nick holland 31072012
TRANSCRIPT
What Do Investors Want From a Gold Mining Stock?
Key Note Speech Presented to theMelbourne Mining Club
on31 July 2012
by
Nick Holland Chief Executive Officer
Gold Fields Limited
Nick HollandCEO, Gold FKeynote Pre31 July 201
Good Mo
When I wunder the
I thereforthe most best cash
The topicgiven mustock?
In comingone-on-obut they independwell as a
dFields Limited esentation, Me2
orning Ladie
was invited te sun, excep
re decided ninnovative
h producing
c that I wantuch thought
g to the viene sessionare large fu
dent intervierecent JP M
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es and Gent
to talk to yopt about my
not to talk agold mining and divide
t to focus ot to over th
ews that I as so far thiunds that teews and surMorgan surv
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u here today own comp
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ay the organpany.
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nisers told m
ed - not to tmost excitinn the indust
mething thad that is w
oday I’ve peot necessaMy views a
y behalf withment funds
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me that I ca
tell you that ng project pry.
t, surprisinghat do inve
ersonally sprily investoalso incorpoh several lefrom aroun
lland, Melbourn
an talk abou
t Gold Fieldpipeline, and
gly, many oestors want
poken to 72rs in Gold orate a numeading gold nd the world
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Nick HollandCEO, Gold FKeynote Pre31 July 201
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Obviouslyunderstan
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going on in t
s try and anuncil.
e introducedhe total holdar period we
can see we’to investor
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d the inaugudings in gole could get s
’ve hit that rs, with a fuillion and ho
TFs have mTF’s have e
also a dowFs have coold stocks, E
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ctor?
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ural producd ETF’s, wesales of 500
and gone wrther 8 sim
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wnside for sontributed tETFs are a
people to gto worry ab
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remember
ct, the so-cae set ourse0 tonnes, th
way beyonilar productve 2,500 to
y to invest il expectatio
stocks: 1) ito a widendouble-edg
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when we la
alled GLD, welves some hat would be
d it. In factts. These fu
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n gold and on and that
nvestors haning gap beged sword.
ld is just gselection etc
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aunched thi
which now targets. Wee a home ru
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have brougmust be go
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o and buy c.
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is product v
makes up ae thought thun.
currently 1a total com
ght many nood for gold.
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the ETF.
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about 60% hat if over a
12 gold ETFbined mark
new investo.
Fs instead ce and stoc
It’s simple
b
rld
to a 5
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ors
ofck
to
Nick HollandCEO, Gold FKeynote Pre31 July 201
The ETFchanged.generalisthe easie
Now, I domarket camarket va
But you crather thastocks.
The challto attract
dFields Limited esentation, Me2
F craze ha. Ten years
st investors est way to ge
on’t think wapitalisationalue of abou
can see froan into ma
enge now fsome of the
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s been givs ago we and emerget in? Just g
we can blamn is about $ut US$120
om recent tajor gold eq
for gold stoce incremen
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ven further used to haing market get the ETF
me all of th$400 billionbillion.
trade volumquities. It h
cks is how ttal investme
4
impetus aave more investors w
F.
e ills of the, which is s
mes that thehas canniba
to provide ient into gold
as the inveprofessiona
who want to
e gold sectostill significa
ere has bealised som
nvestors wid equities.
Nick Hol
estor univeral gold inve
get gold in
or on ETFsantly more t
en a pronoe investme
th leverage
lland, Melbourn
rse in goldestors. Tod
nto their por
s because tthan the co
ounced movent away fr
e over the g
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d stocks haday we havrtfolio. What
the total goombined ET
ve into ETFrom the go
old price an
b
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nd
Nick HollandCEO, Gold FKeynote Pre31 July 201
Why do p
They wan
They wabetween
And effecsuperior r
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people want
nt to get lev
nt to see the gold pri
ctively theyreturns. I do
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t to buy gold
verage to the
that, with aice and ear
y want us aon’t think th
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e gold price
a rising gonings.
as manageis informatio
5
e.
old price, th
ers to optimon should s
here is mo
mise our assurprise any
Nick Hol
ore than a
ssets and myone in this
lland, Melbourn
one-to-one
make sure room.
