Q3 2025 Gold Fields Ltd Earnings Call

Speaker #2: Ladies and gentlemen , please remain online . The call is due to start shortly . Ladies and gentlemen , please remain online . The conference call is due to start shortly .

Speaker #3: Good day , ladies and gentlemen . Welcome to the Goldfields . Q3 FY 2025 Operating Update conference call . All attendees will be in listen only mode .

Speaker #3: There will be an opportunity to ask questions prompted . If you need assistance during the call , please signal an operator by keying in star and then zero .

Speaker #3: Please note that this event is being recorded . I will now hand you over to the CEO , Mr. Mike Fraser . Please go ahead , sir .

Speaker #4: Thank you . Judith . Good morning and good afternoon , everyone , and thank you for joining us on today's market call to discuss Goldfields Q3 2025 , operating update .

Speaker #4: I'm joined on this call by members of our executive committee , John Magagula . Our EVP of External and Corporate Affairs , Alex Dall , our Chief Financial officer .

Speaker #4: And Grotius , our EVP of Strategy and Corporate Development . So I'll start with a couple of comments . And then and then pass on to to questions .

Speaker #4: I think firstly , I'll just say that quarter three for us was a fairly good quarter for us . And most of our operations delivered according to their plans .

Speaker #4: I think firstly , though , just starting on our safety journey , we've we've made a huge amount of strides in improving the predictable and reliable operational performance of our business .

Speaker #4: And whilst we made good progress with our safety improvement plan and improving our overall risk management maturity , Chris have three serious injuries during the quarter and that reminds us that of of the need to continuously focus and improve effort on on our safety , performance from a production point of view , we delivered another solid performance during the quarter with attributable production increasing 6% quarter on quarter and 22% year on year .

Speaker #4: A lot of that supported by obviously , the the improvement and the ramp up at Saladas naught , but also just the stability that we're seeing across the other operations costs were better .

Speaker #4: So all in cost decreased 11% quarter on quarter and 4% year on year . Whilst all in sustaining costs decreased 10% quarter on quarter and 8% year on year .

Speaker #4: Some of that was obviously supported with the the rollover on on gold sales of 45,000oz , which rolled into early July from from quarter two .

Speaker #4: Importantly , our guidance for 2025 remains on track and we are well on track to deliver on our full year guidance that we provided in February .

Speaker #4: We'll expect to see production in the upper half of our guidance and costs . Tracking well within gardens . The other thing that we announced today was in respect of Tarkwa , we are in the midst of a conversation on lease renewal in Ghana and as part of that , we have declared an increase to our reserve from 4.3 million ounces on a managed basis to 7.4 million ounces , and overall mineral resources increased to 11.2 million ounces .

Speaker #4: This is really a key focus for us is around extending and supporting the extension of Tarkwa life . To support this lease extension , the increase in reserves has really been contributed by a couple of things .

Speaker #4: Firstly , we have also announced the intention to increase our reserve and resource planning price assumptions to $2,000 for reserves and $2,300 for resources .

Speaker #4: We also have in undertaken a removed a few operational constraints , like some of the mining distances from our CIL plant , which has given us , again , some additional inventory .

Speaker #4: In addition , we haven't yet seen the full value of of some of the cost optimization projects that are underway , and we expect to see some further opportunities emerging through reducing costs at Tarkwa , we have had some constructive initial engagements with the government of Ghana in relation to this re lease renewal and certainly they've encouraged us to commence this process early , so we'll provide further updates during the course of 2026 .

Speaker #4: In respect to windfall, we continue to advance the permitting processes. We've been engaging with COMEX and the Environmental Ministry, as well as the Mining Ministry in Quebec.

Speaker #4: On the EIA approvals, as well as secondary permits, we continue to engage with the Cree First Nation of Waswanipi in respect to the IBA.

Speaker #4: We will obviously , for a lot more detail at on the outlook for windfall at our capital Markets Day on the 12th of November , including both schedule and capital estimates .

