Q1 2025 Gold Fields Ltd Earnings Call
Speaker Change: Good day ladies and gentlemen and welcome to the Gold Fields Q1 2025 operating update market conference call or participants will be in listen only mode. There will be an opportunity to ask questions later during the conference.
Speaker Change: If you should need assistance during the call, please signal an operator by pressing star and then zero. Please note that this call is being recorded. I would now like to hand you over to Mark Fraser, Gold Fields CEO . Please go ahead.
Speaker Change: Good morning and good afternoon everybody and thank you for joining us today on our Q1 2025 Operating Results Update Call.
Jongi Samagogula: I'm in Johannesburg and joined in Johannesburg with me is John Giesmuggler.
Thomas Mangle, Alex Dahl and Chris Graschis.
Jongi Samagogula: We have a really good turn up so thank you all for joining.
Speaker Change: Just a couple of comments and then we can jump straight into questions.
Jongi Samagogula: Firstly, I just want to talk about safety performance. We have put in a huge amount of effort into our safety improvement plan over the past.
Jongi Samagogula: 12 months and pleasingly I can say that some of these benefits are starting to bear fruit and we continue to see improvement in many of our safety metrics.
Jongi Samagogula: In addition, I can report that we have now had 12 months without any fatalities across the business, and while this isn't a good statistic on its own right, it does demonstrate the benefits of the effort that we are putting in.
Jongi Samagogula: and meeting our goal of delivering safe reliable, cost-effective production across our operations.
Jongi Samagogula: In the quarter we had a good start to the year with our operational momentum reported in H2 continuing in to Q1 2025.
Jongi Samagogula: Our Gold Incubidant Production of 551,000 Houses is in line with our plan for the quarter and important be means that we remain on track to meet our guidance for the full year.
Jongi Samagogula: From a cash flow point of view, we delivered strong cash flow during the quarter. Obviously supported by a good support of Gold Fields environment despite paying out $346 million in dividends, we were able to reduce our net debt in the quarter.
Jongi Samagogula: Our focus during the quarter apart from, say, our safe liable operations of our core assets was continuing the ramp up its solidest naughty and preparing the plant for the upcoming winter. We were able to increase production by 13%.
in the quarter in line with our ramp up plan.
Jongi Samagogula: At the Windfall Project, the Environment for Permanent Progress during the quarter and we continue to advance detailed engineering and ramping up our project execution team ahead of a final investment decision plan for Q1 of 2026.
Jongi Samagogula: Close the call to end, you would have seen a lot of
Jongi Samagogula: Communication and media around our domain mind and Garner and pleasingly post-corder in reached an agreement with the Government of Garner.
Jongi Samagogula: for a way forward with demand, which includes an extension of a mining lease for 12 months to Gold Fields to continue to operate and mine stockpiles as well as recommends open put mining and during the 12 months we will look to a
Jongi Samagogula: A transition of this asset to new ownership during that period.
Jongi Samagogula: Underpinned by this support was a clear and open support for the life extension at Takaman and the lease extension there. We immediately commenced preparing for the application to extend those leases.
Jongi Samagogula: Lastly, as you would have seen by the press yesterday, we also concluded defining agreement.
Jongi Samagogula: to acquire 100% of Gold Road Resources, which was announced yesterday.
Jongi Samagogula: We believe this transaction represents a lower risk opportunity to enhance our portfolio through the consolidation of the Griezmann which we already operate.
Jongi Samagogula: Full ownership of Grier will likely take place in around October and will immediately enhance our cashflow profile in the navel us to streamline decision making and increase flexibility with respect to the operation and future development opportunities.
I now pause there and hand over to Q and A.
Speaker Change: Thank you. If you would also ask a question, you might press star and then one to join the Christian queue. You will hear a confirmation turn that you have joined the queue.
Speaker Change: If you decide to withdraw your question, you might press star and then two to remove yourself from the question queue. Once again, if you would like to ask a question, you might press star and then one. We will pose an amendment to see if we have any questions.
Tania Jokaskonek: We have a question from Tan New Yorker Skoneg of Squisher Bank. Please go ahead.
