Q2 F2009 RESULTS. 29 January 2009

Transcription

1 H2 F2009 GENERATING FREE CASH FLOW Q2 F2009 RESULTS Johannesburg 29 January 2009

2 INTRODUCTION Forward Looking Statements 1 Certain statements in this document constitute forward looking statements within the meaning of Section 27A of the US Securities Act of 1933 and Section 21E of the US Securities Exchange Act of Such forward looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the company to be materially different from the future results, performance or achievements expressed or implied by such forward looking statements. Such risks, uncertainties and other important factors include among others: economic, business and political conditions in South Africa; decreases in the market price of gold; hazards associated with underground and surface gold mining; labour disruptions; changes in government regulations, particularly environmental regulations; changes in exchange rates; currency devaluations; inflation and other macro-economic factors; and the impact of the AIDS crisis in South Africa. These forward looking statements speak only as of the date of this document. The company undertakes no obligation to update publicly or release any revisions to these forward looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events. 2

3 2 EMERGENCY PROCEDURES In the event of an emergency an alarm will sound Exit premises through doors on the north side of room Congregate on lawns to the north of the building Await further instructions 3

4 3 PROGRAMME Introduction Financial Review South Africa Review International Review Strategy Review and Conclusion Questions and Discussion Nick Holland Chief Executive Officer Paul Schmidt Chief Financial Officer Vishnu Pillay Head of South African Operations Glenn Baldwin Head of International Operations Nick Holland Chief Executive Officer Willie Jacobsz Head of Investor Relations 4

5 Introduction Nick Holland Chief Executive Officer

6 INTRODUCTION CFO Appointed 5 Paul Schmidt Chief Financial i Officer LEADERSHIP TEAM BEDDED DOWN 6

7 INTRODUCTION Strategy To Release Value 6 Again A Four Million Ounce Producer SAFETY Notional Cash Expenditure (NCE) Total cash costs + All Capital FREE CASH FLOW UNHEDGED Securing the Future Operational Excellence Growing Gold Fields Q3 F09 TARGET ~4 moz run rate annualised NCE of R:US$8.00 (Copper at US$6,000/ton and Gold at US$800/oz) RECOVERY STRATEGY PRESENTED 9 MAY

8 INTRODUCTION Strategy To Release Value 7 DELIVERING OUR COMMITMENTS GUIDANCE Q1 and Q2 F09 production and cost targets achieved TARKWA CIL plant expansion completed EXPANSION 1 mtpm design capacity by 23 Dec 08. CERRO CORONA Capital project completed 500,000 tpm name plate capacity by late Dec 08 ST IVES Belleisle and Cave Rocks ramped up by Dec 08 Production build-up as underground mines deliver OVER THE CAPITAL HUMP 8

9 INTRODUCTION Strategy To Release Value 8 SAFETY PROJECTS KLOOF Main Shaft steel replacement completed on schedule DRIEFONTEIN Critical secondary support backlog completed SOUTH DEEP 95 2 & 3 West Ramps rehabilitation completed Vent Raise Hole repaired PILLAR MINING Pillar mining review completed and implemented SOUTH AFRICA TO INCREASE PRODUCTION FROM 15.5 TONS TO 18 TONS OF GOLD PER QUARTER ALL REHABILITATION PROJECTS COMPLETED 9

10 INTRODUCTION Strategy To Release Value 9 STEP CHANGE IN SAFETY Du Pont Safety Review completed Training and Culture interventions ongoing Significant ifi improvements in all safety metrics 8 Fatalities year to Dec against total of 47 for F2008 WE WILL NOT MINE IF WE CANNOT MINE SAFELY 10

11 INTRODUCTION Strategy To Release Value 10 Gold production Cash costs NCE Operating profit Net earnings Q2 F2009 RESULTS Up 5% to 839,000 attributable ounces ZAR flat at R153,893 (US$ - down 21% to US$ 487/oz) ZAR - up 8% to R244,210 (US$ - down 15% to US$774/oz) Up to R2,566m Up to R483m Normalised earnings Interim Dividend Up to R542m R0.30 per share GUIDANCE ACHIEVED 11

