Earnings Call Transcript - GFI Q2 2023

Martin Preece, Executive Director

Good afternoon, and good evening to those in other parts of the world. Thank you for joining us for the Gold Fields H1 '23 Results Presentation. Paul and I will guide you through the slides. Before I begin, I would like to mention the announcement regarding Paul's intention to request early retirement, which we've included in the report and results released this morning. Paul has been with the company since 1996, demonstrating loyalty and contributing significantly to our success. You likely recognize the transformation of our company from a South African narrow-reef miner to a globally diversified gold mining entity. He has served as CFO for the past 15 years, with 14 of those as an Executive Director. Over the last 6.5 to 7 years, Paul has been instrumental in our progress at South Deep, helping us achieve significant milestones. Recently, in his interim role, Paul has offered invaluable guidance and support to me and the rest of the executive team, which has helped maintain the company's stability and allowed us to continue delivering strong results. We are grateful to Paul, and fortunately, he is not in a hurry to leave, so this won't be the last time you'll see him. We have begun the search for Paul's replacement, but as you can imagine, that process will take some time. I'm confident we will see Paul at the next set of results, so this is not a farewell; rather, it enables us to initiate the search for his successor. Paul, would you like to share a few thoughts?

Paul Schmidt, CFO

Thank you for the kind words. This is about a lifestyle change. As Martin mentioned, I've been with Gold Fields for a long time. My wife and I want to relax and enjoy life, and that's what this is about. So, thanks, Martin.

