GOLD FIELDS RESULTS
Q1F2008
I
10
Exploration and corporate
development
Gold Fields completed drilling on five projects during the
quarter on its greenfield exploration sites.
At the Essakane project in Burkina Faso, the Bankable
Feasibility Study was completed and delivered to our partners,
securing an additional 10 per cent share in the project and
bringing GFI’s stake to 60 per cent. Highlights from the study
include ore production of 5.4 million tons per annum, producing
an average of 292,000 ounces per annum of gold over 8.6
years. The partners are currently reviewing the study before
making a production decision expected before the end of the
year.
On the Sankarani project in south-western Mali, presently
operated by partner Glencar Mining plc (AIM: “GEX”), a review
of the project’s untested potential was incorporated into a wider
regional review. To date just over US$2.5 million has been
spent giving Gold Fields an effective 25 per cent interest in the
project. Gold Fields has a right to increase its stake to 51 per
cent by spending an additional US$1.5 million by December
2007. Twenty-seven new targets for RAB drilling were
identified within the Bokoro and Sanioumale licenses. At the
80 per cent owned Kisenge project in the southern DRC, the
second phase of diamond drilling was completed on the
Kajimba, Mpokoto, Lungenda and Weji targets with
encouraging results. Drilling was started on the Katompe target
and work was continuing on a regional stream sediment
sampling programme to identify new anomalies within our
license areas.
In Kyrgyzstan, Gold Fields has an option to joint venture the
Talas project via its equity placement in Lero Gold Corp (TSX-
V: “LER”). Phase 1 drilling at Taldybulak Central and
Northwest targets was completed. In Slovakia, Gold Fields has
a right of first refusal to joint venture the Biely Vrch project
through our equity holdings in EMED Mining Public Limited
(AIM: “EMED”). During the quarter, Gold Fields participated in
a second private placement in EMED to maintain its holding at
10 per cent.
At the Central Victoria project in Australia, aircore and diamond
drilling continued to define and extend significant gold
anomalism. Initial diamond drilling was commenced on the
southern end of the eight kilometer long Main-Lees trend as
part of the Fosterville East JV. Gold Fields is earning an 80 per
cent stake in the Gobondery JV, Wellington North JV and
Cowal East JV. In Central Queensland, Gold Fields entered
into the Mt Carton regional joint venture agreement with
Conquest Mining Limited (ASX: “CQT”) where we can earn a
51 per cent stake in eight exploration tenements surrounding
Conquest’s Silver Hill discovery.
In the El Callao District in Venezuela, adjacent to the Choco 10
Mine, drilling was completed on the La Pinta, La Victoria and
Avila targets. On the Dominican Republic joint venture with
partner GoldQuest Mining Corp (TSX-V: “GQC”), preparations
were made to commence drilling in the December quarter on
the Cerro Dorado, Piedra Iman and Josefina targets. In Central
Chile at the joint venture with a private Chilean company (Gold
Fields earning 70 per cent), 13,200 hectares of exploration
concessions were staked on selected target areas in the
Maricunga Belt.
Corporate
Sale of Essakane Project
On 11 October an agreement was reached in terms of which
Gold Fields will sell its current 60 per cent stake in the
Essakane project located in Burkina Faso, West Africa, to its
partner in the project, Orezone Resources Inc.
Orezone will pay Gold Fields US$150 million in cash and
US$50 million in Orezone securities or US$200 million in cash
at Orezone’s election. To date Gold Fields has spent a total of
US$47 million on the project. The sale price represents a
significant return on investment for Gold Fields.
The transaction is subject to a number of conditions, including
Orezone securing net proceeds of at least US$150 million
through a public offering of its securities, and approval of the
transaction by the South African Reserve Bank. Gold Fields
and Orezone expect the transaction to close towards the end of
November.
Sale of Venezuela assets
On 12 October 2007 an agreement was reached in terms of
which Gold Fields will effectively dispose of its assets in
Venezuela to Rusoro Mining Ltd. for a total consideration of
approximately US$532 million*.
Rusoro will pay Gold Fields a minimum of US$150 million in
cash, US$30 million in convertible debt, and 140 million Rusoro
shares. Gold Fields is expected to own around 38 per cent of
the outstanding shares of that Company after the transaction
has been concluded. Gold Fields will, through its exposure to
Rusoro, retain exposure to the upside inherent in the assets.
The total investment to date in the Venezuelan assets,
including the initial acquisition costs, is US$425 million. .
The transaction envisages Rusoro acquiring Gold Fields’ stake
in the Choco 10 gold mine, as well as the contiguous mineral
rights owned by Gold Fields.
The transaction is subject to various conditions, including South
African Reserve Bank and stock exchange approvals, the
raising of the required funding by Rusoro, as well as approval
by Rusoro shareholders, more than 50 per cent of who have
given written irrevocable support to the transaction. Rusoro
and Gold Fields expect the transaction to close in mid-
December 2007.
* Based on the 10-day VWAP of the Rusoro share price at the time of the
announcement.
Provisional accounting for South Deep
The acquisition of South Deep has been accounted for on a
provisional basis in accordance with IFRS 3. This has resulted
in the recognition of goodwill amounting to R4.4 billion.
Outlook
Excluding Choco 10 from both quarters, gold production should
increase and unit costs decline in the December quarter when
compared with the September quarter.
Basis of accounting
The unaudited results for the quarter have been prepared on
the International Financial Reporting Standards (IFRS) basis.
The detailed financial, operational and development results for
the September 2007 quarter are submitted in this report.
These consolidated quarterly statements are prepared in
accordance with IAS 34, Interim Financial Reporting. The
accounting policies used in the preparation of this report are
consistent with those applied in the previous financial year
except for the adoption of the revised international accounting
standards forthcoming from the IAS improvements project and
new IFRS issued by the International Accounting Standards
Board.
I.D. Cockerill
Chief Executive Officer
25 October 2007