20-F 1 u48057e20vf.htm 20-F e20vf
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As filed with the Securities and Exchange Commission on November 26, 2004



UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 20-F

(Mark One)

     
[   ]
  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
            or
[X]
  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
  OF THE SECURITIES EXCHANGE ACT OF 1934
  For the fiscal year ended June 30, 2004
            or
[   ]
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
  For the transition period from                      to                     

Commission file number: 1-31318

Gold Fields Limited

(Exact name of registrant as specified in its charter)

Republic of South Africa
(Jurisdiction of incorporation or organization)

24 St Andrews Road,
Parktown, 2193
South Africa
011-27-11-644-2400

(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

     
Title of Each Class
Ordinary shares of par value Rand 0.50 each
American Depositary Shares, each representing
one ordinary share
  Name of Each Exchange on Which Registered
New York Stock Exchange*
New York Stock Exchange

*   Not for trading, but only in connection with the registration of the American Depositary Shares pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None
(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the Annual Report:

Ordinary shares of par value Rand 0.50 each 491,492,520

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes [X] No [ ]

Indicate by check mark which financial statement item the registrant has elected to follow: Item 17 [ ] Item 18 [X]




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Presentation of Financial Information

Gold Fields is a South African company and the majority of its operations, based on gold production, are located there. Accordingly, its books of account are maintained in South African Rand and its annual and interim financial statements are prepared in accordance with South African Statements of Generally Accepted Accounting Practice, or S.A. GAAP, as prescribed by law. Gold Fields also prepares annual financial statements in accordance with United States Generally Accepted Accounting Principles, or U.S. GAAP, which are translated into U.S. dollars. Except as otherwise noted, the financial information included in this annual report has been prepared in accordance with U.S. GAAP and is presented in U.S. dollars; and descriptions of significant accounting policies refer to accounting policies under U.S. GAAP. The financial statements of Abosso Goldfields Limited, or Abosso, have been prepared in accordance with IFRS and reconciled to U.S. GAAP.

For Gold Fields’ financial statements, unless otherwise stated, balance sheet item amounts are translated from Rand to U.S. dollars at the exchange rate prevailing on the date of the balance sheet (Rand 6.30 per $1.00 as of June 30, 2004), except for specific items included within shareholders’ equity that are translated at the rate prevailing on the date the relevant transaction was entered into, and statement of operations item amounts are translated from Rand to U.S. dollars at the weighted average exchange rate for each period (Rand 6.90 per $1.00 for the year ended June 30, 2004).

In this annual report, Gold Fields presents the financial items “total cash costs”, “total cash costs per ounce”, “total production costs” and “total production costs per ounce”, which have been determined using industry standards promulgated by the Gold Institute and are not U.S. GAAP measures. An investor should not consider these items in isolation or as alternatives to production costs, net income/(loss), income before tax, operating cash flows or any other measure of financial performance presented in accordance with U.S. GAAP. While the Gold Institute has provided definitions for the calculation of total cash costs and total production costs, the calculation of total cash costs, total cash costs per ounce, total production costs and total production costs per ounce may vary significantly among gold mining companies, and by themselves do not necessarily provide a basis for comparison with other gold mining companies. See “Key Information — Selected Historical and Pro Forma Financial Data — Selected Historical Consolidated Financial Data”, “Information on the Company — Glossary of Mining Terms — Total cash costs per ounce” and “Information on the Company — Glossary of Mining Terms — Total production costs per ounce.”

Defined Terms and Conventions

In this annual report, all references to “South Africa” are to the Republic of South Africa, all references to “Ghana” are to the Republic of Ghana, all references to “Australia” are to the Commonwealth of Australia and all references to “Finland” are to the Republic of Finland.

This annual report contains descriptions of gold mining and the gold mining industry, including descriptions of geological formations and mining processes. In order to facilitate a better understanding of these descriptions, this annual report contains a glossary defining a number of technical and geological terms. See “Information on the Company — Glossary of Mining Terms.”

In this annual report, “R” and “Rand” refer to the South African Rand, “cents” and “Rand cents” refer to subunits of the South African Rand, “GHC” and “Cedi” refer to Ghanaian Cedi, “$” and “U.S. dollars” refer to United States dollars, “U.S. cents” refers to subunits of the U.S. dollar, “A$” and “Australian dollars” refer to Australian dollars and “C$” refers to Canadian dollars.

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In this annual report, gold production figures are provided in troy ounces, which are referred to as “ounces,” or “oz,” and ore grades are provided in grams per metric tonne, which are referred to as “grams per tonne” or “g/t.” All references to “tonnes” or “t” in this annual report are to metric tonnes. See “Information on the Company — Glossary of Mining Terms” for further information regarding units of measurement used in this annual report and a table providing rates of conversion between different units of measurement.

In this annual report, unless otherwise noted, historical financial information and production statistics for Gold Fields prior to the dates of the acquisitions of the St. Ives, Agnew and Damang gold mining operations do not include activity attributable to the St. Ives and Agnew gold mining operations in Australia, which Gold Fields acquired from WMC Limited and WMC Resources Ltd on November 30, 2001, or the Damang gold mining operation in Ghana, which Gold Fields and Repadre Capital Corporation acquired when they purchased Abosso Goldfields Limited from Ranger Minerals Limited on January 23, 2002. In addition, except where otherwise noted, all production and operating statistics are based on Gold Fields’ total operations, which include production from the Tarkwa and Damang mines in Ghana which is attributable to the minority shareholders in those mines.

For the convenience of the reader, certain information in this annual report presented in Rand and Australian dollars has been translated into U.S. dollars. Unless otherwise stated, the conversion rates for these translations are Rand 6.10 and A$1.34 per $1.00, respectively, which were the noon buying rates on October 29, 2004. By including convenience currency translations, Gold Fields is not representing that the Rand and Australian dollar amounts actually represent the U.S. dollar amounts shown or that these amounts could be converted into U.S. dollars at the rates indicated.

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    221  
 Exhibit 4.3
 Exhibit 4.4
 Exhibit 4.5
 Exhibit 4.6
 Exhibit 4.7
 Exhibit 4.8
 Exhibit 4.9
 Exhibit 4.10
 Exhibit 4.11
 Exhibit 4.12
 Exhibit 4.15
 Exhibit 4.19
 Exhibit 4.20
 Exhibit 4.21
 Exhibit 4.22
 Exhibit 8.1
 Exhibit 12.1
 Exhibit 12.2
 Exhibit 13.1
 Exhibit 13.2

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Part I

Item 1: IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

Item 2: OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

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Item 3: KEY INFORMATION

Selected Historical Consolidated Financial Data

The selected historical financial data set out below for the three years ended June 30, 2004, and as of June 30, 2004, 2003 and 2002 have been extracted from the more detailed information and financial statements, including Gold Fields’ audited consolidated financial statements for those years and as of those dates and the related notes, which appear elsewhere in this annual report. The summary financial data for the two years ended June 30, 2001, and as of June 30, 2001 and 2000 have been derived from Gold Fields’ audited consolidated financial statements as of that date, which are not included in this annual report. The selected historical financial data presented below have been prepared in accordance with U.S. GAAP.

                                         
    Year ended June 30,
   
    2000
  2001
  2002
  2003
  2004
    (in $ millions, except where otherwise noted)
Statement of Operations Data
                                       
Revenues
    1,130.4       1,028.4       1,219.4       1,564.2       1,727.3  
Production costs
    861.8       743.4       710.0       1,015.0       1,355.2  
Corporate expenditure
    13.9       16.0       12.3       16.6       20.3  
Depreciation and amortization
    135.5       99.8       113.3       188.1       198.6  
Exploration expenditure
    11.7       17.7       16.5       29.6       39.9  
Franco-Nevada merger costs
          2.5                    
Settlement costs of Oberholzer irrigation water dispute
          1.2       1.0              
Impairment of assets
    15.7       112.1             29.6       72.7  
Increase/(decrease) in post-retirement healthcare provision
    8.4       8.8       6.6       (5.0 )     (5.1 )
Increase in provision for environmental rehabilitation
    5.6       12.2       4.7       5.3       8.4  
Finance expense/(income)
    3.2       1.9       (8.3 )     (4.2 )     12.2  
Unrealized loss/(gain) on financial instruments
    2.0       (0.8 )     (45.9 )     (35.7 )     (39.2 )
Realized loss/(gain) on financial instruments
    14.4       (7.4 )     (4.7 )     (15.1 )     8.7  
Employment termination costs
    16.0       5.0       6.4       3.8       10.5  
Profit on sale of non-current investments
                      (57.2 )     (13.9 )
Write-down of investments
          2.0                    
Stock compensation
                4.8              
New York Stock Exchange listing and associated costs
                4.3              
Gain on disposal of St. Helena mine
                      (13.4 )      
Share of equity investees’ losses
    0.8                          
Profit on sale of mineral rights
                            (27.1 )
Write-down of mineral rights
                            3.6  
Other expenses
    1.4       1.0             0.3        
                               

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    Year ended June 30,
   
    2000
  2001
  2002
  2003
  2004
    (in $ millions, except where otherwise noted)
Income before tax
    40.0       13.0       398.4       406.5       82.5  
Income and mining tax benefit/(expense)
    85.2       (21.6 )     (147.1 )     (133.8 )     (11.8 )
 
   
 
     
 
     
 
     
 
     
 
 
Income/(loss) before minority interests
    125.2       (8.6 )     251.3       272.7       70.7  
Minority interests
    1.7       (8.8 )     (12.2 )     (14.4 )     (21.8 )
Income/(loss) before cumulative effect of
                                       
changes in accounting principles
    126.9       (17.4 )     239.1       258.3       48.9  
Cumulative effect of changes in accounting
                                       
principles, net of tax
          (0.6 )           (1.3 )      
 
   
 
     
 
     
 
     
 
     
 
 
Net income/(loss)
    126.9       (18.0 )     239.1       257.0       48.9  
 
   
 
     
 
     
 
     
 
     
 
 
Other Financial and Operating Data
                                       
Basic earnings/(loss) per share before cumulative effect of changes in accounting principles ($)
    0.28       (0.04 )     0.52       0.55       0.10  
Diluted earnings/(loss) per share before cumulative effect of changes in accounting principles ($)
    0.28       (0.04 )     0.51       0.54       0.10  
Basic earnings/(loss) per share ($)
    0.28       (0.04 )     0.52       0.54       0.10  
Diluted earnings/(loss) per share ($)
    0.28       (0.04 )     0.51       0.54       0.10  
Dividend per share (Rand)
    0.50       1.05       1.30       3.70       1.40  
Dividend per share ($)
    0.08       0.13       0.13       0.39       0.19  
Total cash costs per ounce of gold produced($/oz) (1)
    215       194       170       212       302  
Total production costs per ounce of gold produced ($/oz) (2)
    251       224       198       254       349  


Notes:

(1)   Gold Fields has calculated total cash costs per ounce by dividing total cash costs, as determined using the Gold Institute industry standard, by gold ounces sold for all periods presented. The Gold Institute was a non-profit international industry association of miners, refiners, bullion suppliers and manufacturers of gold products that ceased operation in 2002, which developed a uniform format for reporting production costs on a per ounce basis. The standard was first adopted in 1996 and revised in November 1999. Total cash costs, as defined in the Gold Institute industry standard, are production costs as recorded in the statement of operations, less offsite (i.e., central) general and administrative expenses (including head office costs charged to the mines, central training expenses, industry association fees, refinery charges and social development costs), rehabilitation costs, amortization, reclamation, capital development and exploration costs, plus royalties and employee termination costs. Under U.S. GAAP, production costs do not include amortization, reclamation, capital development or certain exploration costs. Changes in total cash costs per ounce are affected by operational performance, as well as changes in the currency exchange rate between the Rand and the Australian dollar compared to the U.S. dollar. Management, however, believes that total cash costs per ounce provides a measure for comparing Gold Fields’ operational performance against that of its peer group, both for Gold Fields as a whole, and for its individual operations. Total cash costs per ounce is not a U.S. GAAP measure. An investor should not consider total cash costs per ounce in isolation or as an alternative to net income/(loss), income before tax, operating cash flows or any other measure of financial performance presented in accordance with U.S. GAAP. While the Gold Institute has provided a definition for the calculation of total cash costs, adoption of the standard is voluntary and thus the calculation of total cash costs per ounce may vary significantly among gold mining companies, and by itself does not necessarily provide a basis for comparison with other gold mining companies. See “Information on the Company — Glossary of Mining Terms — Total cash costs per ounce.” For a reconciliation of Gold Fields’ production costs to its total cash costs for fiscal 2004, 2003 and 2002, see “Operating and Financial Review and Prospects — Results of Operations — Years Ended June 30, 2003 and 2004” and “ — Years Ended June 30, 2002 and 2003.”

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(2)   Gold Fields has calculated total production costs per ounce by dividing total production costs, as determined using the Gold Institute industry standard, by gold ounces sold for all periods presented. Total production costs, as defined by the Gold Institute industry standard, are total cash costs, as calculated using the Gold Institute industry standard, plus amortization, depreciation and rehabilitation costs. Changes in total production costs per ounce are affected by operational performance, as well as changes in the currency exchange rate between the Rand and the Australian dollar compared to the U.S. dollar. Management, however, believes that total production costs per ounce provides a measure for comparing Gold Fields’ operational performance against that of its peer group, both for Gold Fields as a whole, and for its individual operations. Total production costs per ounce is not a U.S. GAAP measure. An investor should not consider total production costs per ounce in isolation or as an alternative to net income/(loss), income before tax, operating cash flows or any other measure of financial performance presented in accordance with U.S. GAAP. While the Gold Institute has provided a definition for the calculation of total production costs, adoption of the standard is voluntary and thus the calculation of total production costs per ounce may vary significantly among gold mining companies, and by itself does not necessarily provide a basis for comparison with other gold mining companies. See “Information on the Company — Glossary of Mining Terms — Total production costs per ounce.” For a reconciliation of Gold Fields’ production costs to its total production costs for fiscal 2004, 2003 and 2002, see “Operational and Financial Review and Prospects — Results of Operations — Years Ended June 30, 2003 and 2004” and “ — Years Ended June 30, 2002 and 2003.”

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    Year ended June 30,
    2000
  2001
  2002
  2003
  2004
    (in $ millions, except where otherwise noted)
Balance Sheet Data
                                       
Cash and cash equivalents
    75.8       23.6       195.1       133.6       656.3  
Financial instruments
                            37.0  
Receivables
    36.0       50.5       56.2       74.9       116.4  
Inventories
    24.5       21.1       68.5       76.8       63.9  
Material contained on heap leach pads
    17.7       31.3       45.0       41.8       42.5  
 
   
 
     
 
     
 
     
 
     
 
 
Total current assets
    159.0       126.5       364.8       327.1       916.1  
Property, plant and equipment, net(1)
    2,178.1       1,798.7       1,726.9       2,231.0       2,805.5  
Financial instruments
                46.2       67.7       70.3  
Non-current investments
    38.5       42.2       73.3       101.0       179.8  
 
   
 
     
 
     
 
     
 
     
 
 
Total assets
    2,375.6       1,967.4       2,211.2       2,726.8       3,971.7  
 
   
 
     
 
     
 
     
 
     
 
 
Accounts payable and provisions
    148.1       127.4       153.3       184.7       290.6  
Income and mining taxes payable
    13.9       1.2       44.5       52.0       14.2  
Current portion of long-term loans
    10.0             37.0       20.5        
 
   
 
     
 
     
 
     
 
     
 
 
Total current liabilities
    172.0       128.6       234.8       257.2       304.8  
Long term loans
    20.0             145.0       21.1       643.2  
Deferred income and mining taxes
    588.8       506.9       448.2       647.3       769.0  
Provision for environmental rehabilitation
    42.6       47.5       58.8       99.2       116.0  
Provision for post-retirement health care costs
    55.9       51.0       44.7       23.9       18.9  
Minority interests
    29.4       39.0       52.8       58.8       102.7  
Share capital
    41.1       41.3       42.1       42.2       43.6  
Additional paid-in capital
    1,493.0       1,498.1       1,560.8       1,565.2       1,792.3  
Retained earnings
    81.9       2.7       182.6       255.3       211.6  
Accumulated other comprehensive loss
    (149.1 )     (347.7 )     (556.8 )     (243.4 )     (30.4 )
 
   
 
     
 
     
 
     
 
     
 
 
Total shareholders’ equity
    1,466.9       1,194.4       1,226.9       1,619.3       2,017.1  
 
   
 
     
 
     
 
     
 
     
 
 
Total liabilities and shareholders’ equity
    2,375.6       1,967.4       2,211.2       2,726.8       3,971.7  
 
   
 
     
 
     
 
     
 
     
 
 
Other Data
                                       
Number of ordinary shares as adjusted to reflect changes in capital structure
    453,250,595       455,836,608       470,522,224       472,364,872       491,492,520  
Net assets
    1,466.9       1,194.4       1,226.9       1,619.3       2,017.1  


Note:  

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(1)   As discussed in Note 2 to the consolidated financial statements which appear elsewhere in this annual report, Gold Fields changed its method of accounting for mineral and surface use rights during the 2004 fiscal year in accordance with FASB Staff Position FAS 141-1, which required the balance of the mineral interests and other intangible assets in 2002 and 2003 to be restated and included as part of Property, plant and equipment, net.

Exchange Rates

The following tables set forth, for the periods indicated, the average, high, low and period-end noon buying rates in New York City for cable transfers in Rand as certified for customs purposes by the Federal Reserve Bank of New York expressed in Rand per $1.00:

                                 
    Year ended June 30,
    Average(1)
  High
  Low
  Period end
2000
    6.37       7.18       5.98       6.79  
2001
    7.64       8.16       6.79       8.05  
2002
    10.20       13.60       8.01       10.39  
2003
    9.12       10.90       7.18       7.51  
2004
    6.82       7.80       6.17       6.23  
2005 (through October 29, 2004)
    6.39       6.73       5.90       6.10  


Note:

(1)   The average of the noon buying rates on the last day of each full month during the relevant period.

                         
    Month ended
    High
  Low
  Period end
May 31, 2004
    7.05       6.52       6.52  
June 30, 2004
    6.64       6.17       6.23  
July 31, 2004
    6.34       5.91       6.27  
August 31, 2004
    6.74       6.09       6.65  
September 30, 2004
    6.67       6.40       6.45  
October 29, 2004
    6.61       6.10       6.10  

The noon buying rate for the Rand on October 29, 2004 was Rand 6.10 per $1.00. Fluctuations in the exchange rate between the Rand and the U.S. dollar will affect the dollar equivalent of the price of the ordinary shares on JSE, which may affect the market price of the ADSs on the New York Stock Exchange. These fluctuations will also affect the dollar amounts received by owners of ADSs on the conversion of any dividends paid in Rand on the ordinary shares.

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RISK FACTORS

In addition to the other information included in this annual report, the considerations listed below could have a material adverse effect on Gold Fields’ business, financial condition or results of operations, resulting in a decline in the trading price of Gold Fields’ ordinary shares or ADSs. The risks set forth below comprise all material risks currently known to Gold Fields. However, there may be additional risks that Gold Fields does not currently know of or that Gold Fields currently deems immaterial based on the information available to it. These factors should be considered carefully, together with the information and financial data set forth in this document.

The defense against Harmony’s unsolicited offer to purchase all of Gold Fields’ outstanding ordinary shares could require Gold Fields to incur significant costs and demand significant management time.

On October 18, 2004, Harmony Gold Mining Company Limited, or Harmony, announced an unsolicited and hostile tender offer to acquire the entire issued share capital of Gold Fields. According to the registration statement on Form F-4, or the Form F-4, filed by Harmony with the SEC, Harmony has structured the tender offer to occur in two steps. The first step consists of an “early settlement offer” in which Harmony has offered, subject to certain conditions, to acquire up to 34.9% of the outstanding Gold Fields ordinary shares (including ordinary shares in the form of American depositary shares, or ADSs). Subject to satisfaction of the conditions to the early settlement offer, Harmony has stated that the offer will close on November 26, 2004. According to the Form F-4, following completion of the early settlement offer, Harmony has irrevocably committed to make a “subsequent offer” to acquire, subject to certain conditions, the remaining Gold Fields ordinary shares and ADSs not tendered or accepted for payment in the early settlement offer on same terms as were given in the early settlement offer. As disclosed by Harmony, each of the early settlement offer and the subsequent offer are comprised of two offers – a “U.S. Offer” which is available to holders of Gold Fields ordinary shares located in the United States and holders of Gold Fields ADSs wherever located and an “International Offer” which is available to holders of Gold Fields ordinary shares outside the United States to the extent such holders may lawfully participate in the International Offer. In the Form F-4, Harmony states that, with respect to the early settlement offer, the U.S. Offer and the International Offer are being made on substantially similar terms and are subject to substantially similar conditions.

In response to Harmony’s unsolicited and hostile tender offer, on November 3, 2004, the Board of Gold Fields issued an Offer Response Document to its shareholders and filed a Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC recommending that Gold Fields shareholders take no action and reject the Harmony offer. See “Information on the Company — Recent Developments — Harmony Offer.”

Gold Fields is pursuing various legal and regulatory actions in South Africa and the United States challenging the basis on which the Harmony offer is being made. These actions could be protracted and could be costly to pursue. Moreover, there can be no assurance that Gold Fields will be successful in any of these actions. In addition, responding to the Harmony offer has required, and may continue to require, a significant amount of management time. It has also required and may continue to require Gold Fields to incur significant costs, which could adversely affect Gold Fields’ business and results of operations. The Harmony Offer may interfere with Gold Fields’ ability to successfully complete the proposed transaction with the IAMGold Corporation. See “Information on the Company — Recent Developments — Proposed IAM Gold Transaction.”

Harmony’s offer to purchase Gold Fields’ outstanding ordinary shares may result in an event of default under the Mvela Loan Agreement.

Gold Fields, GFI Mining South Africa (Proprietary) Limited, or GFIMSA, Mvelaphanda Gold (Proprietary) Limited, or Mvela Gold, First Rand Bank Limited, Gold Fields Australia Pty Limited, or Gold Fields

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Australia, and Gold Fields Guernsey Limited, or Gold Fields Guernsey, entered into a loan agreement dated December 11, 2003, as amended on February 13, 2004 and on November 17, 2004, which is referred to in this discussion as the Mvela Loan Agreement. Pursuant to the Mvela Loan Agreement, Mvela Gold advanced a loan of Rand 4,139 million, or the Mvela Loan, to GFIMSA on March 17, 2004. The events of default under the Mvela Loan Agreement include any change in control of Gold Fields that occurs without the written consent of the agent, or the Senior Agent, of the providers of the commercial bank debt that funded, in part, the Mvela Loan, where the change in control could reasonably be expected to have a material adverse effect on the ability of Gold Fields, Gold Fields Australia and Gold Fields Guernsey, as guarantors of the Mvela Loan, or on GFIMSA, to perform their obligations under the Mvela Loan or on the validity or enforceability of any document relating to the Mvela Loan. If Harmony acquires enough Gold Fields shares in the early settlement offer or the subsequent offer to effect a change of control and Gold Fields does not obtain the consent of the Senior Agent to that change of control, there may be an event of default under the Mvela Loan Agreement. The occurrence of an event of default under the Mvela Loan Agreement would allow the Senior Agent, on behalf of Mvela Gold, to demand immediate repayment of the principal amount of Mvela Loan, the present value of all future interest payments on the Mvela Loan and any tax payable by Mvela Gold as a result of the early payment of the principal and interest. The source of funds for these repayments would be Gold Fields’ available cash. However, there can be no assurance that Gold Fields will have sufficient cash upon a change of control to satisfy these repayment obligations. If Gold Fields does not have sufficient cash, it may be required, among other things, to seek financing in the debt market, sell selected assets or reduce or delay planned capital expenditures or acquisitions. There can be no assurance that any of these measures would enable Gold Fields to satisfy the repayment obligations or that any such financing or sale of assets would be available on commercially favorable terms. See “Information on the Company-Recent Developments-Harmony Offer” and “Operating and Financial Review and Prospects-Overview-Mvelaphanda Transaction.”

Harmony’s offer to purchase Gold Fields’ outstanding ordinary shares may allow it to exercise a substantial degree of control over Gold Fields.

The structure of Harmony’s offer to purchase Gold Fields’ outstanding shares means that Harmony could end up holding a significant portion, but less than all, of Gold Fields’ outstanding ordinary shares. Under the early settlement offer, Harmony has offered, subject to certain conditions, to acquire up to 34.9% of Gold Fields’ outstanding ordinary shares, and may therefore acquire any amount of shares up to the 34.9% level. Harmony has stated that under the subsequent offer it will seek to acquire the remaining Gold Fields ordinary shares not tendered in the early settlement offer. Harmony has stated that the subsequent offer will be subject to certain conditions including receiving acceptances in the subsequent offer from Gold Fields’ shareholders holding in excess of 50% of the entire share capital of Gold Fields, including those Gold Fields ordinary shares settled by Harmony under the early settlement offer and those Gold Fields ordinary shares in respect of which Gold Fields’ largest shareholder, OJSC MMC Norilsk Nickel, has irrevocably undertaken to accept the subsequent offer. See “Information on the Company-Recent Development-Harmony Offer.” Depending on the number of Gold Fields’ ordinary shares Harmony may obtain in one or both of the early settlement offer and the subsequent offer, Harmony could be able to exercise significant influence over Gold Fields’ operations and business strategy, including the composition of the Board of Directors, declaration of dividends, disposal of assets and changes of control. The interests of Harmony in these matters may not be aligned with, and could conflict with, the interests of other shareholders and could inhibit Gold Fields’ development. If Harmony obtains a significant number, even if less than 50%, of Gold Fields’ shares, it could have the effect of delaying, deferring or preventing a change of control, may discourage other bids for Gold Fields’ ordinary shares and may adversely affect the market price of Gold Fields’ ordinary shares. If Harmony acquires more than 50%, but less than all, of the Gold Fields’ ordinary shares, it will have no

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fiduciary obligations under South African common law to minority shareholders. See “Additional Information-Rights of Minority Shareholders and Directors’ Duties.”

Changes in the market price for gold, which in the past has fluctuated widely, affect the profitability of Gold Fields’ operations and the cash flows generated by those operations.

Substantially all of Gold Fields’ revenues are derived from the sale of gold. Historically, the market price for gold has fluctuated widely and has been affected by numerous factors over which Gold Fields has no control, including:

  the demand for gold for industrial uses and for use in jewelry;
 
  actual, expected or rumored purchases and sales of gold bullion holdings by central banks or other large gold bullion holders or dealers;
 
  speculative trading activities in gold;
 
  the overall level of forward sales by other gold producers;
 
  the overall level and cost of production by other gold producers;
 
  international or regional political and economic events or trends;
 
  the strength of the U.S. dollar (the currency in which gold prices generally are quoted) and of other currencies;
 
  financial market expectations regarding the rate of inflation; and
 
  interest rates.

In addition, the current demand for and supply of gold affects the price of gold, but not necessarily in the same manner as current demand and supply affect the prices of other commodities. Since the potential supply of gold is large relative to mine production in any given year, normal variations in current production will not necessarily have a significant effect on the supply of gold or the gold price. Central banks, financial institutions and individuals historically have held large amounts of gold as a store of value and production in any given year historically has constituted a small portion of the total potential supply of gold. Historically, gold has tended to retain its value in relative terms against basic goods in times of inflation and monetary crisis.

On March 8, 2004, fifteen European central banks entered into a new gold sales agreement effective September 27, 2004, pursuant to which they restrict their annual sales of gold to specified limits. This agreement will be reviewed in five years. Although the new agreement calls for an increase in the amount of gold that can be sold of 100 tonnes of gold per year to 500 tonnes yearly, the effect on the market in terms of total gold sales is unclear.

While the aggregate effect of these factors is impossible for Gold Fields to predict, if gold prices should fall below Gold Fields’ cost of production and remain at such levels for any sustained period, Gold Fields may experience losses and may be forced to curtail or suspend some or all of its operations. In addition, Gold Fields might not be able to recover any losses it may incur during that period.

Because Gold Fields does not use commodity or derivative instruments to protect against low gold prices with respect to its production, Gold Fields is exposed to the impact of any significant drop in the gold price.

Unlike many other gold producers, as a general rule Gold Fields sells its gold production at market prices. Gold Fields generally does not enter into forward sales, derivatives or other hedging arrangements to establish a price in advance for the sale of its future gold production. In general, hedging reduces the risk of exposure

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to volatility in the gold price. Hedging also enables a gold producer to fix a future price for hedged gold that generally is higher than the then current spot price. To the extent that it does not generally use commodity or derivative instruments, Gold Fields will not be protected against decreases in the gold price, and if the gold price decreases significantly, Gold Fields runs the risk of reduced revenues in respect of gold production that is not hedged. See “Quantitative and Qualitative Disclosures About Market Risk.”

Gold Fields’ gold reserves are estimates based on a number of assumptions, any changes to which may require Gold Fields to lower its estimated reserves.

The ore reserves stated in this annual report represent the amount of gold that Gold Fields believed, as of June 30, 2004, could be mined, processed and sold at prices sufficient to recover Gold Fields’ estimated future total costs of production, remaining investment and anticipated additional capital expenditures. Ore reserves are only estimates based on assumptions regarding, among other things, Gold Fields’ costs, expenditures, prices and exchange rates, many of which are beyond Gold Fields’ control. In the event that Gold Fields revises any of these assumptions in an adverse manner, Gold Fields may need to revise its ore reserves downwards. In particular, if Gold Fields’ production costs or capital expenditures increase or if gold prices decrease or the Rand or Australian dollar strengthens against the U.S. dollar, a portion of Gold Fields’ ore reserves may become uneconomical to recover, forcing Gold Fields to lower its estimated reserves.

To the extent that Gold Fields seeks to expand through acquisitions, it may experience problems in executing acquisitions or managing and integrating the acquisitions with its existing operations.

In order to expand its operations and reserve base, Gold Fields may seek to make acquisitions of selected precious metal producing companies or assets. Gold Fields’ success at making any acquisitions will depend on a number of factors, including, but not limited to:

  negotiating acceptable terms with the seller of the business to be acquired;
 
  obtaining approval from regulatory authorities in South Africa and the jurisdiction of the business to be acquired;
 
  assimilating the operations of an acquired business in a timely and efficient manner;
 
  maintaining Gold Fields’ financial and strategic focus while integrating the acquired business;
 
  implementing uniform standards, controls, procedures and policies at the acquired business; and
 
  to the extent that Gold Fields makes an acquisition outside of markets in which it has previously operated, conducting and managing operations in a new operating environment.

Any problems experienced by Gold Fields in connection with an acquisition as a result of one or more of these factors could have a material adverse effect on Gold Fields’ business, operating results and financial condition.

To the extent that Gold Fields seeks to expand through its exploration program, it may experience problems associated with mineral exploration or developing mining projects.

In order to expand its operations and reserve base, Gold Fields may rely on its exploration program for gold and platinum group metals and its ability to develop mining projects. Exploration for gold and other precious metals is speculative in nature, involves many risks and frequently is unsuccessful. Any exploration program entails risks relating to the location of economic orebodies, the development of appropriate metallurgical processes, the receipt of necessary governmental permits and regulatory approvals and the construction of mining and processing facilities at the mining site. Gold Fields’ exploration efforts may not result in the discovery of gold or platinum group metal mineralization and any mineralization discovered may not result in an increase of Gold Fields’ reserves. If orebodies are developed, it can take a number of years and substantial

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expenditures from the initial phases of drilling until production commences, during which time the economic feasibility of production may change. Gold Fields’ exploration program may not result in the replacement of current production with new reserves or result in any new commercial mining operations. Also, to the extent Gold Fields participates in the development of a project through a joint venture there could be disagreements or divergent interests or goals among the joint venture parties, which could jeopardize the success of the project.

In addition, significant capital investment is required to achieve commercial production from exploration efforts. There is no assurance that Gold Fields will have, or be able to raise, the required funds to engage in these activities or to meet its obligations with respect to the exploration properties in which it has or may acquire an interest.

Due to the nature of mining and the type of gold mines it operates, Gold Fields faces a material risk of liability, delays and increased production costs from environmental and industrial accidents and pollution.

The business of gold mining by its nature involves significant risks and hazards, including environmental hazards and industrial accidents. In particular, hazards associated with Gold Fields’ underground mining operations include:

  rock bursts;
 
  seismic events, particularly at the Driefontein and Kloof operations;
 
  underground fires and explosions, including those caused by flammable gas;
 
  cave-ins or falls of ground;
 
  discharges of gases and toxic chemicals;
 
  releases of radioactivity;
 
  flooding;
 
  sinkhole formation and ground subsidence; and
 
  other accidents and conditions resulting from drilling, blasting and removing and processing material from an underground mine.

Hazards associated with Gold Fields’ open pit mining operations include:

  flooding of the open pit;
 
  collapses of the open pit walls;
 
  accidents associated with the operation of large open pit mining and rock transportation equipment;
 
  accidents associated with the preparation and ignition of large scale open pit blasting operations;
 
  production disruptions due to weather; and
 
  hazards associated with heap leach processing, such as groundwater and waterway contamination.

Hazards associated with Gold Fields’ rock dump and production stockpile mining and tailings disposal include:

  accidents associated with operating a rock dump and production stockpile and rock transportation;
 
  production disruptions due to weather;

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  collapses of tailings dams; and
 
  ground and surface water pollution, on and off site.

Gold Fields is at risk of experiencing any and all of these environmental or other industrial hazards. The occurrence of any of these hazards could delay production, increase production costs and result in liability for Gold Fields.

Gold Fields’ insurance coverage may prove inadequate to satisfy potential claims.

Gold Fields may become subject to liability for pollution or other hazards against which it has not insured or cannot insure, including those in respect of past mining activities. Gold Fields’ existing property and liability insurance contains exclusions and limitations on coverage. In fiscal 2003, in an effort to reduce costs, Gold Fields changed from business interruption insurance cover based on gross profit to cover based on fixed operating costs or standing charges only. Should Gold Fields suffer a major loss, future earnings could be affected. In addition, insurance may not continue to be available at economically acceptable premiums. As a result, in the future Gold Fields’ insurance coverage may not cover the extent of claims against Gold Fields, including, but not limited to, claims for environmental or industrial accidents or pollution.

Because most of Gold Fields’ production costs are in Rand and Australian dollars, while gold is generally sold in U.S. dollars, Gold Fields’ operating results or financial condition could be materially harmed by an appreciation in the value of the Rand or the Australian dollar.

Gold is sold throughout the world principally in U.S. dollars, but Gold Fields’ operating costs are incurred principally in Rand and Australian dollars. As a result, any significant and sustained appreciation of either of these currencies against the U.S. dollar may materially increase Gold Fields’ costs and reduce its net revenue.

The Rand and the Australian dollar each appreciated against the U.S. dollar during calendar years 2002 and 2003, with the Rand appreciating by approximately 28.4% and 22.9% in 2002 and 2003, respectively, and the Australian dollar appreciating by approximately 10.0% and 24.6% in 2002 and 2003, respectively. More recently, the Rand and the Australian dollar have experienced a period of further appreciation against the U.S. dollar. As of October 29, 2004, the Rand had appreciated by 8.8%, and the Australian dollar had appreciated by 0.3%, against the U.S. dollar since January 1, 2004. This appreciation has already significantly increased Gold Fields’ costs in U.S. dollar terms particularly at its South African operations and continuation of the appreciation trend for either of these currencies could have a material adverse effect on Gold Fields’ operating results or financial condition. See “Quantitative and Qualitative Disclosures About Market Risk — Foreign Currency Sensitivity.”

Political or economic instability in South Africa or regionally may have an adverse effect on Gold Fields’ operations and profits.

Gold Fields is incorporated and owns significant operations in South Africa. As a result, political and economic risks relating to South Africa could affect an investment in Gold Fields. Large parts of the South African population do not have access to adequate education, health care, housing and other services, including water and electricity. Government policies aimed at alleviating and redressing the disadvantages suffered by the majority of citizens under previous governments may have an adverse impact on Gold Fields’ operations and profits. In recent years, South Africa has experienced high levels of crime and unemployment. These problems have impeded fixed inward investment into South Africa and have prompted emigration of skilled workers. As a result, Gold Fields may have difficulties attracting and retaining qualified employees.

Recently, the South African economy has been growing at a relatively slow rate, inflation and unemployment have been high by comparison with developed countries, and foreign reserves have been relatively low. GDP (based on 1990 prices given by Statistics South Africa) growth was 3.4% for 2000, 2.7% for 2001, 3.6% for 2002 and 1.9% for 2003. Corresponding inflation rates were 5.3% in 2000, 5.7% in 2001, 9.2% in 2002 and

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5.9% in 2003, while corresponding unemployment rates were 26.7%, 26.9%, 30.5% and 28.4% as of December 31, 2000, 2001, 2002 and 2003, respectively. Gross foreign exchange reserves stood at $13.0 billion as of October 31, 2004. The depreciation of the Rand in 1997 and 1998 resulted in an increase in the South African bank prime lending rate, which peaked at approximately 25.5% during 1998, although rates have since decreased substantially. On October 29, 2004, the rate was 11%. Consequently, Gold Fields faces a high cost of capital should it need to borrow in South Africa.

In the late 1980s and early 1990s, inflation in South Africa reached record highs. This increase in inflation resulted in considerable year over year increases in operational costs. In recent years, the inflation rate has decreased to single-digit figures. A return to significant inflation in South Africa, without a concurrent devaluation of the Rand or an increase in the price of gold, could have a material adverse effect on Gold Fields’ operating results and financial condition.