Martin Preece, Executive Director

Good. Let's move on to the slide deck. I want to highlight the statements and ask you to note the forward-looking and non-IFRS measures. We will cover the salient features for the first half of the year, including some positive developments in the ESG area. We will review operations at a high level, followed by an update on Salares Norte. Paul will discuss the financials and our current position, and I will conclude at the end. Unfortunately, we experienced one fatality in the first quarter, which we have reported, along with three serious injuries, totaling one fatality and three serious injuries for the first half of the year. The fatality occurred at our Tarkwa mine in Ghana. I want to assure you that this issue is a priority for both the executive team and the Board, and we have discussed it extensively this week. In terms of ESG, we submitted our GISTM and tailings reports for our high-risk dams at Tarkwa and Cerro Corona on August 3rd. There are no significant dam safety-related issues; however, we still need to work on community engagement and emergency preparedness. Operations have seen a 4% year-on-year decrease in attributable gold equivalent production, primarily due to the planned downscaling at the Damang mine in Ghana. Adjusted free cash flow for the half-year stands at $140 million, and all-in costs have only increased by 3% year-on-year, despite a challenging inflationary environment in many of our regions. The balance sheet has experienced a net increase of $324 million in debt, mainly due to a $222 million windfall payment for our entry into Canada and a dividend payment that included a portion of a $215 million break fee. The net debt-to-EBITDA ratio remains flat at 0.42, and Paul is confident that we will work hard to reduce this in the second half of the year. Regarding dividends, we have declared a dividend of R3.25 per share, which is 35% of our normalized earnings, aligning with our dividend policy. We are making good progress on the proposed Tarkwa/Iduapriem joint venture with AngloGold Ashanti and have started initial discussions with the government of Ghana, which will dictate our timeline moving forward. We announced the closing of the Windfall joint venture in Canada in May and are pleased with the progress made there, having submitted permits for construction and expecting approvals by the fourth quarter of next year. The team at Salares Norte is on track to deliver our first gold in the fourth quarter of this year. Additionally, our full-year production and cost guidance remains unchanged from earlier this year. Australia is a critical region for us, contributing 44% of production and 41% of cash flow. Ghana also remains vital for cash flow and production, while the Americas and South Africa, including South Deep, will see significant contributions, particularly with Salares Norte progressing. Production costs in Australia are $1,270, in South Africa they are $1,387, in Ghana it’s $1,210, and at Cerro Corona, it’s $990, leading to an overall all-in cost of $1,398 per ounce. Paul will detail cost specifics later. Regarding our ESG initiatives, we are committed to expanding our concept of zero harm to include psychological well-being, in addition to physical health and safety. Unfortunately, we had one non-operational fatal incident at the Tarkwa stadium project we are funding in Ghana, where lives were lost during construction. We have also seen a rise in our total recordable injury frequency rate, lost time injury frequency rate, and occupational disease frequency rate. During the first half of the year, we initiated the Gold Fields Way culture journey, aimed at fostering psychologically safe work environments, and we will provide more updates on this at the end of the month. Decarbonization remains a highlight, with a 5% reduction in carbon emissions compared to H1 last year, and our renewable energy use has increased from 12% to 16%. We are working towards having 70% of St Ives' power requirements sourced from renewables by the end of the year and expect to deliver this by November. We have completed a Rebase study on our Scope 3 emissions and plan to publish reduction targets by the year-end. Regarding tailings management, we submitted our disclosure reports for Tarkwa and Cerro Corona, and our focus is now on community engagement concerning emergency preparedness. We are diligently working on the remaining 33 tailing storage facilities for reporting by August 2025, and if any are ready sooner, we will report earlier. In terms of group-level operations, we noted a 4% decrease in attributable production to 1.154 million ounces, primarily driven by reductions at Damang. All-in costs increased by 3%, and adjusted free cash flow decreased from $518 million in H1 last year to $482 million. Importantly, our guidance for both costs and production remains intact for year-end. In Australia, cost pressures resulted in a 5% increase in all-in costs, while production is down 3% due to challenges at Gruyere and grade issues at Granny Smith, as well as volume issues at St Ives. As such, we are focused on bringing production back on track. In South Africa, South Deep saw a 5% decrease in production year-on-year, impacted by ground conditions, with major ground events occurring in Q1. Our guidance has been adjusted to an expected production of 320,000 ounces for the year, postponing our steady state of 80,000 ounces per annum to the second half of 2025. Despite this, South Deep remains strong financially, generating $97 million in the half, though costs are under pressure due to volume and inflation. In Ghana, the team has performed exceptionally well, with production down 6% to 360,000 ounces, but both Damang and Tarkwa are exceeding our plans for the year. The all-in cost margin here is well controlled, generating $116 million in free cash flow. Regarding operations in Peru, we experienced strong performance, with a 4% increase in production driven by higher grades and recoveries. All-in costs went up by 1% to $990 per ounce, generating $71 million in cash. Now, to update you on the Salares Norte project, total project completion stands at 94%, up from 87% at the end of last year, with CapEx of $881 million spent by the end of June. The regulatory approval for the amended Chinchilla Relocation Plan has been received, allowing us to commence the relocation process starting in September. As of now, construction completion is at 95%, slightly ahead of last year’s 86%, although skills remain a challenge. The plant is at 92% completion, and we are working with OEMs to finalize commissioning. The mining team has moved 16 million tonnes during the half, bringing the total moved to 67 million tonnes, with 840,000 tonnes and 172,000 ounces in stockpiles at the end of June. We are on track to achieve just shy of 0.5 million ounces of stockpile by the end of December. Exploration efforts continue as the team focuses on finding the next opportunity at the site, aiming for first gold production in the fourth quarter. The images displayed illustrate various completed elements of the project. The primary crusher and stockpile facility have been commissioned and are operational. The main body of the process plant and related buildings, including the Merrill-Crowe and carbon recovery facilities, are progressing well, ensuring we are prepared for any adverse weather conditions this winter. I’ll now hand it over to Paul to discuss the financials.

Paul Schmidt, CFO

Thanks, Martin. Martin has mentioned some important points. I will address free cash flow and net debt later. Regarding the overall costs, they are up 3% year-on-year. I am happy to confirm that we are on track to meet our guidance. Our guidance was between $1,480 and $1,520, and based on our current forecasts, we will meet this. Although many may believe the guidance is high, it's important to note that we usually allocate more capital in the second half of the year and typically have a slow start. So, we remain on track for the $1,480 to $1,520 range. I am pleased to announce the interim dividend of R3.25. Now, if we could move to the next slide, I want to highlight the ESG sustainability-linked loan we secured. This is a first for Gold Fields and reinforces our commitment to ESG principles. We have tied it to three of our key ESG priorities: gender diversity, decarbonization, and water stewardship. If you go to the next slide, please. We can discuss cash flow. Looking at operations, which we term adjusted free cash flow from operations, we generated $482 million. We invested $202 million into Salares Norte, leaving us with $280 million. After accounting for all interest paid and other expenses, we ended up with $140 million, which is significantly lower than last year. One major difference year-over-year is the substantial investment in working capital during the first half of this year, amounting to $22 million for a prepayment for a new camp at St Ives. We plan to construct a new camp in Kambalda near the St Ives mine. Additionally, we saw an approximately $90 million increase in stockpiles primarily at our Tarkwa mine and Cerro Corona, along with smaller amounts from our other mines. If you would like to move to the next slide, please, Thomas. Our net debt has risen to $1,028 million. As Martin mentioned, this is related to our final 2022 dividend payment of $215 million and a $222 million capital investment to acquire the Windfall project. We also contributed another $33 million in capital calls. Excluding leases, our actual true debt at the end of June was $629 million. Our net debt-to-EBITDA ratio is 0.42, well within our covenants of 3.5x net debt-to-EBITDA. That's all I have. I'll hand it over to Martin for the conclusion.

