Earnings Labs

Gold Fields Limited (GFI)

Q2 2024 Earnings Call· Fri, Aug 23, 2024

$43.17

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Transcript

Mike Fraser

Management

Good day all and thank you for joining us today for the presentation of our operational and financial results for the six months ending 30th of June 2024. With me today is our Interim CFO, Alex Dall. I ask that you note our forward-looking statements. As part of the presentation today, we will be sharing our safety, operational, financial and ESG performance for the six months, as well as providing an update and outlook for the balance of the year. It is with deep regret that we reported two fatalities in the half year. We would like to honor the lives of our colleagues that we lost at our operations and continue to keep their families and loved ones in our thoughts. I again extend our sincere condolences to the family, friends and colleagues of our colleagues that lost their lives. I absolutely believe that a fatality-free mining business is possible and that we can deliver on our promise that everyone who works at Gold Fields goes home safe and healthy every day. As part of improving the safety outcomes in our business, we commissioned DSS+ to conduct an independent review of our safety culture, processes, systems and practices. This review has been completed and I'll discuss more of the safety journey with you shortly. In terms of delivering value to our host communities, earlier this month, our St Ives mine signed a landmark native title agreement with the Ngadju People, who are the determined native title holders of the lands and waters surrounding Norseman, where the St Ives mine is located. It was indeed a privilege to have been part of the signing ceremony of this landmark agreement, which will see significant value delivered to the Ngadju People over the life of the mine. We continue to make strides…

Alex Dall

Management

Thanks Mike. On the back of the 20% decrease in production, we have seen a commensurate decrease in normalized earnings down by 22% to $355 million. Adjusted free cash flow has also been significantly impacted, resulting in an outflow of $58 million, which I'll unpack further on the next slide. All-in cost is up at $2,060 per ounce. This has been significantly impacted by the lower production, increase in a gold inventory charge compared to a credit in the prior period, and higher sustaining and non-sustaining capital. We have announced a dividend of ZAR0.300, representing a payout ratio of 40%, which is in line with the full year 2023 payout ratio. Net debt is sitting at $1.2 billion, with a healthy ratio of 0.53 times net debt to EBITDA. During the first half of 2024, we paid our existing $500 million bond out of the RCF. We can report positive cash generation from all our operations which resulted in $321 million. After spend on our two projects of $256 million on Salares Norte and $42 million on Windfall, we had a positive cash flow of $23 million left to fund our interest and other corporate costs and after these we had a negative adjusted free cash flow of $58 million. Our gross debt is sitting at $1.2 billion with available facilities of $1.2 billion at 30 June 2024. The bond repayment was out of existing RCF availability and cash resources. During H1, we also refinanced the Peru RCF. Our debt has a very solid maturity profile, with the majority being due in 2029. Post 30 June, Gold Fields has commitments for a $500 million liquidity facility. Gold Fields will look at options to further optimize its debt structure and maintain balance sheet flexibility. And with that, I hand back to Mike.

Mike Fraser

Operator

Thank you, Alex. We’ve -- over the last seven months, we've also been progressing work to align our strategic priorities to our strategy. What I'd like to do now is provide a high-level overview of this work, but come back with more details later this year. Our aim at Gold Fields is to become a safe, reliable and cost-effective producer. We want to bring predictability back into our business. We have a portfolio of high-quality assets, four of which we expect will anchor our portfolio in the long term. These long-term assets include St Ives, South Deep, the Tarkwa/Iduapriem JV and now Windfall. And despite some of the disappointments experienced recently, we are also confident that Salares once ramped up is going to contribute significantly to our cash flows in the next few years. Much has been said about a decline in our production volumes over the next decade, and this being a concern. For us, it is about growing value by growing cash flow per share. However, we continue to assess growing our portfolio through bolt-on M&A as well as exploration, both Brownfields and Greenfields opportunities, whilst balancing returns to our shareholders. I now want to talk about some of the catalysts that we are looking to that will unlock some of the value in the near term. We've discussed Salares Norte which again will contribute significantly as we ramp this up. Furthermore, since the announcement of the Tarkwa/Iduapriem JV in March of 2023, Gold Fields and AngloGold Ashanti have had extensive engagements with the government of Ghana with respect to the proposed transaction. Significant progress has been made. We are still awaiting final approval from Parliament. However, we continue to pursue completion of this joint venture. We continue to engage with the government of Ghana and will continue…