Good day, ladies and gentleman, and welcome to the Gold Fields Second Quarter Fiscal 2007 results conference call. My name is Jeremy and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will conduct the question-and-answer session towards the end of the conference. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to your host, Ms. Nerina Bodasing, Head of Investor Relations. Please proceed ma’am.

Thanks, Jeremy, and good afternoon everyone and welcome to today's conference call. Ian Cockerill, our Chief Executive Officer will kick-up with an introduction followed by Nick Holland, our Chief Financial Officer on the finances; Terence Goodlace, the Head of South African Operations will review the operational performance for the group; and John Munro, the Head of New Business Development will provide an update on our new projects. Ian will conclude and then we will open for questions. And I will now hand over to Ian.Ian Cockerill: Good afternoon or good morning everybody and thank you for joining us here today. Firstly, I just like to open with a special tribute to Brendan Walker, our previous Head of South African Operations. So, as you know, he tragically died in a car accident over the New Year period. At this time, I think it is appropriate to remember Bren's contribution to the old Gold Fields in South Africa, which he joined as a fresh graduate from the University, as well as to the more recent contribution that he made to Gold Fields as we know it today. Whilst obviously, we are going to miss him terribly as relatives and family will, I didn’t get to say something about the strength within Gold Fields, it’s a day we are pleased to welcome Terence Goodlace as a new Head of South African Operations from the -- his previous role at the international [scene], and I’m sure you will join me in wishing him well in his new position. Moving on to the corporate hand and I think probably at some stage in the future we will look back at this specific December quarter. I do believe that we have come to view this as a similar kind in the history of Gold Fields. We…

Thanks and good afternoon. As you heard earlier, we just started to retire the Western Areas hedge book and that was closed out yesterday. To put into perspective what the hedge book looked like, there was a whole series of put options quotes, call options sells coming up with a net delta of just over 1 million ounces plus a deferred premium of $187 million, which related to options which were previously taken up by Western Areas, but not paid for, and the payment of those options was deferred. In addition, the call options kept gold prices somewhere between $300 and $400 per ounce and you all know today we have spot this trading at of the order about 650 today. So, our view on this is that this represented a significant liability for the company. We didn’t even look at this as a derivative position, but we look that this as a liability and an uncapped liability up there, and we decided to settle it. If you look at the numbers that we had when we took over Western Areas, we established control on the 8th of December. And the mark-to-market value at that time was $539 million. At the end of December, the figure was very close to that with the mark-to-market gold price round about $634 per ounce. What we've managed to achieve is to closeout the hedge book at average book price of $622 per ounce, and the full closeout cost including all cost and charges is $527.8 million. So, we're extremely pleased that we've been able to exit this hedge position and achieve a lower effective price for gold that exists at the end of the previous quarter. And indeed, I think if you add some mark-to-market the book today at -- I'd seen on…

Thank you Nick, and good afternoon everybody. Looking at the operations I think at first its important to say that safety remains very important for us and we were particularly pleased with the performance that we had in terms of our fatality rate for the quarter, which was at 0.08. If we look at the actual gold production, and I’ll talk through the South African operations first that was broadly in line with forecast and amounted to some 654,000 ounces including 27,000 ounces from South Deep. Production at Driefontein was in line with as forecasted 270,000 ounces at the mine and this was on the back of a re-planning exercise at 4 shaft were we had to cater for seismic testing. Gold production at Kloof did decrease to 231,000 ounces and that reduction is primarily as a result of a poor mine gold factor. Beatrix was steady for the quarter at 150,000 ounces with lower volumes offset by high yields and better quality mining. We also had to stop many panels at 2 shaft to curtail unplanned mining. Development remains the key driver for our business and we had provided quite a lot of detail in terms of development at the back of the quarterly book, so I do not plan on going through that other than saying that we will continue to accelerate development as it is such an important part of our business. In terms of operating costs for the South African operations, the combined Driefontein, Kloof and Beatrix operations had an increase of 2% quarter-on-quarter and their total cash costs were $354 per ounce. The margin at the South African operations is robust at 39%. Nick has been into -- has explained a little bit about the capital expenditure for the South African mines, which increased to…

