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Gold Fields Ltd. (NYSE:GFI) H1 2019 Results Earnings Conference Call August 15, 2019 4:00 PM ET
Gold Fields Ltd.（纽约证券交易所股票代码：[GFI]）2019年上半年业绩收益电话会议2019年8月15日美国东部时间下午4:00
Avishkar Nagaser - EVP, IR & Corporate Affairs
Nicholas Holland - CEO & Executive Director
Martin Preece - EVP, South Africa
Paul Schmidt - CFO & Executive Director
- Avishkar Nagaser - 执行副总裁，投资者关系和公司事务
- Nicholas Holland - 首席执行官兼执行董事
- Martin Preece - 南非执行副总裁
- Paul Schmidt - 首席财务官兼执行董事
Patrick Mann - Bank of America Merrill Lynch
Brendan Ryan - Miningmx
- Patrick Mann - 美国银行美林证券
- Brendan Ryan - Miningmx
Ladies and gentlemen, welcome to Gold Fields' Half-Year Results. Before we get started, in the case of an emergency, there are two exit points, one at the back of the room and one in the front and then the muster point is at the front of the building that you’ve entered.
I will hand over to Nick Holland, CEO to begin the presentation and we'll do Q&A afterwards. Over to Nick.
女士们，先生们，欢迎来到Gold Fields的半年业绩。 在我们开始之前，在紧急情况下，有两个出口点，一个在房间的后面，一个在前面，然后集合点在你进入的建筑物的前面。
我将交给首席执行官Nick Holland开始介绍，之后我们将进行问答。 到尼克。
Thank you very much Avishkar. Good morning everybody. Welcome to our First Half Year Results for 2019, very simple messages for you this morning. Essentially, production is up 9% compared to the corresponding period in the previous year, all in cost around 5% and with cash flow positive from being over $70 million negative in the same period last year. This year our core operations $49 million positive with obviously all of the projects being financed, all of the interest burden having being carried in that number.
In particular, Gruyere has commenced production. We’re pleased to inform you that we’ve achieved practical completion at the Gruyere process plant, what does that mean in essence? It’s a technical construction term. In essence it means we’ve achieved 96 hours uninterrupted through the entire valley chain of the process plant, so the crusher, the SAG mill ball mill, the Illusion circuit, the gravity circuit are all functioning, steady state for 96 hours. That's really great news for us. That was achieved on the 10th of August. And so now we're in the process of ramping up that plant over the balance of the year.
And as we've mentioned, we're giving a range of production because obviously with all ramp ups, it's a large process facility. It's over 8 million tons a year, that's large in the scheme of processed plants. You might get hiccups along the way. So we're saying that we should be able to ramp that up over the balance of the year.
Bear in mind over the long term, Gruyere is a project as the joint venture announced in our recent joint release, that this is a three hundred thousand pounds ANSI mine with long term costs of about AUD$1025 an ounce, at least with 11years to 12 years to start with. And then of course there's potential on the joint venture property and of course at the mine itself to -- to look for potential to add to that over time.
So really a great addition to the group, in line with the strategy of adding life at lower cost, so that we can be defensive in the face of volatility in the gold price. And now let's talk about the gold price briefly. We've seen the gold price come up. Has it gone too quick too -- too far too quick? Who knows? It may be volatile in the future. Nice to have it for now, but we're not putting our store on a higher gold price. We'll keep discipline in the business. We are still targeting to achieve a 15% margin at a $1200 gold price at a AUD$1600 gold price and a R550,000 per kilogram South African price.
And I think as you can see those prices on a relative basis to a spot are still some distance away from where we are today, which is good. Let's keep that -- that flexibility, that cushion on our operations.
Damang as we’ve mentioned before and I'll show you a few pictures, but later that continues to track ahead of plan. So we're on track to really get to the heart of the ore body around about quarter two next year. That's really the big price for us is to open up the heart of the ore body, and get in there.
从长远来看，Gruyere是我们最近联合发布的合资企业项目，这是一个耗资三十万英镑的ANSI矿，长期成本约为每盎司1025澳元，至少11年到12年多年的开始。当然，合资企业的财产，当然还有矿山本身的潜力 - 寻找潜力随着时间推移而增加。
这对集团来说真的是一个很好的补充，符合以较低成本增加生命的策略，这样我们就可以在金价波动的情况下保持防御。现在让我们简单谈谈黄金价格。我们已经看到黄金价格出现了。它太快了 - 太快太快了？谁知道？它将来可能会动荡不定。很高兴现在拥有它，但我们并没有让我们的商店有更高的金价。我们将继续遵守业务纪律。我们仍然的目标是以1200澳元的金价和每公斤南非价格的R550,000以1200美元的金价实现15％的保证金。
而且我认为，你可以看到相对于某个地点的价格仍然与我们今天的距离有一段距离，这很好。让我们保持这种 - 灵活性，缓解我们的运营。
South Deep after a very painful and time consuming restructuring process that included a 45-day strike, a difficult quarter one, as we had to recalibrate the mine post that strike, which was only concluded just before Christmas. So really in quarter one, we had to take around about 20 pieces to 30 pieces of gear out of commission, drill rigs, loaders and trucks. We had to say goodbye to a third of our workforce. We had to obviously recalibrate all of the logistics and consumables. We shut down remember 87-1 West and 87-2 West. We suspended the new mine development at the bottom of the mine, and we had to turn South Shaft into essentially a Service a Shaft not a fully-fledged operating shaft. Lot of things we had to do, that took the bulk of quarter one to get going.
But in quarter two, we've got to a better position, to the point where production is up almost 70% on the first quarter. Costs have come down to about R590,000 a kilogram and we've made a modest cashflow contribution of R71 million for the quarter.
Bottom line that is after paying all of the bills. One [Indiscernible] doesn't make a summer. I told the staff this morning, when we did this -- a bridge presentation to them, and certainly Martin Preece and myself are very sober about this early achievement. We need to build on it, and we need to show that South Deep can actually achieve its goals.
That said, where we are today having produced about 2.8 million -- 2.8 tonnes of gold for the first six months. We're on track to achieve our 6 tonne gold target bearing in mind quarter 2 was about 1.8 tonnes of gold. So far, so good. What's particularly pleasing for me is not just to see the headline numbers improving, but seeing all of the things behind it improving. Our ground support is of the highest levels I can remember, Backfill is at a much higher level than what I've seen for a long, long time, de-stress has got up there, development is way ahead of plan. So those are the things at the front end of the [Indiscernible] machine that will make sure that if we can sustain these improvements that those things will be the important components to make sure that we could do so.
We've talked about the balance sheet, the need to basically refinance our debt given that we have maturities coming up. We've successfully done that over the last number of months. We've issued two new bonds, which will spread the maturities out. We've refinanced our revolvers with a big syndicate of banks, and I think we can safely say now that our liquidity is in pretty good shape, and very well received by the market. We've been able to refinance our debt at lower cost, and we've been able to put in long term bonds, five and 10 years, at certainly lower cost than what we thought were possible in the planning stages.
In line with our strategy of paying out between 25% and 35% of our core earnings as dividends, we've paid out $0.60. We're very proud of our dividend policy. The fact that it has been a company with a dividend first philosophy, we've said that we’ll pay dividends in line with the strategy, and that we’ll continue to honor that that policy, notwithstanding other commitments in the company.