Speaker #4: With respect to Saladas North Tab . Pleasingly , we were able to deliver a really safe and reliable ramp up during winter and achieved commercial production on the 1st of September 2025 and expect to be at steady state levels by year end .

Speaker #4: We expect to at least be within around the midpoint of guidance for 2025 . I think the only other call I'd make is on Gruyere .

Speaker #4: We've been playing catch up , certainly after a tough start to the year and particularly on the on the plant side . But I think one thing to call out , which is a real positive , is the level of mining that we're running at and we probably running at the highest level of mining rates we've ever seen .

Speaker #4: And been running at over 70 million tonnes per annum run rate . So , and hitting a number of those days . So I think that that's certainly positive .

Speaker #4: But there's a huge amount of strip that we still working through . And we're probably only going to start seeing some of those real benefits of the higher or ore rates , you know , later in 26 .

Speaker #4: So, I think I'll pause there, I think. And then just hand over to the operator to take questions.

Speaker #3: Thank you sir . Ladies and gentlemen , we will now be conducting the question and answer session . If you'd like to ask a question , please key in star and then one on your telephone keypad .

Speaker #3: A confirmation turn will indicate that your line is in the question queue . You may key in star and then two to leave the question queue .

Speaker #3: Our first question comes from Adrian Hammond of SPG. Please go ahead.

Speaker #5: Thanks . Operator . Good day Mike and team . Two questions , please . Mike , the first one on the announcement or news flow around the Ghanaian audit on mining companies .

Speaker #5: Have you received any formal . Notification from the government ? And what's the nature of this audit ? I don't think we've done one for some years .

Speaker #5: And obviously there's , you know , your current Tarkwa mining licenses is being reviewed currently . So is there any risk to do you see any risk there or and when do you think you'll get a an answer on this mining license renewal for Tarkwa .

Speaker #5: So quite a few things on Tarkwa . And then secondly on the reserve price that you've increased quite a quite a quite a substantial increase on , on Tarkwa reserves with this new price parameter , I assume that this will be applied to the rest of the group and perhaps we could expect some larger , some large increases .

Speaker #5: Again , at the full year results . Is my thinking correct ? There ? And perhaps , given the large increase of life at Tarkwa , how does this impact your average life of mine for the group ?

Speaker #5: Thank you .

Speaker #4: Yeah , thanks , Adrian . And I don't want to short shrift your the answer to this because I think we will be trying to dive into many of the assets next week at the Capital Markets Day .

Speaker #4: So we'll have a better idea of being able to just unpack what this actually means . And the pathway to life extension at each of the assets , because each each asset has got a slightly different journey behind that .

Speaker #4: We're working to . But I think just to to start with the second question , because it is it is an important one .

Speaker #4: I think , you know , when we looked at the reserve price , we said , look , two things . One one is we don't want to just lift reserve price and just see a cost escalation .

Speaker #4: So it was a really mindful way of thinking about whilst are there marginal ounces that we are leaving outside of the pit shell that we would actually bring in because frankly , to try and add those ounces into the portfolio through other means would be a much more expensive exercise .

Speaker #4: But I think when we get to next week , what we'll be able to demonstrate is certainly over the the near term horizon that we aren't seeing a huge step up an incremental , ongoing step up in costs on the portfolio because of those increased ounces .

Speaker #4: When you take a portfolio view . So I think we've been very mindful that we shouldn't then just see a big step up in costs .

Speaker #4: What we will do in in March when we do our normal MRI update , we will obviously apply the new reserve prices on the rest of the portfolio and you will see some incremental ounces coming through .

Speaker #4: But you won't see the full impact of that . And you should start seeing as we deliver some of these asset optimization initiatives and bigger opportunities , some of that even flowing into future years .

Speaker #4: But again , we'll unpack that a little bit about what it means for each asset next week . Coming to Tarkwa and the audit , what we probably going to see .

Speaker #4: And we have had a formal notification from from the ministry , as has all large producers to do the audit . We in fact , have discussed it with the minister and his deputy , who's running the process .