Good day. I will just talk very briefly about the new development options that we have ongoing around the world. It’s useful to overlay these on the list of capital projects that Terence has just spoken about. The emphasis of which was on brownfield's expansion at existing operation. Now, in terms of new development, most significant project remains the Cerro Corona, Copper Gold project in Peru. During the December quarter, the community blockade that we spoke about previously was resolved peacefully and operations as well as the project construction got underway again through the later part of November of 2006. Mining operations are backed above the planned level of 1 million tons a month, so that’s back to normal. And towards the end of last calendar year the bulk of the surface earth was -- were also completed. As a result, the main construction contractor was mobilized to 2nd January and the actual erection of the process plant is now underway. Engineering is largely complete, and we have got three large orders left to make, that’s trading down, the electrical facilities and the permanent man camp. But all ordering of other equipment has gone very well, and in fact some of the large equipments such as the grinding mills is already under transport from the construction facility that are on the world by ship across to Peru. In terms of the capital outlook for this project, we remain at our previous guidance of some $340 million to complete this project having spent around 120 million to-date. In terms of schedule, this remains under pressure with the loss of time due to the blockade that we spoke about previously, that costs us just an excess of a month of actual construction time. And although, we are targeting to get those project…

Thanks John. And firstly a little guidance on the upcoming quarter and now as South Deep begins to recover from the effects of the shaft accident and we absorb the impact of the post Christmas euphoria down here in South Africa and you heard Terence say that our international operations certainly continue to perform at or above levels that we have seen previously with the exception at Choco 10 that sadly will fall short of last quarter's production. We should experience a growth in output for the group as a whole in the next quarter, but somewhere between 2 and 4% which if you annualized it would mean that Gold Fields would be producing at or around 4.3 or just over 4.3 million ounces per annum. And certainly, so far we are anticipating costs will be at a similar level to those that we experienced in this past quarter. Now already as said, that we were now at just under 98% of Western Areas and that our offer is going to close tomorrow and then we will commence with the 440K closeout process, which should take six to eight weeks to complete. So, to conclude then I think it is fair to say this indeed has been a very, very busy quarter. I believe we started on next phase of firmly positing Gold Fields as an un-hedged, globally diversified, top tier gold producer. Based upon the unique franchise which is Gold Fields of a few large high quality assets, comprising a solid South African foundation, a record expansion of our international asset base with a simple corporate structure and an optimal financial structure, and I also believe that this company is incredibly well positioned both operationally and financially, now to take advantage of what we believe is going to be a strongly rising gold market. I think a compelling story indeed. I think with that I would like to thank you all for listening and let me hand you back to Nerina and we will open up the lines for any questions you may have.

Jeremy, you can ahead to the questions.

(Operator Instructions). And your first question comes from the line of Jacques Garibaldi with Royal Capital

Hi, good morning everyone.

Hi, Jacques.

I am taking back to the fall and when you first said that what scenario it is deal. My understanding was that you all were -- you were not going to raise equity that you knew the hedge book was around $500 and $550 million and if you close it out, you would close it out with debt and that you were comfortable with debt and in fact this pro forma 1.7 times debt to EBITDA that you'll have in January 30th is within your comfort parameters. So, given all that can you just explain what changed since the fall and why you are raising 12% of your equity basically?