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e relationsh
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hip
ve
Nick HollandCEO, Gold FKeynote Pre31 July 201
There areare lookiproductioshowingavailable
Now, if yodo? You’dborrowingcommon
Dividendswhich thethem sayreturns is
In my minthat we disciplineprice kickThat’s wh
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e two types ng for. If y
on volumes,that you cafor shareho
ou’re a largd look to levg money ancause.
s. Are dividey put out juy dividends s important.
nd, if you looffer a hig
e. Investors k, then you hat investor
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of companyou are run, margin exan increaseolders at a p
e publicly liverage the nd gearing
dends impoust before I are importa
ok at the pogh dividend
want to seget a mult
rs are lookin
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ies that younning a sin
xpansion ane the returnparticular go
sted compabalance shup the equ
ortant? Somleft to comeant and abo
oor performd yield. It nee that if yoiplier effect
ng for.
6
u can reallyngle asset nd capital on on the mold price.
any with a pheet and mauity returns
me people se here – theout 40% sa
mance of golnot only heou get all o like we us
look at to dmining com
optimisationine and tha
portfolio of make sure thathat you ge
say they areir poll of inay that reinv
ld stocks ovelps to diffof these thied to see i
Nick Hol
determine wmpany, the. In other wat you can
mining asseat you can eet as a con
ren’t. JP Movestors indivesting cas
ver the pastferentiate ungs right, an the gold
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what measue metrics awords, you w
increase t
ets, what elsenhance yonsequence.
organ just icates that a
sh flows to
t ten years ius, but it dand you gesector som
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ures investoare growth want to keehe cash flo
se would yoour returns b
I think that
did a surveabout 40% give superi
it is importademonstratet a nice go
me years ag
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ors in
epow
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ant es
oldgo.
Nick HollandCEO, Gold FKeynote Pre31 July 201
As you astrong lev
This maunderperf
Often whon?”
dFields Limited esentation, Me2
all know thevels of late.
akes the rformed the
hen I go into
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e gold price Five years
performancgold price.
o investor m
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e over the pfew of us w
ce of gold
meetings, th
7
past few yewould have
d equities
his graph g
ears has rispredicted c
so disap
ets pulled o
Nick Hol
sen stronglycurrent price
ppointing.
out and I ge
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y and maine levels.
We have
et asked: “W
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ntained thes
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What’s goin
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tly
ng
Nick HollandCEO, Gold FKeynote Pre31 July 201
To get tomeasures
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o the bottos over the la
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om of this ast decade?
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let’s look ?
8
at how thee industry
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has perform
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med agains
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st these ke
b
ey
Nick HollandCEO, Gold FKeynote Pre31 July 201
Gold prod(35%) of
I’ve beenconsistenproductio
But if wehave drop
Even thounot comesince 200
These trethe more productioColombia
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duction. If ythe industry
n going to nt theme inon is going t
had actuapped outpu
ugh the gole from the m06 though m
ends are alsmature ma
on declined a, have add
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you look at y’s current p
investor con the preseto the moon
lly met all ot on a comp
d industry amajor producmost of this
so evident inarkets such by ~5.3Mozed a combi
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onferences entations o
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our productpound annu
as a whole hcers. Other growth has
n a geograpas South Az since 200ned ~7.6Mo
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majors (listeof about 60
over my laof all of th
tion promiseual basis by
has gone uproducers
s come sinc
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6. Emerginoz of additio
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ast 15 yeare large go
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p somewhahave insteae 2008.
down of prodalia, Peru ag markets, onal produc
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lide), we m70 million ou
rs at Gold old produce
e last five yen 2006 and
at - by 3% pad increase
duction, whand the USAnotably Chi
ction since 2
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make up jusunces.
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ich has droA, where anina, Mexico2006.