There has been regional political and economic instability in the countries surrounding South Africa. Any similar political or economic instability in South Africa could have a negative impact on Gold Fields’ ability to manage and operate its South African operations.

Political or economic instability in Ghana may have an adverse effect on Gold Fields’ operations and profits.

A significant portion of Gold Fields’ production takes place in Ghana at the Tarkwa and Damang mines. As a result, political and economic risks relating to Ghana could affect an investment in Gold Fields.

Ghana has had periods of political instability, and could be subject to instability again in the future. Presidential and parliamentary elections were conducted under the present Ghanaian constitution in 1992, 1996 and 2000. The 2000 elections resulted in the principal opposition party winning the elections and forming the present government. Since the present government came into power it has passed legislation imposing a tax and import duty which have affected the mining industry. The Ghana Chamber of Mines, of which Gold Fields Ghana Limited and Abosso Goldfields Limited, subsidiaries of Gold Fields, are members, has expressed its concern to the government that these legislative measures have eroded the competitiveness of the fiscal regime affecting mining companies in Ghana. The current government or a future government might adopt additional changes to policies in the future, which could: (1) modify the regulatory or fiscal regime governing mining companies in Ghana, such as increasing the proportion of foreign currency earnings that mining companies are required to repatriate to Ghana or (2) otherwise make investments or foreign-owned operations in Ghana less attractive. Any departure from current policies by the government of Ghana could have a material adverse effect on Gold Fields’ business, operating results and financial condition.

In addition, it is possible that in the future Ghana will experience adverse economic conditions or disruptions which may negatively impact Gold Fields’ Ghana operations.

Gold Fields’ financial flexibility could be materially constrained by South African exchange control regulations.

South Africa’s exchange control regulations restrict the export of capital from South Africa, the Republic of Namibia, and the Kingdoms of Lesotho and Swaziland, known collectively as the Common Monetary Area. Transactions between South African residents (including companies) and non-residents of the Common Monetary Area are subject to exchange controls enforced by the South African Reserve Bank, or SARB. As a result, Gold Fields’ ability to raise and deploy capital outside the Common Monetary Area is restricted.

Under South African exchange control regulations, Gold Fields must obtain approval from the SARB regarding any capital raising involving a currency other than the Rand. For example, in connection with its approval, it is possible that the SARB may impose conditions on Gold Fields’ use of the proceeds of any such capital raising, such as limits on Gold Fields’ ability to retain the proceeds of the capital raising outside South Africa or requirements that Gold Fields seek further SARB approval prior to applying any such funds to a specific use. These restrictions could hinder Gold Fields’ financial and strategic flexibility, particularly its ability to fund acquisitions, capital expenditures and exploration projects outside South Africa. See

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“Information on the Company — Regulatory and Environmental Matters — South Africa — Exchange Controls.”

An acquisition of shares in or assets of a South African company by a non-South African purchaser that is subject to exchange control regulations may not be granted regulatory approval.

In some circumstances, potential acquisitions of shares in or assets of South African companies by non-South African resident purchasers are subject to review by the SARB pursuant to South African exchange control regulations. In 2000, the SARB refused to approve an acquisition of Gold Fields by Franco-Nevada Mining Corporation Limited, a Canadian mining company. The SARB may refuse to approve similar proposed acquisitions of Gold Fields in the future. As a result, Gold Fields’ management may be limited in its ability to consider strategic options and Gold Fields’ shareholders may not be able to realize the premium over the current trading price of Gold Fields’ ordinary shares which they might otherwise receive upon such an acquisition. See “Information on the Company — Regulatory and Environmental Matters — South Africa — Exchange Controls.”

Gold Fields’ operations and financial condition may be adversely affected by labor disputes or changes in South African, Ghanaian or Australian labor laws.

As of June 30, 2004, approximately 79% of Gold Fields’ employees belonged to unions. Accordingly, Gold Fields is at risk of having its production stopped for indefinite periods due to strikes called by unions and other labor disputes. In South Africa, in addition to strikes, on occasion Gold Fields experiences work stoppages based on national trade union “stay away” days regardless of the state of its relations with its workforce. Significant labor disruptions at any of Gold Fields’ operations could have a material adverse effect on Gold Fields’ business, operating results and financial condition.

Gold Fields’ production may also be materially affected by relatively new labor laws. Since 1995, South African laws relating to labor have changed significantly in ways that affect Gold Fields’ operations. In particular, laws enacted since then that provide for mandatory compensation in the event of termination of employment for operational reasons and that impose large monetary penalties for non-compliance with the administrative and the reporting requirements in respect of affirmative action policies, could result in significant costs to Gold Fields. There may continue to be significant and adverse changes in labor law in South Africa over the next several years.

Ghanaian law contains broad provisions requiring mining companies to recruit and train Ghanaian personnel and to use the services of Ghanaian companies.

The Labour Relations Reform Act of Western Australia was passed by Parliament in July 2002. This law reduces the availability of state workplace agreements and is designed to promote collective bargaining and union access to the workplace. This law could strengthen the role of unions in Western Australia’s mining industry, which could have a material adverse effect on labor costs at Gold Fields’ mining operations in Australia and, accordingly, on Gold Fields’ business, operating results and financial condition. See “Directors, Senior Management and Employees — Employees — Labor Relations — Australia.”

Any expansion of these provisions or new labor legislation which increases labor costs in Ghana could have a material adverse effect on Gold Fields’ mining operations in Ghana and, accordingly, on Gold Fields’ business, operating results and financial condition.

Gold Fields may suffer adverse consequences as a result of its reliance on outside contractors to conduct its operations in Ghana and Australia.

A significant portion of Gold Fields' operations at the Damang mine in Ghana and in Australia are currently conducted by outside contractors. As a result, Gold Fields' operations at those sites are subject to a number of risks, some of which are outside Gold Fields' control, including:

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  negotiating agreements with contractors on acceptable terms;
 
  the inability to replace a contractor and its operating equipment in the event that either party terminates the agreement;
 
  reduced control over those aspects of operations which are the responsibility of the contractor;
 
  failure of a contractor to perform under its agreement with Gold Fields;
 
  interruption of operations in the event that a contractor ceases its business due to insolvency or other unforeseen events;
 
  failure of a contractor to comply with applicable legal and regulatory requirements, to the extent it is responsible for such compliance; and
 
  problems of a contractor with managing its workforce, labor unrest or other employment issues.

In addition, Gold Fields may incur liability to third parties as a result of the actions of its contractors. The occurrence of one or more of these risks could have a material adverse effect on Gold Fields’ business, results of operations and financial condition. See “Directors, Senior Management and Employees — Labor Relations— Ghana” and “ — Australia.”

Gold Fields’ South African operations may be adversely affected by increased labor costs at its mining operations in South Africa.

Wages and related labor costs account for approximately 37% of Gold Fields’ total production costs in fiscal 2004. Accordingly, Gold Fields’ costs may be materially affected by increases in wages and related labor costs, particularly with respect to Gold Fields’ South African employees, who are unionized. Negotiations with South African unions in 2003 resulted in agreements on above-inflation wage increases required to be implemented through July 2005. If Gold Fields is unable to increase production levels or implement cost cutting measures to offset these increased wages and labor costs, these costs could have a material adverse effect on Gold Fields’ mining operations in South Africa and, accordingly, on Gold Fields’ business, operating results and financial condition. See “Directors, Senior Management and Employees — Employees — Labor Relations — South Africa.”

HIV/AIDS poses risks to Gold Fields in terms of lost productivity and increased costs.

The incidence of HIV/AIDS in South Africa, which is forecast to increase over the next decade, poses risks to Gold Fields in terms of potentially reduced productivity and increased medical and other costs. Gold Fields’ current estimate of the potential impact of HIV/AIDS on its operations and financial condition is based on a variety of existing data and certain assumptions, including the incidence of HIV infection among its employees, the progressive impact of HIV/AIDS on infected employees’ health, and the medical and other costs associated with the disease, most of which involve factors beyond Gold Fields’ control. Should Gold Fields’ actual experience significantly differ from the assumptions on which its current estimate is based, the actual impact of HIV/AIDS on its business, operating results and financial condition could be significantly worse than Gold Fields expects. See “Directors, Senior Management and Employees — Employees — Health and Safety — AIDS Program.”

Gold Fields’ operations in South Africa are subject to environmental regulations which could impose significant costs and burdens.

Gold Fields’ South African operations are subject to various environmental laws and regulations including, for example, those relating to waste treatment, emissions and disposal, and must comply with permits or standards governing, among other things, tailings dams and waste disposal areas, water consumption, air emissions and water discharges. Gold Fields may, in the future, incur significant costs to comply with the

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South African environmental requirements imposed under existing or new legislation, regulations or permit requirements or to comply with changes in existing laws and regulations or the manner in which they are applied. Also, Gold Fields may be subject to litigation and other costs as a result of environmental rights granted to individuals under South Africa’s Constitution or other sources of rights. These costs could have a material adverse effect on Gold Fields’ business, operating results and financial condition.

South African mining companies are required by law to undertake rehabilitation works as part of their ongoing operations. In addition, during the operational life of their mines, they must provide for the cost of mine closure and post-closure rehabilitation and monitoring once mining operations cease. Gold Fields funds these environmental rehabilitation costs by making contributions into an environmental trust fund, with amounts approved by the authorities. As of October 29, 2004, Gold Fields had contributed a total of approximately Rand 340.5 million, including accrued interest, to the fund. Changes in legislation or regulations (or the approach to enforcement of them) or other unforeseen circumstances may materially and adversely affect Gold Fields’ future environmental expenditures or the level and timing of Gold Fields’ provisioning for these expenditures. See “Information on the Company — Regulatory and Environmental Matters — South Africa — Environmental.”

Gold Fields’ operations in South Africa are subject to health and safety regulations which could impose significant costs and burdens.

The present Mine Health and Safety Act 1996, or the Mine Health and Safety Act, came into effect in January 1997. The principal objective of the Mine Health and Safety Act is to improve health and safety at South African mines and to this end, the Mine Health and Safety Act imposes various duties on Gold Fields at its mines, and grants the authorities broad powers to, among other things, close unsafe mines and order corrective action relating to health and safety matters. Exercising her authority under the Mine Health and Safety Act, the Minister of Minerals and Energy stopped production at Beatrix Shaft Nos. 1 and 2 for 10 days in May 2001 and required Gold Fields to implement various safety measures at the mine, following a methane gas explosion in which 13 people lost their lives and which was the second such explosion since May 2000. In the event of any future accidents at Gold Fields’ mines, regulatory authorities could take similar steps.

The Occupational Diseases in Mines and Works Act 78 of 1973, or the Occupational Diseases Act, governs the payment of compensation and medical costs related to certain illnesses contracted by persons employed in mines or at sites where activities ancillary to mining are conducted. Occupational health care services are made available by Gold Fields to employees from its existing facilities. Pursuant to changes in the Occupational Diseases Act, Gold Fields may experience an increase in the cost of these services, which could have an adverse effect on Gold Fields’ business, operating results and financial condition. This increased cost, should it transpire, is currently indeterminate. See “Information on the Company — Regulatory and Environmental Matters — South Africa — Health and Safety.”

Gold Fields’ mineral rights in South Africa have become subject to new legislation which could impose significant costs and burdens.

The New Minerals Act. The Mineral and Petroleum Resources Development Act 2002, or the New Minerals Act, came into effect on May 1, 2004.

Among other things, the New Minerals Act: (1) vests the right to prospect and mine in the state without the automatic payment of compensation, (2) makes provision for a transitional period for the phasing out of privately held mineral rights, prospecting permits and mining authorizations held under the old regime and (3) requires that new applications be made in respect of those rights and new rights to be granted pursuant to the New Minerals Act. Consistent with international practice, the New Minerals Act provides that a mining or prospecting right granted under the New Minerals Act could be cancelled if the mineral to which the right relates is not mined at an “optimal rate.” There is no guarantee that Gold Fields will be able to successfully

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apply for any or all of its existing mining rights under the New Minerals Act or that the terms on which they will be granted will not be significantly less favorable to Gold Fields than the current terms. The requirements of the New Minerals Act could have a material adverse effect on Gold Fields’ mining and exploration activities in South Africa and, as a result, Gold Fields’ business, operating results and financial condition. See “Information on the Company — Regulatory and Environmental Matters — South Africa — Mineral Rights — The New Minerals Act.”

The Mining Titles Registration Amendment Act, or the Mining Titles Act, came into force on May 1, 2004. The Mining Titles Act provides for the registration of rights granted under the New Minerals Act. The Mining Titles Act repeals certain sections of the former legislation dealing with the registration of mineral rights, subject to the transitional provisions of the New Minerals Act. Until rights held under the previous regime are converted to rights under the New Minerals Act, rights held under the previous regime that become subject to a change in ownership during the transition period will not be able to be registered under the name of the new owner.

The New Minerals Act contains a provision requiring the Minister of Minerals and Energy, or the Minister, within six months of the relevant provision becoming operational, to develop a broad-based socio-economic empowerment charter for effecting entry of historically disadvantaged South Africans, or HDSAs, into the mining industry. The South African Government appointed a task team which included representatives from mining companies, including Gold Fields, to develop a charter. On October 11, 2002, the Minister and representatives of certain mining companies and the National Union of Mineworkers signed a charter that reflects the consultation process called for by the New Minerals Act. The Mining Charter became effective on May 1, 2004.

The charter’s stated objectives are to:

• promote equitable access to South Africa’s mineral resources for all the people of South Africa;

• substantially and meaningfully expand opportunities for HDSAs, including women, to enter the mining and minerals   industry and to benefit from the exploitation of South Africa’s mineral resources;

• utilize the existing skills base for the empowerment of HDSAs;

• expand the skills base of HDSAs in order to serve the community;

• promote employment and advance the social and economic welfare of mining communities and areas supplying mining labor; and

• promote beneficiation of South Africa’s mineral commodities beyond mining and processing, including the production of consumer products.

To achieve these objectives, the charter requires that mining companies achieve a 15% HDSA ownership of mining assets within five years and a 26% HDSA ownership of mining assets within 10 years by each mining company. Under the charter, the mining industry as a whole agrees to assist HDSA companies in securing finance to fund participation in an amount of Rand 100 billion over the first five years. Beyond the Rand 100 billion commitment, HDSA participation will be increased on a willing seller-willing buyer basis, at fair market value, where the mining companies are not at risk. In addition, the charter requires, among other things, that mining companies spell out plans for achieving employment equity at management level with a view to achieving a baseline of 40% HDSA participation in management and achieving a baseline of 10% participation by women in the mining industry, in each case within five years. When considering applications for the conversion of existing licenses, the government will take a “scorecard” approach, evaluating the

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commitments of stakeholders to the different facets of promoting the objectives of the charter. See “Business — Regulatory and Environmental Matters — South Africa — Mineral Rights — The New Minerals Act.”

In order to comply with the terms of the charter, Gold Fields has adjusted the ownership structure of its South African mining assets. On March 8, 2004, the shareholders of Gold Fields approved a series of transactions, referred to in this discussion as the Mvelaphanda Transaction, involving the acquisition by Mvelaphanda Resources Limited of a 15% beneficial interest in the South African gold mining assets of Gold Fields for cash consideration of R4,139 million. “See “Operating and Financial Review and Prospects—Overview—Mvelaphanda Transaction.” The Mvelaphanda Transaction is intended to meet the charter’s requirement that mining companies achieve a 15% HDSA ownership within five years of the charter coming into effect. See “Information on the Company — Regulatory and Environmental Matters — South Africa— Mineral Rights— The New Minerals Act.” There is no guarantee, however, that the Mvelaphanda Transaction will not have a negative effect on the value of Gold Fields’ ordinary shares. In addition, any further adjustment to the ownership structure of Gold Fields’ South African mining assets in order to meet the mining charter’s 10 year HDSA ownership requirement of 26% could have a material adverse effect on the value of Gold Fields’ ordinary shares and failing to comply with the charter’s requirements could subject Gold Fields to negative consequences, the scope of which has not yet been fully determined. Gold Fields may also incur expenses to give effect to the charter’s other requirements, and may need to incur additional indebtedness in order to comply with the industry-wide commitment to assist HDSAs in securing Rand 100 billion of financing during the first five years of the mining charter’s effectiveness. Moreover, there is no guarantee that any steps Gold Fields has already taken or might take in the future will ensure the successful conversion of any or all of its existing mining rights or for the grant of new mining rights or that the terms of any conversion or grant would not be significantly less favorable to Gold Fields than the terms of its current rights.

The Royalty Bill. On March 20, 2003 the draft Mineral and Petroleum Royalty Bill, or the Royalty Bill, was released for public comment. The South African National Treasury subsequently missed an August 1, 2003 deadline for submitting a revised draft to the South African Parliament and, as yet, no revised draft has been submitted or published.

The Royalty Bill proposes to impose a 3% revenue based royalty on the South African gold mining sector payable to the South African government. Under the terms of the proposed Royalty Bill, the royalty is to take effect when companies convert to new order mining rights in accordance with the New Minerals Act, although the Minister has indicated that the royalty is not expected to take effect until the transitional period for the conversion of mining rights under the New Minerals Act expires. The Minister of Finance in his Budget Speech in February 2004 indicated that the royalty will be based on revenues and will take effect in 2009. There is uncertainty as to what further amendments will be made to the Royalty Bill. If adopted, in either its current or a revised form, the Royalty Bill could have a negative impact on Gold Fields’ South African operations and therefore an adverse effect on its business, operating results and financial condition. See “Information on the Company — Regulatory and Environmental Matters — South Africa — Mineral Rights — The Royalty Bill.”

Gold Fields’ land and mineral rights in South Africa could be subject to land restitution claims which could impose significant costs and burdens.

Gold Fields’ privately held land and mineral rights could be subject to land restitution claims under the Restitution of Land Rights Act 1994, or the Land Claims Act. Under this Act, any person who was dispossessed of rights in land in South Africa as a result of past racially discriminatory laws or practices without payment of just and equitable compensation is granted certain remedies, including the restoration of the land. Under the Land Claims Act, persons entitled to institute a land claim were required to lodge their claims by December 31, 1998. Gold Fields has not been notified of any land claims, but any claims of which it is notified in the future could have a material adverse effect on Gold Fields’ right to the properties to which

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the claims relate and, as a result, on Gold Fields’ business, operating results and financial condition. See “Information on the Company — Regulatory and Environmental Matters — South Africa — Land Claims.”

The Restitution of Land Rights Amendment Act, or the Amendment Act, became law on February 4, 2004. Under the Land Claims Act, the Minister for Agriculture and Land Affairs, or the Land Minister, may not acquire ownership of land for restitution purposes without a court order unless an agreement has been reached between the affected parties. The Amendment Act, however, entitles the Land Minister to acquire ownership of land by way of expropriation either for claimants who do not qualify for restitution, or, in respect of land as to which no claim has been lodged but the acquisition of which is directly related to or affected by a claim, the acquisition of which would promote restitution to those entitled or would encourage alternative relief to those not entitled. Expropriation would be subject to provisions of legislation and the South African Constitution which provides, in general, for just and equitable compensation. There is, however, no guarantee that any of Gold Fields’ privately held land rights could not become subject to acquisition by the state without Gold Fields’ agreement, or that Gold Fields would be adequately compensated for the loss of its land rights, which could have a negative impact on Gold Fields’ South African operations and therefore an adverse effect on its business, operating results and financial condition. See “Information on the Company — Regulatory and Environmental Matters — South Africa — Land Claims.”

Gold Fields’ operations in Ghana are subject to environmental regulations which could impose significant costs and burdens.

Gold Fields’ Ghana operation is subject to extensive environmental laws and regulations. The Ghanaian environmental protection laws require, among other things, that Gold Fields register with the Ghanaian environmental authorities, and obtain environmental permits and certificates for the Ghana operation.

Ghanaian mining companies are required by law to rehabilitate land disturbed as a result of their mining operations pursuant to an environmental reclamation plan agreed with the Ghanaian environmental authorities. Gold Fields funds these environmental rehabilitation costs in part by posting a reclamation bond to secure estimated costs of rehabilitation. Changes in the required method of calculation for these bonds or an unforeseen circumstance which produces unexpected costs may materially and adversely affect Gold Fields’ future environmental expenditures. See “Information on the Company — Regulatory and Environmental Matters — Ghana — Environmental.”

Gold Fields’ operations in Ghana are subject to health and safety regulations which could impose significant costs and burdens.

The Ghanaian health and safety regulations impose statutory duties on an owner of a mine to, among other things, take steps to ensure that the mine is managed and worked in a manner which provides for the safety and proper discipline of the mine workers. The regulations prescribe the measures to be taken to ensure the safety and health of the mine workers. Additionally, Gold Fields is required under the terms of its mining leases to comply with the reasonable instructions of the relevant authorities for securing the health and safety of persons working in or connected with the mine. A violation of the health and safety regulations or a failure to comply with the reasonable instructions of the relevant authorities could lead to, among other things, a temporary shut down of all or a portion of the mine, a loss of the right to mine or the imposition of costly compliance procedures and, in the case of a violation of the regulations relating to health and safety, constitutes an offense under Ghanaian law. If Ghanaian health and safety authorities require Gold Fields to shut down all or a portion of its mines or to implement costly compliance measures, whether pursuant to existing or new health and safety laws and regulations, such measures could have a material adverse effect on Gold Fields’ business, operating results and financial condition. See “Information on the Company — Regulatory and Environmental Matters — Ghana — Health and Safety.”

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Gold Fields, as the holder of the mining lease, has potential liability arising from injuries to, or deaths of, workers, including, in some cases, workers employed by its contractors. In Ghana, statutory workers’ compensation is not the exclusive means for workers to claim compensation. Gold Fields’ insurance for health and safety claims or the relevant workers’ compensation arrangements may not be adequate to meet the costs which may arise upon any future health and safety claims.

On September 12, 2003, the National Health Insurance Act, 2003 (Act 650) came into effect. The act requires every person resident in Ghana to belong to either a public or private health insurance scheme. To fund the National Health Insurance Fund, the act imposes a levy of 2.5% on goods and services produced or provided in, or imported into, Ghana. The provisions of the act relating to the levy came into effect on August 1, 2004. The levy could have an adverse impact on Gold Fields’ Ghanaian operations and thus an adverse effect on its business, operating results and financial condition. See “Information on the Company — Regulatory and Environmental Matters — Ghana — Health and Safety.”

Gold Fields’ mineral rights in Ghana are subject to regulations which could impose significant costs and burdens.

In Ghana, the ownership of land on which there are mineral deposits is separate from the ownership of the minerals. All minerals in their natural state in or upon any land or water are, under Ghanaian law, the property of Ghana and vested in the President on behalf of the people of Ghana. Gold Fields’ mining leases for the Tarkwa property have not yet been ratified by the Ghanaian parliament, as required by law. To the extent that failure to ratify these leases adversely affects their validity, there may be a material adverse effect on Gold Fields’ business, operating results and financial condition. See “Information on the Company — Regulatory and Environmental Matters — Ghana — Mineral Rights.”

Gold Fields’ operations in Australia are subject to environmental regulations which could impose significant costs and burdens.

Gold Fields’ Australian operations are subject to various laws and regulations relating to the protection of the environment, which are similar in scope to those of South Africa and Ghana. Gold Fields may, in the future, incur significant costs to comply with the Australian environmental requirements imposed under existing or new legislation, regulations or permit requirements or to comply with changes in existing laws and regulations or the manner in which they are applied. These costs may have a material adverse effect on Gold Fields’ business, operating results and financial condition.

Australian mining companies are required by law to undertake rehabilitation works as part of their ongoing operation. Gold Fields makes provisions in its accounts for the estimated cost of environmental rehabilitation for its Australian mining properties. Gold Fields guarantees its environmental obligations by providing the Western Australian Government with unconditional bank-guaranteed performance bonds to secure the estimated costs. These bonds do not cover remediation for events that were unforeseen at the time the bond was taken. Changes in the required method of calculation for these bond amounts or an unforeseen circumstance which produces unexpected costs may materially and adversely affect future environmental expenditures. See “Information on the Company — Regulatory and Environmental Matters — Australia — Environmental.”

Gold Fields’ operations in Australia are subject to health and safety regulations which could impose significant costs and burdens.

Western Australian health and safety laws impose a duty on a mine owner to provide and maintain a working environment which is safe for mine workers. The regulations prescribe specific measures to be taken and provide for inspectors to review the work site for hazards and violations of the health and safety laws. A violation of the health and safety laws or a failure to comply with the instructions of the relevant health and

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safety authorities could lead to, among other things, a temporary shutdown of all or a portion of the mine, a loss of the right to mine or the imposition of costly compliance procedures. If health and safety authorities require Gold Fields to shut down all or a portion of the mine or to implement costly compliance measures, whether pursuant to existing or new health and safety laws and regulations, such measures could have a material adverse effect on Gold Fields’ business, operating results and financial condition. A bill to reform laws with respect to health and safety in Western Australia’s mining industry was introduced in the Western Australia parliament in August 2004 but has not, as yet, been passed. The proposed reforms will increase penalties for breaches of the health and safety law, including imprisonment of persons found liable for the breaches and introduce new offenses, including gross negligence causing death or serious injury. In addition, there will be broader powers for inspectors to impose improvement or prohibition notices on machinery and work practices, and a new duty of care imposed on employers with respect to residential accommodation supplied in connection with employment. If these changes are enacted, Gold Fields’ exposure to prosecution will be increased, as will be the costs of health and safety compliance of Gold Fields’ mining operations in Australia. See “Information on the Company — Regulatory and Environmental Matters — Australia — Health and Safety.”

Gold Fields’ tenements in Australia are subject to native title claims and include Aboriginal heritage sites which could impose significant costs and burdens.

Certain of Gold Fields’ tenements are subject to native title claims, and there are Aboriginal heritage sites located on certain of Gold Fields’ tenements. Native title and Aboriginal legislation protects the rights of Aboriginals in relation to the land in certain circumstances. Other tenements may become subject to native title claims if Gold Fields seeks to expand or otherwise change its interest in rights to those tenements. Native title claims could require costly negotiations with the claimants or could affect Gold Fields’ access to or use of its tenements, and, as a result, have a material adverse effect on Gold Fields’ business, operating results and financial condition.

Aboriginal heritage sites relate to distinct areas of land which have either ongoing ethnographic or archaeological or historic significance. Aboriginal heritage sites have been identified with respect to portions of some of Gold Fields Australian mining tenements. Additional Aboriginal heritage sites may be identified on the same or additional tenements. Gold Fields may, in the future, incur significant costs as a result of changes in the interpretation of, or new laws regarding, native title and Aboriginal heritage, which may result in a material adverse effect on Gold Fields’ business, operating results and financial conditions. See “Information on the Company — Regulatory and Environmental Matters — Australia — Land Claims.”

Investors in the United States may have difficulty bringing actions, and enforcing judgments, against Gold Fields, its directors and its executive officers based on the civil liabilities provisions of the federal securities laws or other laws of the United States or any state thereof.

Gold Fields is incorporated in South Africa. The majority of Gold Fields’ directors and executive officers (and certain experts named herein) reside outside of the United States. Substantially all of the assets of these persons and substantially all of the assets of Gold Fields are located outside the United States. As a result, it may not be possible for investors to enforce against these persons or Gold Fields a judgment obtained in a United States court predicated upon the civil liability provisions of the federal securities or other laws of the United States or any state thereof. A foreign judgment is not directly enforceable in South Africa, but constitutes a cause of action which will be enforced by South African courts provided that:

  the court which pronounced the judgment had jurisdiction to entertain the case according to the principles recognized by South African law with reference to the jurisdiction of foreign courts;
 
  the judgment is final and conclusive (that is, it cannot be altered by the court which pronounced it);
 
  the judgment has not lapsed;

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  the recognition and enforcement of the judgment by South African courts would not be contrary to public policy, including observance of the rules of natural justice which require that the documents initiating the United States proceeding were properly served on the defendant and that the defendant was given the right to be heard and represented by counsel in a free and fair trial before an impartial tribunal;
 
  the judgment was not obtained by fraudulent means;
 
  the judgment does not involve the enforcement of a penal or revenue law; and
 
  the enforcement of the judgment is not otherwise precluded by the provisions of the Protection of Businesses Act 99 of 1978, as amended, of the Republic of South Africa.

It is the policy of South African courts to award compensation for the loss or damage actually sustained by the person to whom the compensation is awarded. Although the award of punitive damages is generally unknown to the South African legal system, that does not mean that such awards are necessarily contrary to public policy. Whether a judgment was contrary to public policy depends on the facts of each case. Exorbitant, unconscionable, or excessive awards will generally be contrary to public policy. South African courts cannot enter into the merits of a foreign judgment and cannot act as a court of appeal or review over the foreign court. South African courts will usually implement their own procedural laws and, where an action based on an international contract is brought before a South African court, the capacity of the parties to the contract will usually be determined in accordance with South African law. It is doubtful whether an original action based on United States federal securities laws may be brought before South African courts. A plaintiff who is not resident in South Africa may be required to provide security for costs in the event of proceedings being initiated in South Africa. Furthermore, the Rules of the High Court of South Africa require that documents executed outside South Africa must be authenticated for the purpose of use in South Africa.

Gold Fields is a named defendant in two lawsuits filed in the United States alleging human rights violations during the apartheid era which could impose significant costs and burdens.

On May 6, 2003, a lawsuit was filed by Zalumi Singleton Mtwesi against Gold Fields in the State of New York. Mr. Mtwesi alleges that during the apartheid era in South Africa he was subjected to human rights violations while employed by Kloof Gold Mining Company Limited, which at the time was a subsidiary of a predecessor of Gold Fields. Mr. Mtwesi filed the lawsuit on behalf of himself and as representative of all other victims and all other persons similarly situated. Mr. Mtwesi and the plaintiffs’ class have demanded an order certifying the plaintiffs’ class and compensatory damages from Gold Fields in the amount of $7 billion. A complaint has not been served on Gold Fields. Should the lawsuit proceed, defending it may be costly and time consuming and there can be no assurance that Gold Fields will be successful. If Gold Fields is unsuccessful in defending the lawsuit considerable compensatory damages or other penalties may be imposed on Gold Fields which may have a material adverse effect on Gold Fields’ business, operating results and financial condition. See “Information on the Company — Legal Proceedings.”

On July 9, 2004, a lawsuit was filed in a federal district court in New York by six individuals against Gold Fields and a number of other defendants including IBM Corporation, Anglo American PLC, UBS AG, Union Bank of Switzerland, Fluor Corporation, Strategic Minerals Corporation, the Republic of South Africa and President Thabo Mbeki. The lawsuit alleges, among other things, that one of the plaintiffs was a victim of apartheid by virtue of acts committed against him at facilities in Randfontein, South Africa including those allegedly owned by one or more predecessors of Gold Fields. The suit further alleges that Gold Fields is liable for various wrongful acts and property expropriation, as well as violations of international law, allegedly committed during the apartheid era in South Africa. The plaintiffs are jointly and severally seeking, on each of two counts, unspecified compensatory damages and punitive damages of $10 billion with interest and costs against the various defendants. A complaint has not been served on Gold Fields. Should the lawsuit proceed,

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defending it may be costly and time consuming and there can be no assurance that Gold Fields will be successful. If Gold Fields is unsuccessful in defending the lawsuit, considerable compensation damages or other penalties may be imposed on Gold Fields, which may have a material adverse effect on Gold Fields’ business, operating results and financial condition. See “Information on the Company — Legal Proceedings.”

Gold Fields is unable to issue any ordinary shares for cash on a non-pre-emptive basis without shareholder approval.

At the annual general meeting of Gold Fields held on November 16, 2004, the proposed resolution giving the directors a general authority to issue shares for cash was not passed by the requisite majority. Under the listing requirements of the JSE Securities Exchange South Africa and the South African Companies Act, 75% of the votes cast by shareholders present or represented by proxy is required for the passing of a resolution providing such general authority. As a result, the Gold Fields’ board is prevented from allotting and issuing any ordinary shares for cash without first seeking shareholder approval unless the shares are offered to all existing shareholders on a pre-emptive basis. This requirement could affect Gold Fields’ ability to raise capital for specific transactions or for general corporate purposes, which could have an adverse effect on its business.

Because the principal trading market for Gold Fields’ ordinary shares is the JSE Securities Exchange South Africa, investors face liquidity risk in the market for Gold Fields’ ordinary shares.

The principal trading market for Gold Fields’ ordinary shares is the JSE Securities Exchange South Africa, or the JSE. Historically, trading volumes and liquidity of shares listed on the JSE have been low in comparison with other major markets. The ability of a holder to sell a substantial number of Gold Fields’ ordinary shares on the JSE in a timely manner, especially in a large block trade, may be restricted by this limited liquidity. See “The Offer and Listing — The JSE Securities Exchange South Africa.”

Gold Fields may not pay dividends or make similar payments to its shareholders in the future.

Gold Fields pays cash dividends only if funds are available for that purpose. Whether funds are available depends on a variety of factors, including the amount of cash available and Gold Fields’ capital expenditures and other cash requirements existing at the time. Under South African law, Gold Fields will be entitled to pay a dividend or similar payment to its shareholders only if it meets the solvency and liquidity tests set out in the South African Companies Act and Gold Fields’ Articles of Association. Cash dividends or other similar payments may not be paid in the future.

Gold Fields’ non-South African shareholders face additional investment risk from currency exchange rate fluctuations since any dividends will be paid in Rand.

Dividends or distributions with respect to Gold Fields’ ordinary shares have historically been paid in Rand. The U.S. dollar or other currency equivalent of any dividends or distributions with respect to Gold Fields’ ordinary             shares will be adversely affected by potential future reductions in the value of the Rand against the U.S. dollar or other currencies. In the future, it is possible that there will be changes in South African exchange control regulations, such that dividends paid out of trading profits will no longer be freely transferable outside South Africa to shareholders who are not residents of the Common Monetary Area. See “Additional Information — South African Exchange Control Limitations Affecting Security Holders.”

Gold Fields’ ordinary shares are subject to dilution upon the exercise of Gold Fields’ outstanding options.

As of October 29, 2004, Gold Fields had an aggregate of 1,000,000,000 ordinary shares authorized to be issued and as of that date an aggregate of 491,831,765 ordinary shares were issued and outstanding. Gold Fields has two securities option plans which are authorized to grant options in an amount of up to an aggregate of 25,071,013 ordinary shares. Gold Fields had outstanding as of October 29, 2004 options to purchase a total of 9,334,683 ordinary shares at exercise prices of between Rand 13.55 and Rand 154.65 that expire between June 17, 2005 and October 22, 2011 under the GF Management Incentive Scheme and 313,000 ordinary shares at exercise prices of between Rand 43.70 and 110.03 that expire between October 31, 2006 and November 27, 2008 under the GF Non-Executive Director Share Plan. Shareholders’ equity interests in Gold Fields will be diluted to the extent of future exercises of these options and any additional options. See “Directors, Senior Management and Employees — The GF Management Incentive Scheme”, “Directors, Senior Management and Employees — The GF Non-Executive Director Share Plan.”

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As part of the Mvelaphanda Transaction, Mvela Gold is obliged to subscribe for 15% of the share capital of GFIMSA upon repayment of the Mvela Loan. Under the Subscription and Share Exchange Agreement entered into in connection with the Mvelaphanda Transaction for a period of one year after the subscription of the GFIMSA shares each of Gold Fields and Mvela Gold will be entitled to require the exchange of Mvela Gold’s GFIMSA shares for ordinary shares of Gold Fields of an equivalent value, but numbering not less than 45,000,000 and not more than 55,000,000 Gold Fields’ ordinary shares, adjusted as necessary to reflect changes to Gold Fields’ capital structure and certain corporate activities of Gold Fields. Shareholders’ equity interests in Gold Fields will be diluted if Gold Fields or Mvela Gold requires the exchange of GFIMSA shares for Gold Fields shares. See “Operating and Financial Review and Prospects — Mvelaphanda Transaction.”

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Item 4: INFORMATION ON THE COMPANY

Introduction

Gold Fields is a significant producer of gold and major holder of gold reserves in South Africa, Ghana and Australia. Gold Fields is primarily involved in underground and surface gold mining and related activities, including exploration, extraction, processing and smelting, and also has strategic interests in platinum group metals exploration. Gold Fields is currently the third largest gold producer in South Africa and one of the largest gold producers in the world on the basis of annual production.

The majority of Gold Fields’ operations, based on gold production, are located in South Africa. It also owns the St. Ives and Agnew gold mining operations in Australia and has a 71.1% interest in each of the Tarkwa gold mine and the Damang gold mine in Ghana. In addition, Gold Fields has gold and other precious metal exploration activities and interests in Africa, Australasia, China, Europe, North America and South America. Gold Fields owns 100% of the Arctic Platinum Project, or APP, in northern Finland, which is evaluating the economic potential of deposits of open pittable and underground platinum group metal mineralization. APP was formerly a joint venture with Outokumpu Oy, or Outokumpu. On September 11, 2003, Gold Fields acquired Outokumpu’s 49% interest in APP.

Gold Fields also has a right to acquire 92% of the voting shares (which is effectively 80.7% of the economic interest) of Sociedad Minera La Cima S.A., the owner of the Cerro Corona Project in Peru which is evaluating the economic potential of deposits of open pittable gold and copper mineralization.