Speaker Change: Good afternoon everybody. Thank you for taking my questions. Maybe I'm just going to start on this meeting, agreement with the government and then the joint venture pods with Angle Gold.
Speaker Change: Can we assume these are tied together in terms of Anglo's decision to pause or maybe you can shed some light on why the pause at the same time as the man is negotiated?
Thank you for watching.
Speaker Change: Thanks for that question, Tony, I hope you're well. Look, I think I wouldn't like to speculate that these are connected in any way. I do believe that these are separate issues that are being dealt with on their own merits.
Speaker Change: I think just a bit of colour on demand and probably during the course of last year we've been talking about demand as a transition asset and an asset that
Speaker Change: The most important objective for us was to find a pathway for a future life extension opportunity given that there is resource there but it would require a considerable amount of capital that we didn't see passing our hurdles to to invest in.
What we had
Speaker Change: is applied for an extension of that lease, so that we could at least continue the feasibility study with an idea of finding a pathway for
for a transition.
Speaker Change: As it turned out, I think the agreement that we got to was the region of the elegant one.
Speaker Change: which allowed us to deliver on our plan for the year which is what we committed to the market but also then worked to an orderly transition of the asset to an owner who would then obviously need to find the capital to reinvest into the future mine life extension.
So I think that that kind of stands on its own.
I think on the joint venture, I think the is the
Speaker Change: What has happened with the passage of time is clearly one of the biggest drivers that's changed the economic so this acid is gold-price.
Speaker Change: and without reading too much into it, I think you can quite easily see.
Speaker Change: that all of a sudden different parties had a slightly different view of what that Gold price meant for the different options analysis on a combined basis or standalone basis.
I certainly believe that the industrial logic of the combination
and the unlocked benefits that will be realised.
Speaker Change: still is compelling. But you know, this what this pause does to
Speaker Change: is at least allows us to get through the least extension process in a fairly...
Speaker Change: short order of time which is what the Government of Ghana committed to and equally allow both parties to focus on the things that are needed to be done within our own business and then hopefully that allows us to bring these assets together to some point in the future.
Speaker Change: Okay, well thank you so much for that explanation. Maybe I can move on if I can to just one fall.
Speaker Change: I just wanted to try and understand a couple of things on windfall number one we've got this feasibility study that is coming out in the second half of the year.
And with it, I guess the updated reserves and resources.
Speaker Change: Just trying to get an understanding of why, you know, what do you need to still do on the reserves and resources to provide us with an estimate there, given that there was a lot of grilling done already on the property, so number one, what should I be thinking about on the reserve front?
Speaker Change: And two, how should I be thinking about the feasibility study from a cost-thing side in the sense that, you know, we've come through inflation? Should I be thinking that?
Speaker Change: A sort of normal inflation of from that period has been as high as like 15% 20% should I be thinking those types of numbers in capital and operating costs?
Speaker Change: Thanks, Tanya. Very good question and maybe let me unpack it as follows. So the reason we did not declare and we do have
Speaker Change: Obviously and we're overlaid our own internal operating assumptions and modifying factors on the reserve and resource.
Statements that had previously been declared by Osisco.
Speaker Change: But what we didn't want to do is to go out and publicize that alongside of any changes to.
Speaker Change: Our development assumptions whilst we had the environmental permitting process underway and so we wanted to allow that process to continue to unfettered which has actually been supported by the original feasibility study that was completed in 2022 by Cisco mining so [inaudible]
Speaker Change: You know we really didn't want to complicate that process so that's why we've left that to run on its run on its own feet.
Speaker Change: The feasibility study is really an out of you and update. So the call
Speaker Change: parameters of the man is not going to fundamentally change you know we still going to be.
Speaker Change: Constraint by the Environmental Permanent Application, which is essentially a 300,000oz mine, a 2 million tonne per annum, processing plant and a 10 year mine life.
Speaker Change: But what we are doing is doing quite a number of trade-off studies in this update around what you would always appreciate is...
Is there trade off between operating cost and upfront capital?