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Nick HollandCEO, Gold FKeynote Pre31 July 201
So the grallocate sincreased
A lot of it
It’s not sodifficult it
Central bincreasin
There’s othe averaBut that iswe’ve gon
That is wproductiomajors - w
The key mhave becnow kingAnd, wha
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rowth in prosome funds d by 21% p.
comes dow
o easy to finis to find ne
banks, as yog. But supp
one more issage grade ths no longerne the othe
hy I believeon growth wwill merely
message hecome scepti, not growth
at will the re
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oduction hasto the gold
.a. over tho
wn to the fac
nd gold any ew deposits
ou will see laply isn’t kee
sue - back hat was beir the case aer way.
e investors awill average
maintain ou
ere is that gcal. This ha
h, and we’reesultant gold
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ct that Gold
more. Certs.
ater, are buping pace.
in the days ng mined wnd as a res
are right to 6% per ann
utput.
gold miners as in recent e reining in d scarcity m
10
rom the go-te’ve got to ars.
d is becomin
tainly from a
uying, not se
when the gwas often higsult we have
be scepticanum. It is lik
have not mmonths ledspending. T
mean for futu
to stocks usask ourselve
ng scarce.
an explorati
elling. ETFs
gold price wgher than then’t really gr
al of claims kely that at b
met their prod to a changThis raises ture gold pric
Nick Hol
sed by invees why not w
on perspec
s are increa
was $200, $3he average rown produ
that over thbest the ind
oduction proge in rhetoritwo questioces?
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stors when when the g
ctive we kno
asing. Dema
300, $400 agrade of ouction volum
he next five dustry – in p
omises and ic from mine
ons. Is this j
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they want told price ha
ow how
and is
an ounce -ur reserves
mes. In fact,
yearsparticular the
investors ers. Cash isust rhetoric
b
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.
e
sc?
Nick HollandCEO, Gold FKeynote Pre31 July 201
Expandinoperating
If you mehave ach
It’s obviou
Margins a
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ng margins.g profit? We
easure the ieved grow
us that we h
are up, but
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How haveell, over the
compoundth of only 8
haven’t deli
nowhere ne
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growth in % against a
vered the le
ear the rise
11
s done in tem 2002 to 20
EBITDA bean annual in
everage.
in the gold
erms of EB011 – you c
etween 200ncrease in t
price over t
Nick Hol
ITDA margican see the
06 and 201the gold pric
the same ti
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ins - which impact.
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me frame.
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ht companie
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Nick HollandCEO, Gold FKeynote Pre31 July 201
Let’s try a
Operatinginflation hand this annum go
Why is thprice, I’msteel pricwe think years ago
Of late a next yearinflation iresponsib
The otheyields amof this decan be se
Over the declinedannum frfurther do
dFields Limited esentation, Me2
and explore
g costs arehad been aris just on aoing forward
hat the casem afraid, doece goes up.
we are. Tho, as it is to
lot of the lar. How is this increasinbility costs t
r issue thatmongst the mecline will heen in long-
last 30 yeby ~3% pe
rom 1998 toownward pr
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e why.
e increasinground 10% a cost per d. This mea
e? It’s skillsesn’t go up Cement gohat’s one oday.
arge mining hat possibleng, and it isthat the indu
t the industrmajor produave been d-term explor
ars, ore grar annum. To 2008. Asressure on a
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ans you’re g
shortages.by itself. E
oes up. Waof the revela
companiese? It’s the cs escalatingustry is attra
ry has to coucers have ddriven by a ration disco
ades from ghis trend ha these discaverage yie
12
& Co toldm. What I tho
– that costgoing to see
. It’s the cosEverything eages go upations that
s have warncombined eg even moacting.
onfront is thdropped bygradual de
overies:
global primas continuecoveries coelds.
d me last yought was st inflation we a doubling
st of consuelse moves. So we’re maybe was
ned that caseffect of all re today be
hat our grady 5% per anecline in the
mary gold did more recme through
Nick Hol
year that hscary is tha
was probablg of costs ov
mables. It’swith it. The
not as levesn’t as wel
sh costs areof these is
ecause of
de has declnum over th
e quality of
scoveries gently, with gh to produc
lland, Melbourn
istorically tat they werely going to ver five yea
s energy coe oil price g
ered to the l understoo
e going to bessues I menthe rapidly
ined over tihe last five ore-bodies
greater thangrades fallinction, we’re
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they felt coe predicting
be 15% pars.
sts. The gogoes up. Thgold price a
od five to te
e 20% highntioned. Co
rising soci
ime. Averagyears. Som, a trend th
n 1Moz havng by 4% plikely to se
b
ost – er
old heasen
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veeree
Nick HollandCEO, Gold FKeynote Pre31 July 201
How havcomparis20% per
The indusper annumgreenfield2006 to 2
And then years. Anis actually
If you looat a loweon a per o
dFields Limited esentation, Me2
ve we doneson. Over laannum.