Jacques, I think there is a misinterpretation on your part. When we took out the or when we made the acquisition in when we were going to make this acquisition in -- as you called it in the fall, we at that stage knew that we would have $1.2 billion worth of debt and that was the debt level that we had. There was a mark-to-market position on the hedge book, but it had not been crystallized. So, it wasn’t that we said that we were going to take out the hedge book. We didn’t know what the hedge book was like at that stage. We had a rough idea of the level of the mark-to-market, but certainly not at that stage had any intention of crystallizing it. Once we've taken over the company and once we actually had a good look at this, it became quite clear that to get the support of the banks in this transaction, the hedge counterparties, but it was important that we actually looked to doing something constructive with this hedge. Now, the best solution that we came up with was in fact we should actually close the hedge out as and when an opportune time came, take the pain in the short-term and then move on in a purely unhedged fashion. That meant that we actually had to, as you heard Nick say, we had to increase our debt level to 500 -- another $530 million. That took us up to, by the end, something in the order of $1.9 billion. Now, whilst banking governance and banks will probably loan you on something like two times EBIDTA and we have an EBIDTA of about a -- plus or minus $1 billion a year. Clearly, $1.9 billion would be within normal banking general policies. However, we said in the past that we wouldn’t want to go too high, but we certainly would not want to leverage the balance sheet entirely on one transaction and close off other potential opportunities. And we felt that, having crystallized the hedge, moving from what we had before the hedge crystallization of about $1.2 billion and going up to $1.9 billion, we felt the shift move too far. And on the basis of that, we said, we believe it is prudent to reduce the debt level back to a point where we are comfortable. We have retained debt in this company. We are not unhappy with debt. And we are happy to live with that debt. But we believe it should be done at the level. That means that we don’t close off further opportunities to this company going forward. That’s why we have decided to reduce the debt levels.

And how did you determine 1.2 billion, I mean why not just raise [55,600] over the Western Areas hedge book?

Well, we will see what comes in, maybe that’s all that we get in 550, but we are hopeful we will get to actually around $1.2 billion. We will see. I mean we don’t know what the appetite in the market is like. Is this is going to be a very sort of quick process, but we do believe that what it will do, it will leave us in a situation where we will ultimately land up with a much more optimal financial structure and a much stronger balance sheet.

Okay. Well, thank you, I appreciate you taking the questions.

Good. Thanks a lot.

Your next question is from the line of Victor Flores with HSBC.

Thank you. Good morning, Ian. I would like to ask you three hopefully pretty brief questions. First, regarding Cerro Corona, could you tell us when the mill foundations were actually poured or if they have been poured?

John will answer that question.

Victor, I just finished a list and then while I am talking the guys can make sure they come up with answers

Sure. Second question goes to Kloof, and perhaps some explanation for why it seems that the grades continue to drop even though we were hoping that they would stabilize? And then the final question is just a bit more detail on what you expect in terms of cost and capital for South Deep, as you get it back up to where you want it to be to at 220,000 tons a month.

Okay, thanks, Victor. In terms of Cerro Corona, what was completed at the end of last year was the bulk work. So that means that the moving of earth and the creating of the flat surfaces, the contour of flat surfaces was complete. Then the construction contract of [Ghani Montera] was mobilized to site in January. So, moving forward from here is when they would be moving into mill foundations, which is I think specifically your question. So that’s not been poured yet. That would be the process of moving into North.

Okay, thank you.

Hi, Victor. It’s Terence. Just moving -- looking at the Kloof mine call factor and grade, I mean the deliberate grades are below expectation and these are on the back of the low mine call factor. There were a couple of things that affected us in the quarter. One is that, a lot of the high grades that we did attain in the quarter, the overall mine grade was equal between the two previous quarters. That occurred in the December measuring month. A lot of that gold didn’t come out from underground and that resulted in the lower mine call factor. Is there anyone ready to sell, I invite you to go and take that last door out and bring it to surface. As far as the cost and capital are concerned at South Deep, first off, we had given some guidance in the quarterly book in terms of what the capital expenditures should be like over the next six months. I wouldn’t like to go beyond that because I haven’t had full sight of the numbers, but that number is R264 million. As far as the costs are concerned, we currently have a cost of R133,000 per kg. We're looking by the end of this quarter to be something like 120,000 and by June at about R100,000 per kilogram.