Speaker Change: All the optionalities that we want to bring into our capital estimate now that gives us expansion and extension opportunities at a latent stage.
Speaker Change: And obviously the original feasibility study that was done in 2022 would be, I don't want to say promotional, but clearly done with this slightly different purpose than trying to build a mine and a plant that we want to continue to operate for multiple decades.
Speaker Change: So that's kind of how it plays out. We will provide an update on those capital estimates later in the year once we've put a bit of fill for those and obviously leading into our board approval in ideally Q1 of 2025.
Speaker Change: I think as you think about the, you know, what is a way to model it.
Bye.
Speaker Change: You know, quite clearly there is going to be a significant component of escalation in related to just core mining inflation. We are doing reprisings on some of the key components now and clearly as terrorists move around that could be a component of what we need to model.
Speaker Change: But equally, we are really minded to the fact that we're wanting to go the plant that is going to be here for multiple decades. It is going to be a cornerstone of our portfolio and
Speaker Change: Without being very irrational and exuberant on the upfront capital, I would be more inclined to err on the side of being conservative up front than putting ourselves in a corner for an asset that is going to be our quality part of our business.
Speaker Change: I think with those kind of cautions, I think you're kind of thinking of escalating with inflation and then maybe a little bit is not about what it thinks about it.
Speaker Change: Okay, and so I should be thinking that the plant then could be designed potentially as you've got the permits that you're doing that plant for that slide. You're saying that maybe it has the ability to factor in potential expansion in the future. Would you be thinking of it that way?
Speaker Change: And I think what we would have to do is it would have to go through probably another permitting process because I think we add the maximum of the provincial approval limit. But what we would do on the plant is to ideally be have some kind of expansion potential to it so that would be the idea.
Speaker Change: Yeah, yeah, you'd have to go for federal permit. Yeah, okay. Thank you for that. And just my final question if I can I just don't allow us nor take
Speaker Change: is nice to see that the project is moving forward. Just wanted to ask about the commercial production because it appeared to me that we flipped a quarter from Q2 into Q3. I know it had always been somewhere at the end of Q2 and now we're slipping into Q3.
Speaker Change: Can we just review what is it exactly that you know has moved us from Q2 to Q3 and what is your definition of commercial production? Is it 30 days or 60% capacity at the mail?
Speaker Change: So I think there's two elements. I think it's it's two components. So it's 30 days of 60% and then 85% of metallurgical gold recovery on a 30 day average basis. Yes, and then it would be and four costs to continue operating and to repeat the month after that 30 days is achieved. So that's actually just flipped from May to June .
Speaker Change: for the current modeling. That's what happens within July become the July becomes the first month.
Speaker Change: Okay, caught it. So it's just really the definition on that, you know, the metallurgy part for 30 days after that that we get that commercial production.
Speaker Change: Yeah. Okay. Yeah. And that's the problem. Everything speaks of an account to definition. It doesn't materially change. The red pop profile for you hasn't changed.
Speaker Change: Okay. Got it. No, I really, really appreciate it. I'll leave to someone else to ask questions. I really appreciate you taking all my questions. Thank you.
Thanks, John.
Speaker Change: The next question we have is from Sheila Modi of HSBC. Please go ahead.
Speaker Change: afternoon team. Just a couple of questions from my side. How are you thinking about your date levels post the conclusion of the acquisition of?
Gold Road Ltd
Speaker Change: Does this affect the sequencing for wind-fold capex, and how does the wrap-up of salaris and the cache generation from that also feed into your thinking around it and capex sequencing?
[inaudible]
Speaker Change: Thanks. I'll have a first attempt. I will ask Alex touch on it. I think the first thing I'll just say is that clearly we are in a very fortunate position that we foresee a strong cast generation across the portfolio and a very strong, de-leveraging impact.
Speaker Change: is a component of that support. But in the modelling that we have done, obviously we see
Speaker Change: money going out in quarter four for the acquisition of Gold Road, but you know with the with the cash generation and the ball up over the next while we feel quite confident with where debt level of it. And if you want to comment about the modeling and the work you do. Yeah, so obviously we as we say we want to target on it to the duration of one time through the cycle so we run various modeling scenarios.