stry’s capitam over the d developm2011.
on top of thnd of coursey replace pr
ok at the coer grade to gounce basis
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as an induast ten year
al expenditusame perio
ment capex,
hat M&A spe M&A hasnroduction th
mbined effeget the sams to actually
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ustry in terrs, on a com
ure on a peod. Growth i
which on its
pend has gon’t grown thhat has bee
ect of all of me gold andy sustain an
13
ms of optimmpound an
er ounce bain capital exs own has g
one up 17%e production falling off
that, it mead, combinednd build new
mising our nual growth
asis, howevexpenditure pgone up by
% per annumon base, as . So we’re s
ans that wed with risingw operation
Nick Hol
capital? Heh basis, the
er, has gonper ounce han estimate
m on a $/oz you saw ea
spending m
e’ve got to m cost inflatios.
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ere’s anothee gold price
ne up by 32has been dred 50% per
basis over arlier. What
more to stand
mine more ton, it is cos
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er interestinhas risen b
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Nick HollandCEO, Gold FKeynote Pre31 July 201
If you comcapital exchart –we
Comparewould maanywheresaid to yo
Just a bperforma$1,000 an
Who are generate
The only you’re maroyalties
We’ve goabout whelse, but
It is like s
dFields Limited esentation, Me2
mbine the expenditure –e have in fa
ed with the ake is that e near the sou earlier, in
brief word nce – that wn ounce.
we trying toafter every
people weaking superand so on.
ot to changehat it really to talk abou
scoring an o
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effect of the – as depicte
act not creat
explosion inthe indust
same extenn five years
on NCE. Awe are mak
o kid? We dything is acc
’re kidding r profits, ple
e the lens tcosts to prout cash cost
own goal ev
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increases ied by the Noted much le
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At investorking significa
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are governease pay u
through whoduce an ots only is no
very time yo
14
in operatingotional Cas
everage at a
price over tcosts - reprwe’ve had as costs hav
r conferencant operatin
e investors The sell-si
nments and p. And befo
ich we andounce of goot telling the
ou play, and
g costs, the sh Expendituall.
the same peresented bya 16% annue doubled.
ces the indng cash flow
because thde also und
communitiore we kno
the world vold. I don’t ce full story.
being prou
Nick Hol
decline in gure (NCE) y
eriod the ay NCE - shual increaseWe’ve lost
dustry oftenw margins -
hey know hoderstands th
es who, now it we hav
view this incare if we c
ud of it!
lland, Melbourn
grades, the you can see
assumption houldn’t hae in our totaa lot of the
n extolls it sometimes
ow much cahis.
ot surprisingve windfall
ndustry, andcall it NCE
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increase ine on this
most peopve escalateal costs. Asupside!
ts cash cos in excess
ash we rea
gly, say okataxes, high
d start talkinor somethin
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Nick HollandCEO, Gold FKeynote Pre31 July 201
What hasgold comcap, we’vAnd if you
Good wobeen annspend itsprojects iover the n
What’s cdecliningwe’re dea70 million
Having smessage
Most recgreater ein capital be trimmenvironm
But the ju
dFields Limited esentation, Me2
s happenedmpanies andve invested u look at co
rk done by nounced in ts market canto productnext six yea
concerning . We know aling with an to 80 millio
aid that, ine to the indu
cently, and emphasis on
spend, anded. But this
ment.
ury is still ou
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ommunicate
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vestors areustry. And w
in line withn capital spd focusing ms will in tur
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Gold Councdustry over in other wo
stimated thaess all of th
ese projectsmining finit
where, in ora year, it is
e fed up wiwe are starti
h the broadend disciplimore on retrn impact o
surprising, i
15
e? If you taending oveap. That’s ment plans for
cil shows ththe next ten
ords $400 bat as much he projects c
s aren’t alte resourcesrder for us going to co
ith promiseng to wake
der mining ine. Gold mturns than o
on future pr
investors ar
ake the aver the last fi
more than wr the next fiv
at if we impn years, thebillion woulas 60% of mcurrently on
l going to s. A lot of tto sustain t
ost a lot of m
s of jam toup to what
industry, gminers are bon growth. Wroduction gr
re cynical.