Just one follow-up. Where do you expect to see cost for South Deep, once you are at that 220,000 ton a month level?

Once we do get to that level, it certainly will be below 100,000 and I would be hoping that would be below 90,000. If you look at way this mine is operating at historically before the shaft accident, it was operating with a throughput of something at 460,000 ounces and it had cash cost of R93,000 per kilogram. So, we would certainly be at full production at 220,000 tons per month, which would equate to something like 1.3 tons of gold at 6 grams per ton a month, you would be looking below R90,000 a kilogram.

Thank you very much.

Victor, it's John here. I would like to clarify the bigger picture on South Deep because it’s a question we keep getting and its worth putting Terence’s comments in context. Just to reiterate prior to the shaft accident, the mine was doing about 450,000 ounces a year at R93,000 a kilogram. So, priority one, is to get it back to that level, and then to build of there to the ultimate production levels. Now, in the due diligence, we focused on the blockade plan, and that blockade plan is to get those mines a full production by 2012, and that means that we get to 800,000 ounces a year from the twin shaft system and the capital to get from now to there is about R3.5 billion. The other dimension of that is that full production of 800,000 ounces a year from the twin shaft system, the cash cost that estimated at around R65,000 per kilogram, so quite substantial build-up from here to that point in time. Now, that’s based on the public domain information that is previously being put out by the joint venture and in fact in the Western Areas circular and that was the basis of our due diligence and what we regard as the base plant for the twin shaft system.

Thank you very much.

Your next question is from the line of Oscar Cabrera with Goldman Sachs.

Good afternoon guys. Good morning for us. Just a couple of quick questions and follow-up. In terms just pulling up on the South Deep, thank you for all the detail that you've provided, I mean at what point or what level is a comfort level with the debt? Is it two times EBITDA? Ian or -- can you stretch that and--?

Yeah. Look the presentations that we've given over the last year or two, which we put on the web, where we got into a lot of detail about the level of debts, that we are comfortable with. And as I mentioned this earlier, in the presentation, around $700 million to $750 million of debts would be a comfortable level of debt for us to maintain. And our EBITDA, as you also heard earlier, is about $1 billion a year at current process. So, that’s about 0.7 of EBITDA. Also it’s going to conflict when we did the South Deep deal, we also said that the consequence of that purchase, consequence of that acquisition. We could stretch that 750 a bit higher. And in the worst case scenario, we had delivered the $1.2 billion of debt, we could have done so. And that’s what we indicated at the time. But clearly adding the hedge on to that, changes the whole situation. Because what you've done is by closing out the hedge you've accelerated the liability by 6 to 8 years, which put the whole different complexion on it. So, if we get the equity or anything away, at the level that we've targeted, we will be at comfortable levels for debt going forward.

Si, do you mean to say that its indication that you have given, is that two times EBITDA would be something that you guys are comfortable with, and I guess I'm just asking the question because as you go through the other expansion projects you have, you have in mind you develop South Deep, is there going to be need to, would you rather have another equity financing or are you going to use debt for that?

Sorry, I just want to clarify or correct you if I may with respect. We've never said we'd be comfortable with debt of two times EBITDA, that’s never ever been said by this company.

Okay, that’s fair enough.

That’s a misconception. Each acquisition that we look at or each internal project that we look at, we make a decision on its merit, how best to fund that project. But I think the important thing is, if we get the debt levels down for the level I've indicated to you, it doesn’t limit us in terms of our ability to take on additional debt, should we need for further projects.

Oscar, I think the other points as you mentioned, what about the financing for the capital at South Deep. One of the advantages is taking out this hedge position, is instead of applying the revenue that we are getting now as a R140,000 odd a kilogram, instead of applying that to working out this hedge book, we can only use it to internally fund, the capital program and certainly the work that we have done to date leads us to believe that at current prices and the current levels of performance and where we are moving towards for the next quarter or so that South Deep will be in a position that it is able to almost breakeven after its working cost and its capital. So it is one or the other reasons for wanting to take this hedge out and do not underestimate the physiological advantage to the guys on the mine where now all of a sudden we're actually seeing themselves making profits. There is nothing more demoralizing to people quarter-after-quarter not making money despite their best efforts. So, another three quarter softer regions for wanting to take out this hedge and turn this into a proper mine not just something that’s making the banks rich, we want to make our shareholders rich not the banks.