Gold Fields’ operations include:

  Driefontein Operation. This operation consists of seven shaft systems and three gold plants in South Africa’s Gauteng Province near Carletonville. Driefontein produced 1.1 million ounces of gold during the year ended June 30, 2004, accounting for approximately 27% of attributable gold production for Gold Fields in fiscal 2004. The operation employed approximately 17,900 people including contractors as of June 30, 2004 including a limited number working for outside contractors at the site. The Driefontein operation includes both underground mining and surface rock dump processing.
 
  Kloof Operation. This operation consists of five shaft systems and three gold plants in South Africa’s Gauteng Province near Carletonville. Kloof produced 1.0 million ounces of gold during the year ended June 30, 2004, accounting for approximately 25% of attributable gold production for Gold Fields in fiscal 2004. The operation employed approximately 16,600 people including contractors as of June 30, 2004 including a limited number working for outside contractors at the site. The Kloof operation includes both underground mining and some surface rock dump processing.
 
  Beatrix Operation. This operation, formerly known as the Free State Operation, was renamed Beatrix following the sale of the St. Helena gold mining operation to ARMGold/Harmony Freegold Joint Venture Company (Proprietary) Limited, or Freegold, on October 30, 2002. The operation consists of four shaft systems and two gold plants in South Africa’s Free State Province near Welkom and Virginia. The Beatrix operation produced 0.6 million ounces of gold during the year ended June 30, 2004, accounting for approximately 15% of attributable gold production for Gold Fields in fiscal 2004. The operation employed approximately 12,200 people including contractors as of June 30, 2004 including a limited number working for outside contractors at the site. The Beatrix operation consists of both underground mining and some limited surface rock dump processing.
 
  Ghana Operation. This operation consists of: (1) the Tarkwa mine, which comprises several open pit operations with two heap leach recovery facilities and a SAG mill and CIL plant that commenced

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    continuous operations in November 2004 and (2) the Damang mine, which Gold Fields acquired in January 2002 and which consists of a number of open pit operations with a CIL plant. Both mines are located in southwestern Ghana, about 300 and 360 kilometers by road west of Accra, respectively. During the year ended June 30, 2004, the Ghana operation produced 0.9 million ounces of gold (of which 0.7 million ounces of gold were attributable to Gold Fields and the remainder to minority shareholders in the Ghana operation), accounting for approximately 15% of attributable gold production for Gold Fields in fiscal 2004. The operation had approximately 4,200 employees as of June 30, 2004, including those working for the outside contractor at the sites.

  Australia Operation. Gold Fields purchased the St. Ives and Agnew gold mining operations from WMC Limited and WMC Resources Ltd (collectively, WMC) in November 2001. Both mines are located in the state of Western Australia, with St. Ives situated near Kambalda, straddling Lake Lefroy, and Agnew situated near Leinster. These two mines together produced 0.8 million ounces of gold, accounting for approximately 18% of attributable gold production for Gold Fields in fiscal 2004. St. Ives and Agnew had approximately 1,200 employees as of June 30, 2004, including those working for outside contractors at the sites. St. Ives and Agnew conduct both underground and surface operations. Prior to their acquisition by Gold Fields, St. Ives and Agnew were owned by WMC.

Based on the figures reported by Gold Fields’ mining operations, as of June 30, 2004 Gold Fields had attributable proven and probable reserves of approximately 75.4 million ounces of gold. In the year ended June 30, 2004, Gold Fields processed 46.0 million tonnes of ore and produced 4.4 million ounces of gold, of which 4.2 million ounces were attributable to Gold Fields.

History

The company that is today Gold Fields was originally incorporated as East Driefontein Gold Mining Company Limited on May 3, 1968, and subsequently changed its name to Driefontein Consolidated Limited. The Gold Fields group holdings evolved through a series of transactions, principally in 1998 and 1999.

With effect from January 1, 1998, a company formed on November 21, 1997 and referred to in this discussion as Original Gold Fields, acquired substantially all of the gold mining assets and interests previously held by Gencor Limited, Gold Fields of South Africa Limited and New Wits Limited and certain other shareholders in the companies owning the assets and interests including:

  a 100% interest in Beatrix Mines Limited, or Beatrix, which in turn owned a 100% interest in Beatrix Mining Company Limited, or BMC, BMC owned the Beatrix mine;
 
  a 37.3% interest in Driefontein Consolidated Limited, which owned the Driefontein operation;
 
  a 100% interest in Kloof Gold Mining Company Limited, or Kloof, which owned the Kloof operation;
 
  a 54.2% interest in St. Helena Gold Mines Limited, or St. Helena, which owned the St. Helena and Oryx mines;
 
  a 100% interest in Gold Fields Guernsey Limited, or Gold Fields Guernsey, which indirectly owned a 70% interest in the Tarkwa mine (which was later increased to 71.1% due to the dilution of the other shareholders);
 
  a 100% interest in Orogen Holding (BVI) Limited, or Orogen; and
 
  various exploration and other rights and assets.

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The Driefontein, Kloof and Tarkwa interests were acquired from Gold Fields of South Africa Limited, while the Beatrix and St. Helena interests were originally acquired from Gencor Limited. New Wits Limited provided various mineral rights. Original Gold Fields then owned 100% of Driefontein Consolidated Limited.

With legal effect from January 1, 1999, Driefontein Consolidated Limited acquired Original Gold Fields (which was subsequently renamed GFL Mining Services Limited) in a merger. For accounting purposes, Original Gold Fields was fully consolidated with effect from June 1, 1999. Although for legal purposes Driefontein Consolidated Limited acquired Original Gold Fields, for accounting purposes Original Gold Fields was considered the acquiror because Original Gold Fields’ shareholders obtained the larger interest in the enlarged company. Driefontein Consolidated Limited was renamed Gold Fields Limited on May 10, 1999, following the merger. For accounting purposes, the merger was treated as if it occurred on June 1, 1999.

In order to achieve greater operational and administrative efficiency within the Gold Fields group following the merger, the Gold Fields group structure was reorganized with effect from July 1, 1999 as follows:

  GFL Mining Services Limited transferred its interests in Beatrix, St. Helena, Oryx and Kloof to Gold Fields; and
 
  Gold Fields transferred the Driefontein mine as a going concern to a shelf company named Driefontein Consolidated (Proprietary) Limited, a wholly-owned subsidiary of Gold Fields.

With effect from July 1, 1999, Gold Fields also acquired the remaining 45.8% interest in St. Helena from St. Helena’s minority shareholders. Subsequent to this acquisition, St. Helena acquired the Beatrix mine from BMC.

On November 30, 2001, Gold Fields acquired the St. Ives and Agnew gold mining operations from WMC.

On January 23, 2002, Gold Fields acquired a 71.1% interest in Abosso Goldfields Limited, or Abosso.

On October 30, 2002, Gold Fields sold the St. Helena gold mining operation to Freegold for gross consideration of Rand 120.0 million and a monthly 1% royalty payment to Gold Fields on the net revenues from gold sales from the St. Helena mine for a period of four years after closing. Subsequent to the sale, St. Helena was renamed Beatrix Mining Ventures Limited and the Free State Operation was renamed the Beatrix Operation.

With effect from February 23, 2004, as part of an internal reorganization of the Gold Fields group in connection with the transaction with Mvelaphanda Resources Limited, or Mvela Resources, described below, Gold Fields transferred its South African gold mining assets, including the Beatrix operation, the Driefontein operation and the Kloof operation as going concerns to GFI Mining South Africa (Proprietary) Limited, or GFIMSA, a wholly owned subsidiary of Gold Fields.

On March 8, 2004, the shareholders of Gold Fields approved a series of transactions, involving the acquisition by Mvela Resources, through a wholly-owned subsidiary, of a 15% beneficial interest in the South African gold mining assets of Gold Fields, for cash consideration of R4,139 million. See Operating and Financial Review and Prospects — Overview — Mvelaphanda Transaction.

On September 30, 2004, Gold Fields, Gold Fields Ghana Holdings Limited, Gold Fields Guernsey and IAMGold Corporation, or IAMGold, signed a definitive agreement pursuant to which, subject to certain conditions precedent, all assets owned by Gold Fields’ subsidiaries located outside the Southern African Development Community would be transferred to IAMGold in exchange for the issuance to Gold Fields or its subsidiaries of common shares of IAMGold which will result in Gold Fields owning, directly or indirectly, approximately 70% of the fully diluted equity of the enlarged company. In addition, immediately before completion, IAMGold shareholders registered as such on a record date, which will be a

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date shortly before completion, will receive a special cash dividend of C$0.50 per IAMGold share. The definitive agreement was amended and restated as of November 4, 2004 to incorporate certain conditions and amendments requested by the Toronto Stock Exchange, or the TSX. See “ — Recent Developments — Proposed IAMGold Transaction.”

On October 18, 2004, Harmony Gold Mining Company Limited, or Harmony, announced an unsolicited and hostile tender offer to acquire the entire issued share capital of Gold Fields. According to the registration statement on Form F-4, or the Form F-4, filed by Harmony with the SEC, Harmony has structured the tender offer to occur in two steps. The first step consists of an “early settlement offer” in which Harmony has offered, subject to certain conditions, to acquire up to 34.9% of the outstanding Gold Fields ordinary shares (including ordinary shares in the form of American depositary shares, or ADSs). Subject to satisfaction of the conditions to the early settlement offer, Harmony has stated that the offer will close on November 26, 2004. According to the Form F-4, following completion of the early settlement offer, Harmony has irrevocably committed to make a subsequent offer to acquire, subject to certain conditions, the remaining Gold Fields ordinary shares and ADSs not tendered or accepted for payment in the early settlement offer on same terms as were given in the early settlement offer. As disclosed by Harmony, each of the early settlement offer and the subsequent offer are comprised of two offers — a “U.S. Offer” which is available to holders of Gold Fields ordinary shares located in the United States and holders of Gold Fields ADSs wherever located and an “International Offer” which is available to holders of Gold Fields ordinary shares outside the United States to the extent such holders may lawfully participate in the International Offer. In the Form F-4, Harmony states that, with respect to the early settlement offer, the U.S. Offer and the International Offer are being made on substantially similar terms and are subject to substantially similar conditions.

In response to Harmony’s unsolicited and hostile tender offer, on November 3, 2004, the Board of Gold Fields issued an Offer Response Document to its shareholders and filed a Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC recommending that Gold Fields shareholders take no action and reject the Harmony offer.

See “ — Recent Developments — Harmony Offer”.

Gold Fields is a public company incorporated in South Africa, with a registered office located at 24 St. Andrews Road, Parktown 2193, South Africa, telephone number 011-27-11-644-2400.

Organizational Structure

Gold Fields is a holding company with its ownership interests organized as set forth below.

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Group Structure(1)

(GROUP STRUCTURE)


    Notes:

(1)   Unless otherwise stated, all subsidiaries are, directly or indirectly, wholly owned by Gold Fields Limited
 
(2)   Closing is conditional upon approval of an environmental impact study and issue of construction permits

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  South Africa: Gold Fields’ interests in the Driefontein, Kloof and Beatrix operations are held through GFIMSA.
 
  Ghana: Gold Fields’ interests in the Tarkwa and Damang mines, which comprise the Ghana operation, are held through its 71.1% owned subsidiaries, Gold Fields Ghana Limited, or Gold Fields Ghana, and Abosso Goldfields Limited, or Abosso, respectively. The remaining interests in Gold Fields Ghana and Abosso are indirectly held by IAMGold Corporation, or IAMGold, which acquired an 18.9% beneficial interest previously held by Repadre Capital Corporation following a merger between the two companies on January 8, 2003, and the government of Ghana, which holds a 10.0% interest.
 
  Australia: Gold Fields’ interests in the St. Ives and Agnew mines are held through two wholly-owned Australian subsidiaries, St. Ives Gold Mining Company Pty Ltd. and Agnew Gold Mining Company Pty Ltd., which, in turn, are wholly owned through intermediaries by Orogen.
 
  Exploration Assets: Gold Fields’ exploration assets are generally held by project companies in the jurisdiction where the exploration assets are located, which are, in turn, held through either Orogen or Gold Fields Guernsey. Orogen holds APP through intermediaries.

Strategy

General

Gold Fields is a significant producer of gold and major holder of gold reserves in South Africa, Ghana and Australia. The gold industry has historically been highly fragmented and a trend has been underway to consolidate the industry to make it more competitive and efficient. Gold Fields supports and is participating in this consolidation, as shown by its acquisitions of assets in Australia and Ghana.

Gold Fields also intends to enter the platinum group metals, or PGM, business, and to this end has acquired a PGM deposit in Finland. The full mineral and economic potential of this deposit continued to be evaluated during fiscal 2004.

Global Context

Gold Fields’ strategy was developed in the context of a global market characterized by an extended period of low gold prices, reduced global expenditure on gold exploration and increasing industry consolidation. This strategy has evolved over time, but despite the recent increase in the price of gold, Gold Fields has maintained a strategy of general caution with respect to financial commitments while maintaining full exposure to the effects of the gold price.

Generally, Gold Fields’ strategy consists of the following key elements:

  improving returns through the optimization of existing assets and diversification. Specifically, this implies the reduction of costs and growing assets through inward investment while growing Gold Fields by diversifying geographical, technical and product risk by acquiring and developing additional long-life assets;
 
  developing the people of Gold Fields. Gold Fields believes that it has two primary assets — ore reserves and people — and Gold Fields has implemented education and training programs for employees at all levels;
 
  earning and maintaining what Gold Fields calls its “license to operate” in those countries and regions in which it operates. Gold Fields views its ability to conduct its operations as involving a reciprocal commitment from Gold Fields to the communities where it is located and the ability to deal with issues related to sustainable development;

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  developing the gold market for the benefit of Gold Fields’ product and its shareholders. The fact that Gold Fields is essentially unhedged underlines its commitment to gold. Gold Fields fully supports the World Gold Council, or WGC. Christopher M.T. Thompson, a director and chairman of Gold Fields, became chairman of the WGC in 2002 and continues in that capacity currently.

Improved Profitability and Increased Reserves

Improved profitability and increased reserves at existing underground operations in South Africa and operations elsewhere can be achieved by reducing costs and thereby reducing cut-off grades. Management believes that significant opportunity exists to do this, specifically through:

  investing in cost reduction through replacement of older equipment with modern and more efficient equipment;
 
  improved incentive compensation systems that more effectively link reward to key outputs; and
 
  better use of new technologies in the form of new mining methods, the use of drill rigs and jigs, improved ventilation usage and research into new underground mining techniques.

Acquisitions and Exploration

Gold Fields is one of the largest producers of gold in the world based on annual gold production. Gold Fields’ corporate development mandate is to grow as a world leader in developing and operating precious metal mines and to make investments that generate positive returns. Gold Fields is sensitive to the fact that industry pressure for consolidation and the competition for acquisitions are pushing asset prices to high levels that threaten returns. Gold Fields believes its acquisitions of St. Ives and Agnew in Australia, the Teberebie property in Ghana and the Damang mine in Ghana offer excellent prospects of good investment returns and growth due to the exploration potential offered at the sites and, with respect to the Ghana operation, the synergies offered with respect to Gold Fields’ existing operations. Accordingly, these acquisitions provide examples of what is possible despite the limitations that constrain Gold Fields’ ambitions.

For acquisitions of gold assets or companies outside South Africa, Gold Fields is at somewhat of a disadvantage to certain of its competitors outside South Africa but also has offsetting strengths. First, South African exchange control regulations limit Gold Fields’ ability to provide guarantees or borrow outside South Africa without express approval from the South African Reserve Bank, or the SARB. In his speech to Parliament towards at the end of October 2004, the Minister of Finance outlined the South African Treasury’s medium term budget policy statement and repeated that it was the government’s eventual goal to replace all remaining exchange controls with prudential benchmarks. He also announced the abolition of exchange control limits on new outward foreign direct investments by South African corporations and the lifting of their obligation to repatriate foreign dividends. Gold Fields nonetheless remains at a disadvantage to its non-South African competitors. Second, shares of North American and, to a lesser extent, Australian gold companies historically have traded at premiums relative to shares of South African gold companies, thereby making it difficult to make non-dilutive acquisitions through equity issuances, although these premiums have reduced recently. On the other hand, Gold Fields has a strong balance sheet and low debt-to-equity ratio that diminishes the equity pricing disadvantage, and also has a skilled and effective corporate evaluation and acquisition team.

Gold Fields maintains an active global exploration effort for gold and PGMs through exploration offices worldwide and an exploration team that management believes is well focused, cost efficient and skilled. Generally, Gold Fields budgets to spend up to $10 per ounce of gold it produces on exploration, provided the opportunities offered warrant such expenditure. Exploration efforts are carefully selected with strict economic criteria in mind.

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Hedging

Generally, Gold Fields does not enter into forward sales, derivatives or other hedging arrangements to establish a price in advance for future gold production. Gold Fields believes that investors in Gold Fields’ shares seek an unlimited exposure to movements in the U.S. dollar gold price and the resulting effect on Gold Fields’ earnings.

However, commodity hedges are sometimes undertaken on a project specific basis as follows:

  to protect cash flows at times of significant expenditure;
 
  for specific debt servicing requirements; and
 
  to safeguard the viability of higher cost operations.

Gold Fields may from time to time establish currency and/or interest rate financial instruments to protect underlying cash flows or to take advantage of potential favorable currency movements.

Reserves of Gold Fields as of June 30, 2004

Methodology

While there are some differences between the definition of the South African Code for Reporting of Mineral Resources and Mineral Reserves, or SAMREC Code, and that of the SEC’s industry guide number 7, only reserves at each of Gold Fields’ operations as of June 30, 2004 which qualify as proven and probable reserves for purposes of the SEC’s industry guide number 7 are presented in the table below. See “ — Glossary of Mining Terms.” In accordance with the requirements imposed by the JSE, Gold Fields reports its reserves using the terms and definitions of the SAMREC Code. Mineral reserves, as defined under the SAMREC Code, are divided into categories of proved and probable reserves and are expressed in terms of tonnes to be processed at mill feed head grades, allowing for estimated mining dilution and recovery factors.

Gold Fields reports reserves using cut-off grades (mainly for open pit operations) and pay limits to ensure the reserves realistically reflect both the cost structures and required margins relevant to each mining operation. Cut-off grade is the grade which distinguishes the material within an orebody that is to be extracted and treated, from the remaining material. The pay limit is the grade at which an orebody can be mined without profit or loss calculated using an appropriate gold price and working costs, plus modifying factors. Modifying factors used to calculate the pay limit grades include adjustments to mill delivered amounts, due to dilution incurred in the course of mining. Modifying factors applied in estimating reserves are primarily historical, but commonly incorporate adjustments for planned operational improvements such as those described below under “ — Description of Mining Business — Productivity Initiatives.” Tonnage and grade includes some mineralization below the selected pay limit and cut-off grade to ensure that the reserve comprises blocks of adequate size and continuity. Reserves also take into account cost levels at each operation and are supported by mine plans.

The estimation of reserves at the South African underground operations is based on surface drilling, underground drilling, surface three-dimensional reflection seismics, orebody facies, structural modeling, underground channel sampling and geostatistical estimation. The reefs are initially explored by drilling from the surface on an approximately 500 meter to 2,000 meter grid. Once underground access is available, drilling is undertaken on an approximate 30 meter by 60 meter grid. Underground channel sampling perpendicular to the reef is undertaken at three meter intervals in development areas and five meter intervals at stope faces. For the Tarkwa open pit operation, estimation of reserves is based on a combination of an initial 100 or 200 meter

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grid of diamond drilling and a 12.5 meter to 25.0 meter grid of reverse circulation drilling. For the Damang open pit operation, estimation of reserves is based on a 20 meter to 80 meter grid of both diamond drilling and reverse circulation drilling.

At the Australian operations the estimation of reserves for both underground and open-pit operations is based on exploration, sampling and testing information gathered through appropriate techniques, primarily from drill holes and mine development. The locations of sample points are spaced closely enough to deduce or confirm geological and grade continuity. Generally, drilling is undertaken on grids which range between 20 meters by 20 meters to 40 meters by 40 meters, although this may vary depending on the continuity of the orebody. Due to the variety and diversity of resources at St. Ives and Agnew, sample spacing may also vary depending on each particular ore type.

Reserve Statement

As of June 30, 2004, Gold Fields had aggregate attributable proven and probable reserves of approximately 75.4 million ounces as set forth in the following table:

Ore Reserve statement as of June 30, 2004 (1)

                                                                                 
                                                                           
    Proven reserves
  Probable reserves
  Total reserves
  Attributable gold
production in the
                                                                            year ended
                                                                            June 30,
    Tonnes
  Grade
  Gold
  Tonnes
  Grade
  Gold
  Tonnes
  Grade
  Gold
  2004(2)
    (million)   (g/t)   (’000 oz)   (million)   (g/t)   (’000 oz)   (million)   (g/t)   (’000 oz)   (’000 oz)
Underground
                                                                               
Driefontein (total)
    29.4       8.1       7,621       59.2       8.1       15,485       88.6       8.1       23,106       970  
Above infrastructure(3)
    29.4       8.1       7,621       27.2       8.2       7,150       56.6       8.1       14,771          
Below infrastructure(3)
                      32.0       8.1       8,335       32.0       8.1       8,335          
Kloof (total)
    17.4       10.3       5,786       62.0       10.6       21,138       79.4       10.5       26,924       1,000  
Above infrastructure(3)
    17.4       10.3       5,786       25.2       8.5       6,885       42.6       9.3       12,671          
Below infrastructure(3)
                      36.8       12.0       14,253       36.8       12.0       14,253          
Beatrix (total)
    19.0       5.2       3,198       35.9       5.7       6,547       54.9       5.5       9,746       593  
Above infrastructure (3)
    19.0       5.2       3,198       33.9       5.7       6,185       52.9       5.5       9,384          
Below infrastructure (3)
                      2.0       5.6       362       2.0       5.6       362          
Australia
                                                                               
St. Ives (4)
                                                           
Agnew (4)
                                                           
Total Underground
    65.8       7.8       16,606       157.1       8.5       43,170       222.9       8.3       59,776       2,562  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Surface (Rock Dumps)
                                                                               
Driefontein
                      12.7       1.3       511       12.7       1.3       511       171  
Kloof
                      13.6       0.8       341       13.6       0.8       341       38  
Beatrix
                      2.7       0.7       58       2.7       0.7       58       32  
Surface (Production Stockpile)
                                                                               
Ghana
                                                                               
Tarkwa
    2.9       0.9       82                         2.9       0.9       82        
Damang
    6.5       1.4       283                         6.5       1.4       283        
Australia
                                                                               

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    Proven reserves
  Probable reserves
  Total reserves
  Attributable gold
production in the
                                                                            year ended
                                                                            2004(2)
    Tonnes
  Grade
  Gold
  Tonnes
  Grade
  Gold
  Tonnes
  Grade
  Gold
  June 30,
    (million)   (g/t)   (’000 oz)   (million)   (g/t)   (’000 oz)   (million)   (g/t)   (’000 oz)   (’000 oz)
St. Ives (4)
    7.4       1.1       265                         7.4       1.1       265        
Agnew (4)
    0.5       1.4       22                         0.5       1.4       22        
Surface (Open Pit)
                                                                               
Ghana
                                                                               
Tarkwa
    142.0       1.3       6,088       105.0       1.3       4,303       247.0       1.3       10,391       391 (5)
Damang(6) (7)
    1.8       0.9       60       5.1       1.5       244       7.0       1.4       304       219 (5)
Australia
                                                                               
St. Ives (4) (6)
    1.8       3.5       203       20.3       3.9       2,545       22.1       3.9       2,748       543 (5)
Agnew (4) (6)
    0.4       14.9       180       3.5       4.1       454       3.8       5.2       634       202 (5)
Total Surface
    163.3       1.4       7,183       162.9       1.6       8,456       326.2       1.5       15,639       1,596  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total
    229.1       3.2       23,789       320.0       5.0       51,626       549.1       4.3       75,415       4,158 (8)
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 


Notes:

(1)   Quoted as mill delivered tonnes and run of mine grades, inclusive of all mining dilutions and gold losses except mill recovery. Metallurgical recovery factors have not been applied to the reserve figures. The approximate metallurgical factors are as follows: (1) Driefontein 96.9%; (2) Kloof 97.5%; (3) Beatrix 96.7%; (4) Tarkwa 95% for milling, 66% for heap leach; (5) Damang 88.6%-94.5%; (6) St. Ives 94% for milling, 55% for heap leach and (7) Agnew 94%. For Driefontein, Kloof and Beatrix, a gold price of Rand 90,000 per kilogram ($350 per ounce at an exchange rate of Rand 8.00 per $1.00) was applied in calculating ore reserve figures. For the Tarkwa and Damang operations, ore reserve figures are based on an optimized pit at a gold price of $350 per ounce. For the Australian operations ore reserve figures are based on a gold price of A$580 per ounce ($350 per ounce at an exchange rate of A$1.66 per $1.00). Open pit ore reserves at the Australian operations are similarly based on optimized pits. The gold price used for reserves is the three year average, calculated on a monthly basis, of the London afternoon fixing price of gold.
 
(2)   Actual gold produced after metallurgical recovery.
 
(3)   Above infrastructure reserves relate to mineralization which is located at a level at which an operation currently has infrastructure sufficient to allow mining operations to occur. Below infrastructure reserves relate to mineralization which is located at a level at which an operation currently does not have infrastructure sufficient to allow mining operations to occur, but where the operation has made plans to install additional infrastructure in the future which will allow mining to occur at that level.
 
(4)   All operations at St. Ives and Agnew are considered surface operations for purposes of reporting reserve and production data in this reserves table.
 
(5)   Includes some gold produced from stockpile material which cannot be separately measured.
 
(6)   Excludes inferred material within the pit design.
 
(7)   Excludes amounts for Lima South, for which an application for conversion from a prospecting license to mining license has been lodged. The application for the conversion to a mining lease requires the grant of an environmental permit from the Ghanaian Environmental Protection Agency. Gold Fields is not aware of any significant impediment to the grant of that permit.
 
(8)   The total does not reflect the sum of the line items due to rounding.

The amount of mineralization which Gold Fields can economically extract, and therefore can classify as reserves, is very sensitive to fluctuations in the price of gold. At gold prices different from the gold price of $350 per ounce used to estimate Gold Fields’ attributable reserves of 75.4 million ounces of gold as of June 30, 2004 listed above, Gold Fields’ operations would have had significantly different reserves. Based on the same methodology and assumptions as were used to estimate Gold Fields’ reserves as of June 30, 2004 listed above, but applying different gold prices that are 10% above and below the $350 per ounce gold price used to

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estimate Gold Fields’ attributable reserves, the attributable reserves of Gold Fields’ operations would have been as follows:

                         
    $ 315/oz   $ 350/oz   $ 385/oz
   
(’000 oz)
 
(’000 oz)
 
(’000 oz)
Driefontein(1)
    14,145 (2)     23,106       23,577  
Kloof(1)
    9,332 (3)     26,924       29,891  
Beatrix(1)
    8,409       9,746       10,289  
Tarkwa
    8,871       10,473       11,790  
Damang
    464       587       603  
St. Ives
    2,764       3,013       3,139  
Agnew
    637       656       682  
 
   
 
     
 
     
 
 
Total(1)
    44,622       74,505       79,971  
 
   
 
     
 
     
 
 


Notes:

(1)   South African operations’ reserves exclude rock dumps.
 
(2)   Excludes Shaft No. 5 below infrastructure material which would not be economical to mine, and thus would not be a reserve, at this gold price.
 
(3)   Excludes the Kloof Extension Area and Eastern Boundary Area and which would not be economical to mine and thus would not be a reserve at this gold price.

The London afternoon fixing price on October 29, 2004 was $426 per ounce.

Gold Fields’ methodology for determining its reserves is subject to change and is based upon estimates and assumptions made by management regarding a number of factors as noted above under “ — Methodology.” Accordingly, the sensitivity analysis of Gold Fields’ reserves provided above should not be relied upon as indicative of what the estimate of Gold Fields’ reserves would actually be or have been at the gold prices indicated, or at any other gold price, nor should it be relied upon as a basis for estimating Gold Fields’ ore reserves based on the current gold price or what Gold Fields’ reserves will be at any time in the future. See “Key Information — Risk Factors — Gold Fields’ gold reserves are estimates based on a number of assumptions, any changes to which may require Gold Fields to lower its estimated reserves.”

Geology

The majority of Gold Fields’ gold production is derived from deep-level underground gold mines located along the northern and western margins of the Witwatersrand Basin in South Africa. These properties include the Beatrix operation, the Driefontein operation and the Kloof operation. These mines are typical of the many Witwatersrand Basin operations which together have produced over 1.3 billion ounces of gold over a period of more than 100 years.

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The Witwatersrand Basin comprises a 6,000 meter vertical thickness of sedimentary rocks, extending laterally for some 300 kilometers northeast to southwest by some 100 kilometers northwest to southeast, generally dipping at shallow angles towards the center of the basin. The basin outcrops at its northern extent near Johannesburg but to the west, south and east it is overlain by up to 4,000 meters of volcanic and sedimentary rocks. The Witwatersrand Basin is Achaean in age, meaning the sedimentary rocks are of the order of 2.7 to 2.8 billion years old.

Gold mineralization occurs within laterally extensive quartz pebble conglomerate horizons called reefs which are developed above unconformable surfaces near the basin margin. As a result of faulting and primary controls on mineralization structure, the gold fields are not continuous and are characterized by the presence or dominance of different reef units. The reefs are generally less than two meters in thickness and are widely considered to represent laterally extensive braided fluvial deposits or unconfined flow deposits which formed along the flanks of alluvial fan systems around the edge of an inland sea. Dykes and sills of diabase or doleritic composition are developed within the Witwatersrand Basin and are associated with several intrusive and extrusive events.

The gold generally occurs in native form, often associated with pyrite and carbon. Pyrite and gold within the reefs display a variety of forms, some obviously indicative of detrital transport within the depositional system and others suggesting crystallization within the reef itself.

The most fundamental controls of gold distribution are the primary sedimentary features such as facies variation and channel directions. Consequently, the modeling of sedimentary features within the reefs and the correlation of payable grades with certain facies is key to in situ reserve estimation as well as effective operational mine planning and grade control.

For a discussion of the geological features present at the Tarkwa, Damang, St. Ives and Agnew mines, see the geology discussion contained in the description of each of those mines found below under “ — Gold Fields’ Mining Operations — Ghana Operation — Tarkwa,” “ — Gold Fields’ Mining Operations — Ghana Operation — Damang,” “ — Gold Fields’ Mining Operations — Australia Operation — St. Ives,” and “ — Gold Fields’ Mining Operations — Australia Operation — Agnew.”

Description of Mining Business

The discussion below provides a general overview of the mining business as it applies to Gold Fields.

Exploration

Exploration activities are focused on the extension of existing orebodies and identification of new orebodies both at existing sites and at undeveloped sites. Once a potential orebody has been discovered, exploration is extended and intensified in order to enable clearer definition of the orebody and the potential portions to be mined. Geological techniques are constantly refined to improve the economic viability of prospecting and mining activities.

Mining

Gold Fields currently mines only gold, with silver as a by-product. The mining process can be divided into two principal activities: (1) developing access to the orebody; and (2) extracting the orebody once accessed. These two processes apply to both surface and underground mines.

Underground Mining

Developing access to the orebody

For Gold Fields’ underground mines, access to orebodies is provided through vertical, inclined and declined shaft systems. If additional depth is required to fully exploit the reef, and it is economically feasible, then

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secondary (sub-vertical) or tertiary shafts are sunk from the underground levels. Horizontal development at various intervals of a shaft, known as levels, extends access to the horizon of the reef to be mined. On-reef development then provides specific mining access. South African mine layouts generally follow a linear, crisscross pattern, while Australian mines have more varied layouts and typically use a spiral-shaped decline layout to descend alongside the orebody.

Extracting the orebody

Once an orebody has been accessed, drilling, blasting, supporting and cleaning activities are carried out on a daily basis and broken ore is scraped into and down gullies to ore passes where it is channeled to the crosscut below. The ore is then hauled by rail to shaft ore passes where it is tipped into loading stations for hoisting to surface. Mining methods employed at Gold Fields’ operations include longwall mining, closely spaced dip pillar mining and conventional scattered mining. In Australia, extraction methods are highly mechanized, with mechanized equipment used within the declines and at the stope for drilling, loading and hauling. South African mining methods tend to be more labor intensive.

Open Pit Mining

Developing access to the orebody

In open pit mining, access to the ore is achieved by stripping the overburden in benches of fixed height to expose the ore below. This is most typically achieved by drilling and blasting an area, loading the broken rock with excavators into dump trucks and hauling the rock and/or soil to dumps.

Extracting the orebody

Extraction of the orebody in open pit mining involves the same activity as in stripping the overburden. The rock is drilled, and the drill cuttings are sampled to determine the grade of the rock at each blasting location. The rock is blasted and lines are established demarcating ore from waste material. The ore is hauled by dump truck to the crusher or stockpile, while the waste is hauled to waste rock dumps.

Rock Dump and Production Stockpile Mining

Gold Fields mines surface rock dumps and production stockpiles using mechanized earth moving equipment.

Mine Planning and Management

Operational and planning management on the mines receives support from corporate management and centralized support functions. The current philosophy is one of bottom-up management, with the non-financial operational objectives at each mine defined by the personnel at the mine based on parameters, objectives and guidelines provided by Gold Fields’ head office. This is based on the premise that the people on the ground have the best understanding of what is realistically achievable.

Gold Fields has a two-stage mine planning process. Each operation compiles a life of mine, or LoM, plan during the first half of each fiscal year and a detailed two year operational plan during the second half of each fiscal year, based on financial parameters issued to the operation by Gold Fields’ Operating Committee. See “Directors, Senior Management and Employees — Operating Committee.” The operational plan is presented to Gold Fields’ Board for approval at the end of each fiscal year. The planning process is sequential and is based upon geological models, evaluation models, depletion schedules and, ultimately, financial analysis. Capital planning is formalized pursuant to Gold Fields’ capital spending planning process. Projects are categorized in terms of total expenditure, and all projects involving amounts exceeding Rand 50.0 million ($8.2 million) are submitted to the full Board for approval.

The South African operations have implemented an integrated electronic reserve and resource information system, called IRRIS, to enhance LoM planning capabilities. This system provides a common planning platform to facilitate quicker, more flexible and more accurate short- and long-term planning and more timely

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identification of production shortfalls. Short term planning on the operations is conducted monthly and aligned with the operational plan. Financial and economic parameters for the LoM and operational plan are issued to the operations from the head office and relevant survey and evaluation factors are determined in accordance with Gold Fields’ guidelines.

Processing

Gold Fields currently has 14 gold plants (eight in South Africa, three in Ghana (an additional plant is in the process of being commissioned) and three in Australia) which treat ore to extract gold. A typical gold processing plant circuit includes two phases: comminution and treatment.

Comminution

Comminution is the process of breaking up the ore to expose and liberate the gold and make it available for treatment. Conventionally, this process occurs in multi-stage crushing and milling circuits, which include the use of jaw and gyratory crushers and rod, tube, ball and semi-autogenous grinding, or SAG, mills. Gold Fields’ newer milling circuits utilize SAG milling where the ore itself and steel balls are used as the primary grinding medium. In older plants, traditional crushing and milling processes are used. Through the comminution process, ore is ground to a minimum size before proceeding to the treatment phase.

Treatment

In all of Gold Fields’ metallurgical plants, gold is extracted into a leach solution by leaching with cyanide in agitated tanks. Gold is then extracted onto activated carbon from the solution using either the CIL or CIP process. The activated carbon is then eluted with gold recovered by electrowinning.

Gold Fields also has three heap leach operations. In the heap leach process, crushed ore is stacked on impervious leach pads and a cyanide leaching solution is sprayed on the pile. The solution percolates through the heap and dissolves liberated gold. A system of underdrains removes the gold-containing solution, which is then passed through columns containing activated carbon using the AD&R process. The loaded carbon is then eluted and the gold recovered by electrowinning.

As a final recovery step, gold recovered from the carbon using the above processes is smelted to produce rough gold bars. These bars are then transported to the refinery which is responsible for refining the bars to good delivery status.

Productivity Initiatives

Gold Fields is currently undertaking a number of initiatives intended to increase efficiency and reduce production costs at its mines. These initiatives include:

  Safe Quality Planned Blast, or SQPB
 
    At the South African operations, the SQPB initiative covers various activities that form part of the underground mining process and are tailored specifically to each operating mine. The purpose of the initiative is to provide for a safe blast each day as planned in the mining cycle, either at the stope face or at a development end to meet specific production and/or development targets.
 
  Optimization
 
    Various initiatives are in place to increase productivity at the international operations. For example, at St. Ives, Gold Fields is studying an improved process for the removal of lake sediment on Lake Lefroy and the introduction of trains for the hauling of underground ore at the Leviathan underground mine. At Agnew, Gold Fields is adapting the underground mining method to facilitate the safe removal of pillars at the Kim mine by introducing cemented backfill. At Tarkwa, Gold Fields converted operations

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    to owner mining during fiscal 2004 and, in connection with the conversion, purchased a full fleet of mining equipment.