Nick Hol
erage markeve years in
what we did ve years, it’
plement all oe gold indusd have to bmarket valun the table.
be growthhat is goingthis industry
money over
omorrow aninvestors w
gold CEOs beginning toWe can exprowth in an
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et cap of thn relation to
the previous going up
of the projestry will probbe spent to
ue may hav
h, because g to be replry at somewthe next te
nd they arewant.
are indicao walk the tpect announn already fla
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he eight largo that markus five yeareven furthe
ects that havbably have o bring these to be spe
the base lacement. S
where arounn years.
e sending th
ating a muctalk of reininnced plans at productio
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Nick HollandCEO, Gold FKeynote Pre31 July 201
Let’s look
The oneHistoricalreally leveleveraged
Having shave had
But certahaven’t n
The long-
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k at some o
depicted lly the golderaging a lod enough.
aid that, a d to be retire
ainly if we’reecessarily o
-term debt m
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here, in pd industry hot of the bal
lot of the bed as well a
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e attractive,
16
confronting t
s difficult: to equity dt with debt.
eets have bding that ha
assic modendustry and
but this wo
the industry
provide badeals to finaSo you mig
been put unas been nee
el of leveragd should con
on’t last fore
Nick Hol
y.
alance sheance majorght argue in
nder pressueded for ove
ged returnsnsider more
ever.
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eet leveragr expansion some case
ure by golderruns on p
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thing that w
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Nick HollandCEO, Gold FKeynote Pre31 July 201
Dividendthe gold sector ha
HistoricalBut peoppremiumcomparis
I’ve beenwant to gdo that, sustaining
But invesHaving saverage d
Why donPaying ouand again
dFields Limited esentation, Me2
yields contsector? W
as not done
lly we’ve felple aren’t loisn’t as att
son with oth
asked by sget our stockbecause thg capital or
stors are huaid that, Gdividend yie
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lt that this wooking at gtractive as ier mining s
some investk up we’ve hen we willmaintaining
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tors why cagot to pushl be payingg our curren
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? Because ividends is norld that is
17
in a yield-hning sector
ause gold isers in the
be. So we’re
an’t we pay h dividend yg out all ount productio
eld, so they’n the gold s rest of the
investors dnot enoughbecoming i
hungry enviroverall has
s money. Yosame way
e not payin
out a divideyields into thur earningson base.
re not partisector at thpeer group
on’t believeh. You’ve goncredibly cy
Nick Hol
ronment. Sos picked up
ou buy gold anymore g dividends
end yield of hose territors. We won’t
cularly enthhe moment. is at an av
e we can reot to repeat ynical.
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o what has p recently,
d stocks youand the so
s that are c
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hralled by th. We are p
verage of ab
epeat that pt that perfor
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%? If we reae simply canything left f
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performancrmance aga
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Nick HollandCEO, Gold FKeynote Pre31 July 201
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The gold been abletalked ab
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18
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Nick HollandCEO, Gold FKeynote Pre31 July 201
Guidanceable to ac
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industry is aeing the eve, and that in
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19
vering. If yoe level of 5%
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Nick HollandCEO, Gold FKeynote Pre31 July 201
So, I’m afterribly w
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20
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Nick HollandCEO, Gold FKeynote Pre31 July 201
So the quwe going
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21
he industryy going to b
Nick Hol
be in the fut
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Nick HollandCEO, Gold FKeynote Pre31 July 201
First of adecisionsETFs conto believe
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The doomgoing to know tha
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22
we don’t hauct is attrac
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gold price e people arat shape, an
safe haven
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Nick HollandCEO, Gold FKeynote Pre31 July 201
Demand.around 5meaningftheir growand 7% fo
Those twrecently,future. Sprincipal
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China and50% now. Tful growth owth has sloor India – a
wo countriesit is still a so I believedrivers, Ch
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23
heir demandwo large eunted for 35ections for the other la
towards gon that counsonably soe to grow int
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five years in the worl
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Nick HollandCEO, Gold FKeynote Pre31 July 201
Central b
Central bit goes udemand i
China is diversify. buying. Tabsorbingproducer
dFields Limited esentation, Me2
bank buying
banks are stup. So if gois self-gene
sitting withThey don’t
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24
ature of the
tend to sell hey will pro
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market ove
when the pobably kee
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Nick Hol
er the past fi
rice goes dp buying. I
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five years.