Okay, I have a great answer. Thank you very much guys.

Your next question is from the line of David Lathal with Deutsche Bank.

Yeah, thanks guys and good job. I think you have answered a few of my questions already. I guess Cerro Corona I just want to revisit them. Capital budget for that -- the capital budget continues to seem to be going up. Did I hear $340 million and I guess is that the center prediction of the capital cost and where are we with, I guess, the selection of the tailings dam in that location?

Right, just to be clear that we have an under $340 million and that’s the number I think we have been reporting for the last two quarters and that follows once the really advanced procurement of dam quite a few months ago as well as some of the more detailed engineering. So, that number has been stable now for quite some time and we are starting to see numbers actually moving into contingency. So, although there is a lot of construction to be done in the coming 12 months and it's a tough environment, weather and terrain, we feel reasonably happy with that number, which is why we've maintained it there in terms of guidance. In terms of the tailings dam which is the biggest single driver of the capital and schedule, although it is not completely in the bag, the revised design is -- has not met any black hole so far and is in the very final stages of signoff including an independent review board of external experts, which really came back with a number of recommendations that are being worked through. So, at this stage we do expect to go with a simpler dam and the result we look at all the capital in schedule. But it's really one evolving equation, but overall we feel that the $340 million capital guidance is the appropriate number at the moment and as I said we have got some numbers moving back into contingency which give us a better room.

Okay, thanks. My second set of questions especially in South Africa as we look at a higher capital program. What sort of capital cost escalation might we be experiencing right now and also on operating side, should we still use PPI type inflationary numbers for your working cost estimates over the next 3 or 4 years?

Dave, Nick here. If you look at published year-on-year PPI over the last 12 months, that's been bordering on double-digit and if you look at the last 5 or 6 months it's round about 7%. Now, again if I background at our South African operations we've achieved an overall increase, weighted average increase in our contract prices of about 4%, so that’s what we've achieved. So, we've beaten inflation and we manage our capital contracts in the same way that we manage our working cost contracts that was managed under a coordinated supply chain program, because we don’t really take the view when we know best capital, so we are not going to have the same controls of operating costs, not the case. You are spending money and when you are spending money you need to have controls. That’s what we've managed to achieve so far. Whether we can achieve that going forward, obviously, is difficult to say, but we'll certainly be attempting to outperform the general inflation in the country. We've managed to do that consistently over the last four years and certainly we hope to achieve that going forward. I don’t think inflation is the biggest risk on these projects. The biggest risk on these projects is actually making sure that you get them done on time and that they don’t actually get delayed. I think we can manage the inflation aspects. The scheduling and making sure we do things on time in a proper sequence is a much bigger risk for me.

Nick just one last follow up. So, are you talking about CPI inflation or PPI inflation as a target to be below?

I think you should look to what we've achieved. We've achieved around 4 or 5% as I mentioned and I would be hoping that we can achieve that going forward. That’s obviously a stiff target, but we certainly do want to outperform inflation, that’s our target.

Okay, thanks.

Your next question is from the line of Daniel McConvey of Rossport Investments

Good morning Nicky and everyone. Oscar answered my first question, just a bit of a gold market question. Nick, when was the hedge book bought back roughly. Was it back in January and over very recently or when did most of that activity take place?

Look we -- Dan, we started the process before Christmas, but that’s the process we started and that culminated in a whole series of steps, which I don't really want to go into, because it is the partial information. That culminated in a final close-up division being agreed yesterday afternoon and the underlying agreements within times. I think the positive side that you can take out of is that a lot of the gold price run up that you have seen over the last week or so. We don't believe it's got anything to do with what we have been doing because of the fact that the process started a lot earlier. But for obvious reasons, I don't want to go into specifics about the (inaudible) with all the strategies we deployed in this.

