Slide 1: Creating a New International Major Gold Producer
CREATING A NEW INTERNATIONAL MAJOR GOLD PRODUCER 18 October 2004
Slide 2: The Proposed Merger Between Harmony and Gold Fields
THE PROPOSED MERGER BETWEEN HARMONY AND GOLD FIELDS OUR OFFER share for share offer for 100% of Gold Fields 1,275 Harmony shares for every Gold Fields share the offer values Gold Fields at R52,9 billion (US$ 8,1 billion) represents a premium of 29% to Gold Fields’ 30 business day volume weighted ave
Slide 3: The Transaction
THE TRANSACTION WE OFFER early settlement – up to a maximum 34,9% of Gold Fields shares to be settled within approximately 30 days allows shareholders to realise in a short time period the premium inherent in the offer WE ARE SEEKING a recommendation from the Gold Fields Board
Slide 4: The Rationale for the Offer
THE RATIONALE FOR THE OFFER continuation of our strategy of growth creation of the world’s largest gold producer value proposition of combined entity makes for a compelling investment case Harmony has a track record in unlocking value of turnaround assets and this can be achieved with the Gold Field
Slide 5: Our Strategy of Growth Continues
OUR STRATEGY OF GROWTH CONTINUES acquiring Gold Fields is consistent with our strategy of growth Harmony has delivered growth through 26 acquisitions, 17 of which have either been operating mines or listed companies OUR SUCCESS is driven by our ability to extract cost savings where other operators h
Slide 6: The Attributes of This New Major Gold Producer
THE ATTRIBUTES OF THIS NEW MAJOR GOLD PRODUCER
Slide 7: The Largest By Production and Market Capitalisation
THE LARGEST BY (Ounces ‘000) Attributable production 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 Goldcorp Newcrest DRD Buenaventura Kinross Placer Dome Barrick AngloGold Ashanti Newmont New Harmony Second largest by proforma market capitalisation US$(millions) 2,000 4,000 6,000 8,000 10,000 12,0
Slide 8: Other Measures: Resources and Reserves
OTHER MEASURES … Attributable resources (Ounces millions) Attributable reserves (Ounces millions) DRD Buenaventura Kinross Newcrest Western Areas Placer Dome AngloGold Ashanti Newmont Barrick New Harmony Kinross Buenaventura Western Areas DRD Newcrest Newmont Placer Dome Barrick AngloGold Ashanti Ne
Slide 9: With a Compelling Equity Story
… WITH A COMPELLING EQUITY STORY FTSE/JSE Africa Top 40 Index Harmony: Gold Fields: #17 # 10 # 6 NYSE Composite Index Harmony: Gold Fields: #616 # 506 # 348 HSBC Global Gold Index Harmony: Gold Fields: #6 # 5 #2 # Company FF Market Weighting Cap (ZARm) (%) 1 Anglo American 220,837 15.40 2 BHP Billit
Slide 10: We Will Have a Robust and Balanced Asset Portfolio
WE WILL HAVE A ROBUST AND BALANCED ASSET PORTFOLIO “Harmony Way” to generate growth within perceived mature Gold Fields portfolio TIME IN QUARTERS Purchase Price Masimong Randfontein Evander Free State VALUE CREATION through margin increases Win-win deal making Deal making phase High impact initial
Slide 11: Harmony Offers an Enhanced Platform for Growth
HARMONY OFFERS AN ENHANCED PLATFORM FOR GROWTH
Slide 12: Significant Value to Be Unlocked
SIGNIFICANT VALUE TO BE UNLOCKED significant reductions in Gold Fields’ cost base to be realised payback of premium requires unit cost reductions of 15% per annum in Gold Fields’ SA cost structure this is over and above Gold Fields’ current efficiency initiatives equates to approximately R1 billion
Slide 13: Delivered by a Team with a Proven Track Record
DELIVERED BY A TEAM WITH A PROVEN TRACK RECORD
Slide 14: Re-capitalise Mature Assets for Growth
re-capitalise mature assets for growth previously abandoned reserves turned into growth OUR PROVEN TRACK RECORD Mineable reserve ('000/oz) 20,000 16,000 12,000 8,000 4,000 Masimong Elandsrand Tshepong Phakisa Doornkop South Reef Production (oz/annum) 1,600,000 1,200,000 800,000 400,000 0 Masimong El
Slide 15: The Merged Entity Offers ....