  Cost, Supply and Labor Management
 
    Gold Fields has implemented standardized cost reporting with uniform terminology and is introducing various systems to centralize supply procurement, improve vendor management and share services among shafts and operations. Gold Fields is putting in place an integrated daily reporting system throughout the South African operations, which it hopes will permit better allocation of labor and supplies among shafts. This includes a new payroll and human resources system called Solitgold, described below, which has been implemented at the Driefontein and Kloof operations and is expected to be implemented at the Beatrix operation in fiscal 2005. In addition, all production and ore reserve management reports are now part of the IRRIS system. See “ — Mine Planning and Management.”
 
  Bonus Systems
 
    Payroll, human resources and bonus systems are being integrated across the South African operations. Gold Fields is altering the bonus system to move it to production target-based standards, rather than only efficiency-based standards, and align it more closely with the SQPB objectives. See “Directors, Senior Management and Employees — Labor Relations — Bonus Schemes.”
 
  Refrigeration and Ventilation Infrastructure
 
    Gold Fields continues to upgrade and increase the efficiency of its refrigeration and ventilation systems.
 
  Training
 
    Gold Fields has implemented an expanded training program for employees at all levels, with an emphasis on safety, literacy and middle management development. An integrated people development system called The Integrated Manager (TIM) has been implemented at all mine sites. See “Directors, Senior Management and Employees — Employees — Training.”
 
  Technology
 
    Gold Fields is introducing a number of applied mining technologies, including mechanized development drill rigs and stope drill jigs, increased use of hydropower, new blasthole drilling methods and transport systems.
 
  Payroll and Human Resources Systems
 
    Gold Fields is currently replacing its seven different payroll and human resources systems in South Africa with an integrated payroll and human resources systems called Solitgold. Gold Fields anticipates that this initiative will provide improved controls and the ability to better manage its payroll and costs on a group-wide basis. The system was implemented in March 2004 at Driefontein and Kloof and is scheduled for implementation in fiscal 2005 at Beatrix.
 
  Processing

Gold Fields is upgrading its metallurgical plants with the aim of reducing processing costs and improving security.
 
  Palladium
 
    Gold Fields has introduced Palladium, an integrated occupational health and safety system that integrates and manages health and safety data from all of the South Africa operations. The

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    management system to support Palladium is currently being finalized and Gold Fields expects the system to be fully operational in fiscal 2004.

Refining and Marketing

Gold Fields has appointed Rand Refinery Limited, or Rand Refinery, to refine all of Gold Fields’ South African produced gold. Rand Refinery is a private company in which Gold Fields holds a 33.1% interest, with the remaining interests held by other South African gold producers.

On June 1, 2004 Gold Fields exercised its right under its agreement with Rand Refinery to sell all of Gold Fields’ gold production from its South African operations with effect from October 1, 2004. Prior to that time, Rand Refinery was the exclusive agent to sell Gold Fields’ South African produced gold, and Gold Fields’ treasury was appointed by Rand Refinery to act as its agent with respect to the sale of 50% of such gold to international customers. Under the new arrangement, Rand Refinery advises Gold Fields from time to time of the amount of gold available for sale. Gold Fields sells the gold at the London afternoon fixing price for the day if it is so advised. Within two business days after receipt of this advice Gold Fields deposits an amount in U.S. dollars equal to the value of the gold sold into Rand Refinery’s nominated U.S. dollar account. On the date of the deposit, Rand Refinery, in turn, deducts any refining and administrative charges payable by Gold Fields relating to such amount of gold, and deposits the balance of the money into the nominated U.S. dollar account of Gold Fields. Gold Fields pays Rand Refinery an amount for administrative services associated with delivery of the refined gold of $0.05 per troy ounce of gold and a refining fee of $0.23 per troy ounce of gold received by Rand Refinery.

All gold produced by Gold Fields at the Tarkwa and Damang mines is refined by Rand Refinery pursuant to two non-exclusive agreements entered into in October 2004 between Rand Refinery and Gold Fields Ghana, and between Rand Refinery and Abosso. Under these agreements, Rand Refinery collects, refines and sells gold as instructed by Gold Fields Ghana and Abosso. Rand Refinery assumes responsibility for the gold upon collection at either the Tarkwa or Damang mine. The gold is then transported to the Rand Refinery premises in Johannesburg, South Africa, where it is refined. Gold Fields Ghana and Abosso reimburse Rand Refinery for transportation costs. Under these agreements, Rand Refinery sells the refined gold on behalf of Gold Fields Ghana and Abosso at the London afternoon fixing price for gold on the date of delivery. Rand Refinery receives refining fees of $0.33 per ounce of gold received, and a realization fee equal to $0.16 per ounce of gold refined. These agreements continue until either party terminates it upon 90 days’ written notice.

In Australia, all gold produced by St. Ives and Agnew is refined by AGR Joint Venture (trade name Australian Gold Refineries). The AGR Joint Venture is a partnership between Australian Gold Alliance Pty Ltd and WA Mint (trade name Perth Mint). Under an agreement which became effective on September 1, 2002 among St. Ives Gold Mining Company Pty Ltd, Agnew Gold Mining Company Pty Ltd and AGR Joint Venture, AGR Joint Venture refines the gold produced by St. Ives and Agnew for a refining fee of A$0.36 per ounce of gold plus a transportation fee of A$0.09 per ounce (subject to minimum charges). The refining fee is scheduled to increase by two cents per ounce in January 2005 and again in January 2006. AGR Joint Venture retains 0.1% of the gold it refines to cover losses in the refining process. AGR Joint Venture must collect the gold from St. Ives and Agnew, refine it and credit the gold to its metals account in Western Australia and then either purchase the gold or swap it to London, which means that AGR Joint Venture provides gold in London for sale by Gold Fields in an amount equal to the gold from St. Ives and Agnew located in Perth. At Gold Fields’ election the gold may be sold to AGR Joint Venture at spot for a fee of $0.20 per ounce or at the London morning or afternoon fixing price for a fee of $0.25 cents per ounce or, if the gold is swapped to London, and sold through third parties for a fee which is based on the gold price and interest rates. This agreement continues indefinitely until terminated by either party upon 90 days’ written notice.

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Gold Fields supports and participates in the gold marketing activities of the WGC and contributes $1.75 per ounce of gold it produces to the WGC in support of its activities.

Services

Mining activities require extensive services, located both on the surface and underground at the mines. Services include:

  mining-related services such as engineering, rock mechanics, ventilation and refrigeration, materials handling, operational performance evaluation and capital planning;
 
  safety and training;
 
  housing and health-related services, including hostel and hospital operations;
 
  geological services, including mine planning and design;
 
  reserves management including sampling and estimation;
 
  metallurgy;
 
  equipment maintenance; and
 
  assay services.

Most of these services are provided directly by Gold Fields, either at the operation level or through the head office, although some are provided by third-party contractors.

Gold Fields’ Mining Operations

Gold Fields conducts underground mining operations at each site except Tarkwa and Damang and conducts some processing of surface rock dump material at Driefontein, Kloof and Beatrix. Tarkwa and Damang are open pit mines and also process material from production stockpiles. St. Ives and Agnew together include underground and open pit operations and also process material from production stockpiles.

Total Operations

The following chart details the operating and production results for fiscal 2002 for all operations owned by Gold Fields as of June 30, 2002, and for fiscal 2003 and fiscal 2004 for all operations owned by Gold Fields as of June 30, 2004, plus the operating and production results of the St. Helena mine through the first four months of fiscal 2003 prior to the sale of the mine to Freegold.

                         
    Year ended June 30,
    2002
  2003
  2004
Production
                       
Tonnes (‘000)
    36,953       42,988       46,028  
Recovered grade (g/t)
    3.6       3.3       3.0  
Gold produced (‘000 oz) (1)(2)
    4,307       4,577       4,406  
Results of operations ($ million)
                       
Revenues
    1,210.0       1,538.2       1,706.2  
Total production costs
    831.4       1,168.3       1,538.3  

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    Year ended June 30,
    2002
  2003
  2004
Total cash costs
    713.4       974.9       1,332.5  
Cash profit(3)
    496.6       563.3       373.7  
Cost per ounce of gold ($)
                       
Total production costs
    198       254       349  
Total cash costs
    170       212       302  


Notes:

(1)   Includes production at Shaft No. 4, which was capitalized through the end of fiscal 2002 (fiscal 2002: 75,000 ounces)
 
(2)   In fiscal 2002, 4.109 million ounces of production were attributable to Gold Fields, in fiscal 2003, 4.334 million ounces were attributable to Gold Fields and in fiscal 2004, 4.158 million ounces were attributable to Gold Fields with the remainder attributable to minority shareholders in the Ghana operation.
 
(3)   Cash profit represents revenues less total cash costs. For a reconcilliation of Gold Fields’ total cash costs to production costs, see “Operating and Financial Review and Prospects — Results of Operations.”

Underground Operations

The following chart details the operating and production results for fiscal 2002 for all underground operations owned by Gold Fields as of June 30, 2002 and for fiscal 2003 and fiscal 2004 for all operations owned by Gold Fields as of June 30, 2004, plus the operating and production results of the St. Helena mine through the first four months of fiscal 2003 prior to the sale of the mine to Freegold.

                         
    Year ended June 30,
    2002
  2003
  2004
Production
                       
Tonnes (‘000)
    11,274       11,895       13,231  
Recovered grade (g/t)
    8.2       7.5       7.0  
Gold produced (‘000 oz) (1)
    2,968       2,855       2,982  
Results of operations ($ million)
                       
Revenues
    824.7       958.5       1,153.4  
Total production costs
    564.5       729.9       1,139.6  
Total cash costs
    498.0       636.8       996.6  
Cash profit(2)
    326.7       321.7       156.8  
Cost per ounce of gold ($)
                       
Total production costs
    197       252       382  
Total cash costs
    174       221       334  


Notes:

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(1)   Includes production at Kloof Shaft No. 4, which was capitalized through the end of fiscal 2002; fiscal 2002: 75,000 ounces).
 
(2)   Cash profit represents revenues less total cash costs. For a reconciliation of Gold Fields’ cash costs to production costs, see “Operating and Financial Review and Prospects — Results of Operations.”

Tonnes milled from the underground operations increased from 11.9 million tonnes in fiscal 2003 to 13.2 million tonnes in fiscal 2004. An increase of 2.0 million tonnes from the Australian operations, resulting from a reclassification of near surface operations from surface to underground operations, was largely offset by decreases at Driefontein and Kloof resulting from a reduction in lower grade mining at the South African operations to counter the lower Rand gold price. The amount of gold produced from the underground operations increased from 2.6 million ounces in fiscal 2003 to 3.0 million ounces in fiscal 2004. The primary reason for this increase was the Australian reclassification of near surface operations to underground operations, which accounted for an additional 420,000 ounces. This offset lower production from the South African operations due to lower tonnes milled at slightly lower yields.

Surface Operations

The following chart details the operating and production results for fiscal 2002 for all surface operations owned by Gold Fields as of June 30, 2002 and for fiscal 2003 and 2004 for all such operations owned by Gold Fields as of June 30, 2004. All operations at St. Ives and Agnew were considered surface operations prior to June 30, 2003 for purposes of reporting production data. Starting in fiscal 2004, production data for the Australian operations has been split between underground and surface operations.

                         
    Year ended June 30,
    2002
  2003
  2004
Production
                       
Tonnes (‘000)
    25,679       31,093       32,797  
Recovered grade (g/t)
    1.6       1.7       1.4  
Gold produced (‘000 oz) (1)
    1,340       1,722       1,424  
Results of operations ($ million)
                       
Revenues
    385.3       579.7       552.8  
Total production costs
    266.9       438.4       398.7  
Total cash costs
    215.4       338.1       335.9  
Cash profit(2)
    169.9       241.6       216.9  
Cost per ounce of gold ($)
                       
Total production costs
    199       255       280  
Total cash costs
    161       196       236  


Notes:

(1)   In fiscal 2002, 1.142 million ounces of production were attributable to Gold Fields, in fiscal 2003, 1.480 million ounces of production were attributable to Gold Fields and in fiscal 2004, 1.176 million ounces of production were attributable to Gold Fields, with the remainder attributable to minority shareholders in the Ghana operations.

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(2)   Cash profit represents revenues less total cash costs. For a reconciliation of Gold Fields’ cash costs to production costs see “Operating and Financial Review and Prospects — Results of Operations.”

Tonnes milled from the surface operations increased from 31.1 million tonnes in fiscal 2003 to 32.8 million tonnes in fiscal 2004 despite the reclassification of near surface operations in Australia from surface to underground operations, principally due to increased tonnage produced in Australia and the treatment of surface tonnage at Beatrix via toll arrangements with a nearby operation. However, the amount of gold produced from the surface operations decreased from 1.7 million ounces in fiscal 2003 to 1.4 million ounces in fiscal 2004, primarily due to the increased processing of lower grade ore in Australia.

Driefontein Operation

Introduction

The Driefontein gold mine is located in the Gauteng Province of South Africa in the Far West Rand mining district, some 70 kilometers southwest of Johannesburg. Driefontein operates under a mining authorization with a total area of 8,561 hectares. It is an underground mine with nominal surface reserves represented by rock dumps that have been accumulated through the operating history of the mine. Driefontein has seven operating shaft systems and three metallurgical plants, and operates at depths between 800 meters and 3,400 meters. In the year ended June 30, 2004, it produced 1.1 million ounces of gold. Driefontein had approximately 17,900 employees, including a limited number employed by outside contractors as of June 30, 2004.

History

Driefontein was formed from the consolidation in 1981 of the East Driefontein and West Driefontein mines. Gold mining began at Driefontein in 1952.

Geology

Gold mineralization at Driefontein is contained within three reef horizons. The Carbon Leader Reef, or Carbon Leader, and the Ventersdorp Contact Reef, or VCR, occur at depths between 500 meters and 3,400 meters. The Middelvlei Reef is the third reef and is a minor contributor to reserves and production.

The stratigraphically lower Carbon Leader is a generally high-grade reef comprising different facies types, and dips to the south at approximately 25º. The Carbon Leader subcrops against the VCR in the eastern part of the mine. The west-dipping Bank Fault defines the eastern limit of both reefs. The VCR is most extensively developed in the east, and subcrops to the west. The average gold grades vary with lithofacies changes in the reef, with sub-economic grades developed on the eastern boundary and a higher grade north-trending zone developed to the west.

Mining

The Driefontein operation is engaged in both underground and surface mining, and is thus subject to all of the underground and surface mining risks discussed in the Risk Factors section. Due to the operating depths and extensive mined out areas, seismicity and the damage caused by seismicity are serious safety and productivity issues at Driefontein. To address this, among other things, Gold Fields seeks to use closely spaced dip pillar mining techniques in its newer deep level operations, as well as using backfill placement to stabilize particularly difficult areas. The safety record at the Driefontein operation during fiscal 2004, in terms of serious injury frequency rate and fatal injury frequency rate, was better than the South African industry average for the same period.

The primary challenges facing the Driefontein underground operation include seismicity, flammable gas, water intrusion and rock temperatures. As noted above, Gold Fields is seeking to reduce seismicity problems

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at Driefontein through using a combination of closely spaced dip pillar mining techniques and backfill methods. Water intrusion is dealt with through an extensive water pumping network. Also, because rock temperatures tend to increase with depth, Driefontein requires extensive cooling infrastructure to maintain comfortable conditions for workers. Driefontein experienced underground fires in July, September and October 2003 at Shaft Nos. 2, 10 and 8 respectively. Shaft No. 2 experienced a partial closure for 2 months, and Shaft No. 10 was closed for approximately 8 weeks after the fires. Shaft No. 8 was back in full production by the third quarter of fiscal 2004. In addition, there has been one fire to date in fiscal 2005 which resulted in minor production interruptions.

During the 2004 fiscal year, Driefontein suffered significant seismic events on July 29, 2003, July 31, 2003, September 22, 2003, November 13, 2003 and March 3, 2004 which resulted in one worker in each event losing their lives. Although the areas affected by the seismicity were temporarily closed, Driefontein did not experience material work stoppages in connection with the accidents. There have been no seismic related fatalities to date in fiscal 2005, but there have been scattered interruptions of the operations at Shaft Nos. 1, 2, 4 and 5.

With respect to underground operations, in the western, older portions of Driefontein the focus is on remnant pillar mining. Some mining activity is located in virgin rock, primarily using longwall and scattered mining methods. In the eastern, newer portions of the mine the focus is also on mining through scattered mining or longwall methods. Newer shafts in the eastern portion, particularly those at the deepest levels of the mine, employ the closely spaced dip pillar mining method. This method provides some mining flexibility and is designed to be generally safer than the longwall method. The scattered mining method is not practiced at depth.

Gold Fields is currently focusing development at Shaft Nos. 1 and 5 to increase mineable ore reserves. In addition to these shafts, Shaft No. 4 continues to be a primary center of production and new development to open up reserves in the shaft pillar area. The other shafts at the operation are mature, with production focused on remnant pillar extraction and accessing and mining the secondary reef horizons. Shaft Nos. 2 and 8 are being used to provide hoisting and services support to the active shafts. Gold Fields has completed a feasibility study to evaluate reopening Shaft No. 9, where development had previously been suspended, to access below infrastructure reserves. However, studies indicated that it was not economically feasible to open Shaft No. 9 at current gold prices. In addition, Shaft No. 10 was depleted in fiscal 2004 after having produced high grade ore for the last 40 years.

Operationally, Gold Fields is focused on improving quality square meters extracted through the SQPB initiative at Driefontein. Also, the Driefontein operation continues to focus on identifying previously worked areas which can offer opportunities for further production under current economic conditions and to search for payshoots outside the scope of current mine development.

Driefontein’s surface operations are confined exclusively to the processing of rock dump material.

The Driefontein operation has access to the national electricity grid and water, road and rail infrastructure and is located near regional urban centers where it can routinely obtain needed supplies. Driefontein also has a water treatment plant to supply water to the Driefontein operation.

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Detailed below are the operating and production results at Driefontein for the past three fiscal years.

                         
    Year ended June 30,
    2002
  2003
  2004
Production
                       
Tonnes (‘000)
    6,587       6,370       6,438  
Recovered grade (g/t)
    6.3       6.0       5.5  
Gold produced (‘000 oz)
    1,327       1,238       1,141  
Results of operations ($ million)
                       
Total production costs
    234.2       293.7       405.6  
Total cash costs
    200.9       254.7       354.5  
Cash profit(1)
    171.3       165.5       85.9  
Cost per ounce of gold ($)
                       
Total production costs
    180       233       355  
Total cash costs
    154       202       311  


Note:

(1)   Cash profit represents revenues less total cash costs. For a reconciliation of Gold Fields’ cash costs to production costs see “Operating and Financial Review and Prospects — Results of Operations.”

The increase in tonnage from fiscal 2003 to fiscal 2004 was primarily due to higher surface waste dump rock and plant clean up processing, offset partially by a decrease in underground tonnage to reduce mining in lower grade areas. The strength of the Rand resulted in a deliberate move to mining higher grade areas and the curtailment of mining in areas deemed not to be economically viable. In addition, Shaft Nos. 4 and 5 did not deliver in line with plan, primarily because of faulting and production bottlenecks. The fall in ounces of gold produced occurred principally as a result of the lower tonnage processed and a reduction in underground yields. Driefontein experienced an increase in total cash costs per ounce of gold from fiscal 2003 to fiscal 2004, principally as a result of the appreciation of the Rand against the U.S. dollar as well as higher Rand cash costs. Total cash costs in Rand terms increased due primarily to a decrease in gold production from output in Shaft Nos. 4 and 5, above inflation wage increases and increases in other costs generally in line with inflation.

Output quality of the Driefontein orebody improved over the course of the fiscal year as the mine switched to mining higher grades, primarily during the latter half of the fiscal year. Shaft No. 10 was closed during fiscal 2004 and less than planned output was achieved at Shaft No. 5 due to ventilation constraints. These ventilation constraints should be removed when a new refrigeration plant and cooling infrastructure is commissioned at Shaft No. 5, which is expected to occur in the third quarter of fiscal 2005.

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In June 2004, Gold Fields renamed its shafts at Driefontein. The total shaft hoisting capacity of Driefontein is detailed below.

Shaft System

         
Hoisting capacity
  (tonnes/month)
No. 8(1)
    96,000  
No. 10(2)
    121,000  
No. 6(3)
    118,000  
No. 7(4)
    190,000  
No. 1(5)
    155,000  
No. 2(6)
    185,000  
No. 4 (7)
    180,000  
No. 5 (8)
    175,000  


Notes:

(1)   Formerly named Shaft No. 4W.
 
(2)   Formerly named Shaft No. 5W. This shaft was closed in fiscal 2004.
 
(3)   Formerly named Shaft No. 6W.
 
(4)   Formerly named Shaft No. 7W.
 
(5)   Formerly named Shaft No. 1E.
 
(6)   Formerly named Shaft No. 2E.
 
(7)   Formerly named Shaft No. 4E.
 
(8)   Formerly named Shaft No. 5E.

On a simplistic basis, and assuming that Gold Fields does not identify any additional reserves at Driefontein, at the production level achieved in fiscal 2004, Driefontein’s June 30, 2004 proven and probable reserves of 23.6 million ounces of gold will be sufficient to maintain production through approximately fiscal 2032. However, because Driefontein’s operations consist of several different shafts that are at various stages of maturity, Gold Fields expects that some shafts will decrease production earlier than others. In addition, as discussed in the Risk Factors section, any future changes to the assumptions on which the reserves are based, as well as any unforeseen events affecting production levels, could have a material effect on the expected period of future operations.

Processing

The following table sets forth year commissioned, processing techniques and processing capacity per month, as well as average tonnes milled per month and metallurgical recovery factor during the fiscal year ended June 30, 2004, for each of the plants at Driefontein:

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            Processing Techniques
          Average milled for   Approximate
recovery factor for
                                    the year ended June   the year ended June
Plant
  Year commissioned
  Comminution Phase
  Treatment phase
  Capacity
  30, 2004
  30, 2004
                                    (tonnes/month)        
 
                  CIP treatment and                        
No. 1 Plant
    2003     SAG milling   Electrowinning     240,000       197,300       96.9 %
 
          SAG/ball milling                                
No. 2 Plant
    2002     circuit   CIP treatment(1)     200,000       211,800       95.1 %
No. 3 Plant
    1998     SAG milling   CIP treatment(1)     115,000       127,300       95.7 %


Note:

(1)   After CIP treatment, electrowinning occurs at No. 1 Plant.

In fiscal 2004, the Driefontein plants collectively extracted approximately 96.2% of the gold contained in ore delivered for processing.

The No.1 Plant was commissioned with a new SAG milling circuit during the second quarter of fiscal 2004. An optimization program has been implemented to address a number of technical issues affecting the mill to improve mechanical reliability and overall utilization, including redesigning the mill discharge ends to improve product transfer size.

In addition, during fiscal 2004, certain upgrades were made at the No. 2 Plant to improve efficiency.

Capital Expenditure

Gold Fields spent Rand 238.3 million on capital expenditure at the Driefontein operation in fiscal 2004. This amount included Rand 138.7 million spent on continuing development at Shaft Nos. 1 and 5 and Rand 54.3 million on upgrading Plant Nos. 1 and 2. Gold Fields has budgeted approximately Rand 270.0 million of capital expenditure at Driefontein for fiscal 2005, principally for continuing major shaft development projects, completing metallurgical plant upgrades and completing the new refrigeration plant and cooling infrastructure at Shaft No. 5. Total capital expenditure for 2005 may be reduced if the Rand gold price remains depressed.

Kloof Operation

Introduction

The Kloof operation is located in the Gauteng Province of South Africa, near Westonaria, and comprises the former Kloof, Libanon and Leeudoorn mines. Kloof operates under a mining authorization with a total area of 20,086 hectares. It is principally an underground operation, with a limited amount of processing of surface rock dump material. Kloof has five operating shaft systems serviced by three metallurgical plants, and, like Driefontein, is a deep-level mine, with operating depths between 1,000 meters and 3,500 meters. In the fiscal year ended June 30, 2004, it produced 1.0 million ounces of gold. As of June 30, 2004, Kloof had approximately 16,600 employees, including a limited number employed by outside contractors.

History

Kloof’s present scope of operations is the result of the consolidation in fiscal 2000 of three adjacent mines: Kloof, Libanon and Leeudoorn. Gold mining began in the area now covered by these operations in 1934.

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Geology

The majority of production at Kloof is from the VCR, which occurs at depths between approximately 1,000 meters and 3,500 meters. The VCR has a general northeast strike and dips to the southeast at between 24° and 45°. The Middelvlei Reef is becoming an increasingly important contributor to production, while minor production volumes are planned from the Kloof and Libanon Reefs.

Kloof lies between the Bank Fault to the west, and the north trending Witpoortjie Fault to the east, the latter truncating the VCR east of the mine boundary. Normal faults are developed sub-parallel to the westerly dipping Witpoortjie Fault, with sympathetic north-northeast trending dykes that show little to no apparent offset of the stratigraphy. Structures that offset the VCR increase in frequency towards the southern portion of the mine.

Mining

The Kloof operation is engaged in underground mining, and is thus subject to all of the underground risks discussed in the Risk Factors section. Like Driefontein, Kloof experiences seismicity due to the extreme depth of operations and also experiences flammable gas. Newer development is based on the closely spaced dip pillar mining method to reduce the impact of seismicity at Kloof. Early detection and increased ventilation of the shafts are being used to minimize the risk of incidents caused by flammable gas. In fiscal 2004, the serious injury frequency rate and the fatal injury frequency rate at Kloof were in line with the South African industry average for the same period. Kloof had three fatalities in the first quarter of fiscal 2005.

The primary challenges facing the Kloof operation are seismicity and flammable gas. As noted above, Gold Fields seeks to reduce the impact of seismicity at Kloof by using the closely spaced dip pillar mining method. Kloof experienced consistent levels of flammable gas during fiscal 2004 as compared to fiscal 2003. As noted above, early detection and increased ventilation of the shafts are being used to minimize the risk of incidents caused by flammable gas. Also, as with Driefontein, Kloof requires extensive cooling infrastructure to maintain comfortable conditions for workers due to the extreme depth of its operations.

Newer areas of Kloof, particularly deep level operations, use the closely spaced dip pillar mining method, while older areas use the longwall mining method. The focus at mature areas of Kloof is on remnant pillar mining. Shaft Nos. 1, 3, 4 and 7 provide the main centers of current production at Kloof. Mining activity at Shaft No. 4, which began production in early 2000, is still in the build up phase and is expected to reach a sustainable production level during fiscal 2005. A development program with an associated exploration program to drill and to endeavor to establish additional proven reserves and improved grades in the Shaft No. 3D area was implemented in fiscal 2002 and development has commenced into certain areas of the VCR. In addition to its own production, Shaft No. 1 provides additional hoisting capacity for Shaft Nos. 3 and 4. As a response to the strength of the Rand against the U.S. dollar, Gold Fields decided to shift its focus at its South African operations to mining in higher grade areas. As a result, Kloof reduced its production from the Middelvlei Reef and stopped production at Shaft No. 9 in the second quarter of fiscal 2004.

Pre-feasibility studies on the Kloof Extension Area, or the KEA, and the Eastern Boundary Area, or EBA, were completed in fiscal 2003. A feasibility study on the KEA was completed in fiscal 2004. However, Gold Fields is continuing surface exploration drilling in the KEA and expects to complete studies in fiscal 2005. Surface drilling at the EBA to confirm the structural model and grade zones at particular depths was completed in fiscal 2004. The EBA is still at the pre-feasibility stage, and a full view on feasibility is not expected until late fiscal 2005 or early fiscal 2006. Gold Fields expects Shaft Nos. 3, 4 and 7 to be the primary sources of future production at Kloof.

Operationally, Gold Fields is focused on improving quality volume and the rate of development at the mine by introducing updated drilling technology, including development drill rigs operated from power packs and increasing the proportion of hydropower drill rigs. Various initiatives have been implemented with the

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intention of improving Kloof’s mine call factor. Gold Fields has been experiencing difficulties with ore grades at the lower levels of Shaft No. 3 due to an unexpected variation in the structure of the VCR, and work is ongoing to overcome this problem.

The Kloof operation has access to the national electricity grid and water, road and rail infrastructure and is located near regional urban centers where it can routinely obtain needed supplies.

Detailed below are the operating and production results at Kloof for the past three fiscal years.

                         
    Year ended June 30,
    2002
  2003
  2004
Production
                       
Tonnes (‘000)
    4,657       4,838       4,983  
Recovered grade (g/t)
    7.4       7.3       6.5  
Gold produced (‘000 oz) (1)
    1,101       1,140       1,038  
Results of operations ($ million)
                       
Total production costs
    199.3       281.4       403.0  
Total cash costs
    178.8       245.9       353.8  
Cash profit(2)
    111.3       134.2       47.2  
Cost per ounce of gold ($)
                       
Total production costs
    195       246       388  
Total cash costs
    175       215       341  


Notes:

(1)   Includes production at Kloof Shaft No. 4, which was capitalized through the end of fiscal 2002 (2002: 75,000 ounces).
 
(2)   Cash profit represents revenues less total cash costs. For a reconciliation of Gold Fields’ cash costs to production costs see “Operating and Financial Review and Prospects — Results of Operations.”

From fiscal 2003 to fiscal 2004, there was a significant increase in processing of surface rock dump material and a decrease in processing of underground tonnage. The decrease in gold produced was principally a result of the decrease in underground tonnage, which was part of a planned strategy to reduce lower grade mining in light of the strength of the Rand against the U.S. dollar. Gold Fields experienced an increase in total cash costs per ounce of gold from fiscal 2003 to fiscal 2004 at Kloof, principally as a result of the appreciation of the Rand against the U.S. dollar as well as higher Rand cash costs. Cash costs in Rand increased due primarily to above inflation wage increases and increases in other costs generally in line with inflation.

Output quality of the Kloof orebody improved as the mine switched to mining higher grades, primarily during the second half of the year. Gold production was below that achieved in fiscal 2003, largely because of the closure of the low grade areas at Shaft No. 9 and less than planned output at Shaft No. 4, where unpay areas and mining constraints affected production in the first half of fiscal 2004. In addition, plans were put into place to reduce the proportion of production from the Middlevlei and Kloof reefs which were considered lower grade areas.

The total shaft hoisting capacity of Kloof is detailed below.

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Shaft System

         
Hoisting capacity
  (tonnes/month)
No. 1
    300,000  
No. 3 (1)
    150,000  
No. 4 (2)
    110,000  
No. 7
    205,000  
No. 8
    75,000  


Notes:

(1)   This shaft does not hoist material to the surface. It has a capacity of 150,000 tonnes per month for sub-surface hoisting.

(2)   This shaft hoists only waste rock to the surface. It has a capacity of 110,000 tonnes per month for sub-surface hoisting.

On a simplistic basis, and assuming that Gold Fields does not identify any additional reserves at Kloof, at the production level achieved in fiscal 2004, Kloof’s June 30, 2004 proven and probable reserves of 27.3 million ounces of gold will be sufficient to maintain production through approximately fiscal 2034. However, because Kloof’s operations consist of several different shafts that are at various stages of maturity, Gold Fields expects that some shafts will decrease production earlier than others. In addition, as discussed in the Risk Factors section, any future changes to the assumptions on which the reserves are based, as well as any unforeseen events affecting production levels, could have a material effect on the expected period of future operations.

Processing

The following table sets forth year commissioned, processing techniques and processing capacity per month, as well as average tonnes milled per month and metallurgical recovery factor during the fiscal year ended June 30, 2004, for each of the plants at Kloof:

                                                 
                                           
            Processing Techniques
          Average milled for   Approximate
recovery factor for
                                    the year ended June   the year ended June
Plant
  Year commissioned
  Comminution Phase
  Treatment phase
  Capacity
  30, 2004
  30, 2004
                                    (tonnes/month)        
 
          Traditional                                
 
          crushing and                                
No. 1 Plant
    1970     milling   CIP treatment(1)     180,000       179,750       97.4 %
 
                  CIP treatment and                        
No. 2 Plant
    1990     SAG milling   electrowinning     120,000       127,333       97.4 %
 
          Traditional                                
 
          crushing and                                
No. 3 Plant
    1990     milling   CIP treatment(1)     140,000       108,250       92.1 %


Note:

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(1)   After CIP treatment, electrowinning occurs at No. 2 Plant.

In fiscal 2004, the Kloof plants collectively extracted approximately 97% of gold contained in ore delivered for processing.

A pumpcell installation was completed in October 2003 at the No. 3 Plant, and the central elution facility at the No. 2 Plant was commissioned in the first quarter of fiscal 2004. This now provides one central elution facility for the entire Kloof operation.

Capital Expenditure

Gold Fields spent Rand 344.4 million on capital expenditures at the Kloof operation in fiscal 2004. Of this amount, Gold Fields spent Rand 201.2 million continuing the development projects at Shaft Nos. 4 and 7, Rand 72.6 million on refrigeration projects, Rand 19.0 million on drilling at the Eastern Boundary Area, Rand 21.2 million on the three-dimensional seismic survey project at the KEA and Rand 19.5 million on continuing metallurgical plant upgrades. The remaining balance of capital expenditure in fiscal 2004 was spent on development projects, mining and ventilation equipment. Gold Fields has budgeted approximately Rand 261.9 million of capital expenditure at Kloof for fiscal 2005, principally for the completion of a sub-vertical shaft project at Shaft No. 4, a drop down project at Shaft No. 3, and the refrigeration and the main shaft pillar extraction. Total capital expenditure for fiscal 2005, may be reduced should Rand gold prices remain depressed.

Beatrix Operation

Introduction

The Beatrix operation is located in the Free State Province of South Africa, near Welkom and Virginia, and comprises the Beatrix mine. The Beatrix operation was formerly known as the Free State operation. Gold Fields renamed the operation Beatrix following the sale of the St. Helena mine to FreeGold on October 30, 2002.

The Beatrix mine is located in the southern Free State of South Africa some 240 kilometers southwest of Johannesburg. Beatrix operates under a mining license with a total area of 16,821 hectares. It is only an underground operation, with the exception of a nominal amount of surface production from processing rock dump material. Beatrix has four shaft systems serviced by two metallurgical plants. It has shallow to intermediate depth operations, at depths between 700 meters and 2,200 meters. In the fiscal year ended June 30, 2004, Beatrix produced 0.6 million ounces of gold. As of June 30, 2004, Beatrix had approximately 12,200, employees, including a limited number employed by outside contractors.

History

Beatrix’s present scope of operations is the result of the consolidation with effect from July 1, 1999 of two adjacent mines: Beatrix and Oryx. Gold mining commenced at Beatrix in 1985 and at Oryx in 1991.

Geology

The Beatrix mine exploits the Beatrix Reef, or BXR, at Shaft Nos. 1, 2 and 3, and the Kalkoenkrans Reef, or KKR, at Shaft No. 4 (the former Oryx mine). The reefs dip to the north and northeast at between 4º and 9º, and are developed on the Aandenk erosional surface.

In general the BXR occurs at depths between 570 meters and 1,380 meters and the KKR occurs at depths of between 1,800 meters and 2,200 meters. Both the BXR and KKR reefs are markedly channelized and consist of multi-cycle, upward fining conglomerate bands with sharp erosive basal contacts. A general east-west paytrend some 800 to 1,000 meters wide has been identified east of Shaft No. 4 and is known as Zone 5. In

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addition, surface exploratory drilling and underground development has exposed additional reserves to the south of the main channel of Zone 5 which now represents the majority of the reserves at the operation.

Mining

The Beatrix mine is engaged in underground mining, and is thus subject to all of the underground mining risks discussed in the Risk Factors section. The primary safety risks at Beatrix are falls of ground and flammable gas explosions. In fiscal 2001, following two fatal flammable gas explosions, regulatory authorities issued an order to stop operations at Beatrix for a period of 10 days while the mine was inspected and declared safe to resume operations. Following the accidents, management has worked actively to remedy the most significant problems which resulted in the explosion, and has implemented, the recommendations arising out of the Department of Mineral and Energy’s investigation of the incident. These remedies have included providing additional safety training and equipment for employees, establishing new monitoring and ventilation procedures and installing additional remote sensing equipment. Beatrix uses a telemetric monitoring system coupled with an extensive ventilation system to help monitor flammable gas. The safety record at the Beatrix operation during fiscal 2004, in terms of serious injury frequency rate and fatal injury frequency rate, was better than the South African industry average for the same period. In fiscal 2004, there were four fatalities at Beatrix due to falls of ground (including rock bursts). There have been no fatalities to date at Beatrix in fiscal 2005.

Beatrix requires cooling infrastructure to maintain comfortable conditions for workers at depth, although not to the degree necessary at Driefontein and Kloof. A refrigeration project at Shaft No. 3 to provide additional cooling capacity, which was originally scheduled to be completed in fiscal 2004, was postponed until fiscal 2006.

Mining at Beatrix is based upon the scattered mining method. Activity at Shaft No. 3 is focused upon haulage development and initial stoping in order to build up production at the shaft. The power source being used at Shaft No. 3 for a variety of activities including drilling is hydropower, as opposed to compressed air, with a majority of the mining equipment being run off a high pressure water system. The benefits of the system include improved cooling underground, improved machine efficiency, lower noise levels and less power wastage.

Shaft Nos. 1, 2 and 4 are the primary sources of production at present and over time Gold Fields expects mining concentration to shift to Shaft No. 3. Gold Fields experienced inconsistent performance at Shaft No. 4 in fiscal 2004 due to grade swings at the KKR, which is characterized as being a highly erratic reef structure, making access to the orebody more difficult. In fiscal 2004, Gold Fields worked to improve ventilation and rock removal systems at Shaft 4.