Martin Preece, Executive Director

Thank you, Paul. To summarize, a key highlight for the first half of the year is that we made notable progress in our cultural journey by launching the Gold Fields Way and hosting a summit with a diverse group of leaders from all our regions. We understand the importance of fostering an inclusive and diverse culture where everyone feels they belong, as this can be a crucial differentiator for our business. As we encounter skill shortages, we have pressing cultural issues to address and will be releasing our Elizabeth Project report at the end of this month. Regarding Pillar 1, which focuses on maximizing the potential of our assets, we presented a proposal on our asset optimization framework to the Board this week and have begun identifying key initiatives for driving asset optimization. We will provide a detailed asset optimization plan and the associated value we aim to achieve during the full-year results in early next year. In line with our ESG commitments, we are proud to report that 16% of our energy now comes from renewable sources. In terms of stewardship, we are ensuring that our investments are value-accretive. We have also completed the tailings disclosure reports for both Tarkwa and Cerro Corona. Additionally, we have made significant progress with a sustainability-linked loan. Concerning the growth and value of our portfolio, we have initiated negotiations with the government regarding the Tarkwa/Iduapriem joint venture. The Windfall joint venture was announced and wrapped up in May, and our teams are collaborating closely to align processes, with permitting already underway. We are excited about the potential success of Gold Fields in this area. Lastly, Salares Norte is advancing well and is on track for its first gold production in the fourth quarter. The team is dedicated and performing admirably. Regarding guidance, Paul has commented on it, and I won't take up too much time, but the key takeaway is that we are on track both for production in terms of ounces and costs. Our primary focuses for the second half of the year include achieving our first gold from Salares Norte in the fourth quarter, continuing our organizational culture initiatives, and progressing towards zero harm. We believe there are significant opportunities in asset optimization, and decarbonization remains a priority as well. We also need to refine our portfolio management concerning the discussions around Asanko and Damang. Those will be our main focus areas. I think we can conclude there, Thomas, and Paul and I are available to take questions.

Operator, Operator

Thanks, Martin and Paul. If we could go to the phone lines first, please.

Operator, Operator

We have a few questions on the conference call. The first one is from Catherine Cunningham of JPMorgan.

Catherine Cunningham, Analyst

Sorry, if one of these has been addressed, I did get cut off. I have 2 questions. The first is on Solaris Norte. So I appreciate you say that you're on track for Q4 production, but I did notice that the guidance is lower for Q4. So just maybe some color on what's driving that and whether you see any risk to the pace of the ramp-up post the fourth quarter? And then also just briefly on South Deep. I think you said on the earlier call that you plan on bringing contractors in to fill the skills gap. Could you maybe share some color on the impact that you expect to have on labor costs on the back of that?

Martin Preece, Executive Director

Let me start with South Deep. The question was about our contracting of certain skills and the expected cost impact. We've brought in a small number of contractors to address some of the positions we’re having difficulty filling or for training purposes. This is not a long-term or full-time solution. While these contracted skills come at a slight premium, their impact on South Deep’s overall costs is minimal and is significantly outweighed by the benefits of increased drilling activity. Therefore, we do not anticipate a material impact on costs from this. Regarding Salares Norte, we provided broad guidance at the start of the year and have slightly adjusted that as we approach the fourth quarter. However, the team remains optimistic about a rapid increase in production once the project is fully commissioned. I mentioned the ounces we’re stockpiling while construction continues. The crusher and stockpile are operational, and we’ve started the mill. The original equipment manufacturer is set to perform the final commissioning of the mill. Additional work is ongoing with the filter plant and the leach tank as well. The team is confident about ramping up production next year.

Operator, Operator

The next question is from Jared Hoover of Morgan Stanley.

