{"id":12949,"date":"2012-07-30T13:46:54","date_gmt":"2012-07-30T11:46:54","guid":{"rendered":"http:\/\/www.myza.co.za\/07\/text-spsummary-gold-fields-ltd\/"},"modified":"2012-07-30T13:46:54","modified_gmt":"2012-07-30T11:46:54","slug":"text-spsummary-gold-fields-ltd","status":"publish","type":"post","link":"https:\/\/www.myza.co.za\/press\/text-spsummary-gold-fields-ltd\/","title":{"rendered":"TEXT-S&P:Summary: Gold Fields Ltd."},"content":{"rendered":"

\t\t<\/span><\/p>\n

Rationale<\/span><\/p>\n

<\/span><\/p>\n

The ratings on South Africa-based gold producer Gold Fields Ltd. (GFI) reflect Standard
\nPoor’s Ratings Services’ view of the company’s “satisfactory” business risk and “intermediate”
\nfinancial risk profiles, as our criteria define these terms.<\/p>\n

<\/span><\/p>\n

GFI’s key business profile is supported by its position as the world’s fourth-largest gold
\nproducer (with about 3.7 million ounces in 2011); long reserves life of more than 20
\nyears; and healthy gold price. These strengths are partially mitigated by GFI being a single
\ncommodity player and having inherently unfavorable unit cash costs, when compared with key North
\nAmerican gold miners and its closest peer, AngloGold Ashanti Ltd. (AGA; BBB-\/Stable\/–;
\nSouth African national scale rating zaA\/zaA-1), due to inflationary pressure, the weakness of
\nthe U.S. dollar against commodity currencies, and the lack of significant by-products. The
\nratings are further constrained by country risks, notably in South Africa where 36% of GFI’s
\nEBITDA is generated and where discussions regarding government policy toward the mining sector
\nare ongoing within the ruling party. In our view, the geographical diversification is not likely
\nto change materially over the coming years.<\/p>\n

<\/span><\/p>\n

Our assessment of GFI’s key financial profile factors in its current low leverage; a
\nmoderate financial policy that dictates a debt-to-EBITDA ratio of less than 1.0x; “adequate”
\nliquidity that can support GFI’s operations under our conservative price assumptions; and the
\ncompany’s willingness to cut down capital expenditure (capex) and production in order to cope
\nwith a potentially lower gold price. These factors are mitigated by the company’s probable
\nexpansionary projects over the coming years, which are likely to lead to negative free operating
\ncash flow (FOCF), under a more prudent gold price.<\/p>\n

<\/span><\/p>\n

SP base-case operating scenario Gold stills plays an important role as a safe haven at a
\ntime when investors fear a double-dip recession in the European Economic and Monetary Union
\n(eurozone) and another U.S. central bank quantitative easing program. As a result, gold prices
\nremain very volatile (trading between $1,319\/oz and $1,895\/oz during 2011). The current price is
\n$1,600\/oz.<\/p>\n

<\/span><\/p>\n

Under our base-case credit scenario, we project that GFI will generate EBITDA of South
\nAfrican rand (ZAR) 16.9 billion ($2.0 billion) in 2012, somewhat below the EBITDA of ZAR18.9
\nbillion in 2011. This scenario takes into account:<\/p>\n

<\/span><\/p>\n

— A gold price assumption of $1,300\/oz for the rest of 2012 (and an average realized price
\nof $1,650\/oz for the year to date), reflecting high volatility and low predictability of the
\nprice of gold, which is susceptible to changes in investors’ sentiment.<\/p>\n

<\/span><\/p>\n

— Total attributable production of 3.5Moz (actual total attributable production of 1.7Moz
\nin the first-half of 2012). We assume the additional production expected from the South Deep
\nmine (approximately 50Koz-70Koz), will cover the slow deterioration in output from some of GFI’s
\nother mines. That said, South African safety stoppages and other one time issues, as seen
\nrecently at GFI’s flagship Kloof Driefontein Complex (known as KDC), could lead to lower
\nproduction levels.<\/p>\n

<\/span><\/p>\n

— Cash costs of $840\/oz, reflecting an increase by 20% driven by electricity prices, labor
\ncosts, general mining inflation, and the deterioration in ore grades. On the other hand, we
\nfactor in a more favorable foreign exchange (F\/X) in our scenario of lower gold prices (that is,
\nthe strength of the U.S. dollar against commodity currencies, notably the South African rand) in
\nthe case of a quicker-than-anticipated recovery of the U.S. economy.
\n\u00a0 Continued…<\/strong><\/span><\/p>\n

<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Rationale The ratings on South Africa-based gold producer Gold Fields Ltd. (GFI) reflect Standard Poor’s Ratings Services’ view of the company’s “satisfactory” business risk and “intermediate” financial risk profiles, as our criteria define these terms. GFI’s key business profile is supported by its position as the world’s fourth-largest gold producer (with about 3.7 million ounces […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","ngg_post_thumbnail":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[830,2370,183],"class_list":{"0":"post-12949","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-south-africa","7":"tag-news","8":"tag-reuters","9":"tag-south-africa-2","10":"entry"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/12949","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/comments?post=12949"}],"version-history":[{"count":0,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/12949\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/media?parent=12949"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/categories?post=12949"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/tags?post=12949"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}