down and thIn this way
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Nick HollandCEO, Gold FKeynote Pre31 July 201
Productiosupply-dewould hafind any m
So what going arogoing to p
Based onthose salthe gold i
dFields Limited esentation, Me2
on. Primary emand fundave thought more, as I h
has been tound trying pay what it’s
n analysis bes to matendustry wo
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gold produdamental ra
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All sorts of ur old jewelrth. How mu
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25
not gone upold rising fi
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people selllery. Obviouch of this c
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p anywhere ve or six ting to the m
ing their jewusly they wcan still kee
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near demames over e
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eed to see hr jewellery a
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and growth. eight or ninit’s just not
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Nick HollandCEO, Gold FKeynote Pre31 July 201
We haveinterestinit’s a telliwrong se
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e talked abog. If you looing picture.
even years o
pite that, tus forecast
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clusions.
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out the fundok at the for The analy
out of seven
they’re still is US$1,21
companies’,380 per ous forecast o
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telling us 4 per ounce
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of US$1,214
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this graph ds in 2012,
e gold priceng term. Jud
26
and they dprices over
keep telling remarkable
that gold e!
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is based o 2013, 2014
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on futures c4 and 2015
down. It’s gtheir past 7
Nick Hol
a higher goeven years, d price is g
rd!
down again
today – basn that, and have an ind
our capital ars, before
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oing to be 7-year track
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old price. Hagainst thegoing down
n! The CIB
sed on the if we belie
dustry.
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Nick HollandCEO, Gold FKeynote Pre31 July 201
What do
We need going to price. Ob
Investorsfocussed
And stay there is nNAV com
If we acqto do thiscomponeassets.
Hedging.and we smay get i
How mucunderwatunhedged
dFields Limited esentation, Me2
investors w
to believe drive long-t
bviously we
s interested on gold. Th
focussed onot a gold p
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uire pure bas. They can ent from gol
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ch has beenter hedges.d – investor
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want us to do
in our produterm returnshouldn’t b
in gold stohat is the st
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ase metals do it themsd assets is
antee you to it. In the loertain peaks
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uct. If we’res, we’ve goe using ridic
ocks believetrong messa
here is still ght now becs a few yea
assets, weselves withofine, but th
that hedginong run you and trough
repairing bato tell you,
ge for thems
27
e going to suot to believeculous price
e in our proage coming
a gold premcause the s
ars. But aga
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g is going u can’t beahs, but you w
alance shee hedging isselves
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oduct and thg back cons
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our relative an acquisitiace in a go
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ets? Possibs coming ba
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business intld price. Doshouldn’t ca
hey want usistently ove
fundamentgroup are
metals there
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old miner’s p
ack into vogpirical data all back ove
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Nick HollandCEO, Gold FKeynote Pre31 July 201
Focus onreturns. Ethose crit
Now, youequity is They wantake a bigthis is our
I’m not saabout assoptimising
Cash andthat we h
dFields Limited esentation, Me2
n cash flow.Everything wteria we hav
u’ve almost very, very
nt to see rog company r own mone
aying we’reset strippingg every Dol
d cash returave the righ
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28
y why are wmeasured ahether it ma
equity stylef capital invservative tey, and say leend is abso
ector overag how we rximising our
o get our mey.
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e are here tareholder reat all.
to managinThey want
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Nick HollandCEO, Gold FKeynote Pre31 July 201
So what d
We’ve gowe don’t. It means
That’s a mto go dowdecline?
Many invwe’re goiounces fomoney ar
dFields Limited esentation, Me2
does this m
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29
KPIs that mground. It’sas free cas
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hether we aproduction.share.
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Nick HollandCEO, Gold FKeynote Pre31 July 201
We as andemonstrcompany
As I explathis Notioof runninga lot of ouhigher tax
We are ncapital spand to en
Focus onsustainingthe end ogrown. Al
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n industry nerate the true
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ey think we’r
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30
ter grip on sents – unfocleverage o
ave reportehich captured if we can nalism. Govre making s
seek greatery been consne is applie
unce of goldIt’s all going
done over fivat is the real
so-called grcused sustaver the gold
d for some es both the get the induvernments asuper profits
r transparensidered essd.
