Gold Fields Limited · JSE:GFI
Gold Fields — AusIMM Global Mining Leaders Conference 2018
17 slides from Gold Fields's conference presentation, September 2018
Slide 1: The changing face of a gold investor
The changing face of a gold investor Presenter: Nick Holland CEO – Gold Fields AusIMM Global Mining Leaders Conference 2018 Date: September 2018
Slide 2: Forward looking statement
Forward looking statement Certain statements in this document constitute “forward looking statements” within the meaning of Section 27A of the US Securities Act of 1933 and Section 21E of the US Securities Exchange Act of 1934. In particular, the forward looking statements in this document include a
Slide 3: Setting the scene
Setting the scene ● Mine production has peaked ● Costs have decreased significantly but appear to have bottomed ● Capital expenditure has been a focus area in the cost cutting drive, but has the industry cut too deep? ● Exploration has focused on brownfields projects and near-mine development ̵ Gree
Slide 4: Production peaking, costs bottoming
Production peaking, costs bottoming ● Production: ̵ Growth in global mine supply has slowed significantly – mine supply increased only 0.2% in 2017 compared to 5.5% in 2013 ̵ 30% of global reserves are currently associated with assets where a construction decision is yet to be made ̵ The World Gold
Slide 5: Has the industry cut too deep?
Has the industry cut too deep? Industry Capex and Opex per ounce produced ● Capital expenditure US$/oz 400 800 360 US$/oz ̵ Capital expenditure has been one of the ‘low 350 313 700 hanging fruits’ targeted by gold miners in their cost 287 300 600 cutting drives 250 240 500 ̵ Of concern is the notabl
Slide 6: Alternatives to direct equity investing
Alternatives to direct equity investing Physically backed ETFs ● Alternative gold investment options have grown significantly 90 Moz US$/oz 1 800 over the past decade and a half 1 600 80 ● Physically backed gold ETFs have grown significantly since 1 400 70 inception in 2003 1 200 ̵ There are current
Slide 7: Changing gold investor landscape
Changing gold investor landscape ● Five to seven years ago, there were a lot more generalist investors investing in gold stocks ̵ Market cap of NA gold companies has decreased to US$130bn from US$250bn seven years ago ̵ Far fewer generalist investors showing interest in the sector today (2016 was th
Slide 8: Changing shareholder landscape: Move to passive
Changing shareholder landscape: Move to passive ● Passive investing has grown in significance and now accounts for a far larger share of publicly traded assets ● Global assets under management at traditional index funds have grown to US$8.1tn from US$1.8tn 10 years ago ̵ This represents 25% of all f
Slide 9: Increased focus on responsible investing
Increased focus on responsible investing ● Associated with the rise in index investing is a growing consensus that the integration of ESG factors into an investment process and active ownership practices (voting and engagement) reduces risks and leads to superior long-term performance ● Evidence of
Slide 10: Evolving share registers of gold producers
Evolving share registers of gold producers Gold producer ownership: Active vs. passive ● Passive shareholding in the top 11 gold 100% 40% companies increased to 26% in Q1 2018 90% 35% 80% from 12% in Q1 2008 70% 30% 60% 25% ● Over the past 10 years, the ratio of 50% 20% passive funds to active funds
Slide 11: Implications of an increase in passive ownership
Implications of an increase in passive ownership What does the increase in index shareholders mean for a gold company? 1. Unlike active managers, index managers cannot sell poorly run companies if they fall in the index and therefore tend to hold positions for long periods 2. They have a fiduciary d
Slide 12: Has the pool of capital been impacted?
Has the pool of capital been impacted? ● Equity funding does not appear to be as readily accessible as it used to be ̵ Despite gold equities appreciating markedly in 2016, the majority of funding used by the producers in 2017 and 2018 has been debt ● Is this an indication that the pool of capital av
Slide 13: How have producers funded recent capital expenditure?
How have producers funded recent capital expenditure? US$m Total capital raised (debt and equity) 12 000 10 000 8 000 Period of balance sheet deleveraging 6 000 4 000 2 000 0 2012 2013 2014 2015 2016 2017 2018 YTD Rights issue Bought deal Accelerated bookbuild Placing Convertible debt Non-investment
Slide 14: Is capital available?
Is capital available? ● Counterintuitively, Gold producers have tended to use equity financing after recent periods of share price depreciation, and debt financing after recent periods of share price appreciation ● Is this a sign of the changing market conditions and shareholder profiles? ● What doe
Slide 15: Hedging to manage near term risk
Hedging to manage near term risk ● With gold price volatility and the tighter funding landscape, should judicious hedging be back on the table as a means of managing risk and enhancing risk adjusted returns? ● Given the decreasing availability of equity funding together with the reluctance to take o
Slide 16: Concluding remarks
Concluding remarks Capital is not as easily available to gold producers as it used to be ̵ The sector is competing with other sectors and gold-linked alternatives for investment and capital Gold producers can no longer rely on equity as a guaranteed means of financing projects or addressing balance
Slide 17: Thank you
Thank you Questions
Gold Fields — AusIMM Global Mining Leaders Conference 2018 on 6ix