Alex: And the base case being we run out of consensus, and then we do on that base to see how
Alex: And then obviously even at conservative prices we might push there slightly but then we see the delivering rapidly as far as not that comes on. So we do run multiple scenarios and all of that.
Alex: and we're quite comfortable that the battery doesn't ability to hold the day table. Yeah and just on the timing you know we don't see any of this impacting the timing of of windfall that capital will largely be spread between 26 and 27th.
Alex: And even with that, we don't see any impact on our current dividend policy and any of our future return programs.
Alex: We feel quite confident that we're going to be in good shape from that point of view. And our current modelling shows us as a side rapidly, did leveraging even with that windfall capital.
Speaker Change: And then perhaps another one or two. How are you guys thinking on Gold or Buy going forward? I mean, to be fair you guys are doing both but
Speaker Change: I know it's a moving target but do you think the market is still a good deal to be made in the market or do you think it's moving shifting more towards a bulldozer's market?
Speaker Change: Look I think it's a that's a difficult question and I'm sure Chris can jump in on this one but but I will say that our strategy is not one or the other. Our strategy is continuously that we will.
Speaker Change: Phoenix ad reserves and answers to additional brownfield drilling will look through incremental enhancement of our existing portfolio because we've got some incremental improvement with the night's existing operating assets.
Speaker Change: We also are revitalising our Greenfield programme and are increasing the number of options that we have in our Greenfield programme all those are longer dated assets and longer dated opportunities.
Speaker Change: And then obviously we do the bolt on and positions like you've seen with the acquisition of the other half of the Cisco and
Speaker Change: and Greer which are really low risk additions if you think about it because we're already in those assets for half of the half of the value.
Speaker Change: But I do think there are opportunities to be had, but I think over the next still while our focus is very much going to be on.
Speaker Change: Delivering what's currently in our portfolio. And I think for certainly for the next while we're quite comfortable with the balls that we've got to deal with. But for some, if you want to add maybe the only other thing I would add Mike is I think the.
Speaker Change: You can never time M&A perfectly in a lot of times it is opportunistic but I you know I think the gold road.
Speaker Change: acquisition was really a unique opportunity to invest in an existing asset that we already controlled and operated and there was an ability to get full control.
Speaker Change: of a land package that view is very perspective. So it's the same approach we take to all of our assets about looking for opportunities to invest in enhanced value within the existing portfolio. This just happened to be one that was through a public transaction.
Speaker Change: Okay, now that makes sense, I appreciate that. I have given feedback to the team that I also agree acquiring assets that George V. Operate makes makes a lot of sense. I appreciate the time. Thanks.
Thank you.
Adrian Hammond: The next question we have is from Adrian Hammond of SPG. Please go ahead.
Dear afternoon everyone. Thanks for the call.
Speaker Change: Yeah Mike, tough Q1 when you look at the costs, but certainly I think it's still early days.
Speaker Change: I'm just looking at the dollar per ton cost that's where I'm coming from and I don't understand if it's still the change in the mining mix with your the dollar per ton costs up.
Speaker Change: about 8% that your mill tonnes are up 8%. So is it just high inflation bit of all mix underground surface that's still playing out or is it just
Speaker Change: The sort of maturity of the operations playing out into those numbers.
Speaker Change: Hi, good day Adrian. Look, I think there's a couple of things that are playing out now across. So I think one is you're quite right. Is there a bit of an all mix coming through on and also we've seen.
Speaker Change: Slightly higher, more tons, but what we also expect to see during 2025 is there's a slightly higher
Speaker Change: Strip across a couple of our material assets. So St Ives, in Tarkwa as well what you also seeing is lower grade speed. So some of that cost is playing out at Tarkwa for instance.
Speaker Change: and then you've got some high strip and some high capital coming through. So we're not yet going to see the full benefit of lower costs probably until 2027 when you're going to start seeing some of those that high strip coming out.
Speaker Change: And we shouldn't then see a higher all mix going in.
All right, let's understood and.