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Nick Hol
owth and suaining capitad price.
time on a tooperating custry to tell are seekings - the oppo
ncy on the rential to sus
mixed up inin the sam
The top eighusiness tod
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ustaining caal spend ca
otal cost bacosts and cait like it is, i
g to impose osite is true.
returns genstain mine o
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Nick HollandCEO, Gold FKeynote Pre31 July 201
The industhe line.
The investhat we h
The key pounces thinvestors encouragreturns.
Considerrequired pmarginal,unexplore
Key pointtechnical
dFields Limited esentation, Me2
stry needs t
stment caseave in front
point here ishat are not ewith the lev
ges mine tea
r a project wprocessing, but justify ed ore body
t: ensure thsolution tha
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to look at al
e has got tot of us.
s to be bullieconomicalverage to thams to incre
where the knplants. Thea decision t
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ll of the opti
o stand on it
sh on the gl. These addhe gold pricease produ
nown ore boe project feato proceed nity of know
ect feasibilityears the inv
31
ions and no
ts own two f
gold price…ditional mar
ce they seekction or ext
ody is attracasibility teamon the basi
wn resource
y considersvestment hu
ot just the m
feet, based
.but not to arginal ouncek. The risk itend lives of
ctive, but tom recognises of the unqs. This can
s all commeurdle.
Nick Hol
marginal oun
on the hard
allow this toes will not ns that chasif mines, rath
o small to ce the projecquantified “on be danger
rcial options
lland, Melbourn
nce that get
d technical
o justify goinnecessarily ing marginaher than op
carry the coct return andoption valuerous.
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Nick Holland CEO, Gold Fields Limited Keynote Presentation, Melbourne Mining Club 31 July 2012
Nick Holland, Melbourne Mining Club 32
30
What investors want
2. Focus on cashflow
3. Deliver on relevantpromises
1. Believe in our product •Manage portfolio for cash returns and investment payback
•Translate cash returns into production guidance (and not vice versa)
•Ensure guidance is realistic and transparent regarding likely impact of gold price movements
•Ultimately, delivery remains paramount
This industry is suffering from a management credibility discount. I’m not sure what that discount is, but it is high because we don’t deliver on our promises.
Execution is everything. We can have great assets, we can have great ore bodies, but if we can’t execute on our promises there is a massive discount.
We need to focus on metrics that we can control and not lose sight of cash returns. We must give realistic production and cost guidance, supported by underlying information that is credible.
Nick HollandCEO, Gold FKeynote Pre31 July 201
Earn the
If we wanoff a solid
How are billion, whexisting a
It’s a fair actually u
dFields Limited esentation, Me2
right to spe
nt to go andd platform.
people goinhen we havassets?
question, I using invest
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end money.
spend a w
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33
money on g
ndustry shonage their m
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Nick Hol
company, l
spend anotptimally as
spend mon
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let’s make s
ther $200 bwe should
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Nick HollandCEO, Gold FKeynote Pre31 July 201
This charfrom 201
On the levaluationacross th
So, if we at 10%, w
On our cuinvestmecost discidemonstrmajor turn
If we can rating – bdeliver cogrowth of
dFields Limited esentation, Me2
rt shows the1-2015, ass
eft you can smultiples ree Top 8 go
believe in awhat sort of
urrent multint that is in iplines in plarate that wenaround.
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see that theemain as thld majors
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expected ant the gold p
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of $2,000 be we going t
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34
nnual sharehprice increas
eturns will ju2011 – whi
by 2015 andto get by 20
e have a rean of the goldier - we havthe gold pri
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holder returses to $2,00
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rn for the m00/oz by 20
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Nick HollandCEO, Gold FKeynote Pre31 July 201
But, if thethe gold pwill not ha
If you arethe short higher retprojects a
So, manathe gold pthat highe
Thank yo
dFields Limited esentation, Me2
e gold price price, unlesappen
e going to interm. And yturns for shand deliver
agers and dprice to remer price.
ou for your a
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35
ay’s price, wdramaticall
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Nick Hol
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they believede them wit
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