South Deep经历了一次非常痛苦和耗时的重组过程，其中包括45天的罢工，一个艰难的第一季度，因为我们不得不重新调整罢工的地雷，这只是在圣诞节前夕才结束。所以真的在第一季度，我们不得不花费大约20件到30件装备，钻机，装载机和卡车。我们不得不告别三分之一的员工。我们必须显然重新校准所有物流和消耗品。我们关闭记得87-1 West和87-2 West。我们暂停了矿井底部的新矿开发，我们不得不将南轴转变为基本上是一个服务轴而不是一个完全成熟的操作轴。我们不得不做的很多事情，占据了第一季度的大部分时间。
支付所有账单后的底线。一个[Indiscernible]没有夏天。我今天早上告诉工作人员，当我们这样做 - 向他们展示桥梁时，当然Martin Preece和我对这个早期成就非常清醒。我们需要在此基础上进行构建，我们需要证明South Deep能够实现其目标。
So as you've seen over the last five to six years, we've been very consistent, and following that dividend policy. So that people know when they buy into the company, they can rely on consistency in terms of a dividend.
So if earnings go up, we'll pay more dividends, as a function of percentage of profits. Clearly, if earnings go down, dividends will reduce. Hopefully we're going to see higher earnings for the year, and hopefully we'll see a good dividend overall for the year.
On safety, we continue to believe we have to eradicate fatalities and serious injuries from our business. At the leadership level in the company, we continue to invest our time in showing the way and making sure we have the right systems, the right leadership, the right behavior, to further drive improvements in safety. We can never relax on safety in our business as we all know.
All right, so looking briefly at the results at the top there, you can see we've done just over $1 million just under 1.1 million ounces all in costs of $1,106 as I said that's about 5% lower than what we had this time last year.
Capital on growth projects is coming down, and in fact if you look at Gruyere, we've spent about US$65 million in the first half of this year, that will essentially dwindle down from there to very little in the second half because the project is done, so that will improve our fortunes in the second half.
Also, Damang spent about $44 million in the first half again in the second half that will be probably about half of that, so certainly that $49 million that we've generated from the business. If all things stay where they are today for the second half, we should do reasonably well from this base given that, that growth capital is down.
As you can see mine cash flow before projects, very healthy $200 million essentially from the business. That's before projects, which gives you a sense of what the Australian, Ghanaian and Peruvian business is doing for us. Strong underpinned, which has enabled us to finance a lot of our acquisitions and projects spend without materially increasing our debt.
But remember, over the last two and a half years, between the acquisition of Gruyere, the building of Gruyere, they pushed back at Damang. We've spent over $800 million. Superimposed on top of that, the continued investment in taking Salares Norte and Chile to feasibility level that's probably at another 100 to 150. Our debt hasn't moved that much. I think it shows you a lot of the growth in the business has been able to be financed internally some debt, but the bulk of it internally.
In Ghana, very good quarter, very good half year as well, 400,000 ounces. We got the addition of Asanko. Remember we didn't have that in the equivalent period in the six months last year we have it in this year. Nice to see as well. Strong cash flow coming out of Ghana $72 million, $52 million coming out of Peru.
Now Peru of course our lowest cost operation copper gold poor free system. And of course, with the copper byproduct against a gold rate of about 1.1 grams that helps you to keep your costs down nice and low.
South Deep as we’ve mentioned for the six months still up at $15.29 an ounce, but in fact if you look at the quarter 2, that figure was down at $12.75 on the back of that increased production, so certainly on the right side of the ledger.
In Australia, good cash flow before Gruyere for the six months of about $92 million. So that's just a good quick summary for you as to where the business sits. So turning cash positive sooner, we certainly weren't planning to be cash positive in this first half. I think the gold price has certainly been the big factor there. And let's capitalize on that in the second half of the year and push on from there after that significant capital expenditure of 18, 17 and of course the early part of 19.
The balance sheet as I've mentioned, I'm not going to go through a lot of this detail. Paul can certainly answer your questions at the end. We know that we've got a bond of a billion dollars maturing towards the back end of next year. We'd bought back $150 million of that previously, so there's $850 million to pay. We decided to go pre-emptively and essentially refinance that. We've split it into two tranches, to avoid near-term maturities, competitive rates. So we've got $500 million going on five years, another $500 million going at ten years. The weighted average cost ran about 5.5% that compares to 4.875% on a maturing bond. That was an exceptional pricing, we did back in 2010.
So we park that money in our revolvers, and knock them off. In the meantime, we've also refinanced $1.2 billion of revolvers. Again, we have split it out three years and five years with the potential to extend, and we'll use that capacity to redeem the 20 -- 20 bond, and make sure that we're covered. On that one on the balance of that, of course will be used for general corporate purposes.
We've also sold non-core investments. One of the strategies we've had is to take a royalty portfolio, which had no value in our company. We’ve entered into a royalty company, go for a ride on the fact that royalty companies are trading at multiples, and then cashed in.
Suddenly, we sold Darlot to an Australian company called Red 5, went for a ride on them, cashed in. So $88 million from virtually nothing, this is a good example of making lemonade from lemons, and getting value where there was no value. We park that in the debt. So it's a nice strategy for us to continue to bring down our debt, which is the key objective of the middle of this year through to the end of next year. We want to make a significant reduction in our debt and a good time to do it is when the gold price is playing well.
There is some accounting changes, which complicates our debt position where leases have to be capitalized, principally these are gas pipelines and gas facilities in Australia and Ghana where essentially you have to treat it as if you own it even though it's underpinned by a long term purchase price agreement. There’s a few odd things coming through, and we've shown you the figures before and after debt goes up. And it also impacts assets onto the balance sheet and operating costs interest charges that will get amended.
We've given you a reconciliation in the books, so I won't dwell too much on that. So there's the balance sheet. I think importantly, you can see now that we have this maturity over here. We bought back another $250 million of that bond, so that bond sits at 600. There's some other odds and sods, that will mature over there. So we'll use the revolver to knock that down. We've got the capacity now. So we're not worried about that. So essentially that's finance, that repayment, that's an Australian loan that was used to finance Gruyere around about $500 million AUD$450, I think it is. And there's your two new bond tranches that are older, so a much better maturity curve than what we've had before.
As you can see net debt, on the old basis down to 1.36, that's down from the figure at the beginning of the year. And we're hoping that by the end of the year, we can certainly bring that down. Remember the long term target was 1 times, but I think over time Paul and I are quite keen to see if we can bring it down even further.
Right, so on the projects, here’s Gruyere, a good snapshot of essentially this is the process plant you're seeing over there. You can see there's a course or stockpile with the stockpile cover on that side, and you could see it's that looks and feels like a mine. There's another picture of the there's a course or stockpile. For those miners in the room you like to see that? That's nice and full. Basically, that’s all crushed and there’s your stockpile cover. That's to prevent dust and everything because obviously you get some winds coming through here.
And then on this side over here, here’s your two RoM pits. We've got a high grade and a low grade RoM pit. But frankly when you're dealing with a cutoff grade of about 0.3 grams a tonne, pretty much everything could go through the plant. It's just a question of sequencing the best grade, you can get in the early and the early part of the mine's life. So obviously there's a whole material handling strategy on that.