Operationally, Gold Fields implemented an initiative in fiscal 2002 called Project M to mine previously developed low grade ore on a marginal cost basis, and this initiative has continued in fiscal 2004 and fiscal 2005. This ore is hoisted at Shaft Nos. 1 and 2 and transported, by road, to take advantage of spare metallurgical capacity at the No. 2 Plant. In addition, Gold Fields is also focusing on various productivity initiatives, such as programs to increase the mine call factor and new drilling and support methods and technologies. A new ventilation shaft at Shaft No. 2 was completed in fiscal 2004 which has improved underground environmental conditions at Shaft No. 2.

Gold Fields expects to increase volumes at Shaft Nos. 3 and 4 in order to offset lower grades at Beatrix and improve gold output from current levels. Gold Fields is focusing on optimizing the mining mix to maintain steady grades at Beatrix. Higher rates of development are planned and the holing of raises at Shaft No. 3 is expected to create additional ore reserve flexibility.

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The Beatrix mine has access to the national electricity grid and water, road and rail infrastructure and is located near regional urban centers where it can routinely obtain needed supplies.

Detailed below are the operating and production results at Beatrix for the past three fiscal years.

                         
    Year ended June 30,
    2002
  2003
  2004
Production
                       
Tonnes (‘000)
    4,115       4,722       5,448  
Recovered grade (g/t)
    4.9       4.3       3.6  
Gold produced (‘000 oz)
    655       659       625  
Results of operations ($ million)
                       
Total production costs
    125.3       171.5       245.5  
Total cash costs
    110.5       151.1       222.2  
Cash profit
    77.3       66.5       19.2  
Cost per ounce of gold ($)
                       
Total production costs
    191       260       393  
Total cash costs
    169       229       356  


Note:

(1)   Cash profit represents revenues less total cash costs. For a reconciliation of Gold Fields’ cash costs to production costs see “Operating and Financial Review and Prospects — Results of Operations.”

Although tonnage increased from fiscal 2003 to fiscal 2004, ounces of gold produced decreased due to lower average grades as the tonnage increase came primarily from an increase in lower grade surface material processed on site. Underground grades were also marginally lower during 2004. The increase in total cash costs per ounce of gold from fiscal 2003 to fiscal 2004 at Beatrix was as a result of the lower production and recovered grade and the appreciation of the Rand against the U.S. dollar.

Lower grade and marginal mining activities were curtailed and crews redeployed to higher grade panels as they became available. Development was primarily focused on the build up of Shaft No. 3 and establishing ore reserves for the higher grade area of Zone 5 at Shaft No. 4, where potential stoping of a well-developed conglomerate with higher grade potential has been identified.

The total shaft hoisting capacities of Beatrix are detailed below.

Shaft System

         
Hoisting capacity
  (tonnes/month)
No. 1
    170,000  
No. 2
    170,000  
No. 3
    170,000  
No. 4
    160,000  

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On a simplistic basis, and assuming that Gold Fields does not identify any additional reserves at Beatrix, at the production level achieved in fiscal 2004, Beatrix’s June 30, 2004 proven and probable reserves of 9.8 million ounces of gold will be sufficient to maintain production through approximately fiscal 2023. However, because Beatrix’s operations consist of several different shafts that are at various stages of maturity, Gold Fields expects that production at some shafts will decrease earlier than at others. In addition, as discussed in the Risk Factors section, any future changes to the assumptions on which the reserves are based, as well as any unforeseen events affecting production levels, could have a material effect on the expected period of future operations.

Processing

The following table sets forth year commissioned, processing techniques and processing capacity per month, as well as average tonnes milled per month and metallurgical recovery factor during the fiscal year ended June 30, 2004, for each of the plants at Beatrix:

                                                 
                                           
            Processing Techniques
          Average milled for   Approximate
recovery factor for
                                    the year ended June   the year ended June
Plant
  Year commissioned
  Comminution Phase
  Treatment phase
  Capacity
  30, 2004
  30, 2004
                                    (tonnes/month)        
No. 1 Plant
    1983     SAG milling   CIP treatment     250,000       266,000       95.9 %
No. 2 Plant
    1992     SAG milling   CIP treatment     150,000       112,400       95.0 %

In fiscal 2004, the Beatrix plants collectively extracted approximately 95.7% of gold contained in ore delivered for processing.

During fiscal 2003, Beatrix put in place arrangements with a nearby mining operation to treat surface tonnage from Beatrix. In August 2004, this arrangement was terminated by the nearby mining operation. Alternative in-house treatment options are currently being pursued by Gold Fields to treat surface tonnage, including a screening project at No. 2 Plant targeted to remove more waste rock from surface tonnage prior to processing.

Also in fiscal 2004, Gold Fields also installed a Knelson concentrator at the No. 1 Plant which removes large pieces of gold earlier in the metallurgical process.

Capital Expenditure

Gold Fields spent Rand 295.1 million on capital expenditures at the Beatrix operation in fiscal 2004. This amount includes a total of Rand 22.2 million spent on a new ventilation shaft to service Shaft No. 2, Rand 170.5 million on continuing development at Shaft No. 3 and Rand 8.9 million on installation of Knelson concentrators for the No. 1 plant. Capital spending was curtailed during the year due to low profitability. Gold Fields has budgeted approximately Rand 280 million of capital expenditure at Beatrix for fiscal 2005, principally for development at Shaft No 3. Total capital expenditure for fiscal 2005 may be reduced should Rand gold prices remain depressed.

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Ghana Operation

The Ghana operation is comprised of the Tarkwa and Damang mines.

Tarkwa Mine

Introduction

Gold Fields Ghana, which holds the interest in the Tarkwa mine, is owned 71.1% by Gold Fields, 18.9% by IAMGold and 10.0% by the Government of Ghana.

The Tarkwa mine is located in southwestern Ghana, about 300 kilometers by road west of Accra. The Tarkwa mine consists of several open pit operations on the Tarkwa property and the adjacent northern portion of the Teberebie property which Gold Fields acquired in August 2000, together with two heap leach facilities, one on the Tarkwa property, referred to as the North Plant, and the other on the northern portion of the Teberebie property, referred to as the South Plant. A new SAG mill and CIL plant commenced continuous operations at the Tarkwa property in November 2005. For regulatory purposes, Ghanaian regulators generally regard the Tarkwa property and the acquired portion of the Teberebie property as a single operation. The Tarkwa mine operates under mining leases with a total area of approximately 20,700 hectares. It currently conducts only surface operations, although it previously had a small underground mining operation which it operated through July 1999 under Gold Fields’ agreement with the government of Ghana. In the fiscal year ended June 30, 2004, Tarkwa produced 0.5 million ounces of gold, of which 0.4 million ounces were attributable to Gold Fields, with the remainder attributable to minority shareholders in Gold Fields Ghana. As of June 30, 2004, Tarkwa had approximately 3,300 employees, including a limited number employed by outside contractors.

History

Investment in large scale mining in the Tarkwa area commenced in the last quarter of the nineteenth century. In 1993, Gold Fields of South Africa, or GFSA, took over an area previously operated by the State Gold Mining Corporation, or SGMC. SGMC had in turn acquired the property from private companies owned by European investors. Following initial drilling, feasibility studies and project development (which included the removal of overburden and the resettlement of approximately 22,000 people), mining operations commenced in 1997. Ore processing began at the North Plant in March 1998 and at the South Plant in December 2000.

Geology

Gold mineralization at Tarkwa is hosted by Proterozoic Tarkwaian metasediments, which unconformably overlie a Birimian greenstone belt sequence. Gold mineralization is concentrated in conglomerate reefs and has some similarities to deposits in the Witwatersrand Basin in South Africa. The deposit comprises a succession of stacked, tabular palaeoplacer units consisting of quartz pebble conglomerates. Approximately 10 such separate economic units occur in the concession area within a sedimentary package ranging from 40 meters to 110 meters in thickness. Low grade to barren quartzite units are interlayered between the separate reef units.

Five separate production areas are centered on the Pepe Anticline, a gently north plunging fold structure that outcrops as a whaleback hill. The sedimentary sequence and interlayered waste zones between the areas of mineralization thicken to the west.

Mining

The Tarkwa mine is engaged in both open pit and production stockpile surface mining, and is thus subject to all of the surface mining risks discussed in the Risk Factors section. Although surface mining generally is less dangerous than underground mining, serious and even fatal accidents do still occasionally occur. While there is no reliable industry benchmark for safety at Ghanaian surface mining operations, the Tarkwa mine had a

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lost time injury frequency rate of approximately 1.2 per million man hours worked in fiscal 2004. There was one fatality in each of fiscal 2003, 2004 and, to date, in fiscal 2005. There were no reported fatalities at the Tarkwa mine in fiscal 2002.

Tarkwa uses the typical open pit mining methods of drilling, blasting, loading and hauling. The progression of blasting downwards into the open pit occurs in steps of six meters (or in some cases three meters) with the ore loaded into 150 tonne dump trucks.

Tarkwa currently presents no unusual challenges beyond those faced at most open pits and heap leaching mining operations, including variations in amenability of ores to leaching. However, harder ores are expected at Tarkwa which could reduce throughput at the North Plant Heap Leach facility and at the South Plant Heap Leach facility. The primary operational challenges include managing effective grade control, lowering operating costs and managing gold-in-process on heap leach pads (gold in the processing circuit that is expected to be recovered during or after operations). A new SAG mill and CIL plant was commissioned in early fiscal 2005 to add to the processing capabilities at Tarkwa.

Most mining labor at Tarkwa was previously provided by a contractor, African Mining Services (Ghana) Pty Ltd., or AMS, which is a joint venture between two Australian mining service contractors. Pursuant to a contract with Gold Fields Ghana, AMS provided employees, supplies and equipment for mining at Tarkwa, including drilling, blasting and waste stripping, as well as the haulage of the material produced from the mining activities, including both ore and waste. The contract with AMS expired at the end of fiscal 2004. Gold Fields has subsequently taken over the mining activities previously performed by AMS, having purchased its own mining fleet of equipment during the latter half of fiscal 2004. The transition from contractor mining to owner mining has gone smoothly to date with Gold Fields re-engaging the majority of the AMS operators and AMS being totally phased out during August 2004. Maintenance and repair contracts have been entered into with all the suppliers of the major equipment. Similar mining equipment to that used by AMS has been acquired to enable the mine to maintain good control over its selective mining methods. The conversion from contractor mining to owner mining at the Tarkwa mine was completed in the first quarter of fiscal 2005.

The Tarkwa mine has access to the national electricity grid, water and road infrastructure. Most supplies are trucked in from either the nearest seaport, which is approximately 140 kilometers away by road in Takoradi, or from Tema near Accra, which is approximately 300 kilometers away by road.

Detailed below are the operating and production results at Tarkwa for the past three fiscal years.

                         
    Year ended June 30,
    2002
  2003
  2004
Production
                       
Tonnes (‘000)
    14,914       15,210       16,000  
Recovered grade (g/t)
    1.1       1.1       1.1  
Gold produced (‘000 oz) (1)
    544       540       550  
Results of operations ($ million)
                       
Total production costs
    105.0       121.5       141.7  
Total cash costs
    89.7       105.0       126.4  
Cash profit(2)
    62.9       74.4       86.8  
Cost per ounce of gold ($)
                       

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    Year ended June 30,
    2002
  2003
  2004
Total production costs
    193       225       258  
Total cash costs
    165       195       230  


Notes:

(1)   In fiscal 2002, 2003 and 2004, 0.386 million ounces of production, 0.384 million ounces of production and 0.391 million ounces of production, respectively, were attributable to Gold Fields, with the remainder attributable to minority shareholders in the Ghana operation.

(2)   Cash profit represents revenues less total cash costs. For a reconciliation of Gold Fields’ cash costs to production costs see “Operating and Financial Review and Prospects — Results of Operations.”

From fiscal 2003 to fiscal 2004, tonnage treated rose due to continued improvements to both the North and South Plants. Ounces of gold produced increased less, proportionally, than tonnage due to decreasing recovery from the heap leach pads. At the same time, total cash and production costs have increased mainly due to increased waste tonnage.

On a simplistic basis, and assuming that no additional reserves at Tarkwa are identified, at the production level achieved in fiscal 2004, Tarkwa’s June 30, 2004 total proven and probable reserves of 14.7 million ounces (10.4 million ounces of which were attributable to Gold Fields, with the remainder attributable to minority shareholders in the Ghana operation) will be sufficient to maintain production through approximately fiscal 2027. In addition, as discussed in the Risk Factors section, any future changes to the assumptions on which the reserves are based, as well as any unforeseen events affecting production levels, could have a material effect on the expected period of future operations.

Processing

Tarkwa’s ore can be processed using conventional heap leach techniques with acceptable recoveries. The current operation incorporates two separate heap leach circuits, the North Plant and the South Plant. The following table sets forth year commissioned, processing techniques and processing capacity per month, as well as average tonnes milled per month and metallurgical recovery factors during the fiscal year ended June 30, 2004, for each of the plants at Tarkwa:

                                                 
                                           
                                            Approximate
            Processing Techniques
          Average treated for   progressive
recovery factor for
                                    the year ended June   the year ended June
Plant
  Year commissioned
  Comminution Phase
  Treatment phase
  Capacity
  30, 2004
  30, 2004
                                    (tonnes/month)        
 
          Multiple stage                                
 
          crushing and                                
North Plant Heap
          screening process   Heap leach (1) with                        
Leach Facility
    1997     and agglomeration   AD&R treatment     810,000       803,041       77 %
 
                                         
                                                 
 
          Multiple stage
crushing and
  Heap leach (1) with                        
South Plant Heap
    1992     screening process   AD&R treatment and     530,000       530,269       61.8 %
Leach Facility
          and agglomeration   electrowinning                        

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Note:

(1)   Heap leach recoveries are the result of an extended solution application process with full recovery requiring several leach cycles. Full recovery of all recoverable gold for current ores is only achieved over several years. Thus, recoveries must be considered in terms of recovery as time progresses, or a “progressive” recovery. Over time, Gold Fields expects both plants to achieve progressive recovery factors of around 67% of contained gold, equivalent to full recovery of all recoverable gold during the life of mine.

During fiscal 2004, the two crushing plants at Tarkwa remained in use while the heap leach pads were upgraded. In fiscal 2004, Gold Fields also undertook to expand the processing facilities at Tarkwa by construction of a new SAG mill and commissioning of a CIL plant. By June 30, 2004, $78 million of the $85 million approved for the mill project had been spent. At that time, earthwork and major structural work had been largely completed, while the SAG mill had been installed and the bulk of the electricity supply infrastructure had been finished. During the last quarter of the 2004 fiscal year, the new primary crusher was put into operation to feed the North Plant Heap Leach facility, while that plant’s crusher was shut down for a major upgrade. The new SAG mill and CIL plant commenced continuous operations in November 2004.

Gold Fields also took steps to address the expected impact of harder ores on the South Plant Heap Leach Facility and moved crushing equipment from the old Teberebie plant to the South Plant to offset any reduction in throughput due to harder ores and to provide increased screening capacity. Additional solution delivery and handling capabilities have been added to the South Plant Heap Leach facility as well.

Capital Expenditure

Gold Fields spent $136.7 million on capital expenditures at the Tarkwa operation in fiscal 2004, of which $131.1 million was spent on the Tarkwa expansion project, which consisted of the conversion to owner mining and the new mill, and $6 million was spent on the expansion of the North Plant Heap Leach Facility and leach pads. Gold Fields has budgeted approximately $72 million for capital expenditure at Tarkwa for fiscal 2005, principally for heap leach pad construction and additional mining equipment, as well as on the remaining work for the commissioning of the new CIL plant and SAG mill and the transition to owner mining.

Damang Mine

Introduction

On January 23, 2002, Gold Fields and Repadre completed the acquisition from Ranger of Ranger’s 90% beneficial interest in Abosso and shareholder loans from Ranger to Abosso totaling A$75.7 million ($39.4 million at an exchange rate of A$1.92 per $1.00, which was the noon buying rate on the date of the transaction). Abosso is a Ghanaian company which owns the Damang mine. Total consideration for the purchase was A$63.3 million ($32.9 million at an exchange rate of A$1.92 per $1.00) in cash contributed by

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Gold Fields and 4,000,000 Repadre shares. Following the transaction, 71.1% of Abosso was owned by Gold Fields, 18.9% by Repadre and 10.0% by the Ghanaian government, mirroring the shareholding structure of Gold Fields Ghana. Repadre’s interest was acquired by IAMGold when the latter merged with Repadre on January 8, 2003.

The Damang mine is located in the Wassa West District in southwestern Ghana approximately 360 kilometers by road west of Accra and approximately 30 kilometers by road northeast of the Tarkwa mine. It consists of an open pit operation with a SAG mill and CIL processing plant.

Damang operates under a mining lease with a total area of approximately 5,239 hectares. In the fiscal year ended June 30, 2004, the Damang mine produced 0.3 million ounces of gold, of which 0.2 million ounces were attributable to Gold Fields, with the remainder attributable to minority shareholders in Abosso. As of June 30, 2004, Damang had approximately 900 employees, including those employed by outside contractors.

History

Mining on the Abosso concession began with underground mining in the early twentieth century. In the late 1980s, Ranger commenced a project to study the feasibility of surface mining at Damang, which culminated in an agreement with the government of Ghana to develop and conduct surface mining at the site. Surface mining at Damang commenced in August 1997, and Gold Fields assumed control of the operations on January 23, 2002.

Geology

The geology of the Damang mine is different from that of the Tarkwa mine. The deposit occurs at the hinge of a regional anticline as hydrothermal mineralization associated with dominantly east dipping thrusts and sub- horizontal quartz veins. Primary gold mineralization also occurs in the conglomerates of the Tarkwaian Formation.

Mining

The Damang mine comprises both open pit and production stockpile surface mining, and is thus subject to all of the surface mining risks discussed in the Risk Factors section. Although surface mining generally is less dangerous than underground mining, serious and even fatal accidents do still occasionally occur. While there is no reliable industry benchmark for safety at Ghanaian surface mining operations, the Damang mine had a lost time injury frequency rate of approximately 0.6 per million man hours worked. There were no reported fatalities at the Damang mine in fiscal 2002, 2003, 2004 or, to date, in fiscal 2005.

Damang uses the typical open pit mining methods of drilling, blasting, loading and hauling. The progression of blasting downwards into the open pit occurs in three meter flitches, which are then combined to form steps of six meters with the ore loaded into 100 tonne dump trucks.

Other than the unusual hardness of the rock at the site, Damang presents no unusual challenges beyond those faced at most open pits and ore processing operations, including variation in ore grades.

Following the acquisition of this mine in January 2002, an exploration programme was started to seek alternative sources of ore to replace the Damang pit, by testing both hydrothermal and conglomerate styles of mineralization across the Damang lease area. Following completion of the bulk of drilling by the middle of fiscal 2003, a full time evaluation project, the Damang Extension Project (DEP), was launched to turn this exploration to account. This work has successfully brought additional mineral reserves to account from conglomerate ore bodies, and from hydrothermal prospects, which are expected to add further life to this mine. The DEP has also identified an opportunity to undertake a cut back of the main Damang pit, the drilling of which began at fiscal year end. This cutback has the potential to further increase the life of Damang. Gold Fields is also exploring options to develop an underground mine below the Damang pit.

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A substantial proportion of the operations at Damang is performed by a mining contractor, AMS. Pursuant to a contract with Abosso, AMS provides employees, supplies and equipment for mining at Damang, including drilling, blasting and waste stripping, as well as the haulage of the material produced from the mining activities, including both ore and waste. AMS receives fees under the contract which depend on the type of service being performed and the equipment being used, with adjustments for overtime and holiday periods. Under the terms of the contract, AMS is liable for any damage or loss it causes, including that caused by any subcontractor it hires. AMS is not liable for damage that is the result of work performed in accordance with the terms of the contract, which is unavoidable or which is caused by any negligent act or omission of employees of Abosso or third parties over whom AMS has no control. AMS is required to take out insurance to cover potential damage and liability. Gold Fields can terminate its contract at any time without paying any significant penalties or having to purchase any of AMS’s equipment.

The Damang mine has access to the national electricity grid, water and road infrastructure. Most supplies are trucked in from either the nearest seaport, which is approximately 200 kilometers away by road in Takoradi, or from Accra, which is approximately 360 kilometers away by road.

Detailed below are the operating and production results at Damang for the six-month period ended December 31, 2001, the period from January 23, 2002 to June 30, 2002 and the fiscal years ended June 30, 2003 and 2004.

                                 
    Six-month period   Period from January        
    ended December 31,   23, 2002 to June        
    2001
  30, 2002 (2)
  Fiscal 2003
  Fiscal 2004
Production
                               
Tonnes (‘000)
    2,204       1,951       4,877       5,236  
Recovered grade (g/t)
    2.0       2.3       1.9       1.8  
Gold produced (‘000 oz) (1)
    143       141       299       308  
Results of operations ($ million)
                               
Total production costs
    42.8       32.9       77.9       75.5  
Total cash costs
    35.0       29.9       72.6       68.5  
Cash profit(3)
    8.8       15.7       26.9       51.5  
Cost per ounce of gold ($)
                               
Total production costs
    298       233       260       245  
Total cash costs
    244       211       243       222  


Notes:

(1)   In the period from January 23, 2002 to June 30, 2002, 0.100 million ounces and in fiscal 2003 and 2004, 0.213 million ounces and 0.219 million ounces of production, respectively, were attributable to Gold Fields, with the remainder attributable to minority shareholders in Abosso.

(2)   Financial data for the period from January 23, 2002 to June 30, 2002 and for the years ended June 30, 2003 and 2004 are based on Gold Fields’ audited financial statements for the years ended June 30, 2002, 2003 and 2004, respectively, which have been prepared in accordance with U.S. GAAP and are not comparable with financial data based on the unaudited financial statements for Abosso for the six-month period ended December 31, 2001 which have been prepared in accordance with IFRS and reconciled to U.S. GAAP.

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(3)   Cash profit represents revenue less cash costs. Cash costs are reconciled in “Operating and Financial Review and Prospects — Results of Operations.”

Performance from the Damang operation during fiscal 2004 was positive, both from a mining and processing point of view. As expected, the mine began to experience a decline in head grades with the maturity of the high grade Damang hydrothermal pit. Although ongoing optimization of the mill feed blend and plant set up allowed Gold Fields to treat more tonnage than the previous year, only a slight increase in gold production resulted in fiscal 2003. Total production and cash costs increased due to decreases in the stripping ratio as the Damang open pit nears the end of its life of mine.

On a simplistic basis, and assuming that no additional reserves are identified at Damang, at an annualized production level based on actual production for fiscal 2004, Damang’s June 30, 2004 total proven and probable reserves of 0.6 million ounces (0.4 million ounces of which were attributable to Gold Fields, with the remainder attributable to minority shareholders in the Ghana operation) will be sufficient to maintain production through approximately fiscal 2007. In addition, as discussed in the Risk Factors section, any future changes to the assumptions on which the reserves are based, as well as any unforeseen events affecting production levels, could have a material effect on the expected period of future operations.

Processing

All processing at Damang is provided by a single plant. The following table sets forth year commissioned, processing techniques and processing capacity per month, as well as average tonnes milled per month and metallurgical recovery factor during the fiscal year ended June 30, 2004 for the plant:

                                         
                                   
                                    Approximate
                              progressive
            Processing Techniques
          Average milled for
the year
  recovery factor for
the year
                            ended June 30,   ended June 30,
Plant
  Year commissioned
  Comminution Phase
  Treatment phase
  Capacity
  2004
  2004
                            (tonnes/month)        
 
          Single stage                            
 
          crushing with SAG                            
Main Plant
    1997     ball milling   CIL     450,000       435,000       90.6 %

The optimization of the Damang mill involves careful blending of hard and soft ores to maximize use of the milling circuit, which remains the constraint in this plant. During fiscal 2004, the leaching circuit’s agitation system was upgraded to allow treatment of ores with a range of viscosities. Mining operations were similarly modified to optimize the plant feed blend by advancing mining in the low grade but soft conglomerate pits, which displaced lower grade ore from the stockpiles.

Capital Expenditure

Gold Fields spent $3.2 million on capital expenditures at the Damang mine in fiscal 2004, of which $2 million related to mining projects primarily directed at defining mining areas which have the potential of extending the mine’s life. The balance represents spending on plant and equipment. Gold Fields has budgeted approximately $5.9 million of capital expenditure at Damang for fiscal 2005, primarily for bringing the recently identified deposits to production, mill maintenance and brown field exploration.

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Australia Operations

On November 30, 2001, Gold Fields acquired from WMC Limited and WMC Resources Ltd (collectively, WMC), members of an Australian mining group, WMC’s gold mining operations in Australia, including the St. Ives and Agnew gold mining operations. The consideration for the transaction was $233.1 million, comprising $180.0 million in cash and 12,000,000 Gold Fields ordinary shares valued at $53.1 million.

In addition, Gold Fields agreed to pay to WMC a royalty based on future gold production at St. Ives and Agnew, calculated according to the following criteria:

  4% of the net smelter return of the gold production of St. Ives for each quarter to the extent that cumulative production of gold from November 30, 2001 exceeds 3.3 million ounces, subject to the spot price of gold exceeding A$400 per ounce;
 
  4% of the net smelter return of the gold production of Agnew for each quarter to the extent that cumulative production of gold from November 30, 2001 exceeds 0.8 million ounces, subject to the spot price of gold exceeding A$400 per ounce; and
 
  10% of the difference between the spot gold price and A$600 per ounce of gold in respect of all gold produced from St. Ives and Agnew each quarter after November 30, 2001, subject to the spot price of gold exceeding A$600 per ounce.

The royalties are payable in cash, quarterly in arrears. On June 26, 2002, WMC agreed to give up its right to receive royalties from the Agnew operation in exchange for a payment of A$3.6 million ($2.0 million at an exchange rate of A$1.80 to $1.00), which was paid on July 11, 2002. The obligation to pay royalties in respect of St. Ives is still in effect. To date, no royalty payments have been required to be paid by Gold Fields under this agreement.

St. Ives

Introduction

St. Ives is located 80 kilometers south of Kalgoorlie and 20 kilometers south of Kambalda, straddling Lake Lefroy in Western Australia. It holds mining leases covering a total area of approximately 91,078 hectares. St. Ives is both a surface and underground operation, with a number of open pits, three operating underground mines and two metallurgical plants. In fiscal 2004, St. Ives produced 0.5 million ounces of gold. St. Ives had a work force of approximately 900 employees as of June 30, 2004, approximately 690 of whom were employed by outside contractors.

Gold production takes place over an extensive area at St. Ives, although it is mainly concentrated in a 30 kilometer corridor extending south-southeast from Kambalda across Lake Lefroy.

History

Gold mining began in the St. Ives area in 1897, with WMC commencing gold mining operations at St. Ives in 1980.

Geology

The gold deposits of St. Ives are located at the southern end of the Norseman-Wiluna greenstone belt of the Eastern Goldfields Province. In the St. Ives area the belt consists of Kalgoorlie Group volcanic rocks, Black Flag group felsic volcanic rocks and sediments and a variety of intrusive and overlying post-tectonic sediments. The area is structurally complex, with host rocks highly metamorphosed to upper greenschist and lower amphibolite facies. Gold mineralization discovered to date is best developed in the mafic dominated parts of the sequence, hosted in minor structures including vein arrays, breccia zones and central, quartz rich

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and mylonitic parts of shear zones. Deposit styles and ore controls are varied, but deposits are commonly associated with subsidiary structures which splay off the regionally extensive Boulder-Lefroy Fault.

Mining

St. Ives is engaged in underground mining and in both open pit and production stockpile surface mining, and is thus subject to all of the underground and surface mining risks discussed in the Risk Factors section. Seismicity at the Junction mine is the primary safety risk, which is addressed through the use of backfilling and by mining different parts of the orebody in controlled steps to improve stability, which is called stope sequencing. The safety record at St. Ives during fiscal 2004, in terms of lost time injury frequency rate, was better than the Australian industry average for the same period. No fatalities were recorded in fiscal 2002, 2003, 2004 or, to date, in fiscal 2005.

St. Ives sources production from a variety of underground and surface operations, and has a heap leach operation which treats low and marginal grade ore. The principal production sources in fiscal 2004 included the Junction, Argo and Leviathan underground mines, the Argo open pit mine and the open pit mines within the Greater Revenge Area. Gold Fields expects the principal production sources in fiscal 2005 to include the Junction underground mine, the Argo underground mine, the Leviathan underground complex, and the several open pit mines within the Greater Revenge Area. As many of the operations at St. Ives involve mining deposits on or under Lake Lefroy (which is a shallow salt lake), extracting ore requires construction of berms and other earthworks to prevent water intrusion. Open pit operations use 180 to 250 tonne excavators loading 150 tonne trucks. Waste dumps are formed adjacent to the pits.

All underground mining activities are completed under a contract with Carlowen Proprietary Ltd, which trades as GBF Underground Mining, or GBF. The five year agreement commenced in April 2004 which operates under a cost reimbursable model. GBF provides all the employees, equipment and consumables necessary to complete the underground development and stoping. Under the terms of the contract Gold Fields approves all expenditures incurred and guarantees to reimburse 95% of these costs, with the remaining 5% plus any profit earned contingent on GBF achieving certain key performance indicators.

Under the terms of the contract, GBF is liable for claims arising from its performance or non-performance, and any loss, damage, injury or death related to the presence of its employees onsite. GBF is not liable for liabilities or losses that are the result of negligence of or a breach of a statutory duty of the mine owner. GBF is required to ensure that it and any subcontractors have adequate insurance.

Leighton Contractors Proprietary Limited, or Leighton, performs the surface mining at St. Ives, under an alliance contract which was extended in January 2004 for a five year period. Leighton provides employees, consumables and equipment for mining ore and waste disposal. The contract is structured so that Leighton carries all the risk on plant and personnel with Gold Fields carrying the risk on costs through reimbursement. Leighton is reimbursed 100% of its costs and is given an additional amount for overhead. Payments above costs are contingent upon Leighton achieving certain key performance indicators.

Under the terms of the contract, Leighton is liable for claims arising from its performance or non-performance or any loss, damage, injury or death related to the presence of its employees on the sites. Leighton is not liable for claims or loss due to the mine owner’s negligence. Leighton is required to ensure that it and any subcontractors have adequate insurance.

Junction Underground Mine

The Junction mine currently uses a combination of uphole open stoping and uphole bench and fill mining methods, with the mix depending on development and production needs. Backfilling using a slurry consisting of tailings and cement, a specifically designed dynamic ground support system as well as stope sequencing, are used to address seismicity issues. Access to the orebody is through a decline tunnel which accommodates

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workers, materials and equipment. The maximum depth at present is approximately 700 meters. As expected, there was a production decline in fiscal 2004 at the Junction mine, previously St. Ives biggest contributor. Mining at the Junction mine is expected to be complete in fiscal 2005.

Argo Complex

Argo has had an open pit operation since 1994. After a dormant period, WMC began open pit mining there again in 2000. Open pit operations ceased in fiscal 2004. Development of the Argo underground reserves commenced in fiscal 2003 in line with Gold Fields’ strategy to reduce reliance on the Junction mine as a source of high grade ore. Stoping activities at the Argo mine commenced in November 2003. By the second half of fiscal 2004, the Argo underground mine had reached targeted stoping tonnages.

Greater Revenge Complex

Mining at the Greater Revenge Area commenced in 1989. Mining operations at the Greater Revenge Area during fiscal 2004 consisted primarily of the Agamemnon and Mars open pit mines, which are located under Lake Lefroy. The mines apply typical open pit and lake sediment mining methods.

Leviathan Complex

The Leviathan complex consists of three distinct areas: Sirius, which is in production, East Repulse, which is in production, and Conqueror, which commenced development in late fiscal 2004. The Sirius underground operation, the first of the three underground operations scheduled within the Leviathan complex, commenced operations during fiscal 2003. Sirius consists primarily of two large stopes which are expected to be depleted early in calendar 2005. East Repulse commenced stoping operations in fiscal 2004. Development of the Conqueror area began in late fiscal 2004 with water drainage and rehabilitation of old access areas. In addition, Gold Fields is continuing to explore opportunities for further extensions of mining operations within the Leviathan complex.

The most significant features of fiscal 2004 were the expected decline of the Junction mine, previously St. Ives biggest contributor, and the planned commissioning of the new underground mines at Argo, Sirius and East Repulse. This strategy had been initiated following significant difficulties at Junction in fiscal 2002 and fiscal 2003 relating primarily to seismic activity and the maturity of this operation. The ramp up of Sirius occurred early in the fiscal year and operations have been a great success following the introduction of more mechanized mining and ore handling systems, including automated loading of trucks and the use of underground road trains for haulage of ore to the surface. Although progress on the other two underground mines was slow in the first half of the fiscal year, by the second half, the Argo mine had reached targeted stopping tonnages while East Repulse began its production ramp up.

The St. Ives operation has access to the local electricity supplier and water, rail and road infrastructure, and needed supplies are trucked in from Kalgoorlie.

Detailed below are the operating and production results at St. Ives for the seven-month period ended June 30, 2002, fiscal 2003 and 2004.

                         
    Seven-month period        
    ended June 30, 2002
  Fiscal 2003
  Fiscal 2004
Production
                       
Tonnes (‘000)
    3,398       5,486       6,744  
Recovered grade (g/t)
    3.1       2.9       2.5  
Gold produced (‘000 oz)
    341       513       543  

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    Seven-month period        
    ended June 30, 2002
  Fiscal 2003
  Fiscal 2004
Results of operations ($ million)
                       
Total production costs(1).
    75.3       151.3       204.7  
Total cash costs(1)
    56.3       101.5       162.6  
Cash profit(2)
    47.3       74.7       49.2  
Cost per ounce of gold ($)
                       
Total production costs(1)
    221       295       377  
Total cash costs (1)
    165       198       300  


Notes:

(1)   For purposes of allocating production costs between St. Ives and Agnew, the consideration paid for the Australian operations in excess of the book value of the underlying net assets was allocated pro rata to the value of the underlying assets
 
(2)   Cash profit represents revenues less total cash costs. For a reconciliation of Gold Fields’ cash costs to production costs see “Operating and Financial Review and Prospects — Results of Operations.”

From fiscal 2003 to fiscal 2004, there was a significant increase in tonnage but gold produced increased only marginally due to lower recovered grades. Total cash costs increased primarily due to the commissioning of the underground mines and the appreciation of the Australian dollar against the U.S. dollar. These factors, when taken together with the lower recovery grades resulted in higher total cash costs per ounce of gold. Total open pit volumes mined decreased from fiscal 2003 levels, evidencing a reduction in ore mining volumes in line with the planned build up in underground mining and an increase in open pit stripping ratios.

On a simplistic basis, and assuming that no additional reserves are identified at St. Ives, at an annualized production level based on actual production during fiscal 2004, St. Ives’ June 30, 2004 proven and probable reserves of 3.0 million ounces of gold will be sufficient to maintain production through approximately fiscal 2011. However, because St. Ives’ operations consist of several different underground and open pit mines that are at various stages of maturity, it is expected that production at some operations will decrease earlier than at others. In addition, as discussed in the Risk Factors section, any future changes to the assumptions on which the reserves are based, as well as any unforeseen events affecting production levels, could have a material effect on the expected period of future operations.

Processing

The table below sets forth year commissioned, processing techniques and processing capacity per month, as well as average tonnes milled per month and metallurgical recovery factors during fiscal 2004, for each of the plants at St. Ives. The Heap Leach Plant operation treats low and marginal grade ore from St. Ives, with crushing and stacking conducted by a contractor, Henry Walker Eltin Proprietary Ltd, or Henry Walker Eltin.

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                                      Approximate
                                    Average   recovery
            Processing Techniques
          milled for
the year ended June
  factor for the
ended June
Plant
  Year commissioned
  Comminution Phase
  Treatment phase
  Capacity
  30, 2004
  30, 2004
                                    (tonnes/month)        
 
          Single stage                                
 
          crushing and SAG   CIP treatment with                        
Main Plant
    1988     milling   electrowinning     258,000       260,000       94.1 %
 
          Multiple stage                                
Heap Leach
          crushing and                                
Plant (1)
    2000     screening process   Carbon absorption     167,000       202,000       57.1 %
 

Note:
                                               

(1)   Heap leach recoveries are the result of an extended solution application process with full recovery requiring several leach cycles. Full recovery of all recoverable gold (about 60% of the contained gold) for current ores is only achieved over several years. Thus, recoveries must be considered in terms of recovery as time progresses, or a “progressive” recovery. Over time, Gold Fields expects the plant to achieve progressive recovery factors of around 60% of contained gold, equivalent to full recovery of all recoverable gold.

The St. Ives mill and heap leach pads each performed well throughout the year. Early in fiscal 2004, recognizing the scale of the production challenges at St. Ives, Gold Fields initiated a substantial toll treatment program using two other mills in the area. Total volumes treated by the plants was slightly ahead of the total volume of ore mined, with the balance of ore being sourced from existing low grade stockpiles. However, Gold Fields does not expect to use other mills in the area to toll treat its ore in fiscal 2005.

The St. Ives optimization study, which had been exploring long-term processing and mining strategies, was completed during the second quarter of fiscal 2004 with the completion of a feasibility study. On November 20, 2003, Gold Fields announced plans to construct a new CIP mill at an estimated cost of A$125.0 million. Gold Fields expects to complete construction in December 2004. This new plant will replace the existing Main Plant which is old, inflexible and expensive to operate.