12 INTRODUCTION Strategy To Release Value 11 HIGHER GOLD PRICE + Higher production + Weaker exchange rate + Lower input costs + Lower capex Lower NCE = IMPROVED FREE CASH FLOW A BETTER H2 F

13 Financial Review Paul Schmidt Chief Financial Officer

14 Q2 F2009 FINANCIAL REVIEW Salient Features 13 Q2F2009 Q1F2009 Gold Produced 1 000oz Exchange rate ZAR/US$ US$/oz Revenue R/kg 250, ,586 Rm 7,074 5,724 Operating costs, net Rm 4,508 4,150 Operating costs R/ton SA ug R/t 973 1,038 Operating profit Rm 2,566 1,574 Operating margin % Total cash costs R/kg 153, ,461 US$/oz Notional cash expenditure 2 (NCE) R/kg 244, ,120 US$/oz Attributable 2 NCE = Operating cost + Capex 14

15 Q2 F2009 FINANCIAL REVIEW Income Statement 14 Q2F2009 Q1F2009 Operating profit Rm 2,566 1,574 Amortisation & depreciation Rm (1,033) (902) Net operating profit Rm 1, Finance cost Rm (164) (112) Share of loss of associates Rm (47) (104) Loss on financial instruments Rm (66) (56) Exploration Rm (136) (68) Other expenses Rm (100) (120) Profit before tax & exceptional items Rm 1, Exceptional items Rm (5) 115 Mining & income tax Rm (496) (257) Net profit Rm Net profit attributable to minority shareholders Rm Net profit attributable to ordinary Rm shareholders SA cps 74 6 Rm Normalised earnings SA cps

16 Q2 F2009 FINANCIAL REVIEW Cash Flow Statement 15 Q2F2009 Q1F2009 Cash flows from operations Rm 1,787 (32) Dividend paid Rm - (785) Capital expenditure net Rm (2,345) (1,811) Other investing activities Rm (5) (97) Net loans (repaid)/received Rm (340) 2,596 Other financing activities Rm 9 3 Net cash outflow Rm (894) (126) Currency translation adjustment Rm 130 (63) Cash at beginning of period Rm 1,818 2,007 Cash at end of period Rm 1,054 1,818 16

17 Q2 F2009 FINANCIAL REVIEW Balance Sheet 16 Net Debt as at End December 2008 Rm $m Loans - Long term (10,016) (1,039) Loans - Short term (392) (41) Ttll Total loans (10,408) (1,080) Less cash and deposits 1, Net debt (9,354) (970) Less investments 4, Net debt after investments (4,994) (518) DEBT LEVELS WITHIN COMFORT RANGE 17

18 Q2 F2009 FINANCIAL REVIEW Financial Flexibility 17 Headroom Available Rand Denominated US$ Denominated Rm $m Uncommitted Facilities Committed Facilities Total credit 1, Debt Maturity Profile (Rm) as at Dec 2008* 6,000 5,000 4,820 4,000 3,410 3,000 2,000 1,446 1, * Converted at US$1 : R9.64 F09 Q4 F10 Q2 F10 Q3 F11 Q4 F15 Q4 Maturity Refinancing Plan Free cash flow Local market remains liquid and cost effective AMPLE LIQUIDITY 18

19 Q2 F2009 FINANCIAL REVIEW Capital Expenditure Profile 18 Growth Projects: All Amounts Rm F2009 Q1 Q2 Q3 Q4 Actual Actual Forecast Forecast Cerro Corona Tarkwa CIL Expansion South Deep Total growth projects Sustaining Capex South Africa Sustaining Capex International (US$73) (US$76) (US$89) (US$85) ORD SA Operations Total Capital Expenditure 1,802 2,337 1,887 1,871 ALL GROWTH PROJECTS FULLY CAPITALISED 19