I was in the Gold Room in fact a few weeks ago, but I wasn't there when they were doing this, I would have loved to have been, that he is pouring the first bars. And by the way, these are not just plastic covered bars. These are real bars. They were a chunk of material that's for sure, Trump picked it up with one hand, that is that is something.
So just over 1100 ounces produced right at the end of June. We're ramping up as I've mentioned, essentially that test of practical completion was a key one for us running 96 hours uninterrupted and we are hopeful that we'll have this plant ticking over at that sort of level as soon as we possibly can.
Tonnes mined have been great as I mentioned, and I was sitting at the end of June, at round about 65,000 tonnes mined. Very nice position to be in, to have that amount of ore sitting on the -- on the stockpiles ready to go. So the plant now that it's running, we're going to drive this pretty hard.
Importantly, capital cost of this project is still in line with what we said. $621 million and that being sort of 99.5% complete, with just the final bits and pieces. We're pretty confident that we're going to stick with that sort of number.
正如我所提到的那样，Tonnes开采得很好，我坐在6月底，开采了大约65,000吨。非常好的位置，有足够数量的矿石坐在 - 准备好的库存上。所以工厂现在正在运行，我们将会非常努力地开车。
Production for this year, a range of 75% to 100%, but remember when we get into 2020, we'll be looking to chase down that longer term target of somewhere close to 300,000 ounces a year.
On Damang, another strong performance for the half year with production up compared to the previous year, and we are on track to meet our full year guidance of 218,000 ounces. Importantly, we made free cash flow. So with the project capital now starting to come down, with ounce production coming up, we start moving into cash positive territory, which is great to see.
And looking at the cumulative project, I'm not going to dwell on these numbers, they're in the book, but you can see in all of the metrics, this project continues to be ahead of where we were.
All right. So here's some pictures just to show the magnitude of the scale of mining here. This is the west wall of the pit. You can see over here where they are when we started, they were up there. These are little trucks over here. They're big trucks, but they look like little trucks. Okay.
So you've taken this wall all the way down there. Okay, we're going to get this mine all the way down to the bottom here. Okay. So it's a hell of a job. And a lot of material has to be moved to make this happen. So the western wall is more advanced than the eastern wall, there's a reason for that, because the ore body dips that way. So you want to get that down first, before you go to the eastern side.
Then if you look at the east wall over here, so you can see where we are on that side over there. You can see that's much less down compared to that side, okay and that's by design. So we're going to get that down there as well, and that will be the target by the middle of next year. We’re pumping this water out, into another dormant pit we're not using, so as the water comes down, the wall comes down. All of these things of course have got to balance each other, and operate in sync, but this is what mining is all about.
And here's from north to south. So that's Juno, the old Juno pit there. In the south, that is the east all over there. The Tailings pit, all Tailings pit is over there, you can see we've got some cover over there, geotechnical requirements, and the west wall on that side. So it gives you a good idea for those if you haven't been up there for a long time. As I said before we started, all of this was up there. All of that was up there. So it's a big earth moving operation.
All right, turning to Australia. A good half year overall. You can see production, we've pretty much maintained. That's about 1% or so down. It's very, very close to where we were. Costs have gone up a sizeable amount year-on-year. There's a couple of reasons for that. We took the decision to go our own way in terms of accommodation at Agnew, instead of renting accommodation in Leinster, which was around about 35-minutes’ drive. We decided to build our own camp, which is within walking distance from the offices and the process plant. That's cost us almost AUD$40 million oneself. There's a payback there about four or five years, and lower accommodation costs, improve morale, having our whole team together has made a big difference.
Also in the previous year, St Ives was mining more than it could process, and there was good reason for that, because there was economies of scale in mining the remaining stages of the Invincible open pit much quicker than what would otherwise have been the case we could bring down the unit costs and we did, the mining cost dropped to around about $4 a tonne from $5 previously.
The net result as we stockpile a lot of ore in 2018. There's also blending issues, because the Neptune open pit is softer material, whereas the Invincible pit is more fresh harder material. We need a blend of about 75:25, 75 fresh 25 oxides, and so we had to stockpile. So this year now we're running it all through. So all of those GRP credits last year becoming GRP charges. It doesn't really affect the cash flow. It's a function of stockpiles being built up, stockpiles released and it comes through your costs.
The other reason costs have gone up is that now with Invincible open pit almost finished, we're now transitioning to what will be principally an underground operation one stage six of Invincible is done. We expect that to be before the end of the year, and then Invincible will just be an underground operation. It will be Invincible main, Invincible south and then eventually Invincible deeps.
The costs are higher, and over time we have to get the leverage in terms of grade as underground grade should be higher, costs will be higher, but overall on a per ounce basis once we get to steady state, we think that we maintain our costs, notwithstanding these increases. Don't be alarmed. We're maintaining our guidance on costs and on production for the year as indicated to you in February. This is just a function of where we are in there.
Just to give you an idea of how the Invincible ore body has developed. Now this was on the lake. As you know, we have a big lake; salt pan going through St Ives called Lake Lefroy. We had an old drill hole that went back to 1994. I think we had a gram at about 2 meters, not too spectacular, but what we didn't know is underneath all of this. There's two and a half million ounces that looks like it, hasn't even finished yet. This could grow further just where we started and we had some initial resources. Then we added some. That was the open pit. Then we added some resource in reserve. You could see the reserve is in the darker color, the resource, and the lighter color that was 2013. Then we added some more in 14, 15. You've got to go through this quickly, I'm told to say it properly. I'll just go back. So that's where we are.
So as you can see what's happened over here is, it's growing laterally. This is a fault, that's not a problem. We've actually already punched through that fault, center development drive through. It's opening up deeper. And what we're finding is, when we mine those, we're getting more tonnes, in many cases slightly lower grade, but more ounces. So if we can actually optimize our cost base, this is going to be something really special for the future and the mainstay of St Ives certainly for the next number of years.
Right, so there's another way of looking at it that just splits it into the different areas. I suppose, if you look at the total strike length over here, compared to that scale, gives you an idea of how big this is, and why we're saying this is 2 million ounces plus and we're not done yet with this.
If we look at Agnew, we've come leaps and bounds on this operation over the last 12 to 18 months. In particular, we run the North Cath [ph] is expanding laterally, and it's going down further as you could see over here, it’s still open. So we're going to see a lot more out of this.
It's too early to say it's an analog of Kim, which was a fantastic ore body, and that was a million ounces at about 10 grams a tonne, but it looks very promising at this stage. That's just on the existing operations. And then if we look at the Redeemer complex, and this is an old mine over here. That's the surface mine that was backfilled. We did some work over here, but we didn't find too much. And an offset from that, we've found two areas what we call zone 2 North, Redeemer north and some are called barren lands. And this is looking very very exciting.
So much so, that we believe we're on the cusp of declaring a maiden resource and possibly even a maiden reserve for this area, and could even be mining this in two to three years’ time. So this could be a very significant addition to Agnew. It's been sitting under our noses for some time, but it's a function sometimes to spending a bit more time these organic [ph] ore systems are time consuming in terms of drilling, you need to do the appropriate geophysics and geochem work. A lot of its under covers, you don't find it easily from surface work -- you are. So this looks like it'll be an important addition.