Capital Expenditure

Gold Fields spent A$171.3 million on capital expenditures at St. Ives in fiscal 2004, primarily reflecting acceleration of the mill expansion project and the costs of the development of the underground mines and pre-stripping of open pits. Gold Fields has budgeted approximately A$112.3 million for capital expenditure at St. Ives for fiscal 2005, principally for exploration, the completion of a new metallurgical processing plant, continuing underground development at the Argo mine and the Leviathan complex and further pre-stripping of open pits.

Agnew

Introduction

Agnew is located 23 kilometers southwest of Leinster, approximately 375 kilometers north of Kalgoorlie in Western Australia. It holds mining leases covering a total area of approximately 58,868 hectares. Agnew is both a surface production stockpile and underground operations, with one open pit stockpile, two underground mines and one metallurgical plant. In fiscal 2004, it produced 0.2 million ounces of gold. Agnew had a workforce of approximately 300 employees as of June 30, 2004, approximately 160 of whom were employed by outside contractors.

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History

Gold was discovered at Agnew in 1895, with gold being produced there since then. WMC acquired the operation in the early 1980s and commenced open pit mining operations in 1987.

Geology

The Agnew deposits are located within the northwest portion of the Norseman-Wiluna greenstone belt of the Achaean Eastern Goldfields province within the Yilgarn Craton. In the Agnew area the greenstone belt is comprised of an older sequence of ultramafic flows, gabbros, basalts, felsic volcanics and related sedimentary rocks. The rocks are folded about the large, moderately north plunging Lawlers Anticline. The Agnew deposits are located on the western limb of this anticline, and major deposits discovered to date lie at or near, the sheared contact with the overlying sequence of sedimentary rocks. The anticline is cut by north-northeast trending faults such as the Waroonga and East Murchison Unit shear zones.

Mining

Agnew is engaged in underground mining and production stockpile surface mining and is thus subject to all of the underground and stockpile mining risks discussed in the Risk Factors section. The primary safety risk at Agnew is falls of ground at the underground operations, which is addressed through the use of ground support. The safety record at Agnew during fiscal 2004, in terms of lost injury time frequency rate, was better than the Australian industry average for the same period. There were no fatalities at Agnew in fiscal 2002, 2003, 2004 or, to date, in fiscal 2005.

Agnew was constrained by a shortage of ore sources during fiscal 2003 caused by a poor grade performance in the Waroonga open pit and the decline in economic ores in the Crusader underground mine. The Waroonga open pit was closed during the third quarter of fiscal 2003 following an expected depletion of economic ores and complications associated with pit wall instability. The low grade ore stockpile from this source will be depleted early in fiscal 2005. Following a decline in the Crusader mine, operations at that mine were shifted to the adjacent Deliverer lode. The performance of this complex remained erratic due to the high degree of variability in grade and thickness of ore zones. Gold Fields expects operations there to cease by the middle of fiscal 2005. The Kim underground mine, which was commissioned in fiscal 2003, achieved sustainable levels of production by the end of fiscal 2003 and performed well in 2004.

Most underground mining labor at the Crusader/Deliverer and Kim underground mines is currently provided by Byrnecut. Byrnecut provides employees, supplies and equipment for underground mining activities including drilling, blasting and haulage of the material produced from the mining activities, including both ore and waste. Byrnecut receives fees under the contracts which depend on the type of service being performed and the equipment being used, with adjustments for performance. Under the terms of the agreement, Byrnecut is liable for claims arising from its performance or non-performance and any loss, damage, injury or death related to the presence of its employees on the sites. Byrnecut is not liable for claims or loss due to the mine owner’s negligence. Byrnecut is required to ensure that it and any subcontractors have adequate insurance. The agreement provides that major work at the mines is to be completed by May 23, 2006.

Waroonga Complex

The Waroonga Complex currently includes the Kim underground mine and the Main Lode deposit. The Waroonga open pit mine was completed and operations ceased in the third quarter of fiscal 2003. Development of the Kim underground mine, to access an orebody below the Waroonga open pit, continued during fiscal 2003 with primary ore production activities commencing in the second half of the year. The mine currently uses uphole open stoping methods with access to the orebody through a decline tunnel which accommodates workers, materials and equipment. All mining is currently conducted by Byrnecut. Ore production achieved full sustainable levels in the first half of fiscal 2004. Feasibility studies for the adjacent

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Main Lode underground deposit are expected to be completed early in fiscal 2005 with development planned for the remainder of the year. The most significant production and financial contribution came from the relatively new Kim underground mine (in the Waroonga Complex), which reached full production during fiscal 2004. The ore grades have generally been above expectation while the ore zones have generally been more continuous than original drilling had predicted. During the year the mining method at Kim was evolved to reduce pillar sizes with the introduction of cemented aggregate backfill, which has increased extraction of the ore body.

Crusader/Deliverer Underground Mine

The Crusader deposit was discovered in 1987, with mining commencing in 1989, initially via an open pit mine. Access to the mine is from a portal near the bottom of the old Crusader open pit mine which leads to a decline. The Deliverer deposit is adjacent to Crusader and is mined concurrently via the same decline access from the surface. Mining methods employed include jumbo cut and mullock fill, uphole open stoping and uphole bench and fill mining methods and are varied to accommodate changes in geotechnical conditions and orebody geometry. All mining and access activities are conducted by Byrnecut. Gold Fields expects economic reserves to be depleted and mining operations at Crusader to have ceased by the middle of fiscal 2005. Exploration and development works are currently being undertaken at several other deposits to provide alternative sources of production. Depletion of the Crusader/Deliverer underground complex was expected early in fiscal 2004, but positive exploration results in the upper end of the Deliverer lode resulted in continued mining activity through the entire fiscal year.

Songvang Open Pit

A significant development at Agnew during fiscal 2004 was the proving of the Songvang open pit. A feasibility study for the Songvang deposit, located eight miles south of the Crusader mine, was completed during the first half of fiscal 2004 and the open pit was approved for development late in fiscal 2004. It is expected to be brought into production in the second quarter of fiscal 2005. This open pit is expected to produce a base load of medium grade ores that, along with the high grade ores from the Waroonga underground complex, are expected to extend the life of Agnew before alternative ore sources are needed.

In addition, innovative exploration around the Redeemer, Waroonga and Crusader complexes has turned up ore grade intersections which in all cases appear worthy of follow up. Exploration on Agnew’s regional tenements, which is the subject of a joint venture with Breakaway Resources, has also brought the Vivien deposit, a portion of which was previously mined and which is located in the northeast of Agnew, closer to a final feasibility decision in fiscal 2005.

Agnew has access to the local electricity supplier and road infrastructure. Water is supplied from local wells, and needed supplies are generally trucked in from Kalgoorlie.

Detailed below are the operating and production results at Agnew for the seven-month period ended June 30, 2002, fiscal 2003 and fiscal 2004.

                         
    Seven-month period        
    ended June 30,        
    2002
  Fiscal 2003
  Fiscal 2004
Production
                       
Tonnes (‘000)
    682       1,268       1,179  
Recovered grade (g/t)
    3.8       3.5       5.3  
Gold produced (‘000 oz)
    83       144       202  

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    Seven-month period        
    ended June 30,        
    2002
  Fiscal 2003
  Fiscal 2004
Results of operations ($ million)
                       
Total production costs(1)
    29.0       56.9       61.1  
Total cash costs(1)
    18.0       31.5       44.5  
Cash profit(2)
    7.0       17.8       34.0  
Cost per ounce of gold ($)
                       
Total production costs(1)
    351       396       303  
Total cash costs(1)
    218       219       221  


Notes:

(1)   For purposes of allocating production costs between St. Ives and Agnew, the consideration paid for the Australian operations in excess of the book value of the underlying net assets was allocated pro rata to the value of the underlying assets.

(2)   Cash profit represents revenues less total cash costs. For a reconciliation of Gold Fields’ cash costs to production costs see “Operating and Financial Review and Prospects — Results of Operations.”

In fiscal 2004, tonnage processed and ounces of gold produced were 1.2 million and 0.2 million ounces, respectively. While tonnes processed decreased from fiscal 2003, gold production increased due in large part to increased yields resulting from improved underground mine performance plus an increase in overall gold recovery. In addition, the Waroonga open pit mine had been producing grades below expectations prior to its closure during fiscal 2003. Total cash costs increased principally because of the appreciation of the Australian dollar against the U.S. dollar and a substantial increase in underground tonnage produced. Total production costs per ounce decreased due to lower depreciation as a result of the lower capital base following the impairment recorded in fiscal 2003. See “Operating and Financial Review and Prospects — Results of Operations — Years Ended June 30, 2004 and 2003 — Impairment of assets.” On a per ounce basis, total cash costs increased only slightly as the impact of the appreciation in the Australian dollar was almost entirely offset by the increase in recovered grade.

On a simplistic basis, and assuming that no additional reserves are identified at Agnew, at an annualized production level based on actual production during fiscal 2004, Agnew’s June 30, 2004 proven and probable reserves of 0.7 million ounces of gold will be sufficient to maintain production through approximately fiscal 2006. However, because Agnew’s operations consist of several different underground mines that are at various stages of maturity, it is expected that some operations will decrease production earlier than others. In addition, as discussed in the Risk Factors section, any future changes to the assumptions on which reserves are based, as well as unforeseen events affecting production levels, could have a material effect on the expected period of future operations.

Processing

All processing at Agnew is provided by a single plant. The following table sets forth year commissioned, processing techniques and processing capacity per month, as well as average tonnes milled per month and metallurgical recovery factor during the fiscal year ended June 30, 2004 for the plant:

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            Processing Techniques
          Average   Approximate
                                    milled for   recovery factor for
                                    the year ended June   the year ended June
Plant
  Year commissioned
  Comminution Phase
  Treatment phase
  Capacity
  30, 2004
  30, 2004
                            (tonnes/month)        
Main Plant
    1986     SAG milling   CIP treatment     96,000       100,000       94.0 %

Capital Expenditure

Gold Fields spent A$27.4 million on capital expenditures at Agnew in fiscal 2004, primarily on development at the Waroonga Complex. Gold Fields has budgeted approximately A$38.2 million for capital expenditure at Agnew for fiscal 2005, primarily for stripping of the new Songvang open pit, continued underground development on the Waroonga Complex and exploration.

Exploration

Gold Fields holds a diverse portfolio of active gold and platinum group metal exploration projects and assets in Africa, Europe, North America, South America, China and Australasia, which are primarily held through project companies incorporated in the jurisdiction where the exploration projects or assets are located. In addition, Gold Fields has in place a number of exploration projects in connection with mineral rights it holds which are adjacent to its active mining operations in South Africa, Ghana and Australia. Gold Fields’ exploration program is headquartered in Denver, Colorado, which also acts as the regional office for North and Central America, with regional offices also in Oxford, England (responsible for Europe, the former Soviet Union and Africa), Perth, Australia (responsible for Australasia and China) and Santiago, Chile (responsible for South America). Gold Fields’ exploration team includes 25 geologists, along with support staff. Gold Fields directs exploration activities at sites adjacent to its South African, Ghanaian and Australian operations from its offices in Johannesburg, Oxford and Perth, respectively, with logistical support from the mining operations.

Gold Fields’ exploration strategy is based on a balanced approach to projects, which permits it to consider a project at any stage of development, from greenfield projects through the feasibility study phase. Gold Fields focuses its exploration activities on finding quality mineral assets with potential for low-cost extraction of gold or platinum group metals. When determining whether it will proceed with a project, Gold Fields weighs a variety of cost factors, including the cost of acquiring the project, expected cash operating costs, costs of capital and overhead costs, against the likely returns for the project and the project’s strategic importance in terms of geographic diversification and production profiles. With respect to exploration projects which are adjacent to Gold Fields’ existing mining operations, Gold Fields also considers possible operating synergies which can be realized, for example, by sharing processing plants and other infrastructure.

Gold Fields has also expanded its exploration activities in countries and regions where it has more limited experience by means of equity investments in, and strategic alliances with, junior mining partners that are already operating in the relevant region with the requisite mining permits and approvals. Gold Fields has applied this strategy to exploration projects in China, Canada, Venezuela, Guinea, Sardinia, Guatemala, Tanzania, and Burkina Faso, among others.

Generally, Gold Fields budgets to spend up to $10 per ounce of gold it produces on exploration, provided the opportunities offered warrant such expenditure. At current gold prices, the economics of gold prospects that may offer positive returns has improved. Gold Fields exploration projects are carefully selected with strict economic criteria in mind and may involve longer term metal price and exchange rate assumptions. Recently,

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higher metal prices have increased the demand for quality projects and, consequently, have increased the price of entry into those projects.

In order to be considered by Gold Fields, an exploration project must have the potential to meet the majority of certain minimum target criteria, which Gold Fields refers to as the “Rule of Twos”. The Rule of Twos criteria require that a project has potential for a minimum of 2 million ounces of reserves, production rates of greater than 200,000 ounces per year, cash cost of production of less than half the commodity price and a double digit rate of return. If these criteria are met and the project fits within Gold Fields’ strategic development goals and is located in a region with acceptable risk, Gold Fields will consider taking on the project.

Gold Fields’ goal in its search for quality assets is to be in the lowest quartile of breakeven cost defined as the sum of acquisition costs, total cash operating costs, capital costs and general and administrative costs.

Gold Fields divides the different phases of a project’s development into what it refers to as the “resource triangle.” The resource triangle provides for the progression of an exploration project in five steps: (1) greenfield exploration, (2) initial drilling, (3) resource definition, (4) pre-feasibility studies and (5) a feasibility study. Each regional exploration office typically targets one greenfield exploration project, along with various other projects at varying stages of development. Once a project reaches the feasibility stage, a team evaluates the project with feedback regarding the project’s strategic implications from Gold Fields’ corporate development office.

Gold Fields’ Exploration Projects

The table below provides a breakdown of the number of projects in Gold Fields’ four exploration regions for each of the five phases of the resource triangle as at September 30, 2004. The table does not include exploration projects on sites adjacent to Gold Fields’ existing operations in South Africa, Ghana or Australia.

                                 
    North and Central            
Phase
  America
  Europe and Africa
  Australasia
  South America
Feasibility
          1             1  
Pre-feasibility
          1              
Resource definition
          3       1       1  
Initial drilling
    2       5       2       3  
Greenfield
          3       3       2  

Gold Fields spent $28.2 million on exploration projects not adjacent to its mining operations in fiscal 2004. Gold Fields’ total exploration budget for projects not adjacent to its mining operations for fiscal 2005 is approximately $47.0 million. In addition, Gold Fields spent $45.9 million on exploration at sites adjacent to its existing mining operations in fiscal 2004 and has budgeted approximately $24.5 million for fiscal 2005. Gold Fields made equity investments in junior mining partners of $23.5 million, as well as exploration expenditure in the APP of approximately $11.4 million during fiscal 2004 and expects to spend approximately $14.6 million to finalize the feasibility study on the APP. If a decision is made to proceed, Gold Fields expects to spend a further $18.4 million on the APP during fiscal 2005. In addition, approximately $15.0 million has been budgeted for development of the Cerro Corona Project

Arctic Platinum Project

The APP is located near the city of Rovaniemi in northern Finland. APP was set up in 2000 as a joint venture to develop potential platinum group metal deposits through open pit and underground operations. Gold Fields

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held 51% of APP during fiscal 2003, with the remainder held by Outokumpu Oy, a Finnish industrial conglomerate with over 50 years’ experience designing and supplying technology for the mining and metallurgical industries. On September 11, 2003, Gold Fields exercised its pre-emptive right to acquire Outokumpu’s 49% interest in APP, for consideration of $31 million comprising $23 million in cash and Gold Fields ordinary shares worth $8 million.

APP is currently at an advanced stage of assessing two potential open pit deposits called Konttijarvi and Ahmavaara, which are referred to as the Suhanko Project. The Konttijarvi and Ahmavaara deposits are found in the Konttijarvi-Suhanko Intrusion, which forms part of the Portimo mafic layered complex situated in northern Finland. Project development during fiscal 2004 focused on the Suhanko Project, with particular emphasis on trial mining, pilot plant test work and infill drilling. Also during the year the environmental permit application for the Suhanko Project was submitted to the Northern Environmental Permit Authority in Oulu. Permits to begin construction are expected in the second half of 2005. APP has begun the process of obtaining the mining lease for the Suhanko Project. A renewal application for the Suhanko mining license was submitted to the Ministry of Trade and Industry in May 2004. The application is expected to be finalized once the final boundaries of the lease area have been established with landowners. The Ministry is expected to issue a concession certificate in late fiscal 2005 which would give APP the right to process and use all extractable minerals in the area covered by the concession certificate and to use the area for mining and processing. Securing suitable treatment terms from one or a number of smelters remains the single biggest challenge to proving this project and will be the focus of particular attention, separate from the completion of engineering and other feasibility study aspects. As of June 30, 2004, approximately 262,300 meters of drilling had been completed.

Cerro Corona Project

In December 2003, Gold Fields, through a subsidiary, signed a definitive agreement to purchase an 80.7% economic and 92% voting interest in the Cerro Corona Project from a Peruvian family-owned company, Sociedad Minera Corona S.A., or SMC. The agreement calls for a reorganization whereby the assets of the Cerro Corona Project are to be transferred to a new Peruvian company named Sociedad Minera La Cima S.A. This condition has been waived by Gold Fields. Gold Fields’ obligation to acquire the Cerro Corona Project is subject to the acquisition of all surface rights and the securing of all permits necessary to construct and operate a mine at the site. Gold Fields has the discretion to waive these two conditions.

The Cerro Corona Project forms part of a porphyry copper-gold deposit located within Hualgayoc Mining District approximately 40 kilometers northwest of the Yanacocha Gold Mine in the Department of Cajamarca, northern Peru. At the time the definitive purchase agreement was signed, SMC already owned 141.7 hectares, comprising the surface rights over much of the Cerro Corona deposit, the Mina Carolina plant and campsite, and about half of the valley that would be used for tailing storage. The remaining parcels needed for the Cerro Corona Project, which total 382.06 hectares, are under various stages of ongoing negotiation by SMC and Gold Fields.

The Cerro Corona Project has been the subject of extensive exploration and several feasibility studies over the last 10 years. Current work by Gold Fields is focused on community relations and completion of an updated environmental impact study. Technical work is also in progress to support a new feasibility study expected to be completed by June 2005. Assuming that all required permits are approved by mid-2005, the construction period is expected to take about 18 months and production start-up is scheduled for early calendar 2007.

The Cerro Corona Project is located in the highest part of the Western Cordillera of the Andes in Northern Peru, close to the headwaters of the Atlantic continental basin. It lies approximately 90 kilometers by road north of the departmental capital of Cajamarca (population approximately 100,000) and near the village of Hualgayoc. Access from Cajamarca is by means of an all-weather road to the Yanacocha Mine (45

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kilometers), followed by approximately 45 kilometers of a relatively poor quality gravel road that continues on to the village of Hualgayoc and the town of Bambamarca.

Gold Fields will complete an updated resource estimate by May 2005 to complete a new feasibility study by June 2005, with input from new data relating to sulfur analyses, waste characterization, check analyses, clay mineralogy, drill hole re-logging, surface mapping and an in-fill/metallurgy drill program. This will be followed by an updated mine plan and new reserve estimate to be completed by June 2005. To support the program described above, Gold Fields plans to also carry out detailed re-mapping of the Cerro Corona deposit with an emphasis on structure and alteration. A concurrent property wide geologic map will also be made as part of an exploration / condemnation program.

Recent Developments

Proposed IAMGold Transaction

On September 30, 2004, Gold Fields, Gold Fields Ghana, Gold Fields Guernsey and IAMGold, signed a definitive agreement, referred to in this discussion as the Gold Fields International Agreement, pursuant to which, subject to, among other things, the conditions precedent set out below, all assets owned by Gold Fields’ subsidiaries located outside the Southern African Development Community, or SADC, would be transferred to IAMGold in exchange for the issuance to Gold Fields or its subsidiaries common shares of IAMGold, or the Consideration Shares, which will result in Gold Fields owning, directly or indirectly, approximately 70% of the fully diluted equity of the enlarged company. In addition, immediately before completion IAMGold shareholders, registered as such on a record date, which will be a date shortly before completion, will receive a special cash dividend of C$0.50 per IAMGold share. The Gold Fields International Agreement was amended and restated as of November 4, 2004 to incorporate certain conditions and amendments requested by the TSX. This transaction is referred to in this discussion as the IAMGold Transaction.

The Gold Fields International Agreement provides for the transfer by Gold Fields’ subsidiaries to IAMGold or its subsidiaries of the following assets, which are referred to in this discussion as the Acquired Interests:

  100% ownership interest in the St. Ives and Agnew gold mines in Australia;
 
  71.1% ownership interest in the Tarkwa and Damang gold mines in Ghana;
 
  the APP, in which Gold Fields’ subsidiaries have a 100% interest;
 
  80.7% economic interest and 92% voting interest in the Cerro Corona development project in Peru, the acquisition of which is subject to completion;
 
  all of the working capital (comprising cash, cash equivalents and receivables owing by trade debtors, less payables owed to trade creditors) of Gold Fields Guernsey and Gold Fields Ghana; and
 
  a portfolio of other exploration properties, cash and investments.

The consideration for the Acquired Interests will consist of 351,690,218 fully paid and non-assessable common shares of IAMGold ranking on the same level and equally with the existing common shares in issue. Based on IAMGold’s volume weighted average trading share price over the 20 trading days prior to August 11, 2004, the date on which Gold Fields and IAMGold first announced the IAMGold Transaction, these common shares had a market value of approximately $2.1 billion. The number of common shares to be issued will be subject to adjustment based on the total net cash contributed by Gold Fields to the acquired companies and the vendors thereof from June 24, 2004 through to completion of the IAMGold Transaction. This

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adjustment will be made based on the 20 business day volume weighted average trading price of the IAMGold shares prior to closing and is capped at U.S.$50 million. Following completion of the IAMGold Transaction, IAMGold will be a listed subsidiary of Gold Fields.

Gold Fields has undertaken that, for so long as required by any South African regulatory authority, it will retain a minimum shareholding of 50.1% in Gold Fields International. Upon completion of the IAMGold Transaction, Gold Fields will be contractually precluded from selling part of its shareholding in Gold Fields International unless it sells its entire shareholding.

Upon completion of the IAMGold Transaction, IAMGold will be renamed Gold Fields International and will become the international growth vehicle (outside of the SADC region) for Gold Fields.

Gold Fields will retain its existing primary listing in South Africa on the JSE and listings outside of South Africa on the NYSE and certain other international exchanges.

The IAMGold Transaction provides for a U.S.$20 million break fee payable under certain conditions.

Subject to approval of the IAMGold Transaction by the holders of ordinary shares of Gold Fields (voting in person or by proxy) at an extraordinary general meeting scheduled for December 7, 2004, or the EGM.

In order to satisfy certain conditions imposed by the SARB in granting its approval of the IAMGold Transaction, which are described below, IAMGold has agreed to provide Gold Fields with anti-dilution rights. These rights include pre-emptive rights that enable Gold Fields and its affiliates to purchase as many shares of Gold Fields International as are necessary to maintain beneficial ownership of not less than 50.1% (or such lesser percentage as may be required or permitted from time to time by the SARB) of the outstanding common shares of Gold Fields International on a fully diluted basis from time to time. The anti-dilution rights entitle Gold Fields to maintain its ownership interest from time to time by participating in any issuance of Gold Fields International equity securities for cash at the same price as other purchasers. In the case of a non-cash issuance, Gold Fields is entitled to participate to the extent necessary to enable it to maintain its interest at 50.1% (or such lesser percentage as may be permitted by the SARB) at a cash price equal to the prevailing market price or fair value of the securities being offered. The anti-dilution rights also restrict Gold Fields International’s ability to issue shares in circumstances where shareholder approval is required, and has not been obtained, prior to the exercise of Gold Fields’ pre-emptive rights.

The IAMGold Transaction is subject to, among other things, the following principal conditions precedent:

  the approval, to the extent necessary, of any regulatory authorities having jurisdiction over the IAMGold Transaction, including the JSE and Canadian securities regulators;
 
  the approval by a majority vote of the holders of ordinary shares of Gold Fields (voting in person or by proxy) at the EGM to be held to approve the IAMGold Transaction;
 
  the approval by a majority of shareholders of IAMGold (voting in person or by proxy) at the special meeting of shareholders to be held to approve the IAMGold Transaction;
 
  the listing of the Consideration Shares of IAMGold on the TSX, and the New York Stock Exchange, or the NYSE, or failing the NYSE, the American Stock Exchange, or AMEX, and confirmation from the TSX and the NYSE or AMEX that the Consideration Shares will not be subject to escrow arrangements;
 
  obtaining third party consents and releases from certain guarantees and obligations of Gold Fields and its subsidiaries (other than the Acquired Interests) in respect of the Acquired Interests, releases from certain cross-guarantees and obligations flowing from the Acquired Interests in favor of Gold Fields or

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    its subsidiaries other than the Acquired Interests and the consent of Mvela Resources, to the assignment of Gold Fields’ exploration rights outside of SADC;
 
  no person having acquired beneficial ownership of 20% or more of IAMGold’s outstanding common shares prior to completion of the IAMGold Transaction;
 
  IAMGold entering into an agreement granting to Gold Fields the anti-dilution rights described above as of completion;
 
  the absence of any changes, effects, occurrences or states of facts, other than those affecting the economy and markets generally (including changes to the gold price and currency exchange rates), that, either individually or in the aggregate, have or would reasonably be expected to have a material adverse effect on the Acquired Interests or IAMGold; and obtaining all necessary governmental consents for the IAMGold Transaction.

This transaction, if completed, will be accounted for as a reverse acquisition because Gold Fields will obtain the majority interest in the enlarged company.

Overview of Gold Fields International

If the transaction is completed, Gold Fields International will have interests in six operating mines: four in West Africa (Tarkwa and Damang in Ghana, Sadiola and Yatela in Mali) and two in Australia (St. Ives and Agnew) with 2005 forecast production totaling 2.0 million ounces of gold. In addition, Gold Fields International will have two near-term development projects, located in Finland (Arctic Platinum) and, subject to completion of the acquisition thereof, Peru (Cerro Corona), along with various royalty interests and a portfolio of advanced-stage exploration projects in Latin America, Canada, Australia, China and Africa.

Gold Fields’ largest shareholder OJSC MMC Norilsk Nickel, or Norilsk, has irrevocably undertaken to vote against the completion of the the proposed IAMGold Transaction. In a statement issued on November 19, 2004, the Gold Fields’ Board of Directors stated that, should Gold Fields’ shareholders vote against the proposed IAMGold Transaction, it would move quickly to implement alternative strategies to ensure that the inherent value of Gold Fields’ international assets can be delivered directly to Gold Fields shareholders.

Harmony Offer

On October 18, 2004, Harmony announced an unsolicited and hostile tender offer to acquire the entire issued share capital of Gold Fields. According to the registration statement on Form F-4, or the Form F-4, filed by Harmony with the SEC, Harmony has structured the tender offer to occur in two steps. The first step consists of an “early settlement offer” in which Harmony has offered to acquire up to 34.9% of the outstanding Gold Fields ordinary shares (including ordinary shares in the form of American depositary shares, or ADSs). In the early settlement offer, Harmony has offered to exchange 1.275 new Harmony Shares or ADSs, for every Gold Fields ordinary share or ADS, respectively. The early settlement offer has been structured as two simultaneously run offers. There is what is referred to in this discussion as a “U.S. Offer” to holders of Gold Fields ordinary shares located in the United States and holders of Gold Fields ADSs wherever located. In addition, there is what is referred to in this discussion as an “International Offer” to holders of Gold Fields ordinary shares outside the United States to the extent such holders may lawfully participate in the International Offer. According to the Form F-4, Harmony states that the U.S. Offer and the International Offer are being made on substantially similar terms and are subject to substantially similar conditions.

Harmony has stated in the Form F-4 that there are only two conditions to the early settlement offer. The first condition is that the issuance of new Harmony ordinary shares and ADSs upon closing of the early settlement offer shall have been duly approved by Harmony’s shareholders at an extraordinary general meeting to be held for that purpose. According to a press release dated, November 12, 2004, Harmony held an extraordinary

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general meeting on that date and the issuance of the new Harmony ordinary shares and ADSs was duly approved by its shareholders. The second condition is that the Form F-4 has been declared effective by the SEC. On November 19, 2004, Harmony announced that its registration statement on Form F-4 had been declared effective by the SEC.

According to Harmony’s disclosure in the Form F-4, the early settlement offer will close on November 26, 2004.

As disclosed in the Form F-4, Harmony has irrevocably committed to commence a “subsequent offer” immediately after the completion of the early settlement offer. Harmony has stated that the subsequent offer will also be structured as two simultaneously run offers – one a U.S. Offer and the other an International Offer. Harmony has stated that the subsequent offer will be made on the same terms as the early settlement offer, but will be subject to different conditions, which Harmony has stated will include:

  the passing and, where applicable, registration by the registrar of the Harmony resolutions relating to the subsequent offer, among other things;
 
  Harmony receiving acceptances of the subsequent offer from Gold Fields shareholders holding in excess of 50% of the entire issued share capital of Gold Fields, including those Gold Fields ordinary shares and ADSs settled by Harmony under the early settlement offer and those Gold Fields ordinary shares in respect of which Norilsk has irrevocably undertaken to accept the subsequent offer;
 
  the proposed IAMGold transaction not being implemented for whatever reason;
 
  the proposed acquisition of Gold Fields being approved by the relevant competition authorities;
 
  the Form F-4 with respect to the new Harmony Shares and ADSs to be issued in the further offers having been declared effective by the SEC; and
 
  the approval of all regulatory authorities whose approval is required for the implementation of the further offers.

In response to Harmony’s unsolicited and hostile tender offer, on November 3, 2004, the Board of Gold Fields issued an Offer Response Document to its shareholders and filed a Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC recommending that Gold Fields shareholders take no action and reject the Harmony offer. The text of the Board’s recommendation statement and further details on the background to, and basis for, the Board’s recommendation may be found in the Offer Response Document. The Offer Response Document is included as an exhibit to the Schedule 14D-9, which is available free of charge from the SEC’s website. In addition, Gold Fields is pursuing various legal and regulatory actions in South Africa and the United States challenging the basis on which the Harmony offer is being made. See “Risk Factors — Harmony’s offer to purchase all of Gold Fields’ outstanding ordinary shares is disruptive to Gold Fields’ business and threatens to adversely affect Gold Fields’ results of operations.”

Insurance

Gold Fields holds insurance policies providing coverage for accidental loss or damage, business interruption in the form of fixed operating costs or standing charges, public liability, material damage and other losses which it holds through a captive insurance company domiciled in Gibraltar. Gold Fields’ insurance policies covering material damage and business interruption based on fixed operating costs or standing charges provide coverage in amounts up to $100 million per event occurring underground and up to $300 million per event occurring elsewhere. In fiscal 2003, Gold Fields changed from business interruption cover based on gross profit to cover based on fixed operating costs or standing charges only in an effort to reduce costs.

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Management believes that the scope and amounts of coverage of its insurance policies are adequate and in accordance with customary practice for a gold mining company of its size with multinational operations.

Regulatory and Environmental Matters

South Africa

Environmental

Gold Fields’ South African operations are subject to various laws relating to the protection of the environment. South Africa’s Constitution grants the people of South Africa the right to an environment that is not harmful to human health or well-being and to protection of that environment for the benefit of present and future generations through reasonable legislative and other measures. The Constitution and the National Environmental Management Act 107 of 1988 grant legal standing to a wide range of people and interest groups to bring legal proceedings to enforce their environmental rights, which are enforceable against private entities as well as the South African government.

Environmental legislation in South Africa has become increasingly more onerous while enforcement of environmental requirements in South Africa is now more rigorous than in the past. Specific environmental rules pertaining to prospecting and mining are set out in the Mineral and Petroleum Resources Development Act 28 of 2002, or the New Minerals Act and its regulations. The environmental obligations imposed by the New Minerals Act are significantly more stringent than the provisions of the former legislation. In particular, the New Minerals Act makes express provision for Directors’ liability in circumstances when environmental harm arises pursuant to mining operations. See “— Mineral Rights.”

South African environmental legislation commonly requires businesses whose operations may have an impact on the environment to obtain permits and authorizations for those operations. The applicable environmental legislation also imposes general compliance requirements and incorporates the “polluter pays” principle. All prospecting and mining operations are required by the New Minerals Act to be conducted according to an approved environmental management plan, which must be approved by the Department of Minerals and Energy.

South African mining companies are required by law to undertake rehabilitation works as part of their ongoing operations in accordance with an approved environmental management plan. In addition, during the operational life of the mine they must provide for the cost of mine closure and post-closure rehabilitation and monitoring once mining operations cease. Gold Fields funds these environmental rehabilitation costs by making contributions into an environmental trust fund. The trust fund system enables payments to be made in a tax efficient way, while providing comfort to the regulators that the operator has the means to restore any mine after operations have ceased. As of October 29, 2004, Gold Fields had contributed a total of approximately Rand 340.5 million, including accrued interest, to the fund.

Gold Fields has implemented environmental management systems in compliance with ISO 14001 throughout its operations in South Africa, and has received full certification under ISO 14000 for all surface portions of its South African operations. Gold Fields’ non-South African operations received full ISO 14001 certification in fiscal 2003.

In addition, Gold Fields is in the process of devising programs to implement at its operations to become compliant with the International Cyanide Management Code.

Health and Safety

The principal objective of the Mine Health and Safety Act No. 29 of 1996, or the Mine Health and Safety Act, is to protect the health and safety of persons at mines. The Mine Health and Safety Act requires that employers and others ensure their operating and non-operating mines provide a safe and healthy working environment, determines penalties and a system of administrative fines for non-compliance and gives the Minister of Minerals and Energy the right to restrict or stop work at any mine and require an employer to take

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steps to minimize health and safety risks at any mine. The Mine Health and Safety Act further provides for employee participation by requiring the appointment of health and safety representatives, and through the establishment of health and safety committees. It also gives employees the right to refuse dangerous work. Finally, it describes the powers and functions of a mine health and safety inspectorate and the process of enforcement.

Under the Mine Health and Safety Act, an employer is obligated, among other things, to ensure, as far as reasonably practicable, that its mines are designed, constructed and equipped to provide conditions for safe operation and a healthy working environment and are commissioned, operated, maintained and decommissioned in such a way that employees can perform their work without endangering their health and safety or that of any other person. Every employer must ensure, as far as reasonably practicable, that persons who are not employees, but who may be directly affected by the activities at a mine, are not exposed to any hazards to their health and safety.

The Mine Health and Safety Act requires employers, among other things, to establish health and safety policies, to provide employees with health and safety training, assess and respond to risk and establish a system of medical surveillance.

The Occupational Diseases in Mines and Works Act 78 of 1973, or the Occupational Diseases Act, governs compensation and medical costs related to certain illnesses contracted by persons employed in mines or at sites where activities ancillary to mining are conducted. Occupational health care services are made available by Gold Fields to employees from its existing facilities. Pursuant to changes in the Occupational Diseases Act, Gold Fields may experience an increase in the cost of these services. See “Key Information — Risk Factors — Gold Fields’ operations in South Africa are subject to health and safety regulations which could impose significant costs and burdens.” This increased cost, should it transpire, is currently indeterminate.

Mineral Rights

The New Minerals Act. The New Minerals Act came into effect on May 1, 2004. The New Minerals Act vests the right to prospect and mine in the state (which includes the rights to grant prospecting and mining rights on behalf of the nation) to be administered by the government of South Africa in order to, among other things, promote equitable access to the nation’s mineral resources by South Africans, expand opportunities for historically disadvantaged persons who wish to participate in the South African mining industry, and advance social and economic development as well as to create an internationally competitive and efficient administrative and regulatory regime, based on the universally accepted principle, and consistent with common international practice, that mineral resources are part of a nation’s patrimony. Gold Fields currently owns substantially all of the mineral rights under the previous regime for the properties for which it has mining authorizations and will seek to convert these rights into mining rights under the New Minerals Act.

Under the former regulatory regime, mineral rights (which encompass the right to prospect and mine) in South Africa were held either privately or by the government of South Africa. Ownership of private mineral rights was held through title deeds and constituted real rights in land, which were enforceable against any third party. Prospecting and mining are now regulated by the provisions of the New Minerals Act including the transitional provisions included therein.

The transitional provisions of the New Minerals Act phase out existing rights to prospect and mine granted under the old legislation. The transitional provisions contemplate three scenarios: (1) mineral rights in respect of which no prospecting permit or mining authorization has been issued and/or no prospecting or mining activities are taking place; (2) mineral rights that are the subject of prospecting permits and prospecting is taking place; and (3) mineral rights in respect of which a mining authorization has been issued and mining is taking place. The rights described in the three categories are referred to as old order rights. Under category (1), the holders of privately-held mineral rights would need to apply for a prospecting or mining right in their

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own names to replace their existing mineral rights. Application has to be made within one year of the relevant provision of the New Minerals Act becoming operational. Under categories (2) and (3), any prospecting permit or mining authorization granted under the old legislation would continue to be valid for the period granted under the old legislation, subject to a maximum period of two or five years, respectively. After the lapse of the one year period referred to in category (1) and the two and five year periods in categories (2) and (3) respectively, the mineral rights would cease to exist. Within these periods, in order to continue with its mining or prospecting operations, the holders of mineral rights and prospecting permits or mining authorizations would have to apply for a new prospecting right or mining right in respect of category (1) and for conversion to new prospecting or mining rights in respect of categories (2) and (3). Gold Fields is entitled to conversion of its existing old order rights provided that it complies with the requirements for conversion, some of which are of a discretionary nature.