20 Q2 F2009 FINANCIAL REVIEW Supply Spend Trends Key Global Commodities Cyanide Ave Price Index Diesel Ave Price Index STEEL INDEX Ammonia Index (Explosives) Price indexes from January 08 to December 08 Downward trend from September 08 onwards. Assuming current prices, estimated savings of US$11m per quarter. (US$8m International and US$3m SA) ZAR & A$ exchange rate weaknesses to partially offset benefit of weaker US$ commodity prices. DECLINE TO FLOW THROUGH TO COSTS 20

21 South Africa Review Vishnu Pillay Head of South African Operations

22 Q2 F2009 SOUTH AFRICA Safety 21 Mining Weekly WE INTEND STEERING THIS SHIP WITH AN INCREDIBLY STEADY HAND AND YOU WILL SEE, IN THE QUARTERS TO COME, AN IMPROVEMENT 22

23 Q2 F2009 SOUTH AFRICA Safety 22 Fatal Injury Frequency Rate Serious Injury Frequency Rate F2004 F2005 F2006 F2007 F2008 YTD 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 F2004 F2005 F2006 F2007 F2008 YTD 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 Financial Year Quarter Financial Year Quarter Improved Safety Lost Day Injury Frequency Rate Best YTD figures since F1999 YTD Improvement: F2009 vs. F2008 FIFR = 72% SIFR = 29% LTIFR = 35% F2004 F2005 F2006 F2007 F2008 YTD Financial Year 2008Q1 2008Q2 Quarter 2008Q3 2008Q4 2009Q1 2009Q2 Frequency Rate per million hours worked WE WILL NOT MINE IF WE CANNOT MINE SAFELY 23

24 Q2 F2009 SOUTH AFRICA Safety 23 Findings of Du Pont Review Areas for improvement: Culture Training Application of standards Will not have a negative impact on production Learning points will improve Health and Safety initiatives A clear and simple safety vision cascading down from the CEO and Management has energy for Safety, and sees it as a priority NEW SAFETY STRATEGY BEING FORMULATED 24

25 Q2 F2009 SOUTH AFRICA Summary 24 Actual Q1 F09 Actual Q2 F09 Guidance Q3 F09 Gold kg 15,304 15, ,900 Production koz Total cash R/kg 153, , ,000 costs US$/oz NCE R/kg 212, , ,600 US$/oz Capex Rm ,000 US$m Salient Points Kloof Main Shaft rehabilitated on schedule Critical Secondary Support addressed Christmas break (12-days) impacted on production; Start-up well managed Outlook Q3 Production to improve by 15% to 17,900kg subject to no major operational interruptions Lower NCE, despite an increase in Capex Mechanisation programme & Project M suite gaining traction RESTORING THE INTEGRITY OF THE OPERATIONS 25

26 Q2 F2009 SOUTH AFRICA Driefontein Gold Mine 25 Actual Q1 F09 Actual Q2 F09 Guidance Q3 F09 Gold kg 6,428 6,063 6,900 Production koz Total cash R/kg 130, , ,000 costs US$/oz NCE R/kg 169, , ,000 US$/oz Capex Rm US$m Salient Points 2 Fatalities; Section 54 stoppage with resultant loss in production (5-days) Citi Critical secondary support addressed d Seismicity at 1 Shaft Outlook Q3 6 and 7 Shafts to focus on reclamation, sweepings and selective mining Production to improve by 14% to 6,900kg STEADY STATE TARGET: 7 TONS PER QUARTER 26

27 Q2 F2009 SOUTH AFRICA Kloof Gold Mine 26 Actual Q1 F09 Actual Q2 F09 Guidance Q3 F09 Gold kg 4,871 4,717 6,100 Production koz Total cash costs NCE Capex R/kg 153, , ,000 US$/oz R/kg 210, , ,000 US$/oz Rm US$m Salient Points 2 Fatalities; Section 54 stoppage with resultant loss in production (4-days) Main Shaft rehabilitation ti completed Fire at 7 Shaft Outlook Q3 Main Shaft to return to normal production at 8,000 to 12,000 square metres per month Aggressively pursuing the Middelvlei Reef at 8 Shaft and Main Shaft (1 Sub-vertical) Increased capital expenditure due to the commencement of the 69 Decline Project Production to improve by 29% to 6,100kg STEADY STATE TARGET: 6.5 TONS PER QUARTER 27