Speaker #4: And they just say , look , you know , they've been doing a lot of work on the artisanal sector . And I think politically they just want to make sure that they can can go out as they think about the revisions to the mining legislation that all of the large producers are acting , acting in line with what the what the mine , their leases are .

Speaker #4: So , I mean , we're not concerned about it . I think we feel quite comfortable that we've been operating in in line with the terms of our lease in the fiscal provisions .

Speaker #4: So we're not certainly afraid of the the audit that's underway . We only expect , however , to probably engage on that audit in about the second quarter of next year .

Speaker #4: So we're probably not going to have too much from that until around mid 2026 . kind of feedback at the very earliest . So we don't see that really impacting our lease application process because we've we've certainly have asked the minister and he's certainly encouraged us to to engage early .

Speaker #4: And that's why we probably going to be looking at an engagement around Tarkwa even before the end of this year , a calendar year to give ourselves enough runway to get this thing resolved during the course of 2026 .

Speaker #4: So whilst they , you know , you can kind of draw the bear , the line between the two in our mind , the timing of these two processes aren't really linked at this stage .

Speaker #5: It's all very clear . Thanks , Mike .

Speaker #4: Thanks , Sarah .

Speaker #3: Question comes from Josh Wolfson of RBC Capital Markets . Please go ahead .

Speaker #6: Yeah , thanks very much . I had a question

Speaker #6: capital Markets Day , but I guess I just wanted to sort of understand , you know , at a high level , how is the company thinking Any about the impact of higher pricing and what that's going to do to grade ?

Speaker #6: And similarly , what that impact is on costs ? I did notice the Tarkwa grade declined by 10% , and I'm wondering , you know , how this has taken in the context of margins and overall volumes .

Speaker #6: Thanks .

Speaker #4: Yeah . Look , Josh , I mean , I think at the at the highest level , absolutely . Managing that margin between your all and sustaining costs and , and what you consensus pricing and part of what we thought about this is when you look at where we were at $1,500 per ounce reserve price and you're dealing with , you know , I think the latest consensus is getting up close to 2000 .

Speaker #4: We at the widest range ever between reserve price and consensus prices . And if you think about creating a sustainable business , if you continue to leave your reserve price at where it is , you probably then end up allocating capital incorrectly and end up probably prioritizing external opportunities above what you have internally .

Speaker #4: And I think what we've been able to demonstrate Goldfields has demonstrated successfully in the past is the ability to extend life at a very low reserve .

Speaker #4: Addition from your existing resource and and so when we went through that thinking , we said , look , let's just make sure it's an even playing field .

Speaker #4: And I think what we'll see also next week when we talk about our internal portfolio , the opportunities to extend life certainly certainly get unlocked .

Speaker #4: And what we will do is show , you know , roughly where we're all in costs . All in sustaining costs . Go and we can see that even with this increase in in reserve price , it doesn't have a material impact on our on our margin .

Speaker #4: And again , even if you just look at the the forward curve on gold , I think we still in a really very good position and we can use this time over the next five years to , you know , do do a number of things .

Speaker #4: One is making sure we competitive in returns to shareholders to we can improve and strengthen our balance sheet and we can invest in our business .

Speaker #4: So, I think it gives us a number of opportunities there. But, Alex, I don't know if you want to comment on that margin question.

Speaker #4: And maybe from your perspective whether you have any concerns about the lift in reserve price on on costs and margins .

Speaker #7: No . Thanks , Mike , and thanks , Josh , for the question . I think Mike's answered it pretty well . What it does , it obviously opens up a lot of internal opportunities , and we are going to be very disciplined in how we allocate the capital to make sure there's adequate returns , and it will potentially come with slightly higher capital up front , as we do make these investments .

Speaker #7: But I do think on an overall driving increasing cash flow per share for our shareholders , it is going to be very accretive .

Speaker #7: And it's not a material move on the cost base at all .