Under the New Minerals Act prospecting rights are initially granted for a maximum period of five years, and can be renewed once upon application for a further period not exceeding three years. Mining rights are valid for a maximum period of 30 years, and can be renewed upon application for further periods each of which may not exceed 30 years. Provision is made for the grant of retention permits, which would have a maximum term of three years and could be renewed once upon application for a further two years. A wide range of factors and principles including proposals relating to black economic empowerment and social responsibility, the details of which are still being determined, will be considered by the Minister of Minerals and Energy, or the Minister, when exercising her discretion whether to grant these applications including, for example, evidence of an applicant’s ability to conduct mining operations optimally. Gold Fields might not be successful in its applications for new prospecting rights or mining rights.

The provisions of the New Minerals Act provide that a mining or prospecting right granted under the New Minerals Act could be cancelled if the mineral to which such mining right relates is not mined at an “optimal rate.” Furthermore, royalties not payable under the old legislation may become payable to the State. See “— The Royalty Bill.”

The Mining Titles Registration Amendment Act, or the Mining Titles Act, came into force on May 1, 2004. The Mining Titles Act provides for the registration of rights granted under the New Minerals Act. The Mining Titles Act repeals certain sections of the current legislation dealing with the registration of mineral rights, subject to the transitional provisions of the New Minerals Act. Until rights held under the previous regime are converted to rights under the New Minerals Act, rights held under the previous regime that become subject to a change in ownership during the transition period will not be able to be registered under the name of the new owner. See “Risk Factors — Gold Fields’ mineral rights in South Africa will become subject to new legislation which could impose significant costs and burdens — The New Minerals Act.”

The New Minerals Act contains a provision requiring the Minister, within six months of the relevant provision becoming operational, to develop a broad-based socio-economic empowerment charter for effecting entry of historically disadvantaged South Africans, or HDSAs, into the mining industry. The South African Government appointed a task team which included representatives from mining companies, including Gold Fields, to develop a charter. On October 11, 2002, the Minister and representatives of certain mining companies and the National Union of Mineworkers signed a charter that reflects the consultation process called for by the New Minerals Act. The Mining Charter became effective on May 1, 2004.

The charter’s stated objectives are to:

  promote equitable access to South Africa’s mineral resources for all the people of South Africa;

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  substantially and meaningfully expand opportunities for HDSAs, including women, to enter the mining and minerals industry and to benefit from the exploitation of South Africa’s mineral resources;
 
  utilize the existing skills base for the empowerment of HDSAs;
 
  expand the skills base of HDSAs in order to serve the community;
 
  promote employment and advance the social and economic welfare of mining communities and areas supplying mining labor; and
 
  promote beneficiation of South Africa’s mineral commodities beyond mining and processing, including the production of consumer products.

The charter clarifies that it is not the government’s intention to nationalize the mining industry.

To achieve these objectives, the charter requires that mining companies achieve a 15% HDSA ownership of mining assets within five years and a 26% HDSA ownership of mining assets within 10 years by each mining company. Ownership can comprise active involvement, through HDSA controlled companies (where HDSAs own at least 50% plus one share of the company and have management control), strategic joint ventures or partnerships (where HDSAs own at least 25% plus one vote and there is joint management and control) or collective investment vehicles, the majority ownership of which is HDSA based, or passive involvement, particularly through broad based vehicles like employee stock option plans. The charter envisages measuring progress on transformation of ownership by:

  taking into account, among other things, attributable units of production controlled by HDSAs;
 
  allowing flexibility by credits or offsets, so that, for example, where HDSA participation exceeds any set target in a particular operation, the excess may be offset against shortfalls in another operation;
 
  taking into account previous empowerment deals in determining credits and offsets; and
 
  considering special incentives to encourage the retention by HDSAs of newly acquired equity for a reasonable period.

It is envisaged that transactions will take place in a transparent manner and for fair market value with stakeholders meeting after five years to review progress in achieving the 26% target. Under the charter, the mining industry as a whole agrees to assist HDSA companies in securing finance to fund participation in an amount of Rand 100 billion over the first five years. Beyond the Rand 100 billion commitment, HDSA participation will be increased on a willing seller-willing buyer basis, at fair market value, where the mining companies are not at risk.

In addition, the charter requires, among other things, that mining companies:

  offer every employee the opportunity to become functionally literate and numerate by the year 2005;
 
  spell out plans for achieving employment equity at management level with a view to achieving a baseline of 40% HDSA participation in management and achieving a baseline of 10% participation by women in the mining industry, in each case within five years;
 
  give HDSAs preferred supplier status, where possible, in the procurement of capital goods, services and consumables; and
 
  identify current levels of beneficiation and indicate opportunities for growth.

When considering applications for the conversion of existing licenses, the government will take a “scorecard” approach to the different facets of promoting the objectives of the charter. In February 2003, the Department

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of Minerals and Energy, or DME, published the scorecard, which is intended to facilitate the application of the charter and measure compliance with the empowerment requirements of the New Minerals Act for the purpose of determining whether an application for conversion of old order rights to new order rights should be granted. The scorecard sets out the requirements of the charter in tabular form which allows the DME to “tick off” areas where a mining company is in compliance. The scorecard covers the following areas:

  human resource development;
 
  employment equity;
 
  migrant labor;
 
  mine community and rural development;
 
  housing and living conditions;
 
  ownership and joint ventures;
 
  beneficiation; and
 
  reporting.

The scorecard does not indicate the relative significance of each item, nor does it provide a particular score which an applicant must achieve in order to be in compliance with the charter and be granted new order rights. The charter, together with the scorecard, provides a system of “credits” or “offsets” with respect to measuring compliance with HDSA ownership targets. Offsets may be claimed for beneficiation activities undertaken or supported by a company above a predetermined “base state”, which has not yet been established for each mineral. Offsets may also be claimed for continuing effects of previous empowerment transactions.

The charter also requires mining companies to submit annual, audited reports on progress towards their commitments, as part of an ongoing review process.

On March 8, 2004, the shareholders of Gold Fields approved a series of transactions, referred to in this discussion as the Mvela Transaction, involving the acquisition by Mvela Resources of a 15% beneficial interest in the South Africa gold mining assets of Gold Fields for cash consideration of R4,139 million. See “Operating and Financial Review and Prospects — Overview — Mvelaphanda Transaction.” The Mvela Transaction is intended to meet the charter’s requirement that mining companies achieve a 15% HDSA ownership within five years of the mining charter coming into effect. There is no guarantee, however, that the Mvela Transaction will not have a negative effect on the value of Gold Fields’ ordinary shares. In addition, any further adjustment to the ownership structure of Gold Fields’ South African mining assets in order to meet the mining charter’s 10 year HDSA ownership requirement of 26% could have a material adverse effect on the value of Gold Fields’ ordinary shares and failing to comply with the charter’s requirements could subject Gold Fields to negative consequences, the scope of which has not yet been fully determined. Gold Fields may also incur expenses to give effect to the mining charter’s other requirements, and may need to incur additional indebtedness in order to comply with the industry-wide commitment to assist HDSAs in securing Rand 100 billion of financing during the first five years of the mining charter’s effectiveness. Moreover, there is no guarantee that any steps Gold Fields has already taken or might take in the future will ensure the successful conversion of any or all of its existing mining rights or for the grant of new mining rights or that the terms of any conversion or grant would not be significantly less favorable to Gold Fields than the terms of its current rights. See “Risk Factors — Gold Fields’ mineral rights in South Africa will be subject to new legislation which could impose significant costs and burdens — The New Minerals Act.” Management believes that Gold Fields is well positioned to meet the requirements of the mining charter within the prescribed periods.

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The Royalty Bill. On March 20, 2003 the draft Mineral and Petroleum Royalty Bill, or the Royalty Bill, was released for public comment. The South African National Treasury subsequently missed an August 1, 2003 deadline for submitting a revised draft to the South African Parliament and, as yet, no revised draft has been submitted or published.

The Royalty Bill proposes to impose a 3% revenue based royalty on the South African gold mining sector payable to the South African government. The royalty would be calculated on the basis of published tradable value or, where no published tradable value is available, on an imputed gross sales value of the relevant mineral. The royalty would be deductible as an expense for income tax purposes as opposed to a rebate against income tax. Under the terms of the proposed Royalty Bill, the royalty is to take effect when companies convert to new order mining rights in accordance with the New Minerals Act, although the Minister has indicated that the royalty is not expected to take effect until the transitional period for the conversion of mining rights under the New Minerals Act expires. The Minister of Finance in his Budget Speech in February 2004 indicated that the royalty will be based on revenues and will take effect in 2009. If adopted, in either its current or a revised form, the Royalty Bill could have an adverse effect on Gold Fields’ South African operations and therefore an adverse effect on its business, operating results and financial condition. See “Key Information — Risk Factors — Gold Fields’ mineral rights in South Africa will become subject to new legislation which could impose significant costs and burdens — The Royalty Bill.”

Land Claims

Gold Fields’ privately held land and mineral rights could be subject to land restitution claims under the Restitution of Land Rights Act 1994, or the Land Claims Act. Under this Act, any person who was dispossessed of rights in land in South Africa as a result of past racially discriminatory laws or practices without the payment of just and equitable compensation is granted certain remedies including, but not limited to:

  restoration of the land claimed with or without compensation to the holder;
 
  granting of an appropriate right in alternative state-owned land to the claimant; or
 
  payment of compensation by the state to the claimant.

If land is restored without fair compensation it is possible that a constitutional challenge to the restoration could be successful. Once a notice of a land claim has been published in the Government Gazette the rights of any person in respect of such land are restricted in that he may not perform certain actions, including, but not limited to, selling, leasing or developing such land, unless the Regional Land Claims Commissioner has been given one month’s written notice. The Commission is obligated to notify the owner of land in respect of which a claim has been lodged or any other party which might have an interest in a claim. All claims were required to be lodged with the Commission by December 31, 1998. Although this was the final date for filing claims, many claims lodged before the deadline are still being reviewed and not all parties who are subject to claims have yet been notified. However, new land claims may only be instituted after December 31, 1998, if an original claim was filed incorrectly. Gold Fields has not been notified under the Land Claims Act of any land claims against it but it may be notified of claims in the future. If Gold Fields is notified of land claims in the future, these claims could have a material adverse effect on Gold Fields’ right to the properties to which the land claims relate. See “Key Information — Risk Factors — Gold Fields’ land and mineral rights in South Africa could be subject to land restitution claims which could impose significant costs and burdens.”

The Restitution of Land Rights Amendment Act, or the Amendment Act, became law on February 4, 2004. Under the Land Claims Act, the Minister for Agriculture and Land Affairs, or the Land Minister, may not acquire ownership of land for restitution purposes without a court order unless an agreement has been reached between the affected parties. The Amendment Act, however, entitles the Land Minister to acquire ownership

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of land by way of expropriation either for claimants who do not qualify for restitution or, in respect of land as to which no claim has been lodged but the acquisition of which is directly related to or affected by a claim, the acquisition of which would promote restitution to those entitled or would encourage alternative relief to those not entitled. See “Key Information — Risk Factors — Gold Fields’ land and mineral rights in South Africa could be subject to land restitution claims which could impose significant costs and burdens.”

Exchange controls

South African law provides for exchange control regulations, which restrict the export of capital from the Common Monetary Area, comprising South Africa, the Kingdoms of Lesotho and Swaziland and the Republic of Namibia. The exchange control regulations, which are administered by the SARB are applied throughout the Common Monetary Area and regulate transactions involving South African residents, including companies. The basic purpose of exchange controls is to mitigate the decline of foreign capital reserves in South Africa and the devaluation of the Rand against other currencies, in particular the U.S. dollar. It is anticipated that South African exchange controls will continue to operate for the foreseeable future. The South African government has, however, committed itself to gradually relaxing exchange controls and a significant relaxation has occurred in recent years. It is the stated objective of the authorities to achieve equality of treatment between residents and non-residents in relation to inflows and outflows of capital. The gradual approach to the abolition of exchange controls adopted by the South African government is designed to allow the economy to adjust more smoothly to the removal of controls that have been in place for a considerable period of time.

SARB approval is required for Gold Fields and its South African subsidiaries to receive loans from and repay loans to non-residents of the Common Monetary Area. Repayment of principal and interest on such loans will usually be approved where the payment is limited to the amount borrowed and a market related rate of interest.

Funds raised outside of the Common Monetary Area by Gold Fields’ non-South African resident subsidiaries (whether through debt or equity) can be used for overseas expansion, subject to any conditions imposed by the SARB. Gold Fields and its South African subsidiaries would, however, require SARB approval in order to provide guarantees for the obligations of any of Gold Fields’ subsidiaries with regard to funds obtained from non-residents of the Common Monetary Area. Debt raised outside the Common Monetary Area by Gold Fields’ non-South African subsidiaries must be repaid or serviced by those foreign subsidiaries. Absent SARB approval, income earned in South Africa by Gold Fields and its South African subsidiaries cannot be used to repay or service such foreign debts. Also, absent specific SARB approval, income earned by one of Gold Fields foreign subsidiaries cannot be used to finance the operations of another foreign subsidiary.

Transfers of funds from South Africa for the purchase of shares in existing offshore entities or for the expansion of existing business ventures offshore require Exchange Control approval. Under the exchange control regulations, Gold Fields and its South African subsidiaries can invest overseas only if the investment meets certain tests including one of “national interest”, as determined by the SARB. However, consideration will be given to applications submitted to the SARB to transfer funds from South Africa for the purpose of initial foreign expansion and expansion of existing projects.

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October 26, 2004. Foreign dividends repatriated to South Africa after that date may be retransferred abroad at any time and be used for any purpose.

A listing by a South African company on any stock exchange other than the JSE in connection with raising capital needs permission from the SARB. Any such listing which would result in a South African company being redomiciled also needs approval from the Minister of Finance.

Under South African exchange control regulations, Gold Fields must obtain approval from the SARB regarding any capital raising involving a currency other than the Rand. In connection with its approval, it is possible that the SARB may impose conditions on Gold Fields’ use of the proceeds of any such capital raising, such as limits on Gold Fields’ ability to retain the proceeds of the capital raising outside South Africa or requirements that Gold Fields’ seek further SARB approval prior to applying any such funds to a specific use. Any limitations imposed by the SARB on Gold Fields’ use of the proceeds of a capital raising could adversely affect Gold Fields financial and strategic flexibility. See “Key Information — Gold Fields’ financial flexibility, including its ability to utilize the proceeds of this offer outside South Africa, could be materially constrained by South African exchange control regulations.”

In his speech to Parliament towards at the end of October 2004, the Minister of Finance outlined the South African Treasury’s medium term budget policy statement and repeated that it was the government’s eventual goal to replace all remaining exchange controls with prudential benchmarks. He also announced the abolition of exchange control limits on new outward foreign direct investments by South African corporations and the lifting of their obligation to repatriate foreign dividends.

Ghana

Environmental

The laws and regulations relating to the environment in Ghana have their roots in the 1992 Constitution which charges both the state and individuals with a duty to take appropriate measures to protect and safeguard the natural environment. Mining companies are also required under the Minerals and Mining Law, 1986 (P.N.D.C. Law 153) to have due regard to the effect of their operations on the environment and to take steps to prevent pollution of the environment.

The principal legislation regulating activities which affect the environment is the Environmental Protection Act, 1994 (Act 490) and the Environmental Assessment Regulations (LI 1652) and related guidelines. Mining operations are required by these laws to undergo an environmental impact assessment process, to obtain approval for an environmental permit prior to commencing operations and subsequently, after a period of operation, to submit an environmental management plan for the operations to obtain an environmental certificate. The laws also require mining operations to rehabilitate land disturbed as a result of mining operations pursuant to an environmental reclamation plan agreed with the Ghanaian environmental authorities. This obligation is included in a reclamation security agreement signed by the mining company and negotiated with the Environmental Protection Agency, or EPA, and is secured by posting reclamation bonds and a cash deposit, which serve as a security deposit against default.

In Ghana, environmental management plans are submitted every three years and include details regarding the likely impact of the operation on the environment, including local communities, as well as a comprehensive plan and timetable for actions to lessen and remediate adverse impacts. Updated reclamation plans are submitted to the EPA every two years with readjustment of the calculated bond. Gold Fields Ghana has posted a reclamation bond of $6.1 million representing 50% of the liability estimated at December 2001. The bond is expected to be increased in the second quarter of fiscal 2005 to $7.4 million. Estimated rehabilitation costs totaling $26.6 million are forecast over the life of Tarkwa and Teberebie. Reclamation bonds are assessed based on 50% of the agreed estimated rehabilitation costs for the two year period after the date of the last reclamation plan.

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Gold Fields Ghana has an environmental permit for both the Teberebie and the Tarkwa properties. Gold Fields Ghana has been issued an environmental certificate for the two properties as a single unit dated October 27, 2003 which expires on October 26, 2006 and Teberebie is now treated as part of Tarkwa for purposes of this certificate. As part of the process of obtaining an environmental certificate, Gold Fields Ghana has posted a reclamation bond for Tarkwa and Teberebie and has submitted an environmental management plan covering both properties. In Ghana, environmental management plans are submitted biannually and include details regarding the likely impact of the operation on the environment, including local communities, as well as a comprehensive plan and timetable for actions to lessen and remediate adverse impacts. Reclamation bonds are assessed based on agreed estimated rehabilitation costs incurred to date and expected to be incurred during the two years until the next reclamation plan is submitted to the EPA. Estimated rehabilitation costs totaling $26.6 million are forecast over the life of Tarkwa and Teberebie.

On October 16, 2001, a cyanide solution spill was discovered at the Tarkwa property. Gold Fields has identified and corrected the cause of the spill. On October 19, 2001, Gold Fields reported the leak to the EPA. In consultation with Ghanaian government authorities, including the EPA, Gold Fields created a fund to pay for any costs incurred as a result of the spill in the amount of approximately $130,000 (Cedi 1.0 billion at an exchange rate of approximately Cedi 7,692 per $1.00). A writ was filed against Gold Fields by the chief and principal members of a nearby community on behalf of that community claiming compensation in respect of the spill. An agreement has been reached with this community and this legal action has been settled. However, it is possible that others could issue writs or make claims in connection with this incident. Management is not able at present to predict the final outcome of any such claims, if any, although it does not expect the final amount of the claims to be material to Gold Fields.

Gold Fields is in the process of devising programs to implement at its operations to become compliant with the International Cyanide Management Code.

Abosso submitted its first environmental impact assessment statement in 1991, but soon discovered the Damang orebody which necessitated revision of the statement. An amended and updated environmental impact assessment statement was submitted, and Abosso was then issued an environmental permit on November 21, 1995. This permit was amended in November 1996. Since then, Abosso has submitted the required environmental management plans and reclamation plans and is in compliance with all permit, certificate and reclamation requirements. An environmental certificate for the Damang mine was issued on October 9, 2003 for a two year period to October 8, 2005. Abosso was the first mining company in Ghana to sign a reclamation security agreement, in May 2001. This agreement was re-negotiated to include rehabilitation cost estimates in respect of additional expansion areas of the mine and to take account of a reduction in its reclamation liability after achieving certain prescribed reclamation criteria for a portion of the mining area covered by its lease. An amended and restated reclamation security agreement for Damang was signed in March 2003. Abosso has posted a reclamation bond of $2.0 million and deposited $200,000 cash to secure the agreement. Estimated rehabilitation costs totaling $6.3 million are forecast over the life of Damang.

Health and Safety

A mine owner is statutorily obligated to, among other things, take steps to ensure that the mine is managed and worked in accordance with the provisions of the Mining Regulations, 1970 L.I. 665 which provide for the safety and proper discipline of the mine workers. The regulations prescribe the measures to be taken at every mining operation to ensure the safety and health of mine workers. Additionally, Gold Fields is required under the terms of its mining leases to comply with the reasonable instructions of the Chief Inspector of Mines

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regarding health and safety on the mine. A violation of the provisions of the health and safety regulations or failure to comply with the reasonable instructions of the Chief Inspector of Mines could lead to, among other things, a shut down of all or a portion of the mine or the imposition of costly compliance procedures, and, in the case of a violation of the regulations relating to health and safety, constitutes an offence. Gold Fields, as the holder of the mining lease, has potential liability arising from injuries to, or deaths of, workers, including, in some cases, workers employed by its contractors. Although Ghanaian law provides statutory workers’ compensation for injuries or fatalities to workers, it is not the exclusive means for workers to claim compensation. Gold Fields’ insurance for health and safety claims or the relevant workers’ compensation may not be adequate to meet the costs which may arise upon any future health and safety claims. As a result, Gold Fields may suffer adverse consequences. See “Key Information — Risk Factors — Gold Fields’ operations in Ghana are subject to health and safety regulations which could impose significant costs and burdens.”

On September 12, 2003, the National Health Insurance Act, 2003 (Act 650) came into effect. The act requires every person resident in Ghana to belong to either a public or private health insurance scheme. To fund the National Health Insurance Fund, the act imposes a levy of 2.5% on goods and services produced or provided in, or imported into, Ghana. By the National Health Insurance (Commencement of Levy) Instrument, 2004 (L.I. 1973) the imposition of the levy came into force on August 1, 2004. Certain types of machinery used in mining, as well as water and certain types of fuel are exempt from the levy. Employers who establish or contribute to a private health insurance scheme are not exempt from payment of the levy. As a result, the imposition of the levy could increase Gold Fields’ costs with respect to goods and services utilized in Ghana, including labor costs. See “Key Information — Risk Factors — Gold Field’s operations in Ghana are subject to health and safety regulations which could impose significant costs and burdens.”

Mineral Rights

Under the Minerals and Mining Law 1986, neither a landowner nor any other person may search for minerals or mine on any land without having been granted a mineral right by the Minister responsible for mines.

Gold Fields Ghana holds five mining leases in respect of its operations at the Tarkwa property, each dated April 18, 1997, and two mining leases dated February 2, 1988 and June 18, 1992, respectively, for its operations at the Teberebie property. The Tarkwa property mining leases all expire in 2027 and the Teberebie property mining leases both expire in 2018. Under the provisions of the Minerals and Mining Law and the terms of the mining leases, all of the Tarkwa property and Teberebie property mining leases are renewable by agreement between Gold Fields Ghana and the government of Ghana.

Abosso holds a mining lease in respect of the Damang mine dated April 19, 1995, as amended by an agreement dated April 4, 1996. This lease expires in 2025. As with the Tarkwa and Teberebie mining leases, this lease is renewable under its terms and the provisions of the Minerals and Mining Law by agreement between Abosso and the government of Ghana.

In addition, under Ghanaian law, the Tarkwa property mining leases are subject to the ratification of parliament. The Minerals Commission, the statutory corporation overseeing the mining operations on behalf of the government of Ghana, has submitted the Tarkwa property leases for parliamentary ratification, but they have not yet been ratified. See “Key Information — Risk Factors — Gold Fields’ mineral rights in Ghana are subject to regulations which could impose significant costs and burdens.”

A license is required for the export, sale or other disposal of minerals and the permission of the Chief Inspector of Mines is required to remove minerals obtained by the holder of a mineral right. Under the Project Development Agreement between, among others, Gold Fields Guernsey Limited and the government of Ghana, Gold Fields is entitled to export and sell its entire production of gold and by-products. However, under Ghanaian law, the government has a right to compel the sale to it of all minerals obtained in Ghana and all products derived from the refining or treatment of minerals. In respect of Abosso, the government has

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agreed pursuant to a deed of warranty dated April 26, 1996, not to exercise these pre-emption rights for as long as Abosso follows the procedure for marketing its products as may be approved by the Bank of Ghana acting on the advice of the Minerals Commission.

Under the provisions of the Minerals and Mining Law, the size of an area in respect of which a mining lease may be granted cannot exceed 50 square kilometers for any single grant or 150 square kilometers in the aggregate for any company. Gold Fields Ghana’s mining leases cover approximately 207 square kilometers and Abosso’s mining lease covers approximately 52 square kilometers. Gold Fields has identified land at the Tarkwa and Damang sites which is not viable for Gold Fields’ desired use and plans to give up that land so as to come within the prescribed limits prior to the end of calendar 2004.

Recent Fiscal Measures

The Ghanaian elections of 2000 resulted in the principal opposition party winning and therefore forming the present government. Since this government came into power it has passed legislation imposing a national reconstruction levy for the calendar years 2001 and 2002 which in the case of mining companies is 2.5% of operating profit. This levy has been extended for the calendar years 2003, 2004 and 2005. Additionally the current Ghana government has introduced measures imposing levies on mining equipment previously exempt from customs duty. The Ghana Chamber of Mines has made formal representation to the government expressing concern that these legislative measures have eroded the competitiveness of the fiscal regime in Ghana.

Government Option to Acquire Shares of Mining Companies

Under Ghanaian law, the government is entitled to a 10% interest in any Ghanaian company which holds mineral rights in Ghana without the payment of compensation. The government of Ghana has already received this 10% interest in each of Gold Fields Ghana and Abosso. The government also has the option of acquiring an additional 20% interest in the share capital of mining companies at a price agreed upon by the parties, at the fair market value at the time the option is exercised, or as may be determined by international arbitration. The government of Ghana exercised this option for Gold Fields Ghana, and subsequently transferred the interest, which now forms part of the IAMGold interest in Gold Fields Ghana. The Government of Ghana retains this option to purchase an additional 20% of the share capital of Abosso. As far as management is aware, the government of Ghana has not exercised this option for any other gold mining company in the past.

Under the Minerals and Mining Law, the government has a further option to acquire a “special share” in a mining company for no consideration or in exchange for such consideration as the government and that company shall agree. This interest, when acquired, constitutes a special share which gives the government the right to attend and speak at any general meeting of shareholders, but does not entitle the government to any voting rights. The special share does not entitle the government to distributions of profits of the company which issues it to the government. The written consent of the government is required to make any amendment to a company’s articles of incorporation relating to the government’s option to acquire a special share. Although the government of Ghana has agreed not to exercise this option for Gold Fields Ghana, it has retained this option for Abosso.

Exchange Controls

Ghana’s exchange control laws require permission from the Ghanaian authorities for transactions involving foreign currency. Under a foreign exchange retention account agreement with the government of Ghana, Gold Fields Ghana is required to repatriate 20% of its revenues derived from the Tarkwa mine to Ghana and use the repatriated revenues in Ghana or maintain them in a Ghanaian bank account. Abosso is currently obligated to repatriate 25% of its revenue to Ghana, although the level of repatriation under the deed of warranty between Abosso and the government of Ghana is subject to renegotiation every two years. The most recent

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negotiations were concluded in February 2003. While management has no reason to believe that the repatriation level will increase as a result of the next set of negotiations, there is no agreed ceiling on the repatriation level, and it could be increased. Any increase could adversely affect Gold Fields’ ability to use the cash flow from the Damang mine outside Ghana, including to fund working costs and capital expenditures at other operations, to provide funds for acquisitions and to repay principal and interest on indebtedness.

During the first half of 2000 the central bank, or the Bank of Ghana, requested mining companies, including Gold Fields Ghana and Abosso, to repatriate an additional 25% of their revenues to foreign currency accounts with local banks. Gold Fields Ghana and Abosso were specifically asked to do so by letter from the then Minister of Finance. Gold Fields Ghana responded that it was at the time repatriating more than its required percentage of revenues to Ghana and expected to continue to, although it could not guarantee that it would, do so for the foreseeable future. Neither Gold Fields Ghana nor Abosso has heard anything further from either the Bank of Ghana or the Minister of Finance. Because of its need to fund operating costs for the Ghana operation, Gold Fields currently repatriates approximately 40% of revenues from the Ghana operation to Ghana. The Bank of Ghana or the Ministry of Finance may in the future request or direct Gold Fields to repatriate higher amounts to Ghana. Management believes that Gold Fields Ghana is entitled to rely on the provisions of the foreign exchange retention account agreement for the duration of the Tarkwa mining leases.

Australia

Environmental

While Australia’s national government retains the power to regulate activities which impact upon matters of national environmental significance, the Constitution vests the power to legislate environmental matters principally in the states. Gold Fields’ gold operations in Australia are primarily subject to the environmental laws and regulations of the State of Western Australia. The Western Australia Environmental Protection Act 1986 and Mining Act require, among other things, that Gold Fields obtain environmental licenses, work approvals and mining licenses to begin mining operations.

During the operational life of its mines, Gold Fields is required by law to make provisions for the ongoing rehabilitation of its mines and to provide for the cost of post-closure rehabilitation and monitoring once mining operations cease. Gold Fields guarantees its environmental obligations by providing the Western Australian government with unconditional bank-guaranteed performance bonds. However, these bonds would not cover any environmental events requiring remediation that were unforeseen at the time the bonds were issued or which occur as a result of a breach of Gold Fields’ environmental licensing conditions.

The Contaminated Site Act 2003 is expected to come into effect in late 2004. This legislation will require Gold Fields to report known or suspected contaminated sites. Gold Fields may also be required to remediate an affected site if there is contamination that is likely to cause harm to human health or the environment. The government of Western Australia recently amended the Environmental Protection Act 1986 to create new offences in relation to environmental harm (some of which provide for strict liability) and other obligations with which Gold Fields must comply. One of the purposes for these amendments is to broaden the Department of Environmental Protection’s power to prosecute for environmental harms. As a result, Gold Fields’ exposure to prosecution for environmental harms may be increased. Further, as a result of these changes, Gold Fields’ environmental duties and responsibilities will be increased which could impose significant costs and burdens. See “Key Information — Risk Factors — Gold Fields’ operations in Australia are subject to environmental regulations which could impose significant costs and burdens.”

Gold Fields is in the process of devising programs to implement at its operations to become compliant with the International Cyanide Management Code.

Health and Safety

The Western Australia Mines Safety and Inspection Act 1994 (WA), or the Safety and Inspection Act, regulates the duties of employers and employees in the mining industry with regard to occupational health and safety and outlines offences and penalties for breach. The regulations prescribe specific measures and provide

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for inspectors to review the work site for hazards and violations of the health and safety requirements. A violation of the health and safety laws or failure to comply with the instructions of the relevant health and safety authorities could lead to, among other things, a temporary shut down of all or a portion of the mine, a loss of the right to mine or the imposition of costly compliance procedures. However, mine owner liability for contractors’ employees under the Safety and Inspection Act extends only to matters which the employer can reasonably control. See “Key Information — Risk Factors — Gold Fields’ operations in Australia are subject to health and safety regulations which could impose significant costs and burdens.”

A bill to reform laws with respect to health and safety in Western Australia’s mining industry was introduced in the Western Australia parliament in August 2004 but has not, as yet, been passed. The proposed reforms will increase penalties for breaches of the health and safety law, including imprisonment of persons found liable for the breaches and introduce new offenses, including gross negligence causing death or serious injury. In addition, there will be broader powers for inspectors to impose improvement or prohibition notices on machinery and work practices, and a new duty of care imposed on employers with respect to residential accommodation supplied in connection with employment. If these changes are enacted, Gold Fields’ exposure to prosecution will be increased, as will be the costs of health and safety compliance of Gold Fields’ mining operations in Australia.

Mineral Rights

In Australia, the ownership of land is separate from the ownership of most minerals, which are the property of the states and are thus regulated by the state governments. The Western Australian Mining Act 1978 (WA), or the Mining Act, is the principal piece of legislation governing exploration and mining on land in Western Australia. Licenses and leases for, among other things, prospecting, exploration and mining must be obtained pursuant to the requirements of the Mining Act before the relevant activity can begin. Application fees and rental payments are payable in respect of each mining tenement.

Prospecting licenses, exploration licenses and mining leases are subject to prescribed minimum annual expenditure commitments. Royalties are payable to the state based on the amount of ore produced or obtained from a mining tenement. A monthly production report must be filed and royalties are calculated accordingly.

Ministerial consent is required with respect to assignment or sale of a mining lease and certain other leases and tenements. Gold Fields has obtained ministerial consent for the transfer of all material mining leases and other tenements acquired from WMC.

Land Claims

In 1992, the High Court of Australia recognized a form of native title which protects the rights of indigenous people in relation to land in certain circumstances. As a result of this decision, the Native Title Act 1993 (Cth), or Native Title Act, was enacted to recognize and protect existing native title by providing a mechanism for the determination of native title claims and a statutory right for Aboriginal groups or persons to negotiate, object, and/or be consulted when, among other things, there is an expansion of, or change to, the rights and interests in the land which affects native title and constitutes a “future act” under the Native Title Act. The existence of these claims does not necessarily prevent continued mining under existing tenements. Certain of Gold Fields’ tenements are currently subject to native title claims.

Mining leases do not necessarily extinguish all native title, but do extinguish the native title rights with which they conflict. The right of native title holders to control access to land is extinguished by a mining lease in Western Australia. However, mining leases may not extinguish other native title rights. Therefore, some native title rights may co-exist with the rights granted under a mining lease. Compensation could be payable for rights lost by native title holders on the grant of a mining lease. In addition, negotiations with native title applicants are generally necessary before a new mining lease will be granted by the state and these can be time consuming and costly.

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It is possible that land comprised in seven of Gold Fields’ existing tenements could be at risk due to native title claims, because those particular tenements may have been granted by the State of Western Australia in a manner contrary to the Native Title Act. Although the validity of those seven tenements is in question, Gold Fields’ management does not believe those tenements are material to its Australian operation.

The Aboriginal heritage laws protect sites of significance to Aboriginal people which have ongoing ethnographic, archaeological or historic significance. Gold Fields is aware of several Aboriginal heritage sites on its tenements. However, it does not believe that the protected status of these sites will materially affect its current operations in Australia. See “Key Information — Risk Factors — Gold Fields’ tenements in Australia are subject to native title claims and Aboriginal heritage sites which could impose significant costs and burdens.”

Property

Gold Fields’ operations as of June 30, 2004 comprised the following:

Gold Fields’ operative mining areas as of June 30, 2004

         
Operation
  Size
Driefontein
  8,591 hectares
Kloof
  20,086 hectares
Beatrix
  16,821 hectares
Ghana
       
Tarkwa
  20,700 hectares
Damang
  5,239 hectares
Australia
       
St. Ives
  91,078 hectares
Agnew
  58,868 hectares

Gold Fields leases its corporate headquarters in Johannesburg.

The New Minerals Act came into operation on May 1, 2004. The New Minerals Act vests the right to prospect and mine in the state (which includes the rights to grant prospecting and mining rights on behalf of the nation) to be administered by the government of South Africa. Under the former regulatory regime, mineral rights (which encompass the right to prospect and mine) in South Africa were held either privately or by the government of South Africa. Ownership of private mineral rights was held through title deeds and constituted real rights in land, which were enforceable against any third party. Prospecting and mining are now regulated by the provisions of the New Minerals Act including the transitional provisions included therein.

The transitional provisions of the New Minerals Act phase out existing rights to prospect and mine granted under the old legislation. Gold Fields owned substantially all of the mineral rights under the previous regime for which it has mining authorizations under that regime. Gold Fields will seek to convert those rights into mining rights under the New Minerals Act. Gold Fields is in the process of preparing its application for conversion of its rights into mining rights under the New Minerals Act. Gold Fields also owns most of the surface rights with respect to its South African mining properties. Where Gold Fields conducts surface operations on land the surface rights of which it does not own, it does so in accordance with applicable mining and property laws. In addition, Gold Fields owns various mineral, under the previous regime, and surface rights contiguous to its operations in South Africa. As required under the New Minerals Act, Gold Field intends to register its surface rights utilized for mining purposes before April 30, 2005. Gold Fields has received mining rights on properties which it has identified as being able to contribute, now or in the future, to its business and will similarly seek to convert those mining rights to mining rights under the New Minerals Act. See “— Regulatory and Environmental Matters — South Africa — Mineral Rights.”

Gold Fields Ghana obtained the mining rights for the Tarkwa property from the government of Ghana in 1993. In August 2000, with the consent of the government of Ghana, Gold Fields Ghana was assigned the

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mining rights for the northern portion of the Teberebie property. The Tarkwa rights expire in 2027, while the Teberebie rights expire in 2018. Abosso holds the right to mine at the Damang property under a mining lease from the government of Ghana which expires in 2025. Gold Fields may exploit all surface and underground gold at all three sites until the rights expire, provided that Gold Fields pays the government of Ghana a royalty which is calculated on the basis of a formula which ranges from 3% to 12% of revenues derived from mining at the sites. For fiscal 2004, this formula resulted in Gold Fields paying royalties equivalent to approximately 3% of the revenues from gold produced at the Tarkwa and Teberebie properties, and Abosso paying approximately 3% of the revenues from gold produced at the Damang property.

In Australia, mining rights and property are leased from the state. Australian mining leases have an initial term of 21 years with one automatic 21-year renewal period and thereafter an indefinite number of 21-year renewals with government approval. Gold Fields pays a royalty to the state of 2.5% of revenues from gold produced at St. Ives and Agnew.

Gold Fields also holds exploration tenements covering a total of approximately 26.2 million hectares (excluding mining leases and the Cerro Corona exploration leases) in various countries, including China, Indonesia, Finland, South Africa, Ghana and Australia. Gold Fields’ ownership interests in these sites vary with its participation interests in the relevant exploration projects. See “— Exploration.”