28 Q2 F2009 SOUTH AFRICA South Deep Gold Mine 27 Actual Q1 F09 Actual Q2 F09 Guidance Q3 F09 Gold kg 849 1,471 1,600 Production koz Total cash R/kg 339, , ,000 costs US$/oz 1, NCE R/kg 579, , ,000 US$/oz 2,328 1,147 1,110 Capex Rm US$m Salient Points Vent Raise Hole repaired & winder replaced Twin Vent Shaft brattice wall completed Production up by 74% Development increased by 69% Outlook Q3 Refurbishment of the South Shaft Complex to accelerate production build-up Mine to self-fund 50% of capital for the balance of F2009 Production to improve by 9% to 1,600kg in Q3 F09 ACCELERATED BUILD-UP 28

29 Q2 F2009 SOUTH AFRICA Beatrix Gold Mine 28 Actual Q1 F09 Actual Q2 F09 Guidance Q3 F09 Gold kg 3,156 3, , Production koz Total cash R/kg 150, , ,000 costs US$/oz NCE R/kg 206, , ,000 US$/oz Capex Rm US$m Salient Points 2 fatalities; Section 54 stoppage resulted in production delays (2-days) Insufficient production volumes and recovered grade is too low Outlook Q3 Improve quality mining, production volumes and grades Optimisation of Metallurgical Plants Production of 3,300 kg for Q3 F09 STEADY STATE TARGET: 3.6 TONS PER QUARTER 29

30 SA REGION Way Forward 29 Simple Strategy Safety Principal value and top priority Deliver Operational Plans Volume Value Quality NCE Management FOCUS ON THE FUNDAMENTALS 30

31 International Review Glenn Baldwin Head of International Operations

32 Q2 F2009 INTERNATIONAL Summary 31 Actual Q1 F09 Actual Q2 F09 Guidance Q3 F09 Gold Produced - managed koz Total cash costs US$/oz NCE US$/oz Capex US$m Outlook Q3 Tarkwa CIL Expansion ramped up to full production Cerro Corona ramped up to full production Major project completion in Q2 results in positive metrics going forward: Higher gold production Substantial reduction in capital Cash generating margin Further definition of Athena Project at St Ives INCREASE IN PRODUCTION = DECLINE IN NCE 32

33 Q2 F2009 INTERNATIONAL Tarkwa Gold Mine 32 Gold Production Total cash costs Actual Q1 F09 Actual Q2 F09 Guidance Q3 F09 koz US$/oz NCE US$/oz 1,029 1, Salient Points 1mtpm CIL plant commissioned i end Dec: Full capex ~$173 mllion fully accounted for in Q2 Achieved name plate capacity Production impacted by: Tie-in of new plant GIP l k i h l h d Capex US$m GIP lock-up in heap leach pads Outlook Q3 Costs lower reflecting higher production and reduced diesel and other input costs Improved productivity to deliver short term goals and provide long term strip STEADY STATE TARGET: 200 KOZ PER QUARTER. 33

34 Q2 F2009 INTERNATIONAL Damang Gold mine 33 Actual Q1 F09 Actual Q2 F09 Guidance Q3 F09 Salient Points Gold Production Total cash costs koz US$/oz NCE US$/oz Rex pit started Improved yield and plant availability DPCB performing as planned Capex US$m Outlook Q3 Grade increase with pebble crusher installation Major crusher rebuild (2 weeks) but crushed ore stockpile sufficient for mill feed Benefits of lower diesel and other input costs STEADY STATE TARGET: 50 KOZ PER QUARTER 34

35 Q2 F2009 INTERNATIONAL St Ives Gold Mine 34 Actual Q1 F09 Actual Q2 F09 Guidance Q3 F09 Salient Points Gold Production Total cash costs koz US$/oz NCE US$/oz Capex US$m Higher grade underground ore improves costs Leviathon pit on schedule Cash costs includes US$80/oz royalties Cave Rocks attained full production Athena delineation continued Outlook Q3 Cost reduction projects deliver benefits Strong gproject pp pipeline developing with promising intersections (Athena and Hamlet) H2F2009 complete Athena Conceptual Study STEADY STATE TARGET: 115 TO 120 KOZ PER QUARTER 35