One of the reasons, again we decided to build a camp at Agnew, and also put in renewables over a long term period as we're pretty confident this is going to be around for 10 years and probably more.
So we're down here to run about 400 meters, 500 meters very acceptable depth, not a problem at all. Bearing in mind, mines in Australia getting down to two kilometers. Now by comparison, this is pretty shallow. Okay.
All right, turning to the Americas, again Cerro Corona, steady as she goes a great operation as you can see. Good production, very very low cost makes really good cash flow. Now for a mine making, 280,000 ounces a year roughly, $52 million for a half year. Very, very nice cash flow. That compares to amongst the best on a cash flow per ounce basis.
We've done a feasibility for life extension. Sorry, we're in the process of finalizing. We did the briefings. No real issues at this stage. We've quite comfortable that that project should go. And if you can recall that is accelerated mining in the pit, stockpiling strategy and then input dumping one of the best way to do retails, in pit dumping, safer, more cost effective, you don't have issues of tails [ph] dams running away from you, which I know we've seen issues recently elsewhere.
如果我们看看阿格纽，我们在过去的12到18个月内实现了这项运营的跨越式发展。特别是，我们运行的North Cath [ph]正在横向扩展，它会进一步下降，因为你可以看到它，它仍然是开放的。所以我们将会看到更多这方面的内容。
这么多，我们相信我们正处于宣布首个资源甚至可能是该地区的首次储备的风口浪尖，甚至可能在两到三年内开采这个。所以这可能是Agnew的一个非常重要的补充。它已经在我们的鼻子下呆了一段时间了，但是有时候花费更多时间这些有机矿石系统在钻井方面耗费时间，你需要做适当的地球物理和地球化学工作。很多它的封面，你从表面工作中找不到它 - 你是。所以这看起来像是一个重要的补充。
So we're doing input dumping as well elsewhere in the group. We're doing it at Agnew. We're doing it at St Ives. And certainly, we've got some good experience on that. Salares Norte in Chile, you've seen we declare the main reserve that formally announces round about $500 an ounce, all in sustaining costs once it's in production, with round about 11 years of production. But part of a major district that we believe will get bigger over time.
The next process here is to get the EIA complete and signed off by the authorities. We're in the second round of questions that we've answered. I'm hoping that we’ll by no later than the middle of the year, next year we'll have approval. We'll take the final project to the board. And if all goes well, we'll start building this project towards the end of next year, subject obviously to board approval, and a board supported funding plan.
That's been a topical issue. It's an $800 million project. It's a lot of money. You'll be spending that money over about 26, 27 months. So it's a lot of money to spend quickly, and we're looking at different options as to how we fund that, and we'll give you an update on that I'm sure, over the next three to six months.
Looking at the district, we've got very encouraging results at a nearby deposit called Horizonte, which again, I think reinforces the camp potential in this area. We bought a 16% interest in Chakana; I'll come back to that now. But just to give you an idea, this is the greater area, part of the greater area. There's the Salares Norte deposit and here’s Horizonte over here, that's less than 20 kilometers trucking distance from the proposed plant site. And in fact, the ground package over here is at least twice the ground package of Salares. So you know we've got 4 million ounces over here. Who knows what might be here, we’ll see in time.
We've done about 12,000 meters of diamond drilling here so far this year. We’ll continue into next year. Bear in mind, Salares took about around about 170 kilometres of drilling over 10 years. Now so finding these greenfields deposits, particularly this kind of epithermal systems takes a lot of hard work, but let's see how we go. I'm hopeful; we'll add another ore body here within the next five years.
Right, Chakana, so given that we've been in Peru for a long time around about 15 years, built up some experience, what better way to leverage off a great operating team platform and look for something else. So we've taken a 16% interest in the Soledad project, which is, it’s a series of breccia pipes which copper gold as well similar to Cerro Corona. It's in a great part of the country, and cash easier to operate there, than where we are as you can see we're up here, that's down here. So it's early days.
A lot of the money that we've subscribed for in the company is going into exploration. So again, this could be one for the future. We think Peru is one of the best destinations to be in the mining industry, and untapped, the Andes region up the western perimeter has not been properly explored. And we believe, hosts many poly metallic style ore bodies not too much gold on its own. We've happy to mine gold, copper maybe a bit of silver. You're going to be in the right terrain to look for that. And certainly we've been successful mining our copper gold mine at Cerro Corona for the last 10 years.
杰夫提到了这一点，但我想重申一下，我们对LatAm和Qantas最近宣布增加悉尼 - 圣地亚哥航线的直接运力感到非常兴奋。这是澳大利亚和南美市场的改变者。由此产生的两端连通性的增加将使悉尼旅客更容易，更快捷，更便捷地前往该地区，他们将在智利，巴西，阿根廷，秘鲁和哥伦比亚的家门口找到它们。两家航空公司都在明年的路线上运营梦想飞机，这也意味着为乘客提供一致且优质的产品。
如果你进入下一页，你就会明白我所指的是什么。我们将机会放在三个广泛的领域，这将决定我们的长期成功。首先，能力。新的超远程飞机正在服务欠缺的市场中创造机会，我们一直在积极瞄准将要开辟的新航线。这些不仅仅是像A350或B777X这样的宽体飞机的超长途市场，而且还有新兴的超长途窄体飞机如A321XLR带来的无数机遇。这些窄体飞机有可能进入重要的二级市场，并提供以前未开发或通过中间点到达悉尼的直接服务。值得一提的是，鉴于他们今天推出的Malindo，实际上已经为其巴厘岛 - 吉隆坡服务推出了一架窄体飞机。...
Right, West Africa, as you can see a big increase in production. That's mainly because of the addition of Asanko in this first half, which wasn't in the previous half. And you could see as well, nice increase in cash flow, but I like to see. As Damangs capital comes down, as the production comes up, and we start seeing the cash. So Asanko, we've been in this for a year. I guess, the agreement we've come up now with our partners is that let's get to a operation that can make good money for us over at least the next 10 years.
That's just the start. It's not the end. And at the same time, let's work out an exploration strategy for the Gruyere camp. This is lodged in between new month’s operations on one side, a half hour Kim and Adansi [ph] AngloGold Ashanti’s operations on the other side, a large piece of ground that has been sitting there waiting for someone to come in.
Share hosted deposits, which is the two main deposits we have at the moment, Nkran and Esaase and we're seeing many potential analogs of that, but we haven't invested enough exploration. So a two pronged approach, let's get Esaase up and running. We're just mining the top of the hill now, which is soft oxides, that's going to be the main source of ore over the next 10 years and beyond. And then, let's crank up the exploration, and let's get a new camp again. I think, this could be something really special over the next 20, 30 years in Ghana. That's why we bought it.
All right, I'll try and run through the rest quickly. Tarkwa, a width style ore body. And if you take the width space in here in South Africa, and you could actually superimpose that on the surface, that's what you've got to talk with, a stack conglomerate package of reefs, which are very consistent. So we've been here a long time. If you look at what Tarkwa was mined to date, and what it has on the books, 20 million ounces. How many? 20 million ounces, deposits do you have in the world, not too many.