Speaker #4: And Josh , I'll just say one thing again , and Alex will talk to capital allocation and our thinking behind it next week .

Speaker #4: But , you know , we've made that point all along is that what's going to mean success . What success will look like is being able to hold the tension of how you allocate these these cash flows that we're going to be we're going to be generating and making sure that we are disciplined around investing in our business and making sure that our shareholders are appropriately rewarded as well .

Speaker #4: At this time . So it's holding the tension on all of those things .

Speaker #6: All and I heard your comments earlier about providing windfall scheduling updates at the Capital Markets Day , maybe just more specifically on the permitting .

Speaker #6: You know , sounds like things are kind of moving forward . Is there any additional perspective you can provide on on just , you know , your expectations for that part of the the milestone in the process ?

Speaker #4: Look , I think , I think the biggest issue that is just such an a difficulty with regards to windfall is that if there are any delays in permitting and and it's not even the primary permits , but also secondary permits because of the , the winter schedule , you can quite easily lose lose 12 months .

Speaker #4: So I think what we'll do next week is we'll really unpack to say , look , this is our this is our pathway to 2028 .

Speaker #4: But if we have , you know , government not coming to the party and helping us get these permits in place , then you could quite easily see a scenario where these slips .

Speaker #4: So , so we'll try and just be very transparent about what we need to see to deliver this 28 plan . And but we're also being , you know , certainly in our guidance , we'll be appropriately conservative in how we include include windfall in our five year plan .

Speaker #6: Thank you . And then just one last question . Capital spending in 2025 is is sort of tracking somewhat light . And perhaps there's some accounting variances included within that .

Speaker #6: Just sort of drilling down on on number one , I guess what's , what's driving that is that windfall related or other items .

Speaker #6: And then second to that, you know, will some of the CapEx from this year be deferred into next year? Thank you.

Speaker #4: Alex , you might want to take that one .

Speaker #7: Yeah . Thanks , Chris . I mean , Josh , so so the majority of it does relate to windfall where we in the guidance range , there was more included as capital .

Speaker #7: That is pre-filled . It's actually being expenses exploration . So it is a bit of a classification and accounting treatment difference as well as that .

Speaker #7: So any of the strip that damang , because of the lease being less than 12 months , that's also being expensed instead of capitalized .

Speaker #7: So I do think we'll be will be a bit light on on capital for the spending this year . There is not really any .

Speaker #7: And where we have seen overspend is obviously relating to winterization Solares not being the main one . And I think we are now finished with that capital and there might be a little bit of carryover capital into next year as we just get ready for winter .

Speaker #7: But nothing material and there's no other real carryover capital into next year .

Speaker #6: Great . Thank you very much .

Speaker #4: Thanks , Josh .

Speaker #3: Ladies and gentlemen , just a further reminder . If you like , ask a question , please . Key in star and then one on your telephone keypad .

Speaker #3: Our next question comes from Chris Nicholson of Army Morgan Stanley . Please go ahead .

Speaker #8: Hi . Good afternoon . Mike , Alex and team . Just two questions from me . Just the first one is just on the cash generation and the reduction in net debt in the quarter was really excellent , actually , quite a bit ahead of what ?

Speaker #8: What I had . I know you obviously stocked that carryover with about 45,000oz of inventory . Also , you had the proceeds on Galiano gold .

Speaker #8: Are there any other kind of one off items or movements in working capital that you'd expect to reverse , or that would have helped numbers in this quarter and that you could just point to ?

Speaker #8: That's number one . And then number two just just relating to a comment you made earlier , you you've talked to really stepping up .

Speaker #8: I think your exploration spend obviously we have the headroom to do that now . And it looks like you're making some some exciting advances on various deposits .

Speaker #8: Just your thought process around that should should we expect this to be a sustained step up over the next number of years in terms of what you're seeing for your exploration portfolio ?

Speaker #8: Thank you .

Speaker #4: Thanks , Chris . I'll ask Alex to talk about the first one , but I think you're right . Are those are probably the only two abnormal ones .