Okay. Thank you very much.

Jeremy, will pick one last question.

Certainly. Your last question comes from the line of Heather Douglas with BMO Capital Markets.

Hi. Good afternoon, everyone. I just have two questions either one well its kind of a compound one but the power -- can you give us the situation both in Ghana and South Africa? Can you give us a little bit more details about the new power plant in Ghana and when you think it will on stream in the foot so that we can see cost coming down?

Heather, it's Terence. We -- there is a consorting of four companies that's Radius, AngloGold, Newmont and Golden Star. We plan on putting a national 100 megawatt plants into Ghana which will provide us with an up tick of something like 80 megawatts. And so that to supplement the growth, it will run on normal fuel in the first instance and then ultimately we will move it on to make it a gasified power station. In terms of the overall position in Ghana right now. The Volta is still very low. It's at 998 levels and extra below and the offset is high. There's been growth in that country and basically the power grid can't keep up. What does it mean for us the full members of the consortium? It means that we put into the grid and in that part such that if we are ever to be asked to reduce our power by 50% that would be sufficient. In other words, the 80 megawatts would make up for that 50%. So, we would be protected up to a 50% reduction in power which emanated from the VRA or Volta River Authority.

Okay. Thanks. And what --

And in terms of cost, the plant that we put in initially will run it about $0.15 per kilowatt hour, ultimately when we convert it to gas and that's one the fire plant that's shipped from Nigeria. It would be able to run it below $0.10 per kilowatt hour and that versus the unmanned power generation cost have run about $0.26 per kilowatt hour.

Okay. And how is the situation now in South Africa? I understand that had some blackout first week -- last week?

That's I think that's just about being resolved and we have had minor interruptions, we have been cooperating with you and we have got to a position where we have had minimal interruptions as far as that's concerned. A lot of the power generation units that were offline as a result of maintenance and unplanned maintenance all being brought back on stream.

And are you concerned about the long-term power situation in South Africa at all? Because last year you had the same blackout thing happened in June?

Yeah that was probably more of a winter phenomenon. I mean that's happened in summer, when we -- in natural effect, a lot of the power stations are actually being repaired for winter. The power situation in South Africa is going to be a challenge. I think it has been said that overtime we are running at just about full capacity mid winter and there is quite a lot of measures in place by a mixed effect they are coming to see us next Tuesday to give us the full plans going forward. But in essence, they are going to recommission some of their power station and in addition, we are advancing quite a few projects, which are collectively core DSM projects or demand side management projects and we're implementing those on the mines. What actually happens with these projects is, if we are managed to reduce power during peak times, we actually get a 100% capital subsidy from Essakane, to actually put those projects in. If it's off peak, we actually get a 50% subsidy. So, we're working hand-in-hand with Essakane to try and reduced our power consumption as well and this is happening across the country with many of the other industries.

Okay. Thanks and my second question is for Nick. How does today's capital raising impact (inaudible) the South Africa operations?

Sorry. I couldn’t hear the question, Heather. Could you repeat that?

Sorry. How does today's capital raising which you'll be using to repay the debt, impact and [well attendant] interest in the Gold Fields of South Africa.

What the agreement would have developed on the does provide the ability to undertake share placements at a certain discount and provided we stay within that discount then its business as usually. If we move that five bits that discount we may have to review the slower and the capitals in place there. So, I can't tell you what the impact is going to be at this stage. I will be very surprised if the impact was material

Okay. Thanks.

Okay. Well, ladies and gentlemen, thank you all very much for listening in today. We look forward to seeing you in three months time. Thanks very much indeed and thanks for listening. Bye.

Thank you for your participation in today's conference, ladies and gentlemen. This does conclude the presentation. You may now discount. Have wonderful day.