Jared Hoover, Analyst

I have three questions. First, I'd like to discuss the Executive Committee changes. It's well known that there has been some instability in the Exco over the past 6 to 12 months. With Paul retiring, there may be some continuity in the leadership team. However, I'm concerned that these leadership changes could lead to a decline in operational performance. How do you think this has played out in South Deep, Salaris, and Gruyere? To what degree do you believe the leadership changes have contributed to operational regression? Or could it be that there are just one-off issues affecting performance? My second question is about South Deep. This mine has performed well over the past three years, with efforts to control seismicity and improve the workforce. However, production has been slightly downgraded for this year, and long-term guidance has been extended. You mentioned skill shortages but indicated that you are addressing this with contractors. My main concern is the unexpected challenges that have arisen at South Deep. Do you think you may need to experiment again with South Deep, possibly reorienting the mine? Is it accurate to say that the risk to your production outlook over the next two years might be lower than we currently expect? Lastly, regarding asset optimization, I appreciate that you may provide more detailed insights in the first half of next year. However, since you began this program at larger assets like St Ives, how should we assess the impact of this program on your business? Should we anticipate a significant reduction in unit costs for 2024, or is this program primarily aimed at offsetting rising inflation levels? I'll stop there for now.

Martin Preece, Executive Director

I will begin by addressing the Exco question. There have been some changes, but the roles have been filled with strong team members joining the executive. Gold Fields operates on a robust regional model. If you consider all the distractions we faced last year with Yamana, where the corporate team focused heavily on finalizing that deal, Gold Fields has four regions led by executives who have maintained solid performance last year and contributed positively this year. There have been some challenges, but Paul has provided stability and has been involved in recruiting the new executive team we have in place. He will not be leaving next week and will likely be present at the results presentation in February, as such searches take time and we want to ensure we find the right fit. We are not rushing anyone out of the office, and it’s crucial for me since he is the first to arrive and I’m the second, giving me someone to discuss matters with in the morning. I am confident in our strong team. We aim to build a business that is not reliant on individual personalities and will continue to appoint good people, and you will see changes over time as people retire. Our regional and central model is effective for us. Regarding South Deep, we are optimistic about the mine's overall trajectory and the remodeling we have undertaken, particularly concerning seismicity and mine orientation. We have faced issues with ground conditions and a stability challenge in one of the key corridors. From a safety standpoint, we are not ready to utilize a single access path until it is fully opened up. We have lost access to some old areas, but we expect to re-enter that area this quarter. The other two areas that faced challenges are back to productive operations. This has affected our guidance. Looking long-term, we encouraged the Board last year to expedite efforts toward Salton Bridge. In a seismically active mine, such as ours, just-in-time production is likely not feasible. We have started to gradually move our lead development teams toward Salton Bridge to prepare for potential weather incidents with additional options. We acknowledge that reaching the target of 380,000 tonnes will likely be delayed by a year, but the trajectory is steady. We have generated nearly $97 million in the first half, contributing significantly to the business, and we will continue to monitor it closely. For asset optimization, we have divided this into three aspects: business improvement, which consists of incremental changes expected from operations; breakthrough interventions, focusing on regional improvements for significant change; and transformational interventions aimed at substantially altering our cost base. We have proposed specific targets to the Board that we will define over the next few months for a five-year period. We expect to see some progress gradually over these five years, understanding that major transformations don’t occur in one quarter. Our hope is that this will mitigate some effects of inflation over time, and we will also seek more efficient and cost-effective solutions.

Operator, Operator

The next question is from Raj Ray of BMO Capital Markets.

Raj Ray, Analyst

My first question is on Salares Norte and it's a follow-up on what Catherine asked. So Martin, you did highlight that you remain comfortable for the ramp-up in 2024. But if there was one risk that you would see is something that keeps you awake, what would that be in terms of the ramp-up next year? Because the 500,000 ounces in the first year of production is a pretty significant milestone. So if you can talk to that? And then second, on the Chinchilla relocation, I did see that you're looking at options for mining that part of the deposit underground. Is that a requirement of the relocation? Is that something Gold Fields is looking at? And if so, what could be the potential impact on, let's say, additional capital or even the production profile when you get to that part of the mine? The second question is on the skill shortage that you have highlighted across the portfolio. I do appreciate that South Deep is a challenging mine. You need continuity, and just bringing in a contract, does that really solve the problem? Or do you want to, at some point, look at the longer-term steady state that may be better suited?

