Gold Fields Limited · JSE:GFI
Gold Fields — Denver Gold Forum 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 Denver Gold Forum 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 110 Global mine supply US$/oz Industry AISC and AIC trends Moz 1 600 1 498 105 1 376 1 400 100 1 200 1 121 1 096 1 070 986 1 016 956 951 1 000 892 868 889 95 800 90 600 85 400 80 200 0 75 2012 2013 2014 2015 2016 2017 2010 2011 2012 2013 2014 2015 2016 2017 AISC A
Slide 5: Alternatives to direct equity investing
Alternatives to direct equity investing Physically backed ETFs ● Alternative gold investment options have grown significantly 90 Moz US$/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 6: 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 7: 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$1.8tn 10 years ago ̵ This represents 25% of all f
Slide 8: Implications of an increase in passive ownership
Implications of an increase in passive ownership What does the increase in index shareholders mean for a gold company? 1. Index managers cannot sell poorly run companies if they fall in the index and therefore tend to hold positions for long periods 2. They have a fiduciary duty to investors to push
Slide 9: Evolving share registers of gold producers
Evolving share registers of gold producers Gold producer ownership: Active vs. passive ● Passive shareholding in the top 11 gold 100% 40% companies increased to 26% in Q1 2018 90% 35% 80% 30% from 12% in Q1 2008 70% 60% 25% ● Over the past 10 years, the ratio of 50% 20% passive funds to active funds
Slide 10: Has the pool of capital been impacted?
Has the pool of capital been impacted? US$m Total capital raised (debt and equity) ● Equity funding does not appear to be 12 000 as readily accessible as it used to be 10 000 ̵ Despite gold equities appreciating 8 000 markedly in 2016, the majority of Period of balance sheet 6 000 funding used by th
Slide 11: 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 12: 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 13: Summary takeaways
Summary takeaways Capital is not as easily available to gold producers as it used to be Gold companies have had to adjust their approach to growth: ̵ Producers are embarking on smaller, more affordable projects that are scalable ̵ There has been an increase in collaboration (JVs) – this trend is set
Slide 14: How has Gold Fields adapted
How has Gold Fields adapted ● Strategy changed to focus on cash flow in 2013 ● The Group continues to spend capital to sustain operations – c.US$250/oz ● Developing 2 new mines to lower Group all-in costs and improve the quality of the portfolio ● Reaching an inflection point on FCF in H2 2019 ● We
Slide 15: Strong international portfolio
Strong international portfolio Production vs AIC Reserves 2500 25 2000 20 1500 15 1000 10 500 5 0 0 2012 Pro-forma 2012 Pro-forma Production AIC Reserves * Pro-forma assumes Gruyere and Damang at full production and reserve at Salares Norte Denver Gold Forum | September 2018 15
Slide 16: Gold Fields' global Footprint
Gold Fields’ global Footprint As at 17 September 2018 Gold Fields Group (H1 2018) Share price (JSE/ADR) R34.54/$2.37 Mines: 7 Market capitalisation ($m) 1,947 Projects: 2 Att. production: 994koz (H1 2017: 1,022koz) Enterprise value ($m) 3,340 AIC: US$1,169/oz (H1 2017: US$1,092/oz) Mine net cash flo
Slide 17: Thank you
Thank you Questions