THE MERGED ENTITY OFFERS .... the world’s largest gold producer with firepower to grow both the domestic and international businesses apply “Harmony Way” to: cut general company overhead costs reduce fixed overhead cost burden on operations reduce cut-offs creating larger economic ore reserve create
Slide 16: The Introduction of the Harmony Way Delivers Value
The introduction of the “Harmony Way” delivers value COST REDUCTION AT EVANDER AND ST HELENA (R/tonne) % 500 450 400 350 300 250 200 Pre-acquisition Post-acquisition Evander (R/tonne) 450 400 300 250 % Pre-acquisition Post-acquisition St Helena
Slide 17: Similar Success at Larger Operations
Similar success at larger operations COST REDUCTION AT RANDFONTEIN AND FREE GOLD Randfontein Freegold (R/tonne) (R/tonne) Pre-acquisition Post-acquisition 16% 27% Pre-acquisition Post-acquisition
Slide 18: More Benefits Available
MORE BENEFITS AVAILABLE… implement operational synergies at SA assets Gold Fields’ international assets offer value: examine the real potential of Cerro Corona and APP review existing operating assets to create a long-term growth portfolio continue to develop potential at Hidden Valley and Wafi/Golp
Slide 19: The IAMGOLD Transaction - Value Destruction for Gold Fields Shareholders
THE IAMGOLD TRANSACTION – VALUE DESTRUCTION FOR GOLD FIELDS SHAREHOLDERS
Slide 20: Gold Fields Have Undervalued Their International Assets
GOLD FIELDS HAVE… undervalued their international assets proposed to sell them on the cheap: selling assets at a substantial discount to Gold Fields’ own rating most commentators assume that the international assets should contribute a higher rating to Gold Fields’ average Relevant benchmarks, Gold
Slide 21: Companies' Relative Share Price Performance
companies’ relative share price performance shows the picture IAMGOLD GOT IT ALL … IAMGOLD share price outperformance Rebased to 10 August 2004, US$-denominated 10-Aug-04 13-Aug-04 18-Aug-04 23-Aug-04 26-Aug-04 31-Aug-04 3-Sep-04 8-Sep-04 13-Sep-04 16-Sep-04 Harmony USD IAMGOLD USD Gold Fields USD H
Slide 22: IAMGOLD Is the Only Winner
IAMGOLD IS THE ONLY WINNER IAMGOLD contribution 76% 76% 74% 72% 73% 24% 24% 26% 28% 27% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Production Reserves Resources Operating cash flow Net asset value Gold Fields 30% even prior to the C$0,50 per IAMGOLD share dividend Gold Fields contribution
Slide 23: More Upside to IAMGOLD Shareholders
MORE UPSIDE TO IAMGOLD SHAREHOLDERS AND US$400m in cash is being transferred AND a US$60m dividend is to be paid to IAMGOLD shareholders Gold Fields contribution IAMGOLD contribution 82% 79% 87% 79% 75% 75% 18% 21% 13% 21% 25% 25% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Resources- M&I Reserves N
Slide 24: On a Re-rating of Gold Fields International
on a re-rating of Gold Fields International ? for Gold Fields shareholders to break even the IAMGOLD share price has to rise to C$14,54 at C$14.54 IAMGOLD shareholders will have made US$900m, or a premium of 108% IAMGOLD TRANSACTION IS A PUNT … 6.99 9.55 14.04 0.50 0.50 0.50 Pre-announcement 14 Octo
Slide 25: Gold Fields International's Re-rating Dilemma
GOLD FIELDS INTERNATIONAL’S RE-RATING DILEMMA no operating fundamentals to support a re-rating: IAMGOLD’s assets add little to the critical mass of Gold Fields International no apparent upside in the IAMGOLD portfolio no synergistic benefits increased overheads through duplicated corporate structure
Slide 26: Gold Fields Is Giving Away Cash and Control