36 Q2 F2009 INTERNATIONAL St Ives Gold Mine 35 Argo-Athena-Hamlet ARGO Reserve : 1.37Mt@6.47g/t for 285Koz Resource : 7.34g/t for 1.04Moz 50Koz 250 Koz 750 Koz Drill Holes 1.5Moz 6.1m@6.1g/t 15m@14.3g/t 7.6m@7.4g/t Drill Holes 750Koz 12m@21.9g/t 9m@10.3g/t 13m@7.6g/t Ounces are inventory unless otherwise indicated SIGNIFICANT UPSIDE 36

37 Q2 F2009 INTERNATIONAL St Ives Gold Mine 36 ARGO ATHENA Ore Reserves (Dec08) 285Koz 250m THE FUTURE BACKBONE OF ST IVES 37

38 Q2 F2009 INTERNATIONAL Agnew Gold Mine 37 Actual Q1 F09 Actual Q2 F09 Guidance Q3 F09 Salient Points Gold Production Total cash costs koz US$/oz NCE US$/oz Kim lode achieves 40ktpm sustainably Equipment availability issues resolved Mine scheduling opportunities to increase production from underground to 50koz/q Capex US$m Outlook Q3 Increase stoping extraction rate in Main Lode Develop infrastructure to support >70ktpm from Waroonga complex Steady state target: ~50koz per quarter from Waroonga underground complex Reserve definition for Waroonga target 5 year plan Accelerate the underground exploration program A CASH GENERATOR 38

39 Q2 F2009 INTERNATIONAL Cerro Corona Gold Mine 38 Actual Q1 F09 Actual Q2 F09 Guidance* Q3 F09 Salient Points Gold koz Copper tons 750 6,200 7,300 Production Eq oz Total cash costs US$/oz N/A NCE US$/oz 2,289 1, Capex US$m Gold and Copper production on target Mine production ramped up to design levels at quarter end Concentrate specification grades achieved end of quarter Project capital completed * Guidance at Copper US$3,200/t and Gold US$850/oz Outlook Q3 Stabilise copper recoveries Deliver planned gold and copper at full production Determine optimal mining schedule and cost structure given lower copper price Aguilas starter dam construction on track THE PROJECT BECOMES A MINE 39

40 Q2 F2009 INTERNATIONAL Cerro Corona Mine 39 Equivalent Ounce Calculation Formula: Equivalent Gold Ounces = Gold Ounces + ( Copper Tons x Copper Price $/t ) Guidance prices & production Q2 F2009 Actual at guidance prices Actual at actual prices Gold Price $/oz Forecast at Q1 Guidance prices Q3 F2009 Forecast at Q3 Guidance prices Gold price $/oz Copper price $/t 5,000 5,000 4,501 5,000 3,200 Gold produced ozs 25,400 26,100 26,100 34,600 34,600 Copper produced tons 4,600 6,200 6,200 7,300 7,300 Equivalent gold ounces koz DELIVERY OF PHYSICALS 40

41 STRATEGY REVIEW Nick Holland Chief Executive Officer

42 SHORT TERM TARGET Uranium Opportunity 41 Global Resource (working hypothesis) Process Historic Tailings Underground Various options reviewed Resource mt Proceeding with consolidated feasibility study Metal grade - U 3 O 8 g/t Metal grade Au g/t Metal content - mlbs U 3 O Drilling accelerated SAMREC Resource in Jun 09, Reserve Dec 09 Extensive metallurgical test work and pilot plant work underway Metal content Au moz Investment decision Dec 2009 THE FIFTH SOUTH AFRICAN MINE 42 20

43 STRATEGY REVIEW South Deep Opportunity 42 Outlook Short Term Target: 320 koz oz p.a. by Q1 F2010 SV1 AREA OLD MINE SV-1 Shaft Accelerate South Shaft refurbishment Accelerate depletion of current mine Long Term Target: 800 koz p.a by Q Twin Shaft Complex PHASE 1 95 L South Shaft Complex 87 L CURRENT MINE 750 koz from mechanised mining (Upper Elsburgs) 50 koz from low profile mechanised mining (VCR) Wrench Fault PHASE L UNCLE HARRY S PRODUCTION BUILD-UPUP 43

