Gold Fields (US:GFI)2024-02-22 18:58Financial Data and Key Metrics Changes - Adjusted free cash flow for the year was $367 million, with operating cash flow exceeding $1 billion, indicating strong cash generation despite a slight increase in debt levels to fund the Salares Norte project [3][16][25] - Normalized earnings reached $900 million, reflecting a 5% year-on-year increase, while all-in costs were reported at $1,512 per ounce, within the guidance range [25][27] Business Line Data and Key Metrics Changes - South Deep contributed over $200 million in free cash flow, showcasing significant improvement from previous years [34][49] - Production from Ghana was 8% lower at 633,000 ounces, primarily due to planned decreases, while Tarkwa's production increased by 4% to 551,000 ounces [20][21] Market Data and Key Metrics Changes - The Australian operations accounted for over 45% of total production, generating around 1 million ounces, with costs expected to rise by 24% in 2024 due to various factors including the St. Ives microgrid project [40][41] - In Peru, gold equivalent production at Cerro Corona decreased by 8% to 239,000 ounces, with costs rising by 15% due to unseasonably heavy rain and the mine nearing the end of its life [45] Company Strategy and Development Direction - The company aims to maintain a disciplined capital allocation strategy, focusing on safe and reliable production while ensuring a strong balance sheet [31][28] - The Salares Norte project is nearing completion, with first gold expected by April 2024, and ongoing exploration efforts to extend the mine's life [22][23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in safety performance, with a commitment to improving safety systems and culture following recent fatalities [9][12] - The company is focused on addressing rising costs and ensuring capital discipline while progressing towards its 2030 ESG targets, particularly in decarbonization [28][37] Other Important Information - The board approved a $195 million micro-grid project at St. Ives, expected to provide nearly 75% of the mine's electricity needs and reduce electricity costs by almost half [10][14] - The company has set ambitious targets for reducing Scope 3 emissions by 10% by 2030, which will require significant engagement with suppliers [14] Q&A Session Summary Question: Why does Salares Norte production decline sharply from 580,000 ounces in 2025 to an average of 485,000 ounces between 2025 and 2029? - Management explained that the decline is due to the strategy of accessing higher-grade areas first, which was anticipated based on the ore body's characteristics [78] Question: When will the chinchilla relocation become an issue for mining? - The chinchilla relocation is set to commence at the end of February and will continue until May, with mining in the impacted area expected to start around Q2 of 2029 [80] Question: How does the company plan to manage sticky cost pressures and maintain cash margins? - Management indicated that maintaining net debt below 1x EBITDA is a priority, and they will focus on capital spending to help manage all-in sustaining costs [81] Question: What are the immediate opportunities for improvement identified by management? - Management highlighted safety improvements and the successful delivery of the Salares Norte project as key areas for focus, viewing them as opportunities rather than pain points [82] Question: What is the outlook for growth after Salares and the Yamana setback? - Management noted that the gold sector may see further consolidation and emphasized the importance of growing cash flow per share through quality ounces rather than just production volume [83]