All right, so here's the outline of the pits over here. What's interesting, if you look at these sort of mauve [ph] shaded areas, these are the possible extensions that we're drilling out now. So it proves what we've believed is that these kind of ore bodies, these conglomerate packages just continue, and they stacked packages. There's a number of them, obviously interposed with waste. So you have to strip out the waste, then you expose the reef. But when you got multiple packages, there's quite a lot of meat on the bone to go for. So we believe this is something worthwhile early days, but we're seeing potentially up to 20 kilometers. I was talking to our GM [ph] just the other day, there's potentially 20 kilometers of additional strike here, that that we could add. So pretty exciting work to do.
Tarkwa has been a great mine. It's the biggest producer in our portfolio over 500,000 ounces a year, makes good cash. So if we can have this for longer, fantastic. Let's see. All right, South Africa, so as I've mentioned, I think, I've said pretty much all of this. In quarter two, as you can see gold up 67%, 57,000 ounces for the quarter. We've dropped our cost to R590,000 a kilogram. That's $12.75 an ounce. We've made some cash as I mentioned earlier. All of the front end things that support production look reasonably good, and we can keep that going. Then we'll be in good shape.
那只是一个开始。这不是结束。与此同时，让我们为格鲁耶尔营地制定一个探索战略。这是在新的一个月的操作，一个半小时的Kim和Adansi [ph] AngloGold Ashanti在另一边的操作之间提出来的，一大块地面一直坐在那里等着有人进来。
好吧，我会尝试快速完成剩下的工作。 Tarkwa，宽幅矿体。如果你在南非这里占据宽度空间，你实际上可以将它叠加在表面上，那就是你要谈的东西，一堆叠加的珊瑚礁，非常一致。所以我们在这里待了很长时间。如果你看看Tarkwa到目前为止开采的是什么，以及它在书上的含量是2000万盎司。多少？ 2000万盎司，你在世界上存款，而不是太多。
And here's a good example of how de-cluttering the mine in terms of equipment and people has helped. We've increased our productivity from 37 meters per rig last year, to 55 this year. We still think 55 is very modest. Not by international comparisons, but by South African comparisons. There are operations in South Africa that are doing close to 100. So if we can get this up some more, I think this shows you stoping tons of double over the equipment period.
As we mentioned, these are short term stats. We've got to build on it, and prove to you and to ourselves that actually this will be a good mine for the future. ESG, very briefly, I've talked about safety. It's a big focus for our business. What we're doing with ESG issues now is, we're integrating these into the business. Let's make sure make sure that we manage these things in conjunction with the business not on the site. And we have an eye on these things in everything we do. We want to be sustainable on all fronts. So the safety stats are here. I'm not going to dwell on them, but I can assure you this is a big focus for the business. If we cannot mine safely, we will not mine.
Similarly on ESG type things. We have an eye on this in particular, environmental incidents. We don't want to pollute the environment. We don't want effluent -- excuse me, effluent or dirty water to be discharged off the property. So all of those important things.
On renewables, we've done a lot of work in Australia. And I was recently down at Agnew, and I standing in the middle of 10,000 solar panels, which will give only four megawatts, but it's a start. We will be building now 20,000 solar panels at Granny Smith which will give 8 megawatts.
And with the technology changing all the time, in fact, you can now attract the sun on both sides of these panels, and keep moving them backwards and forwards. Battery storage is evolving as we as we speak, and I think within three to five years, we're going to see a lot more renewables.
We will be putting up our first five wind turbines at Agnew, and they'll be commissioned by the middle of next year. This will bring down our costs. It will bring down our carbon footprint, and there's a good business case all around.
Okay. So I think with that, possibly taken a bit longer. But I think we still have around about 20 minutes for question which I'll ask Avishkar to manage between Paul and myself and the team. Thank you.
同样关于ESG类型的东西。我们特别关注这一环境事件。我们不想污染环境。我们不想要污水 - 请原谅我，污水或脏水从房产中排出。所有这些重要的事情。
Okay. So we'll take questions from here first and then we'll go to the conference call. Patrick?
Thanks a lot. It's Patrick Mann from Bank of America Merrill Lynch. I just wanted to ask on Australia and it is obviously very prospective region, and you've got large tenements in place. Is there a way for you to bring forward some of your drilling or increase the life of mine by you know spending more? Or is it just a case of these things take time, and whether you throw more money at it, it's not going to increase the rate?
And then the second thing that caught my eye was just around the potential for a shaft haulage at Granny Smith as you guys go deeper, just what the thinking is around that, and when that would have to come in, and whether haulage costs are getting too expensive there?
非常感谢。 这是来自美国银行美林的Patrick Mann。 我只想询问澳大利亚，这显然是一个非常有前景的地区，而且你已经拥有大型矿权。 有没有办法让你提前进行一些钻探或增加我的生命，你知道花更多的钱吗？ 或者仅仅是这些事情花费时间的情况，以及你是否投入更多资金，它不会增加利率？
Maybe I'll start at the back end, if I may. And in fact, your question is opportune, because I was at the bottom of the mine about five weeks ago when I was down in Australia, where we're actually doing development in zone 120. And it took us in a light vehicle, it took us a little bit over an hour, to get out the mine. You know bearing in mind, we've got light vehicles and we got our trucks going up the spiral inclines out, and that's at 120.
Now imagine, we've got zone 135. It's a package that's like a replica. We've got zone 150, which is down to 1.9 kilometers. It's clear to us, that if we're going to capitalize on what we think is somewhere between seven and 10 million ounces here, we have to think differently, both in terms of material handling and mining. So one of the things we'll be doing over the next year, is a mining and material handling study, that -- and material handling is code for our shaft. All right. Let's be clear.
So we're going to be doing a study on a shaft, and work out at the same time, how we can crank up the mining, because we're going to put a shaft in. We want to be able to increase the ore. The ore at the mine at the moment is about 1.7 million tonnes a year. And you know as well Patrick, that the process plant can do about 3.5 million tonnes. So if we can get more ore up, one is we utilize more spare capacity in the plant. There's economies of scale. And if you're going to spend money on a shaft, which is no small check to right, now you want to get the volume up.
Now I don't over promise on behalf of the Australia region, but clearly, we want to be looking at something over 2 million tonne ore. Bearing in mind what we believe sits towards the bottom of Granny Smith. Bear in mind, it's still open even beyond 150. So a study on that, it's 12 to 18 months as you saw in the book, and we'll come back on that.
In terms of exploration, the one thing that sometimes surprises me is, geologists will always want more money. And if you offer them more money, you should, they'll take it. And it's interesting that the geologists say don't give us any more money, because if you do, we're going to waste it.
The thing with this exploration, because of these origin at GreenStone style of deposits, you've got to do it sequentially. You know you can spend a whole lot of money in drilling out like crazy, and find you've missed the ore body. Their pensions swell, they are discrete, they appear in clusters. So you've got to actually have a program that goes in a sequence. Let's find the things that matter. Let's have a second follow up program. And when you get into diamond drilling, which is trying to get reserves on the balance sheet, it’ fairly expensive. Typically if you're doing it from surface.
So I'm afraid to say, although we believe the potential of St. Ives, Agnew Granny Smith took longer, and you want to see it reported on reserves. I'm afraid to say, although we could probably add a bit here and there, it is what it is. But we're confident that we'll keep replacing.