Speaker Change: There was a question on Solaris that I sort of covers mine, but I...
Speaker Change: I mean, just to be devil's advocate, and I appreciate that no ramp up is ever perfect, but you achieve 50,000 gold equivalents in Q1 with the ramp up that say 60.
Um.
Speaker Change: Are there issues there that are temporary or things that you're comfortable with or leading into the winter period? Or is there anything new that you need to resolve there to give us comfort for the full-year guidance?
Speaker Change: Yeah, Adrian, I think as you rightly are there any farm and there's always challenges in a ramp up and yes, we would have had
Speaker Change: You know, one or two issues we had some issues on filter pumps that we had to to change art.
Speaker Change: You know, we've realized that we also need a bigger furnace capacity. So we've got a new furnace additional furnace on order, which is going to give us greater throughput. But there's nothing that is a process wise of concern to us.
Speaker Change: I think the area that I've always been consistent to say that given an experience of last year, the bigger risk to guidance is just getting through winter reliably and safely. So from a plant performance and an operating performance,
Speaker Change: I don't think you should read much into Q1, yeah, we probably could have had a few extra thousand answers based on more time, more lap time, but rice, nothing that's carried over from the first quarter.
Speaker Change: Got you and and then lastly on the JV that you've put on ice now, I mean, this is quite disappointing, I would say, after 27 months.
Speaker Change: Certainly, Angler Gold have plans of their own with opportunities with their existing asset.
Speaker Change: Where does this pit park where in respect of the standalone option and you know what why you know what what is the the reason to sit back and I have to ask given the
Speaker Change: The issue around the mine-life extension at the man and I think market got a bit concerned around talk where was there any of that fact it.
[inaudible]
Speaker Change: I mean, I have had it obviously, you know, we have had the conversation with that counterparties, but I've started with saying that it takes three parties to make the stance work at the JV. I think the industrial logic in the long term.
Speaker Change: strategic intent about the combinations for makes perfect sense and I don't think it changes certainly my view that this makes the combination makes sense but I think there's always going to be times
Speaker Change: where one party may not be ready, and I think that is the challenge and the risk on this thing.
Speaker Change: very strong in support of Takua and they've asked us to very quickly get the mindless extension in place so they can take that uncertainty out of the market. So I think we feel quite confident with that.
Speaker Change: But I think, you know, without talking too much into how this played out, I mean, you can quite conceivably see a world where as gold prices have run in the way they have since the first deal was inked.
Speaker Change: um you know the economics on both sides would have changed and and I think that that's played a part in it but you know the way I look at this is quite philosophically I think it does.
Speaker Change: Actually, just make both of us focus on making our standalone assets the best that can be and you know, we certainly not afraid of that challenge and it presents an opportunity for our teams to...
Speaker Change: You know, stop focusing for a minute on the integration of these assets to how do we make them the best on a stand-alone basis which makes the combined business even better.
Speaker Change: Sure, certainly the Gold Fields today can change your planning. Thanks so much.
Yep.
Speaker Change: Ladies and gentlemen, just another reminder, if you would like to ask a question, you buy a pre-store and then want. [inaudible]
Speaker Change: The next question we have is from Runehoh writer of NOAA Capital is going ahead.
Hi. Good afternoon. My good.
Speaker Change: Thanks for taking my question. Sorry about that. I've got a couple of questions on gold rod and gray area. I looked at the website. They say they have an open put loft about 2032.
Speaker Change: And then about two years underground, about 760,000 answers underground reserved the resources.
Speaker Change: That sort of makes it a 10-year life. What was the $3.2 billion Aussie?
Speaker Change: payment that you deal value that you're making. What was the internal rate of return of that deal? And is there any or basically on exploration assets?
Speaker Change: Is there anything that could be quite, like, brought into production quite early? Because to me, that looked like the deep out of the money.
[inaudible]
Speaker Change: I'll ask Chris again can add some color to this but I think just a couple of things first and foremost.
Speaker Change: The two years of underground that they declared were certainly based on cold road assumptions.
