tonne were processed adding approximately 500 ounces to production.

Tonnes processed increased by 30 per cent from 100,000 tonnes in the March quarter to 130,000 tonnes in the June quarter. The yield decreased by 24 per cent from 5.84 grams per tonne to 4.42 grams per tonne due to lower grade ore mined and a significantly larger but lower grade trial treatment of surface oxide ore in the June quarter.

Net operating costs, including gold-in-process movements, decreased by 5 per cent from A$21 million (US$16 million) to A$20 million (US$15 million) mainly due to a decrease in mining costs.

Capital expenditure increased by 33 per cent from A$6 million (US$4 million) to A$8 million (US$6 million). Capital was mainly incurred on exploration and the commencement of development to the Oval ore body. The Oval ore body is a recent discovery which is expected to provide the primary ore feed in 2017 and into 2018. The Oval ore body extends the life of mine allowing Darlot to maintain its strategy of at least breaking even while it continues an aggressive exploration program to secure its future as a Gold Fields franchise asset.

All-in sustaining costs and total all-in cost increased by 3 per cent from A$1,534 per ounce (US$1,105 per ounce) in the March quarter to A$1,574 per ounce (US$1,167 per ounce) in the June quarter due to higher capital expenditure, partially offset by lower net operating costs.

Granny Smith

      June
2016
  March
2016
 
Gold produced 000’oz   76.2   67.5  
Yield g/t   6.51   5.56  
AISC and AIC A$/oz   1,081   1,054  
  US$/oz   805   759  

Gold production increased by 13 per cent from 67,500 ounces in the March quarter to 76,200 ounces in the June quarter.

Ore mined from underground increased by 2 per cent from 378,000 tonnes to 385,000 tonnes. Head grade mined increased from 5.99 grams per tonne in the March quarter to 7.04 grams per tonne in the June quarter. The increased grade was due to stoping activity returning to better grade areas of the mine with operating development also advancing through higher grade zones than in the March quarter.

Tonnes processed decreased by 4 per cent from 378,000 tonnes in the March quarter to 363,000 tonnes in the June quarter. A net 21,000 tonnes of ore mined in the June quarter is planned to be processed in the September quarter due to the campaign milling schedule. The yield increased by 17 per cent from 5.56 grams per tonne to 6.51 grams per tonne due to higher grades mined.

Net operating costs, including gold-in-process movements, were similar at A$46 million (US$34 million).

Capital expenditure increased by 55 per cent from A$20 million (US$15 million) in the March quarter to A$31 million (US$23 million) in the June quarter. The higher expenditure related to mine capital development, exploration and the sinking of the VR7 fresh air intake raise which will provide ventilation down to 100 level, the newest mining front. These projects accelerated during the June quarter after a slow start to the year.

All-in sustaining costs and total all-in cost increased by 3 per cent from A$1,054 per ounce (US$759 per ounce) in the March quarter to A$1,081 per ounce (US$805 per ounce) in the June quarter mainly due to higher capital expenditure, partially offset by increased gold sold.