Martin Preece, Executive Director

The ramp-up is a top priority for us. As we consider the ramp-up for next year, we should remember that we don’t need to operate at full capacity in terms of volume due to the advantage we have with grade, which will contribute to our output. Therefore, there's no necessity to push for maximum tonnage next year. We are monitoring everything closely because significant changes at Salares Norte could have a major impact on the group moving forward. Our current focus is on ensuring production starts this year, and we will continue to watch it closely. At this point, the team has indicated that we are in a solid position. Regarding Chinchillas, we have received the approval to relocate. While the relocation plan was being authorized by the government, we became concerned about timing, which prompted an underground study to explore mining the second open pit, Agua Amarga. This was a prudent step since it provided us with an alternative. We didn’t get the permit to relocate the Chinchillas in that area, but transitioning from a high strip ratio open pit to a low strip ratio underground mine maintains similar economic outcomes at a conceptual level, and the team will provide a detailed study by November. Our initial plan involves accessing the Agua Amarga deposit using the beta principal and mining it from underground. We also see potential upsides with this underground option, as we could access additional ore that extends beyond the current open pit. Another advantage is that reducing the strip ratio would significantly lower our carbon emissions associated with diesel trucks. The Chinchilla Relocation Plan has been approved, and we are optimistic about its success. We intend to transition to underground mining, although that will require additional permitting as we move forward later this year and into early next year. In Australia, there are two main issues regarding the skill shortage. The commodity market is thriving with significant iron ore mining, which is where we are competing for skilled workers. Additionally, the country has an unemployment rate of less than 3%, making it difficult for us to compete on salary. The impact on our profits is substantial, and these costs are incorporated into our operations. We believe we offer competitive salaries and bonuses, so we need to explore different strategies to attract and keep talent. Our focus is on innovation and technology to automate processes, which will allow us to maintain efficiency with our skilled workforce. At South Deep, as noted in earlier discussions, they have faced challenges due to their own success. The typical skills for stripping operations may not have met expectations. However, they have cultivated a strong team of longhole drilling operators and maintenance staff over recent years. Unfortunately, these skilled workers have been recruited by a large diamond mine that is starting underground operations, alongside major copper projects in the DRC. In light of this, we have hired additional personnel and are training more than we currently need. We’ve also engaged a contractor to help bridge some of the gaps temporarily while we enhance both the number and skills of our workforce. The availability of artisans and maintenance staff continues to be a challenge, and we are actively addressing this issue.

Raj Ray, Analyst

In Australia, from my recollection of the site visit last year, the operation is running at a good rate of about 1 million ounces. There is considerable development needed regarding upgrades to underground infrastructure, including potential new shafts or hold options, and new mining fronts. The skill shortage in that area could affect your medium-term outlook for the portfolio. Lastly, regarding Asanko, I noticed that the new mining contract has been awarded, but the approval for the feasibility study is still pending. Can you provide your thoughts on this situation?

Martin Preece, Executive Director

In terms of Asanko, the outstanding piece of the feasibility that we're working with Galiano on is the reserve and resource estimates. I think the mining plan, the mining costing per se is not the challenge. It's about the sort of confidence that we have in the resource and reserve models that we've produced. Both teams are working on that. But we're also looking at our options with what we want to do with Asanko and Damang, as I said. So we would hope to conclude that a very clear way forward in the coming months.

Operator, Operator

The next question is from Adrian Hammond of SBG Securities.

Adrian Hammond, Analyst

Martin, you have demonstrated exceptional cost performance over the past few years, especially considering the lower inflation rates. Can you provide some insight into how you achieved this, whether it's related to the assets or your efforts in cost management? Additionally, regarding the asset optimization plans you've implemented, what outcomes should the market anticipate for assessment? Will you be setting new cost and production targets, or what should we be looking forward to next year?

Paul Schmidt, CFO

Adrian, let me just talk to our good cost performance. I think as what I said when I talked about the all-in cost is that our capital is skewed towards the second half of the year, and we're going to obviously spend a lot more towards the end of the year. And the $1,380 circuit that we've talked about for the first half will be a lot out towards the end of the year. I think we've been working hard on cost control. I don't think there's any magic. To be honest, a lot of it, as I said, is the capital. But I have included a slide at the back of the presentation which shows the inflationary pressures we are facing. But I mean, it's a day-to-day job where we're talking to the teams on site as to how they can offset it or mediate some of the inflationary pressures. Especially in Australia, we're seeing huge pressures on wages, Martin alluded to it, with the iron ore mines putting pressure on us on every day.