Last year, we replace reserves in Australia, the year before we did. I think, this year we're reasonably confident that we'll replace again. But you know, $90 million is a lot to spend, and we're drilling out 400 kilometres. I think, we're doing about a third of total gold exploration in Western Australia. So it's a chunk of change. So let's get some success, and see how we go.
But if we bring a Redeemer in, that could add significant ounces and if we can bring in resource conversion at Granny's, we can add more. Let's see how we go. But it's -- I'm afraid, it's a complex geology. It's not like the width space, and again, we put a few holes in, and bingo you've got a big, big reserve.
去年，我们在前一年取代了澳大利亚的储备。 我想，今年我们有理由相信我们会再次取代。 但是你知道，花费了9000万美元，而我们正在钻探400公里。 我想，我们在西澳大利亚进行的黄金勘探总量的三分之一左右。 所以这是一大块变化。 让我们取得一些成功，看看我们如何去做。
但是如果我们带一个救赎者，那可能会增加大量的盎司，如果我们可以在Granny's带来资源转换，我们可以增加更多。 让我们看看我们如何去。 但它 - 我担心，这是一个复杂的地质。 它不像宽度空间，再次，我们放了几个洞，宾果你有一个大的，大的储备。
Nick, it's Brendan Ryan, Miningmx. You for the last five years you've been a strong supporter of Gold's prospects despite what the market has been through. You've now got the gold price going in the right direction. Could I have your assessment of what's going on? Is this a flash in the pan, or do you think there's something more fundamental at work here in the Gold market?
Nick，这是Brendan Ryan，Miningmx。 在过去的五年里，尽管市场经历了一段时间，但你仍然是黄金前景的坚定支持者。 你现在已经让金价朝着正确的方向发展。 我可以评估一下发生了什么吗？ 这是一个昙花一现，还是你认为黄金市场上有一些更基本的工作？
I think, the one and one thing you learn by being in the gold industry for a long time, Terence is just smiling next to you, because he knows what I'm going to say. I've been in Gold Fields now for 22 years, and the longer I'm here in the industry, the less I know about the gold price and what it's going to do. There's so many different factors impacting the gold price, Brendan. You know we just don't know, and day traders will tell you today, it's going up, the same day trader next week will tell you it's going down.
So it's very volatile. Paul always says, our fortunes lie in the dollar. I think, that's still his view. It'll go up, it'll go down, it's going to be volatile. At the moment, it looks like it's pretty good. Let's enjoy it, but let's not get carried away. Let's be cautious. I'll ask Paul to add because I had some strong views.
我想，你在黄金行业长期以来所学到的一件事，特伦斯只是在你旁边微笑，因为他知道我要说什么。 我已经在Gold Fields工作了22年，而且我在这个行业的时间越长，我对黄金价格及其将要做的事情知之甚少。 布兰登认为影响黄金价格的因素很多。 你知道我们只是不知道，今天的交易员会告诉你，它正在上涨，同一天交易员下周会告诉你它会下跌。
所以它非常不稳定。 保罗总是说，我们的命运在于美元。 我想，这仍然是他的看法。 它会上升，它会下降，它会变得不稳定。 目前，它看起来很不错。 让我们享受吧，但是不要忘记。 让我们保持谨慎。 我会请保罗补充，因为我有一些强烈的观点。
I think, a lot of it's interplay in what the U.S. being and the dollar. Remember, they are two big investment vehicles, the U.S. dollar, gold and our people moved it. At the moment, I think there's a perception that gold is more of a safe haven. So gold is running us to what, all the political instability, but you don't know, we’re all guessing.
我认为，很多东西都与美国和美元相互影响。 请记住，它们是两大投资工具，美元，黄金和我们的人民感动它。 目前，我认为人们认为黄金更像是一个避风港。 所以黄金正在把我们带到什么，所有的政治不稳定，但你不知道，我们都在猜测。
Let's be cautious, and if we're wrong being cautious and we make more money, that's not a bad problem.
Going to throw a follow up on specifically South Deep, the Rand. What do you think happened to the Rand, because that obviously has a huge impact on uncertainty?
兰德将特别推出South Deep的后续行动。 您认为兰德发生了什么，因为这显然会对不确定性产生巨大影响？
Well I think, we are as South Africans we are worried about you know the balance of payment issue. You know the national debt going up all the time. We are an emerging market. We get caught up in the trade wars. We are a victim of trade wars potentially. And added to our own sort of fragile finances, the Rand could be under pressure. But you know the one thing Paul and I've also learned is a weakening Rand in our game is like an interest free loan. You're going to pay it back. It's a question. Is it – are you going to pay it back in 18 months or 24 months? The inflation follows behind.
And you know the other thing about South Africa that worries us, is your energy costs for us are probably going to double in five years. Now, we, just us, are spending about R500 million a year on energy. Okay, if that doubles in five years, that's another R500 million for us. What about the rest of the industry? How they're going to cope? We're fairly modest in terms of what we use compared to the big conventional gold mines and the platinum mines. How are they going to survive, the structural inflation here is a major concern. And wages as well continue to go ahead of inflation, and have not been matched by productivity enhancements.
If anything, productivity has gone down, wage has gone up, so we've got some serious structural issues here to deal with.
我想，我们是南非人，我们担心你知道国际收支问题。你知道国债一直在增加。我们是一个新兴市场。我们陷入了贸易战。我们可能成为贸易战的受害者。除了我们自己那种脆弱的财务状况外，兰德还可能面临压力。但是你知道保罗和我也学到的一件事就是在我们的游戏中减弱兰德就像一笔无息贷款。你要还钱了。这是一个问题。是 - 你要在18个月或24个月内还清吗？通货膨胀紧随其后。
Can we see the questions on the conference call.
Yes, we have a question from James [Indiscernible] from RBC Capital Markets.
是的，我们有来自RBC Capital Markets的James [Indiscernible]的问题。
Yes, good morning and thanks for the call. Just two quick ones around South Deep. Do you think the asset can attract capital, when you compare this to some of the other projects and exploration you have in the international portfolio?
And secondly, given your closest peer, is you know potentially looking to access ask about from an asset on a listing point of view. Do you think it’s time now for you to have a look at strategic asset -- strategic options around South Deep or a potential exit from them?
是的，早上好，谢谢你的来电。 只有两个快速的南深。 当您将此资产与国际投资组合中的其他项目和勘探进行比较时，您认为资产是否可以吸引资金？
其次，鉴于您最亲密的同行，您是否知道可能希望从列表的角度查询资产。 您是否认为现在是时候看看战略资产 - 南方深处的战略选择还是潜在退出？
Yes, let's -- let's deal with the second part of your question first. I think, we wouldn't have gone through the massive pain of restructuring allied with a strike, if we were checking out on South Deep. So I think that gives you the answer. We have restructured the operation. We've taken about R$1 billion a year out of the cost base. We've improved the discipline on the mine. We've improved the quality of the management. That is not the signals of someone who's checking out.