nearly all of its cash the bulk of its current operating cash flow management and board control of the international assets GOLD FIELDS IS GIVING AWAY … Gold Fields Operating Cash Flow South Africa International 25% 75% Enlarged IAMGOLD—Board Composition Gold Fields Directors Independent Directors
Slide 27: Gold Fields Is Giving Away Its Growth Potential
GOLD FIELDS IS GIVING AWAY ITS GROWTH POTENTIAL… CAGR 54% Gold Fields’ international asset production (‘000 oz) 1,000 1,500 2,000 2,500 3,000 3,500 Indicative APP Cerro Corona CAGR (6%) Gold Fields’ South African production (‘000oz) 1,000 1,500 2,000 2,500 3,000 3,500 Indicative
Slide 28: Gold Fields Has Condemned SA Assets to a Lingering Death
Gold Fields effectively receives: control of orphaned, mature, capex-intensive SA assets 70% interest in their own international assets and development portfolio potential dilution as IAMGOLD uses paper to fund acquisitions loss of management control without compensation growth confined to the SADC
Slide 29: We Question the Ability of IAMGOLD to Pay Dividends
we question the ability of IAMGOLD to pay dividends to Gold Fields Gold Fields has a history of healthy dividend payouts before Gold Fields can pay a dividend, it must satisfy its own cash requirements capital expenditure requirements of its current South African assets growth prospects financing th
Slide 30: The Harmony Offer - A Full and Fair Upfront Premium
THE HARMONY OFFER – A FULL AND FAIR UPFRONT PREMIUM
Slide 31: A Deal Making Premium
A DEAL MAKING PREMIUM an upfront premium of 29% 29% 22% 20% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% Harmony offer South Africa (2001—2003) Nedbank—Standard Bank Premium 29% 25% 24% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% Harmony offer Rest of the World all share unsolicited offers over U
Slide 32: A Good Offer in Any Measure
A GOOD OFFER IN ANY MEASURE the implied Gold Fields P/NPV of 2.4x compares favourably to: The trading multiples of comparable companies and the P/NPV multiples paid on comparable transactions since 1998 2.4x 2.4x 1.9x 1.9x 0.0 0.5 1.0 1.5 2.0 2.5 3.0 Harmony’s offer international gold majors South A
Slide 33: No Value Leakage to Third Parties
shareholders will retain: cash and cash flow to: fund capex investment pay dividends financial flexibility to allow for optimum cash allocation unrestricted access to growth: locally and internationally prospective exploration potential full management control of all of its assets South African asse
Slide 34: Harmony - A Better Deal for Gold Fields Shareholders
HARMONY—A BETTER DEAL FOR GOLD FIELDS SHAREHOLDERS Complex and inefficient corporate structure Continued ability to pay dividends Future value from financial re-rating ? Clear strategy for future value creation Loss of financial flexibility and stunted growth prospects Retention of cash and cashflow
Slide 35: A Compelling Investment Case
A COMPELLING INVESTMENT CASE THE MERGED ENTITY IS A COMPELLING INVESTMENT PROPOSITION WHEN COMPARED TO THE IAMGOLD TRANSACTION CURRENTLY RECOMMENDED BY THE GOLD FIELDS BOARD
Slide 36: Notice to US Holders
NOTICE TO US HOLDERS In connection with the proposed acquisition of Gold Fields, Harmony will file with the United States Securities and Exchange Commission (SEC), a registration statement on Form F-4, which will include a preliminary prospectus and related exchange offer materials, to register the
Slide 37: Disclaimers
DISCLAIMERS Statements in this announcement, including without limitation, those concerning the economic outlook for the gold mining industry, expectations regarding gold prices and production, financial projections, estimates and their underlying assumptions, Harmony and the enlarged Harmony group