44 STRATEGY REVIEW Exploration 43 Discretionary Exploration Expenditure All in US$m Names of Projects Q1 F2009 Q2 F2009 Greenfields (Expensed) West & Central Africa Kisenge, Sankarani South America Chile Generative, Peru Generative, GoldQuest JV Australasia Myall. Delamarian, Lachlan, Mt Carlton, Sino Gold Eurasia Talas JV Other Brownfields Capitalised St Ives Athena Agnew Waroonga underground Damang Expensed St Ives Agnew Damang Total Expenditure INVESTING IN THE FUTURE 44

45 STRATEGY REVIEW Short Term Targets 44 PRODUCTION ON TARGET 1,200 Actual Estimate 000 oun nces 1, TARGET Agnew St Ives Cerro Corona Damang Tarkwa South Deep 200 Beatrix Kloof 0 Q1 F08 Q2 F08 Q3 F08 Q4 F08 Q1 F09 Q2 F09 Q3 F09 Q4 F09 Driefontein Attributable STILL TARGETING ~ 4MOZ PER ANNUM 45

46 STRATEGY REVIEW Short Term Targets 45 CASH COSTS AHEAD OF GUIDANCE Actual Estimate 1000 US$/oz Q1F08 Q2F08 Q3F08 Q4F08 Q1F09 Q2F09 Q3F09E Q4F09E F2008 F2009 Estimate at US$1: R South Africa Ghana Australia Peru Group POSITIVE IMPACT OF INCREASED PRODUCTION 46

47 STRATEGY REVIEW Short Term Targets 46 US$ 'm 350 MAJOR CAPITAL PROJECT COMPLETED Actual Estimate Q1F08 Q2F08 Q3F08 Q4F08 Q1F09 Q2F09 Q3F09E Q4F09E Estimate at US$1: R F2008 SA Ghana Australia Cerro Corona F2009 STRONG CASH FLOW IN H2 F

48 STRATEGY REVIEW Short Term Targets 47 NOTIONAL CASH EXPENDITURE WELL BELOW TARGET Actual Estimate US$/oz NCE TARGET Q1F08 Q2F08 Q3F08 Q4F08 Q1F09 Q2F09 Q3F09E Q4F09E F2008 F2009 South Africa Ghana Australia Peru Group NCE Estimate at US$1: R WELL POSITIONED FOR CASH GENERATION 48

49 STRATEGY REVIEW Opportunities 48 Lower oil price Power conservation programmes Cost reductions due to pull-back in mining consumables prices Sweat the assets DELIVER POTENTIAL OF EXISTING MINES 49

50 STRATEGY REVIEW Opportunities 49 Copper Price RISKS MITIGATION Cost optimisation Mine planning Safety stoppages at SA mines Increased focus on safety Achieving production and cost targets Financial i position i Beef up regional teams Operational flexibility Major investments completed Strong cash generation outlook FOCUS ON GETTING THE BASICS RIGHT 50

51 Q4 F2008 Conclusions 50 SAFETY FIRST STILL TARGETING 4 MOZ PER ANNUM IMPROVE CONSISTENCY, PREDICTABILITY AND DELIVERY GET ASSETS TO DELIVER TO THEIR POTENTIAL AGGRESSIVE PURSUIT OF FREE CASH FLOW 51

52 CONCLUSION Discussion 51 CELEBRATE PROGRESS, DON T WAIT TO BE PERFECT 52 ANNE MCGEE-COOPER COOPER

53 NEW APPOINTMENTS 52 Nikki Catrakilis-Wagner Investor Relations Manager Office: (Direct): Switchboard: Mobile: +27 (0) Nikki.Catrakilis- Marritt Claassens Corporate Affairs Manager Office (Direct): +27 (11) Switchboard: +27 (11) Mobile: +27 (0)