Speaker Change: We would not have declared any resource or reserves on the basis that we are at very early stages in studying the underground. We've only really started drilling out that opportunity.
Speaker Change: Gold there and it looks pretty consistent, but it's going to come down to us to firmlying the most effective way of mining that underground before would even...
Speaker Change: being prepared to put a resource, a reserve declaration out on that asset.
Speaker Change: The other thing that complicates the future development pathway for Greer.
Speaker Change: is that if gold price consensus prices continue to to hold where they are then in fact you may delay the underground development wire potentially doing another further cutback which extends your your open put life by a few years before you have to then go underground.
Speaker Change: And then the last item which is what we've acquired with Gold Road is that really extensive landfacts that sits outside of the current joint venture that we wouldn't have otherwise had access to, which we also know contains Gold.
So, um...
Speaker Change: But whilst you're based on the declared numbers, you can quite easily come to point and say, well, what have we paid?
Speaker Change: This 2.4 billion US, well 1.6 when you struck out at the northern star state, we're quite comfortable that this is now going to transition into a multi stage, a multi decade asset. It's just about what is the pathway for development of that?
Speaker Change: And as that evolves over the next few years that study evolves you'll start seeing us declaring resource which will add to the life of that asset. And then just on your
Speaker Change: Your question on IRRs you know clearly we don't always declare those and publicize them because there are a number of different that
Sonora is in need to assume but what I can say
Speaker Change: is based on, you know, consensus prices which we know is reasonably conservative right now. We'd be quite comfortable that is nearing, you know, mid-teens kind of IRRs. And then when you overlay near term spot that certainly goes up a lot higher.
And the other thing I'd add Mike
Speaker Change: And then you touched on the exploration ground, you know, for example, they have come out with a PFS on
Speaker Change: on a positive-called Gilmore. There's smoke-wish, there's other opportunities. That also looks to be potentially higher grade.
Speaker Change: So as that you could potentially re-sequence in the mind to extend light even before you get to the underground. So So
Speaker Change: I think the other pockets of additional value that you get is Gold Road did have a royalty that would kick in at a certain point in time, which would get eliminated.
Speaker Change: We obviously have the Gold Lord corporate costs. Obviously they're there are clearly some valuable employees, especially on the exploration side that will want to maintain but there's some some savings there.
Speaker Change: And I think quite importantly to us which was quite unique to us there are significant tax synergies for us in Australia with the ability to write the value of.
Speaker Change: Yeah, just just one more question on the deeper extension of gray area.
Speaker Change: Has the scutting study been done? I heard some gay told me that the scutting study had been done on that.
Speaker Change: Yes, correct. So we have completed a scoping study. Literally, it was received.
Speaker Change: around two weeks ago and that was immediately disclosed by Gold Road as part of their defence. I mean, clearly from our point of view we would never have disclosed at the stage because it still requires quite a bit of work.
Speaker Change: and interrogation and that's why I always said yes it's absolutely an option it's it is going to add life to the asset but trying to attribute value to that right now
given a long-lifed dating on it is quite hard.
Speaker Change: And we're quite comfortable when we did the assessment on the asset that the additional 50% even on the current known law from reserve we believe is
Okay, thanks very much Mike.
Speaker Change: At this stage, we have no further questions, and I would like to hand back to Markville
Mark: Well, thank you very much for the questions. They were really very good questions that we received today, so I appreciate the thought that went into those. You know, I think from from our point of view, the quarter one was largely on track to what we expected.
Mark: Clearly there's a few things that have emerged post-corder that we are now.
Mark: Dealing with the including demand, talkware and the integration of Gold Road but the real focus for us is just to keep delivering safe, reliable production and delivering on our our gardens and our plans for the year but across.
Thank you.
Mark: Production and cost and if we can do that we will see continued significant cash generation in the business which will be good for everybody.
Mark: so very you know comfortable how we started the year and we're all very much focused on delivering to our plan for the remainder of the year and look forward to chatting to you again in at the half year but thank you very much for
Speaker Change: Ladies and gentlemen that completes today's conference. Thank you for joining us. You may now disconnect your lines.