Speaker #4: But I'll ask Alex to comment on it . But maybe before he does , I'll just answer the exploration one . I think longer term we see that the appropriate level of exploration spend for greenfields and I'm a distinction distinguish that from our brownfields is probably around $50 million a year .

Speaker #4: That's kind of roughly the number that we'll probably look to replenish . And the idea behind this greenfields program is to look at what are we bringing into the portfolio , you know , ten years out , you know , that's kind of how we're thinking about it .

Speaker #4: And you've got to go and kiss a lot of frogs until you find a couple of decent opportunities . Having said that , I think even in the things that we've got today , there are some interesting things .

Speaker #4: The one deal that we've done recently , which is kind of a little bit lumpier is , is the Founders Metals transaction , which we announced this week .

Speaker #4: And that was a consideration of of 50 million CAD for about 10.5% of the company . Now , that was probably a little bit on the larger side of a package that we'd kind of expect .

Speaker #4: But there may be times where we just go and do stretch ourselves a little bit when we start seeing something of scale that we really like .

Speaker #4: And this was one of those . But I think on on balance , you shouldn't see this as a sustained jump up . I think our target number is still going to be roughly in that 50 a year , but Chris , you might want to comment on that as well .

Speaker #4: Before we hand to Alex .

Speaker #9: Thanks . Thanks , Mike . And I look , I think for us we've got a clear strategy as we think about replacing replacing reserves and building the business for the longer term .

Speaker #9: Explorations are going to be a core part of that strategy . So really ramping that up and and it's going where the best the best opportunities are clearly our main focus will be where we currently operate in our current jurisdictions .

Speaker #9: But this is a unique environment to just go where we see the best potential resources and founders is a great example of that , and it's it's it's it's a measured , sequenced way of getting into a new country .

Speaker #9: It's similar to what we did with with the Cisco in Canada in a measured way , starting with a joint venture . So we're going to we're going to follow where the quality is .

Speaker #9: And as Mike said , it might be a little lumpy here , here and there . Given the opportunities . But it's definitely a focus on our side as to where we where we look to continue to invest and create that optionality within the portfolio .

Speaker #4: Alex , you want to talk to the cash ?

Speaker #7: Yeah . Thanks , Chris . I think you actually called out the two major drivers being the 45,000oz of carryover . And then the Galiano gold sales .

Speaker #7: We did . Also , there were not really material working capital movements , but it was a slightly positive working capital quarter . And I think just to the earlier question on capital as well , it was a not not a super heavy capital quarter .

Speaker #7: Yeah . It was us main , two ones being the 45,000oz . And then of gold proceeds .

Speaker #8: Okay . Great . Thanks so much guys . Appreciate the time .

Speaker #4: Thanks , Chris .

Speaker #3: Ladies and gentlemen , just a final reminder . If you'd like to ask a question , please . Key in store . And then one on your telephone keypad .

Speaker #3: With no further questions in the question queue , we have reached the end of a question and answer session . I will now hand back to Mr. Michael Fraser for closing remarks .

Speaker #4: Thank you, Judith, and look again. Thanks, everyone, for joining us. Thanks to all for the questions; I think they were excellent questions.

Speaker #4: Obviously we'll try and unpack many of those next week at Capital Markets Day and hopefully that will provide a little bit more insight into the way we're thinking about the business .

Speaker #4: But I think we've made some really good progress in in the nine months to date . This year on delivering of our base plan , which was always our objective .

Speaker #4: But equally , you know , really just starting to set ourselves up for , you know , sustainable future performance . And some of the things that we are starting to see even in the Greenfields programme , the internal optionality that we we're starting to unpack , you know , really start to help us position Goldfields for , for , for the next generation .

Speaker #4: So thanks again , everyone . And look forward to engaging with you next week . For those that are able to join , thank you .

Speaker #4: Bye bye .

Speaker #3: Thank you sir . Ladies and gentlemen , that concludes today's event . Thank you for joining us . Any man or disconnect your lines .