Martin Preece, Executive Director

In regard to asset optimization, I believe we need to focus on factors that create value. This involves either reducing our spending or increasing our production. We are examining ways to minimize waste and eliminate duplicate efforts and unnecessary expenses. While there are essential costs we need to incur, we are also exploring various initiatives to enhance productivity. The goal is to increase output from specific areas at a lower cost, which will positively impact our bottom line. This strategy will help us mitigate the effects of inflation and position us favorably compared to our competitors.

Operator, Operator

The next question is from Cameron Needham of Bank of America.

Cameron Needham, Analyst

Look, firstly, regarding the labor situation you discussed in Australia. Are the issues in terms of labor shortages becoming severe enough and going on for long enough such that they would actually influence how you allocate capital across your portfolio? And then just as a follow-up to that, have you had any engagement with the government in terms of perhaps making it easier to import labor?

Martin Preece, Executive Director

I think it’s something we’re monitoring. Labor turnover has slightly decreased, and we are currently at about 17% to 18% in the Australian region, which is an improvement from earlier this year. We met with Minister Johnson on Monday evening, and we found the government to be very engaging. There has been a relaxation regarding the import of skills into Australia. During my visits to our operations, I've noticed a diverse group of people working in our mines, representing various nationalities. It seems the government is making efforts to support the resources sector by facilitating the import of labor.

Operator, Operator

The next question is from Leroy Mnguni of HSBC.

Leroy Mnguni, Analyst

I have two questions. First, regarding the Tarkwa all-in sustaining costs, they are below $1,200 an ounce. You've slightly reduced your guidance for the year, but it still appears quite high compared to what you achieved in the first half. Could you provide some insights on the cost challenges you anticipate in the second half of the year? Is this also related to increased capital expenditures? For my second question, I recall during your year-end results a few months ago, you mentioned reserves in Australia that were close to being confirmed and that you hoped to add those, but it didn’t happen in time for the results. Is there any update on that? Are you planning to add any additional reserves in Australia?

Martin Preece, Executive Director

Let me start with the reserves question, and then Paul will address the cost question. What we discussed at the mid-year was aligning our reserve and resource program with our business planning cycle. We previously had two out of six, but we have now integrated those two into six. There is an exception for one mine in Australia, Granny Smith, which will be able to submit the reserve and resource conversions a bit later than the other sites. Our concern was that by changing the cutoff cash earlier in the year, we might not replace, as Australia typically does, all the reserves and resources. Currently, we are actively preparing for our business planning, with plans to finalize that in October and November. We will provide an update towards the end of the year. A positive development is that we have aligned the reserve and resource process with our business planning process, ensuring consistency between mine designs and resource reserves. That was the key point we aimed to clarify at the beginning of the year, Leroy.

Paul Schmidt, CFO

I'm not sure what you're referring to, but we've actually reduced the all-in cost guidance from $1,390 to $1,370. This is due to the increase in ounces, upgrading it from 545 to 550. As for the year-to-date figure of $1,181, we are still on track to reach the $1,370 target as I mentioned earlier. We allocated general capital more toward the second half of the year. One of the positives in relation to our guidance is that we’ve experienced a slight decrease in fuel prices in Ghana. I hope that answers your question, and that’s what you were asking me.

Operator, Operator

We have no further questions on the conference call, and I would like to hand back for questions on the webcast.

Operator, Operator

So we've got a couple of questions on the webcast. The first one comes from Belecki from Capital. Are there any plans in the short term, i.e., next 6 months to bolster your balance sheet? If so, please advise?

Paul Schmidt, CFO

No, as we announced, we renewed our $1.2 billion group facility. It consists of a 3-year and a 5-year $600 million facility, and we now have a single 5-year facility of $1.2 billion, which includes an addition that allows for $400 million more, effectively extending the duration to over 7 years. One of the reasons I have been in Australia for the past two weeks is to review and renegotiate our AUD 500 million facility. We hope to finalize that by late September or early October, aiming for a structure similar to what we currently have. Regarding next year, we have the 2024 bond maturing at $500 million, and we intend to pay that using our cash flows. As mentioned, Agnew and Salares Norte are significant for us next year, and we plan to use most of the capital raised from Salares to pay down the bond. We do not intend to issue a new bond next year.