On the first half of the question, you know one of the beauties of South Deep, is we've actually spent a lot of the money on the fixed infrastructure. Remember, we built the plant expansion. We built the backfill plant. We put in a significant amount of additional cooling, ventilation. We deepened the vent shaft. So the real thing ahead of us now is development. Now we've got to develop the ore body. We've got to open up the ore body, which is not dissimilar. Actually I mean, if you look at Wallaby underground gold mine and Granny Smith, in order to access down to a level 150, we've got to open up the ore body, that is the bulk of it. Obviously there's infrastructure maintenance that will continue.
So it's not like we have a mountain of capital ahead of us. It's really development that will be the key thing, obviously replacement of equipment. But as you know we've taken a lot of equipment out of surface, out of operation rather than a park in it up on surface, so that will also defray a lot of the necessary replacements which would otherwise have to have been affected.
So we've done a lot of the hard work here James, and we'll get back into new mine development towards the end of the year. And in addition, a lot of the team that will deploy to that, we redeployed into doing ground support and backfill. So in fact, we'll leverage off just redeploying people back to restart those activities so that will actually mean that the incremental costs won't be as high as it would otherwise have been. Hopefully I've answered your question.
是的，让我们 - 让我们先处理你问题的第二部分。我想，如果我们在南方深处检查，我们就不会经历与罢工结盟的巨大重组痛苦。所以我认为这会给你答案。我们重组了这项业务。我们从成本基数中每年花费大约10亿雷亚尔。我们改善了矿山的纪律。我们提高了管理质量。这不是一个人退房的信号。
在问题的前半部分，你知道South Deep的一个美女，我们实际上是在固定基础设施上花了很多钱。请记住，我们建立了工厂扩建。我们建造了回填工厂。我们投入了大量额外的冷却，通风。我们加深了通风井。所以现在我们面前的真正事情就是发展。现在我们必须开发矿体。我们必须开辟矿体，这并不相同。实际上我的意思是，如果你看看Wallaby地下金矿和Granny Smith，为了达到150级，我们必须打开矿体，这是其中的大部分。显然，基础设施维护将继续。
Yes. That's very clear, thanks Nick. And then, just one more on Salares Norte. If we see spot prices persisting at these higher levels, do you feel like that's a project you can go alone on or is your strong preference still to look at a partner to help you around, is the CapEx still under construction there?
是。 这很清楚，谢谢尼克。 然后，在Salares Norte上再多一个。 如果我们看到现货价格坚持在这些较高水平，您是否认为这是一个可以独自进行的项目，或者您仍然强烈倾向于寻找合作伙伴来帮助您，资本支出是否仍在建设中？
James, I think we still considering all of all options as to how we will bring this to Carlton [ph] are we going to fund the project, that's in process at the moment. Obviously, we'll need to come to a decision by the middle of next year, but we working on it, and there's various streams of work going on as we speak.
The next question we have is from Johann Steyn [ph] from Citibank
我们接下来的问题来自花旗银行的Johann Steyn [ph]
Thank you very much. Thanks for taking my question. Nick, you’ve been very successful if you strip up the South Deep duration of the path that you and your team have been very successful with bolt-on acquisitions and disposals. And I think you create a lot value creation through that and probably something that you don't get enough credit for every day. In this current environment, it seems like you've opted not to go more towards greenfield development as opposed to some sort of bolt on acquisitions. Is that a correct assessment or is it just the fact that the bolt on acquisitions as markets become too expensive?
非常感谢你。 谢谢你提出我的问题。 尼克，如果你剥夺了你和你的团队通过螺栓式收购和处置非常成功的道路的南方深度持续时间，你已经非常成功。 而且我认为你通过这种方式创造了很多价值创造，并且可能是你每天都没有获得足够的信誉。 在当前这种环境下，似乎你选择不再采用绿地开发而不是某种收购方式。 这是一个正确的评估还是只是因为市场变得过于昂贵而收购的事实？
That's a good question. And I think the one thing we must remember in this global consolidation, which I think is going to gather speed over the next year. You know one of the Canadian analysts sort of asked me the other day on a call, you know what did I think the gold industry would look like in a year's time and who would not be here anymore? And I'm not going to mention names here, but what I did say is, I think it's going to be different. But I think, consolidation is a means of trying to deal with the fact that the gold industry has been undercapitalized for years, and the strategy here is let's keep the least undercapitalized assets and get others to pay a premium at $1500 gold price to buy the more undercapitalized assets with a shorter life looming closure obligations, and hopefully then, we can take the money we get from those investment sales, recapitalize our own business, smaller business, lower cost and move on.
So these companies who want to do this are obviously hoping that other companies are going to give them attractive prices for the assets, they don't want, because they're not going to put the best assets on the block. So we've been countercyclical, we invested in new assets three years ago, when everybody else was retiring debt, and making their costs look better by not spending we were still spending. And now that we've finished spending, we have eight to 10 years ahead of us, we don't have any major production gaps, we're happy with what we've got. We've got Salares coming.
And as Paul has just mentioned, we're looking at funding options, but clearly, we're going to compromise our funding options if we go and buy other assets that maybe are inferior. I mean how many assets can you buy that can give you two and a half year payback and $500 an ounce costs in this environment. I don't think anyone would want to sell assets like that, they'd want to keep them.
Organically as well, Johann, all of our mines have potential. We have potential on all of our existing mines to extend life in, particularly given the fact we have the sunk capital spent in the infrastructure, it's lower risk, because we know the ore bodies, the best place to find gold is where you're mining it. I think that's lower risk, higher return options for us. So never say never. You know we continue to run the rule and everything that's out there, but less likely I think, given Salares coming as well. And the fact that we want to pay down our debt share some cash, that we would be a participant in this process.
Those are all the questions on the line.
Mr. Holland, you mentioned one of the risks you had was the electricity supply. Looking at Eskom and their ability to under achieve targets that they've set on an ongoing basis, what is the -- how much can you actually access from alternative sources, and how much of a problem would that be? How much of a setback would it be, if they continued to take even longer than expected to keep the new operations going?
荷兰先生，你提到过你的一个风险就是电力供应。 看看Eskom及其实现目标的能力，这些目标是他们持续设定的目标，您可以从替代来源实际访问多少，以及会出现多少问题？ 如果它们继续花费比预期更长的时间来保持新的运营，它会遭受多少挫折？
So we've done a study on a 40-megawatt solar field at South Deep, which we think is viable, which you know bear in mind you know you can use solar when it's dark and the battery storage is limited. That could probably add on average about 20 megs. And we are using somewhere between 60 and 80 megs. So that's quite a material change to our power composition. So we have a process, we’re in a regulatory process now, and now we need approvals from the likes of Mercer and so we believe there's quite a lineup of people in as well. But if we can get approval, we will implement that in stages, because on a cost basis, we believe that makes sense from day one.
Now bear in mind what I just said, is that if Eskom continues getting 15% a year, that you're going to double your costs over five years, it'll be even more in the money in five years’ time. So we think it's an imperative, and we'd like to be in a position if all goes well to start the first stage of that early next year.