Operator, Operator

Next question comes from Arnold from Nedbank. Is launching the Gold Fields Way culture journey a proactive initiative or a response to recent issues or challenges you've faced? Is this linked to some of the recent safety incidents?

Martin Preece, Executive Director

I believe this is a proactive initiative. A significant portion of our costs, nearly 50%, is associated with our workforce. We truly feel that we can foster a more diverse, inclusive, and equitable workplace that promotes a sense of belonging. This approach can help individuals realize their full potential and inspire them to put in extra effort. We are convinced that our people are the key factor in driving our business forward. Consequently, we aim to establish ourselves as the preferred company for those who wish to join us.

Operator, Operator

Next question is from Josh from RBC. He's asking, why was mining at Salares Norte solely focused on the waste stripping in Q2? Has infill drilling provided any information about reconciliation or required changes to the mine plan?

Martin Preece, Executive Director

So I think, Josh, that's largely related to where you're doing your cuts. We have no pressure at the moment to stockpile more material. We're waiting for the plant to commission. So the focus essentially in the beginning or in this Q2 has been around waste stripping. We're back in the bottom of the pit, now stockpiling ore again, and we will meet the full year's mine plan as put in the guidance at the beginning of the year.

Operator, Operator

Next question is from an anonymous source. The question is, what are the disadvantages to going underground at Agua Amarga, i.e., why did you initially plan to go open pit?

Martin Preece, Executive Director

I believe open pit mining has historically been the preferred method, as it carries less risk and is more economical, allowing for the movement of larger volumes. However, with the challenges we've faced at Chinchilla, we've begun to reconsider this approach. In an era focused on reducing carbon emissions, one significant advantage of underground operations is the potential for a strip ratio over 20 to 1, which translates to substantial diesel consumption. Nonetheless, underground mining does come with higher costs. Initially, we identified two ore bodies suitable for open pit mining. The Chinchilla situation prompted us to reevaluate our strategy. While the economics of open pit and underground mining appear similar, we need to analyze this more thoroughly during the upcoming study and consider the timing and the permitting process to ensure we can maintain uninterrupted production.

Operator, Operator

Next question is from Rene from NAOH. He asks, can you comment or do you have an update on your resources and reserves in terms of ounces or average life for Gold Fields mines?

Martin Preece, Executive Director

That is something that we publish annually. And the team is working on that towards the end of the year and to be published early next year as part of our annual reporting.

Operator, Operator

Next question from David from an anonymous source. He's asking your FX assumptions for cost guidance are quite different from how the currencies have developed over the year. What impact will weaker Aus dollar have on your costs? And can you quantify that perhaps to a percentage saving?

Paul Schmidt, CFO

What I have said earlier in terms of the guidance, I mean, we guided the R17 to the dollar and AUD 0.7. Our current forecast is around R18.53 and AUD 0.67. Looking at the numbers I've got in terms of all-in cost, it's around $50 difference between improved impact using the forecasted exchange rate. But as I said, even at budget and rates would still make our guidance, but the difference is about $50 in terms of where we will add. It's quite a positive impact for us.

Operator, Operator

Last one guys. So Andrea Philips from Risk Insights asks, what steps has Gold Fields taken to address the areas for improvement identified in community engagement and consultation and addressing human rights risks?

Martin Preece, Executive Director

I think we've got a big team working on that, Andrea, out of the Johannesburg office under and seems churns leadership. We subscribe to the principles laid out by the ICMM. And I think we wanted the leading members here in the space. So certainly on our agenda, we regularly present these risk assessments and reviews to our Board. We covered some of our regions this past quarter, and it's something that we believe we have the necessary governance and structure around to ensure we can keep best practice in.

Operator, Operator

Thanks, Martin. That's all the questions. So if you want to just wrap up.

Martin Preece, Executive Director

I think I'm not going to try and repeat all the details. We are pleased with how the teams have performed and what they've delivered. Salares Norte remains front and center of our focus in terms of delivery. We've got work to do with our safety. And again, just to thank Paul, he's going to be sitting with me certainly at least another one time. And if we drag our feet in recruitment, maybe another 2 times Paul, but I think I'm going to have difficulty with Paul's worth. So I'll have to contract our feet on that. Thank you for joining us this evening, and we look forward to catching up in the coming week and next year.