所以我们已经对South Deep的一个40兆瓦的太阳能场进行了一项研究，我们认为这是可行的，你知道，你知道你可以在天黑时使用太阳能并且电池存储有限。 这可能平均增加约20兆。 我们使用的是60到80兆之间。 这对我们的力量构成来说是一个重大变化。 所以我们有一个流程，我们现在处于监管流程中，现在我们需要Mercer等公司的批准，因此我们相信还有相当多的人员。 但是，如果我们能够获得批准，我们将分阶段实施，因为在成本的基础上，我们认为从第一天开始就有意义。
Sorry. We do also have standby generators, Martin, correct me 10 going up to 12 at the end of the year of profit mix, that we've really got on site.
Thank you. May I ask another question?
When you were covering the South African operations, you had a number here gold production increases on the South Deep. And we're looking at $12.75 an ounce. Now looking at the volatility of the gold price, which has been immense recently, how far down could that go before you actually see it, so you've got to cease operations or slow down operations considerably?
当你在覆盖南非的业务时，你在南方深处的黄金产量有所增加。 我们期待每盎司12.75美元。 现在看一下最近巨大的黄金价格的波动性，你实际看到之前可能会走多远，所以你必须停止运营或大幅减缓运营？
Yes, well look the fact that we've already brought our costs down significantly in the second quarter, I think is showing in fact it's going the other way at the moment. And off a very high cost base, clearly we've said that Gold Fields franchise assets, now we want to get to as close as we can to $900 and make a 15% margin at a $1200 gold price. So that's the task for the South Deep team is to drive us down there and you know if you look at an increase in volume what it does. You know you've dropped your costs to now 30% plus just by getting a modest increase in volume, and we’re still only using these sort of production levels, a third of the installed capacity.
So we've got capacity here. So the marginal cost of extra tonnes will be lower, quite a sizeable amount lower than the all in costs. So that's why it's a volume. It always has been – or it will be. And if you can get more open stoping through, which is your big volume, development and stresses on reef, but it's low volume, get you open stopes through, that's really where you're going to see the leverage here. So let's see where we go, but we're encouraged by where we sit today.
是的，看看我们已经在第二季度显着降低了我们的成本这一事实，我认为事实上它正在向另一个方向发展。在非常高的成本基础上，显然我们已经说过Gold Fields特许经营资产，现在我们希望尽可能接近900美元并以1200美元的金价获得15％的保证金。因此，South Deep团队的任务是将我们带到那里，你知道你是否看到它的作用增加了。你知道你已经将成本降低到现在的30％，只是通过适度增加量，而我们仍然只使用这些生产水平，占装机容量的三分之一。
所以我们在这里有能力。因此，额外吨的边际成本将会更低，相当于成本的全部金额。所以这就是为什么它是一个卷。它一直是 - 或者它将是。如果你可以得到更多开放的停止，这是你的大量，开发和对礁石的压力，但它的体积很小，让你打开通过，这真的是你将在这里看到杠杆。所以，让我们看看我们走到哪里，但我们今天所处的位置让我们感到鼓舞。
Nick, following up on your comments on South Africa. Can I ask you for your overall assessment of what's going to happen to the gold industry here? I mean, given AngloGold wants Art, Harmony wants to go to P&G and even the PRC says it wants to invest in South Africa. What is the future of gold mining in this country? Sorry West Africa.
尼克，跟进你对南非的评论。 我可以问你对这里黄金行业会发生什么的整体评估吗？ 我的意思是，鉴于AngloGold想要艺术品，Harmony想要去宝洁公司，甚至中国也表示要投资南非。 这个国家的黄金开采的未来是什么？ 对不起西非。
Well look, I've been saying for a long time that the gold industry is in decline in South Africa. And you know recently, we were eclipsed by Ghana as you saw. Ghana now is the largest gold producer in Africa. And I think South Africa now is down to sub hundred and thirty tonnes a year. I think the die is cast, because if you look at increasing depth, declining grades, increasing costs, you know that's a combination altogether. That is a real storm against you. So I think the Rand, when it weakens, it gives you some respite, but we've seen this over the years. You know the Rand weakens a bit. You get a bit of a respite, inflation comes up, then you get the combined effect of increasing depth, more capital required to access debt, more ventilation, more cooling, rate comes down, the gold industry is in decline and it will continue to be in decline. We're only now 1% of GDP. The gold industry. So how relevant are we in terms of the economy. That's the reality of where we are.
好吧，我已经说了很长一段时间，南非的黄金行业正在衰退。 你最近知道，正如你所看到的那样，我们被加纳黯然失色。 加纳现在是非洲最大的黄金生产国。 而且我认为南非现在每年减少到一百三十吨。 我认为模具是铸造的，因为如果你考虑增加深度，降低等级，增加成本，你知道这是一个组合。 这是对你的真实风暴。 所以我认为兰德，当它减弱时，它给你一些喘息机会，但多年来我们已经看到了这一点。 你知道兰德有点弱化了。 你得到一点喘息，通胀上升，然后你得到增加深度，获得债务需要更多资金，更多通风，更多降温，利率下降，黄金行业下降的综合效应，并将继续 处于衰退状态。 我们现在只占GDP的1％。 黄金行业。 那么我们在经济方面的相关性如何。 这就是我们所处的现实。
Okay, I’ve got one from the webcast; please can you unpack the impact of the hedge and the potential impact going into 2020?
Well, it's in the book, as we've said the mark-to-market loss at the end of June was $120 million. We've basically hedged half of Australia's production for next year, off of Ghana's production. We've hedged 75% of South Deep, one of the main reasons that your concerns raised earlier. We've got hedges of around R680,000 a kilogram for South Deep for next year. That's to give Martin a bit of headroom to get the mine up to the costs, the cost level where we want it.
Yes. The reason we have taken out the hedges is not that we're trying to guess the gold price. Our planning assumptions for next year are US$1200 AUD1600 and R555,000 a kilogram. When we embarked on this hedging exercise, it was about 3.5 months ago. You need to remember where the prices were then. What we did is, we had a draft ops plan for 20. We had a certain cash flow and we were requested what can we do to improve it?
The value of these hedges. Let's ignore the mark-to-market, but visibly what we saw is the planning process as about US$130 million of free cash flow post-tax to our proposed cash flow for next. That's the reason we took it. So as we said, we don't know where the gold price is going. We really don't know. We saw some very attractive prices and we said, let's take some of the money off the table. We are not strategic long term hedges, we will only hedge for a year in advance, and that's what we have done. It's underwater at the moment, but who knows where it will be at the end of the year. Maybe it's worth, maybe it's better, but we're not trying to guess it, at least now. No we're not finalized my plan for next year, which we doing in the next few months. I can put in some different numbers. We’re good on production, we’re good in costs. We always were subject to the gold price volatility. We've locked in a lot of it now. So we can basically know what our cash flow will be for next year when we do our plans, and complete it in three months’ time.
好吧，它就在书中，正如我们所说，截至6月底，按市值计算的损失为1.2亿美元。基于加纳的生产，我们基本上已经对冲了明年澳大利亚产量的一半。我们已经对冲了South Deep的75％，这是您之前提出的担忧的主要原因之一。明年我们为South Deep提供了每公斤680,000左右的套期保值。这是为了让马丁有一定的空间来让矿山达到我们想要的成本和成本水平。
Is there one last one here? No, with that, thank you very much. Media, there are roundtables upstairs. Thank you.
这里有最后一个吗？ 不，有了这个，非常感谢你。 媒体，楼上有圆桌会议。 谢谢。
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