Gold Fields holds title to numerous non-mining properties in South Africa, including buildings, shops, farmland and hospitals. In addition, Gold Fields controls, directly and indirectly, approximately 66,000 hectares of land in the West Wits region, including, among other things, a nature reserve, wetlands and a golf course.

Research and Development

Gold Fields undertakes various research and development projects relating to gold production technology and potential uses of gold. In particular, Gold Fields has developed a patented technology called Biox® through its wholly-owned Swiss subsidiary Biomin Technologies S.A. Biox® involves a process by which bacteria releases gold from sulfide bearing gold ore to permit more economical recovery of the gold. During fiscal 2004, Gold Fields reevaluated the potential future income arising from existing and possible new contracts for Biox®, and as a result reduced the carrying value of the patent. See “Operating and Financial review and Prospects — Years ended June 20, 2004 and 2003 — Impairment of assets.”

Gold Fields is also participating, along with AngloGold Limited and Mintek, as well as other partners, in Project AuTek. Project AuTek involves research into and development of new industrial applications for gold and gold alloys. Gold Fields is also involved in a project called Future Mine with a consortium of other mining companies. The project is focused on researching and developing advanced technologies with applications for underground mining.

Legal Proceedings

On May 6, 2003 a lawsuit was filed by Zalumzi Singleton Mtwesi against Gold Fields Limited in the State of New York. Mr Mtwesi alleges, among other things, that during the apartheid era, he was subjected to human rights violations while employed at Kloof Gold Mining Company Limited, which at the time was a subsidiary of a predecessor of Gold Fields. Mr Mtwesi filed the lawsuit on behalf of himself and as representative of all other victims and all other persons similarly situated. In summary, Mr Mtwesi and the plaintiffs’ class demand an order certifying the plaintiffs’ class and compensatory damages from Gold Fields Limited in the amount of $7 billion. A complaint has not been served on Gold Fields. If and when service of the complaint takes place it will be vigorously contested.

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On July 9, 2004, a lawsuit was filed in a federal district court in New York by six individuals against Gold Fields and a number of other defendants including IBM Corporation, Anglo American PLC, UBS AG, Union Bank of Switzerland, Fluor Corporation, Strategic Minerals Corporation, the Republic of South Africa and President Thabo Mbeki. The lawsuit alleges, among other things, that one of the plaintiffs was a victim of apartheid by virtue of acts committed at facilities in Randfontein, South Africa, that were allegedly owned by one or more predecessors of Gold Fields and that Gold Fields is liable for various wrongful acts and property expropriation, as well as violations of international law, allegedly committed during the apartheid era in South Africa. The plaintiffs are jointly and severally seeking, on each of two counts, unspecified compensatory damages and punitive damages in the amount of $10 billion with interests and costs, against the various defendants. A complaint has not been served on Gold Fields.

See “Risk Factors — Gold Field is a named defendant in two lawsuits filed in the United States alleging human rights violations during the apartheid era which could impose significant costs and burdens.”

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Glossary of Mining Terms

The following explanations are not intended as technical definitions, but rather are intended to assist the reader in understanding some of the terms used in this annual report.

Absorption, desorption and recovery (AD&R): a treatment process involving the extraction of gold in solution using activated carbon, followed by removal of the gold from the carbon.

Agglomeration: a method of concentrating gold based on its adhesive characteristics.

Backfill: material, generally sourced from tailings or waste rock, used to refill mined-out areas to increase the long term stability of mines and mitigate the effects of seismicity.

Call option: a contract which provides the owner with the right, but not the obligation, to purchase an asset at a specified price on or before a specified date.

Carbon absorption: a treatment process which uses activated carbon to remove gold in solution.

Carbon in leach (CIL): a process similar to CIP (described below) except that the ore slurries are not leached with cyanide prior to carbon loading. Instead, the leaching and carbon loading occur simultaneously.

Carbon in pulp (CIP): a common process used to extract gold from cyanide leach slurries. The process consists of carbon granules suspended in the slurry and flowing counter-current to the process slurry in multiple-staged agitated tanks. The process slurry, which has been leached with cyanide prior to the CIP process, contains soluble gold. The soluble gold is absorbed onto the carbon granules which are subsequently separated from the slurry by screening. The gold is then recovered from the carbon by electrowinning onto steel wool cathodes or by a similar process.

Cleaning: the process of removing broken rock from a mine.

Closely spaced dip pillar mining method: a mining method where support pillars are left in place at relatively close intervals to increase the stability of the mine. Mining is conducted using conventional drilling and blasting techniques.

Comminution: the breaking, crushing or grinding of ore by mechanical means.

Crosscut: a mine working driven horizontally and at right angles to a level.

Cut-off grade: the grade which distinguishes the material within the orebody that is to be extracted and treated from the remainder. See also “— Paylimit.”

Decline or Incline: a sloping underground opening for machine access from the surface to an underground mine or from level to level in a mine. Declines and inclines are often driven in a spiral to access different elevations in the mine.

Depletion: the decrease in quantity of ore in a deposit or property resulting from extraction or production.

Development: activities (including shaft sinking and on-reef and off-reef tunneling) required to prepare for mining activities and maintain a planned production level and those costs incurred to enable the conversion of mineralization to reserves.

Development end: the end of an underground excavation or tunnel.

Dilution: the mixing of waste rock with ore, resulting in a decrease in the overall grade.

Dissolution: the process whereby a metal is dissolved and becomes amenable to separation from the gangue material.

Electrowinning: the process of removing gold from solution by the action of electric currents.

Elution: removal of the gold from the activated carbon.

Exploration: activities associated with ascertaining the existence, location, extent or quality of mineralization, including economic and technical evaluations of mineralization.

Flotation: the process whereby certain chemicals are added to the material fed to the leach circuit in order to float the desired minerals to produce a concentrate of the mineral to be processed. This process can be carried out in column floatation cells.

Footwall: the area below a geological feature.

Forward sale contract: the sale of a specified quantity of an asset at a future specified date at a fixed price.

Gangue: commercially valueless material remaining after ore extraction from rock.

Gold in process: gold in the processing circuit that is expected to be recovered during or after operations.

Gold reserves: the gold contained within proven and probable reserves on the basis of recoverable material (reported as mill delivered tonnes and head grade).

Grade: the quantity of metal per unit mass of ore expressed as a percentage or, for gold, as grams of gold per tonne of ore.

Greenfield: a potential mining site of unknown quality.

Grinding: reducing rock to the consistency of fine sand by crushing and abrading in a rotating steel grinding mill.

Head grade: the grade of the ore as delivered to the metallurgical plant.

Heap leaching: a relatively low cost technique for extracting metals from ore by percolating leaching solutions through heaps of ore placed on impervious pads. Generally used on low-grade ores.

In situ: within unbroken rock or still in the ground.

Jig: a rock drill mounted on a bar which can be moved up and down quickly. Used in the stope for drilling holes parallel to each other.

Jumbo cut and mullock fill mining method: a mining method using a Jumbo multi-head drilling rig and waste rock, or mullock, as opposed to tailings, as backfill.

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Leaching: dissolution of gold from the crushed and milled material, including reclaimed slime, for absorption and concentration on to the activated carbon.

Level: the workings or tunnels of an underground mine which are on the same horizontal plane.

Life of mine, or LoM: the expected remaining years of production, based on production rates and ore reserves.

London afternoon fixing price: the afternoon session open fixing of the gold price which takes place daily in London and is set by a board comprising five financial institutions.

London morning fixing price: the morning session open fixing of the gold price which takes place daily in London and is set by a board comprising five financial institutions.

Longwall mining method: a mining method involving mining over large continuous spans without the use of pillars.

Mark-to-market: the current fair value of a derivative based on current market prices, or to calculate the current fair value of a derivative based on current market prices, as the case may be.

Measures: conversion factors from metric units to U.S. units are provided below.

         
Metric unit   U.S. equivalent
1 tonne
  = 1 t   = 1.10231 short tons
1 gram
  = 1 g   = 0.03215 ounces
1 gram per tonne
  = 1 g/t   = 0.02917 ounces per short ton
1 kilogram per tonne
  = 1 kg/t   = 29.16642 ounces per short ton
1 kilometer
  = 1 km   = 0.62137 miles
1 meter
  = 1 m   = 3.28084 feet
1 centimeter
  = 1 cm   = 0.39370 inches
1 millimeter
  = 1 mm   = 0.03937 inches
1 hectare
  = 1 ha   = 2.47104 acres

Metallurgical plant: a processing plant used to treat ore and extract the contained gold.

Metallurgical recovery factor: the proportion of metal in the one delivered to the mill, that is recovered by the metallurgical process or processes.

Metallurgy: in the context of this document, the science of extracting metals from ores and preparing them for sale.

Mill delivered tonnes: a quantity, expressed in tonnes, of ore delivered to the metallurgical plant.

Milling/mill: the comminution of the ore, although the term has come to cover the broad range of machinery inside the treatment plant where the gold is separated from the ore.

Mine call factor: the ratio, expressed as a percentage, of the specific product recovered at the mill (plus residue) to the specific product contained in an orebody calculated based on an operation’s measuring and valuation methods.

Mineralization: the presence of a target mineral in a mass of host rock.

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Net smelter return: the volume of refined gold sold during the relevant period multiplied by the average spot gold price and the average exchange rate for the period, less refining, transport and insurance costs.

Open pit/open cut: mining in which the ore is extracted from a pit. The geometry of the pit may vary with the characteristics of the orebody.

Ore: a mixture of material containing minerals from which at least one of the minerals can be mined and processed at an economic profit.

Orebody: a well defined mass of material of sufficient mineral content to make extraction economically viable.

Ore grade: the average amount of gold contained in a tonne of gold bearing ore expressed in grams per tonne.

Ore reserves or reserves: that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.

Ounce: one Troy ounce, which equals 31.1035 grams.

Overburden: the soil and rock that must be removed in order to expose an ore deposit.

Paylimit: the value at which the orebody can be mined without profit or loss, calculated using an appropriate gold price, production costs and recovery factors. See also “— Cut-off grade.”

Payshoot: a linear to sub-linear zone within a reef for which gold grades or accumulations are predominantly above the cut-off grade.

Paytrend: an ore zone which occurs in a specific direction and which has a concentration of minerals that is above the average concentration of minerals in the orebody.

Probable reserves: reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.

Production stockpile: the selective accumulation of low grade material which is actively managed as part of the current mining operations.

Prospect: to investigate a site with insufficient data available on mineralization to determine if minerals are economically recoverable.

Prospecting permit or right: permission to explore an area for minerals.

Proven reserves: reserves for which: (1) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling; and (2) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.

Pumpcell: a carbon absorption process whereby gold in solution is absorbed onto activated carbon.

Reef: a gold-bearing sedimentary horizon, normally a conglomerate band, that may contain economic levels of gold.

Refining: the final stage of metal production in which final impurities are removed from the molten metal by introducing air and fluxes. The impurities are removed as gases or slag.

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Rehabilitation: the process of restoring mined land to a condition approximating its original state.

Remnant pillar mining: the removal of blocks of ground previously left behind for various reasons during the normal course of mining.

Rock burst: an event caused by seismicity which results in damage to underground workings and/or loss of life and equipment.

Rock dump: the historical accumulation of low grade material derived in the course of mining which is processed in order to take advantage of spare processing capacity.

Run of Mine (RoM): a loose term to describe ore of average grade.

Sampling: taking small pieces of rock at intervals along exposed mineralization for assay (to determine the mineral content).

Scattered mining method: conventional mining which is applied in a non-systematic configuration.

Seismicity: a sudden movement within a given volume of rock that radiates detectable seismic waves. The amplitude and frequency of seismic waves radiated from such a source depend, in general, on the strength and state of stress of the rock, the size of the source of seismic radiation, and the magnitude and the rate at which the rock moves during the fracturing process. Rock bursts, as defined above, involve seismicity.

SAG ball crushing (SABC) mill: a comminution process in which a SAG mill is used in conjunction with a ball mill and a crushing circuit.

Semi-autogenous grinding (SAG) mill: a piece of machinery used to crush and grind ore which uses a mixture of steel balls and the ore itself to achieve comminution. The mill is shaped like a cylinder causing the grinding media and the ore itself to impact upon the ore.

Shaft: a shaft provides principal access to the underground workings for transporting personnel, equipment, supplies, ore and waste. A shaft is also used for ventilation and as an auxiliary exit. It may be equipped with a surface hoist system that lowers and raises conveyances for men, materials and ore in the shaft. A shaft generally has more than one conveyancing compartment.

Slimes: the finer fraction of tailings discharged from a processing plant after the valuable minerals have been recovered.

Slurry: a fluid comprising fine solids suspended in a solution (generally water containing additives).

Smelting: thermal processing whereby molten metal is liberated from beneficiated ore or concentrate with impurities separating as lighter slag.

Spot price: the current price of a metal for immediate delivery.

Stockpile: a store of unprocessed ore.

Stope: the underground excavation within the orebody where the main gold production takes place.

Stripping: the process of removing overburden to mine ore.

Stripping ratio: the number of units of overburden which must be removed in order to mine one unit of ore.

Sulfide: a mineral characterized by the linkages of sulfur with a metal or semi-metal, such as pyrite (iron sulfide). Also a zone in which sulfide minerals occur.

Sweeping: the clean-up of residual ore in a mine left behind during the normal cleaning operations.

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Tailings: finely ground rock from which valuable minerals have been extracted by milling.

Tailings dam/slimes dam: dams or dumps created from tailings or slimes.

Tonnage: quantities where the ton or tonne is an appropriate unit of measure. Typically used to measure reserves of gold-bearing material in situ or quantities of ore and waste material mined, transported or milled.

Tonne: one tonne is equal to 1,000 kilograms (also known as a “metric” ton).

Total cash costs per ounce: a measure of the average cost of producing an ounce of gold, calculated by dividing the total cash costs in a period by the total gold production over the same period. Total cash costs represent production costs as recorded in the statement of operations less offsite (i.e., central) general and administrative expenses (including head office costs charged to the mines, central training expenses, industry association fees, refinery charges and social development costs), rehabilitation costs, plus royalties and employee termination costs. In determining the total cash cost of different elements of the operations, production overheads are allocated pro rata.

Total production costs per ounce: a measure of the average cost of producing an ounce of gold, calculated by dividing the total production costs in a period by the total gold production over the same period. Total production costs represent total cash costs, plus amortization, depreciation and rehabilitation costs.

Uphole bench and fill mining method: a mining method where a section of ore is drilled from the level below the section to the level above the section, blasted and removed. The void is then filled with waste rock or tailings to form a working platform for removing the next section of ore.

Uphole open stoping mining method: a mining method where a section of ore is drilled from the level below the section to the level above the section. Then, vertical “slices” of the section are blasted and removed in succession. The void is not filled at the production stage, but may be filled with waste rock or tailings once production has ceased.

Waste: rock mined with an insufficient gold content to justify processing.

Yield: the actual grade of ore realized after the mining and treatment process.

Zinc precipitation: a chemical reaction using zinc dust that converts gold solution to a solid form for smelting into unrefined gold bars.

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Item 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS

You should read the following discussion and analysis together with Gold Fields’ consolidated financial statements including the notes, appearing elsewhere in this annual report. Certain information contained in the discussion and analysis set forth below and elsewhere in this annual report includes forward-looking statements that involve risks and uncertainties. See “Additional Information — Forward-Looking Statements” and “Key Information — Risk Factors” for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in this annual report.

Overview

General

Gold Fields is a significant producer of gold and major holder of gold reserves in South Africa, Ghana and Australia. Gold Fields is primarily involved in underground and surface gold mining and related activities, including exploration, extraction, processing and smelting. Gold Fields is currently the second largest gold producer in South Africa, on the basis of annual production, and one of the largest gold producers in the world. Gold Fields is also currently engaged in exploration activities for platinum group metals primarily in Finland. In the year ended June 30, 2004, Gold Fields produced 4.4 million ounces of gold, 4.2 million ounces of which were attributable to Gold Fields, and the remainder of which were attributable to minority shareholders in Gold Fields Ghana Limited, or Gold Fields Ghana, and Abosso Gold Fields Limited, or Abosso. Gold Fields had attributable reserves of 75.4 million ounces of gold as of June 30, 2004.

The Gold Fields group holdings evolved through a series of transactions, principally in 1998 and 1999. With effect from January 1, 1998, a company formed on November 21, 1997 and referred to in this discussion as Original Gold Fields acquired substantially all of the gold mining assets and interests previously held by Gold Fields of South Africa Limited, or GFSA, Gencor Limited, New Wits Limited and certain other shareholders in the companies owning the assets and interests. These assets and interests included all of the Beatrix, Oryx and Kloof mines, a 70.0% interest in the Tarkwa mine (which was increased to 71.1% through dilution of some of the other shareholders in 1999), a 54.2% interest in the St. Helena mine and a 37.3% interest in the Driefontein mine. The transaction involved a purchase of the assets and interests held by the three selling companies, as well as offers to the minority shareholders of the three companies holding the Beatrix, Oryx and Kloof mines to acquire their shares in exchange for Original Gold Fields shares. Original Gold Fields accounted for the transaction as a purchase. Because Original Gold Fields was formed as a subsidiary of GFSA, the assets acquired from GFSA were accounted for at the value they had been carried at on GFSA’s books. The assets acquired from Gencor Limited, New Wits Limited and the minority shareholders were accounted for at fair value.

With legal effect from January 1, 1999, Original Gold Fields was acquired by the company that is today Gold Fields. For accounting purposes, Original Gold Fields was fully consolidated with effect from June 1, 1999. Although for legal purposes Gold Fields acquired Original Gold Fields, for accounting purposes, Original Gold Fields was considered the acquiror because the Original Gold Fields shareholders obtained the majority interest in the enlarged company. As part of this transaction, the remaining interest in the Driefontein mine came into the Gold Fields group.

With effect from July 1, 1999, Gold Fields acquired the remaining interest in the St. Helena mine and reorganized the group to simplify its holding structure. For further details of the evolution of the Gold Fields group structure, see “Information on the Company —History.”

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Total gold production was 4.307 million ounces in fiscal 2002 including gold production from Kloof Shaft No. 4, which was capitalized until the end of fiscal 2002 while the shaft was at the development stage, (4.109 million ounces of which were attributable to Gold Fields with the remainder attributable to minority shareholders in Gold Fields Ghana and Abosso. Total gold production increased to 4.577 million ounces in fiscal 2003 (4.334 million ounces of which were attributable to Gold Fields with the remainder attributable to minority shareholders in Gold Fields Ghana and Abosso). This was mainly due to the St. Ives and Agnew mines in Australia and the Damang mine in Ghana being accounted for the full twelve months in fiscal 2003 compared to seven months and five months, respectively, in fiscal 2002. This was slightly offset by St Helena only being accounted for four months in fiscal 2003, compared to the full twelve months in fiscal 2002, due to the sale of St Helena effective October 30, 2002. Total gold production decreased to 4.406 million ounces in fiscal 2004 (4.158 million ounces which were attributable to Gold Fields with the remainder attributable to minority shareholders in Gold Fields Ghana and Abosso). This decrease was due to the closure of two loss making shafts, Kloof Shaft No. 9 and Driefontein Shaft No. 10 and the planned reduction of marginal mining at the South African operations. This strategy was due to the sharp reduction in the rand gold price in the latter half of the year.

Australian Acquisition

On November 5, 2001, Gold Fields and two newly-established Australian subsidiaries of Gold Fields entered into an agreement with WMC to acquire the St. Ives and Agnew gold mining operations from WMC. The transaction was completed on November 30, 2001. The consideration for the transaction was $233.1 million, comprising $180.0 million in cash and 12,000,000 Gold Fields ordinary shares valued at $53.1 million. Of the cash amount, a total of $169.6 million was paid on November 30, 2001. The remainder was comprising principally of amounts in respect of transfer taxes and was paid in full by June 2002. Pursuant to the agreement with WMC, Gold Fields was obligated to issue to WMC ordinary shares with a value of $52.0 million based on the trading price of Gold Fields’ ADSs, subject to a minimum of 12,000,000 ordinary shares being issued. The higher value of $53.1 million assigned to the ordinary shares by Gold Fields is due to the method of determining that value under U.S. GAAP. On November 30, 2001, Gold Fields issued 12,000,000 ordinary shares to WMC. The market value of those ordinary shares, based on the closing price of Gold Fields’ ADSs of $4.60 on November 29, 2001, was $55.2 million. Gold Fields has also agreed to make certain future royalty payments if the future gold price and St. Ives’ and Agnew’s cumulative future gold production exceed specified amounts. On June 26, 2002 WMC agreed to give up its right to receive royalties from the Agnew operation in exchange for a payment of A$3.6 million ($2.0 million at an exchange rate of A$1.80 to $1.00), which was paid on July 11, 2002. On November 30, 2001, Gold Fields drew down the full amount of a $160.0 million term loan facility and $5.0 million of a $90.0 million revolving credit facility to finance, in part, the acquisition. Gold Fields made the first repayment of $16.0 million on the term loan facility in May 2002. During fiscal 2003, Gold Fields repaid $114.5 million on the term loan facility and the full $5 million on the revolving credit facility. During fiscal 2004 the balance of the loan was repaid. See “—Liquidity and Capital Resources—Credit facilities.” Gold Fields assumed operational control of St. Ives and Agnew upon the completion of the acquisition on November 30, 2001.

Damang Acquisition

On January 23, 2002, Gold Fields and Repadre Capital Corporation, or Repadre (now IAMGold Corporation, or IAMGold), completed the acquisition from Ranger Minerals Limited, or Ranger, of Ranger’s 90% beneficial interest in Abosso and shareholder loans from Ranger to Abosso totaling A$75.7 million ($39.4 million at an exchange rate of A$1.92 per $1.00, which was the noon buying rate on the date of the transaction). Abosso is a Ghanaian company which owns the Damang mine in Ghana. The consideration for the purchase was A$63.3 million ($32.9 million at an exchange rate of A$1.92 per $1.00) contributed by Gold Fields and 4,000,000 Repadre shares contributed by Repadre. On January 23, 2002, Gold Fields drew down the full amount of $50.0 million available under two credit facilities to provide funds for the acquisition,

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refinance a letter of credit which acts as an environmental performance bond for the Damang mine, refinance Abosso’s existing indebtedness and provide funds for general corporate purposes. By June 2002, Gold Fields repaid in full the $15.0 million amount of one of these facilities and during fiscal 2003 Gold Fields repaid $20.9 million on the other facility. During fiscal 2004 the balance of the loan was repaid. See “—Liquidity and Capital Resources—Credit facilities.” Gold Fields assumed operational control of Damang upon the completion of the acquisition of Abosso on January 23, 2002.

St. Helena Disposal

On October 30, 2002, Gold Fields disposed of the St. Helena gold mining operation to the ARMgold/Harmony Freegold Joint Venture Company (Proprietary) Limited, or Freegold, for a gross consideration of Rand 120.0 million and a monthly 1% royalty payment to Gold Fields on the net revenues from gold sales from the St. Helena mine for a period of four years after October 30, 2002.

Driefontein Mining Area Disposal

On September 18, 2003, Gold Fields and AngloGold Limited, or AngloGold, announced that an agreement has been reached on the sale of a portion of the Driefontein mining area to AngloGold for cash consideration of Rand 315 million. The transaction related to the mining area Block 1C11, which covers an area of 280,000 square meters and is located on the western boundary of the Driefontein mine. The mining area can be accessed from the adjacent TauTona mining operation of AngloGold. The sale, which was conditional upon approval by the South African Competition Commission, was finalized in January 2004.

Mvelaphanda Transaction

On March 8, 2004, the shareholders of Gold Fields approved a series of transactions, referred to in this discussion as the Mvela Transaction, involving the acquisition by Mvelaphanda Resources Limited, or Mvela Resources, of a 15% beneficial interest in the South African gold mining assets of Gold Fields for cash consideration of Rand 4,139 million.

The Mvela Transaction was preceded by an internal restructuring of Gold Fields, whereby each of the Driefontein, Kloof and Beatrix mining operations, as well as certain ancillary assets and operations, were transferred to a new, wholly-owned subsidiary of Gold Fields, GFI Mining South Africa (Proprietary) Limited, or GFIMSA.

On November 26, 2003, Gold Fields, Mvela Resources, Mvelaphanda Gold (Proprietary) Limited, or Mvela Gold, a wholly owned subsidiary of Mvela Resources, and GFIMSA entered into a covenants agreement, or the Covenants Agreement, regulating their rights and obligations with respect to GFIMSA. This agreement became effective following the advance by Mvela Gold of the loan to GFIMSA described below, which is referred to in this discussion as the Mvela Loan, and, among other things, provides for Mvela Gold to nominate two members of GFIMSA’s board of directors and two members of each of GFIMSA’s Operations Committee and Transformation Committee, the latter of which has been established to monitor compliance with the mining charter promulgated under the Mineral and Petroleum Resources Development Act 2002. See “Information on the Company–Regulatory and Environmental Matters–Mineral Rights.” Under the Covenants Agreement, GFIMSA cannot dispose of any material assets, enter into, cancel or alter any material transaction between GFIMSA and any related party or make any material amendment to its constitutive documents without the prior written consent of Mvela Gold. In addition, if Gold Fields or GFIMSA wants to increase the interest of black empowerment entities in GFIMSA or in any business or assets of GFIMSA, other than pursuant to an employee share incentive scheme, Gold Fields must offer to Mvela Gold the opportunity to increase its interest in GFIMSA. By its terms, the Covenants Agreement remains in force for so long as Gold Fields remains a shareholder in GFIMSA and Mvela Gold holds the right to subscribe for 15% of the shares in, or is a shareholder of, GFIMSA,

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provided that it terminates if the shares of GFIMSA are listed on the JSE Securities Exchange South Africa.

On December 11, 2003, Gold Fields, GFIMSA, and Mvela Gold entered into a subscription and share exchange agreement, or the Subscription and Share Exchange Agreement, pursuant to which, upon repayment of the Mvela Loan, Mvela Gold must subscribe for shares equal to 15% of GFIMSA’s outstanding share capital, including the newly issued shares, for consideration of Rand 4,139 million. In addition, for a period of one year after the subscription by Mvela Gold of the GFIMSA shares, each of Gold Fields and Mvela Gold will be entitled to require the exchange of Mvela Gold’s GFIMSA shares for ordinary shares of Gold Fields of an equivalent value based on an exchange ratio equal to 15% of a discounted cash flow calculation as applied to GFIMSA’s operations divided by the same calculation as applied to Gold Fields’ operations, with certain adjustments. In the event that the parties do not agree on the number of Gold Fields ordinary shares to be issued to Mvela Gold in such exchange, then the exchange ratio will be determined by an independent merchant bank or investment bank appointed by the parties. Mvela Gold has ceded its rights under the Subscription and Share Exchange Agreement to secure its obligations under certain mezzanine financing it incurred to fund, in part, the Mvela Loan. Mvela Gold is entitled to dispose of the GFIMSA shares and any Gold Fields ordinary shares it may hold only in accordance with the terms of a pre-emptive rights agreement entered into by the parties whereby if Mvela Gold receives an offer for, or otherwise wishes to sell, any GFIMSA or Gold Fields shares, it must first offer to sell them to Gold Fields. The Subscription and Share Exchange Agreement became unconditional following the advance of the Mvela Loan to GFIMSA on March 17, 2004.

On December 11, 2003, Gold Fields, GFIMSA, Mvela Gold, First Rand Bank Limited, Gold Fields Australia Pty Limited, or Gold Fields Australia, and Gold Fields Guernsey Limited, or Gold Fields Guernsey, entered into a loan agreement, or the Mvela Loan Agreement, pursuant to which Mvela Gold advanced a loan of Rand 4,139 million, or the Mvela Loan, to GFIMSA on March 17, 2004. GFIMSA applied the loan toward funding its acquisition of Gold Fields’ South African mining operations and certain ancillary assets and operations as part of the internal restructuring of Gold Fields. The Mvela Loan has a term of five years, bears interest at a rate of 10.57% per annum and is guaranteed by Gold Fields, Gold Fields Australia and Gold Fields Guernsey. GFIMSA may elect to repay the Mvela Loan, together with the present value of the then outstanding interest payment obligations and the tax payable by Mvela Gold as a result of such repayment, at any time starting 12 months after the Mvela Loan was advanced. While the Mvela Loan is outstanding, Gold Fields and any of its material subsidiaries, which is defined as any subsidiary whose gross turnover in the most recently ended financial year represents more than 5% of the consolidated gross turnover of Gold Fields and its subsidiaries, may not, subject to certain exceptions, (i) sell, lease, transfer or otherwise dispose of any assets, (ii) enter into any merger or similar transaction, or (iii) encumber its assets. The Mvela Loan will become immediately due and payable upon the occurrence of any event of default, which includes, among other things:

  failure to make payments of interest or principal;
 
  breach of the covenants in the agreement or of any material provision of the documents relating to the Mvelaphanda Transaction;
 
  any representation or statement of GFIMSA or any guarantor in the documents relating to the Mvela Loan being incorrect or misleading in a material and adverse way;
 
  default under other indebtedness of Gold Fields or any of its material subsidiaries in excess of Rand 75 million;
 
  insolvency of Gold Fields or any of its material subsidiaries;
 
  failure of Gold Fields or any of its material subsidiaries to pay any judgment in excess of Rand 75 million within five days of it becoming due;
 
  government expropriation of Gold Fields or any of its material subsidiaries or their respective material assets;

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  a change in the business, condition or prospects of any guarantor or Gold Fields and its subsidiaries taken as a whole that is reasonably likely to have a material adverse effect on the ability of GFIMSA or of any guarantor to perform its obligations or on the validity or enforceability of any document relating to the Mvela Loan;
 
  any litigation, arbitration, administrative proceedings or governmental or regulatory investigations or proceedings against Gold Fields or any of its material subsidiaries that is reasonably likely to be adversely determined and if so determined, could reasonably be expected to have a material adverse effect on the ability of GFIMSA or any guarantor to perform its obligations or on the validity or enforceability of any document relating to the Mvela Loan;
 
  any change in control of Gold Fields that occurs without the written consent of the agent of the providers of the commercial bank debt that funded, in part, the Mvela Loan, or the Senior Agent, where the change in control could reasonably be expected to have a material adverse effect on the ability of any guarantor to perform its obligations or on the validity or enforceability of any document relating to the Mvela Loan; and
 
  GFIMSA ceasing to be a wholly owned subsidiary of Gold Fields.

The Mvela Loan was funded by way of commercial bank debt of approximately Rand 1,300 million and mezzanine finance of approximately Rand 1,100 million, with the balance of approximately Rand 1,700 million being raised by way of an international private placement of shares of Mvela Resources. In connection with the mezzanine finance, Gold Fields subscribed for preference shares in an amount of Rand 200 million in Micawber 325 (Proprietary) Limited, or Micawber, a special purpose entity established by the mezzanine lenders. Further, Gold Fields subscribed for Rand 100 million of the shares issued by Mvela Resources in the private placement. In addition, pursuant to an agreement entered into on February 13, 2004, or the PIC Agreement, Gold Fields has effectively guaranteed a loan of Rand 150 million made by the PIC to Micawber, or the PIC Loan. Interest on the PIC Loan accrues at the rate of 14.25%, is compounded semi-annually and is payable in one lump sum at the end of the term of the loan. Under the terms of the PIC Agreement, the PIC has the right to require Gold Fields to assume all its rights and obligations under the PIC Loan, together with its underlying security, which consists of the PIC’s proportionate share of Mvela Gold’s rights under the Subscription and Share Exchange Agreement and a guarantee of Rand 200 million from Mvela Resources, at a price equal to the value of the principal and interest of the PIC Loan, net of a guarantee fee equal to 3.75% per annum of the value of the principal and interest of the loan, if, at the time the PIC Loan is due for repayment, Micawber does not repay the loan in full. Whether or not the PIC requires Gold Fields to assume its rights and obligations under the PIC Loan, the PIC is obligated to pay the guarantee fee to Gold Fields on the date on which the PIC Loan is repaid to the PIC. See “Operating and Financial Review and Prospects–Liquidity and Capital Resources-Cash Resources-Investing” and “–Credit Facilities-Mvela Loan.”

On February 13, 2004, the Mvela Loan Agreement was amended, principally in order to add and clarify certain definitions.

On November 17, 2004, GFL Mining Services Limited, or GFLMSL, Gold Fields, Mvela Gold, Mvela Resources and GFIMSA entered into an agreement, referred to in this discussion as the Amendment Agreement, amending the existing agreements relating to the Mvelaphanda Transaction, including the Subscription and Share Exchange Agreement and the Covenants Agreement. The Amendment Agreement provides for, among other things, changes in connection with the proposed IAMGold transaction, including that GFIMSA is precluded from providing any type of financial support to other Gold Fields’ subsidiaries. These changes are conditional on the proposed IAMGold transaction being implemented. In addition, and irrespective of whether or not the proposed IAMGold transaction is implemented, (i) GFIMSA agrees not to repay any debt owing, as at the date on which the Mvela Loan was advanced, to Gold Fields or any subsidiary of Gold Fields that is not a subsidiary of GFIMSA prior to the time Mvela Gold may exchange its shares in GFIMSA for Gold Fields ordinary shares, pursuant to the Subscription and Share Exchange Agreement, (ii) GFIMSA must utilize 50% of its free cash flow to pay certain intra-group indebtedness and (iii) Mvela Gold will be entitled to not less than 45,000,000 or more than 55,000,000 Gold Fields ordinary shares in the event that GFIMSA shares are exchanged for Gold Fields

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shares pursuant to the Subscription and Share Exchange Agreement. These minimum and maximum numbers of ordinary shares are subject to adjustment to take account of changes to Gold Fields’ capital structure and certain corporate activities of Gold Fields. The amendments are stated to be subject to approval by Senior Agent and by the lenders who provided the commercial bank debt and mezzanine finance to Mvela Gold to fund, in part, the Mvela Loan. In addition, each of Mvela Resources and Gold Fields is entitled to require that the Amendment Agreement, with the exception of those amendments relating purely to the proposed IAMGold transaction, be approved by the Gold Fields’ shareholders at a meeting to be held not later than June 30, 2005.

Also on November 17, 2004, Gold Fields, Mvela Gold, Gold Fields Australia, Gold Fields Guernsey, First Rand Bank Limited, and GFIMSA entered into a second addendum to the Mvela Loan Agreement. Pursuant to this addendum, various amendments are to be made to the Mvela Loan Agreement, provided that all the conditions to the proposed IAMGold transaction are satisfied. See “Information on the Company—Recent Developments—Proposed IAMGold Transaction.” These amendments include:

 
  the release of Gold Fields Australia Pty Ltd. and Gold Fields Guernsey Limited from their obligations under the Mvela Loan Agreement;
 
  GFIMSA will not provide any guarantees, indemnities or other financial support, or allow its assets to be encumbered, for the benefit of any subsidiaries of Gold Fields that are not subsidiaries of GFIMSA;
 
  GFIMSA must satisfy the Senior Agent that it and its subsidiaries have released any existing guarantees, indemnities, financial support or encumbrances created for the benefit of any subsidiaries of Gold Fields that are not subsidiaries of GFIMSA;
 
  amendments to the covenants under the Mvela Loan Agreement in respect of certain financial ratios and certain activities of Gold Fields International, or GFI, which is the proposed new name for IAMGold Corporation following completion of the proposed IAMGold transaction;
 
  Gold Fields may not, without consent of the Senior Agent, make distributions to its shareholders from the proceeds of any disposal of the capital or fixed assets of GFI or any shares in GFI held by Gold Fields or its subsidiaries; and
 
  certain amendments to the events of default, including establishing a new event of default should there be any change in control of GFI without the prior written consent of the Senior Agent.

Strategy

Gold Fields’ strategy was developed in the context of a global market characterized by an extended period of low gold prices, reduced global expenditure on gold exploration and increasing industry consolidation. This strategy has evolved over time, but despite the recent increase in the price of gold, Gold Fields has maintained a strategy of general caution with respect to financial commitments while maintaining full exposure to the effects of the gold price.

Generally, Gold Fields’ strategy consists of the following key elements:

  improving returns by optimizing existing assets and diversification, through reducing costs and growing assets through inward investment and diversifying its geographical, technical and product risk by acquiring and developing additional long-life assets;
 
  developing the people of Gold Fields;
 
  earning and maintaining its “license to operate” in those countries and regions in which it operates through a commitment to those communities and an ability to deal with issues related to sustainable development; and
 
  developing the gold market.

See “Information on the Company—Strategy.”

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Revenues

Substantially all of Gold Fields’ revenues are derived from the sale of gold. As a result, Gold Fields’ revenues are directly related to the price of gold. Historically, the price of gold has fluctuated widely. The gold price is affected by numerous factors over which Gold Fields does not have control. See “Key information—Risk Factors—Changes in the market price for gold, which in the past has fluctuated widely, affect the profitability of Gold Fields’ operations, and the cash flows generated by those operations.”

The volatility of gold prices is illustrated in the following table, which shows the annual high, low and average of the afternoon London afternoon fixing price of gold in U.S. dollars for the past 12 calendar years and to date in calendar year 2004:

                         
    Price per ounce
Year
  High
  Low
  Average
    ($)   ($)   ($)
1992
    360       330       344  
1993
    406       326       360  
1994
    396       370       384  
1995
    396       372       384  
1996
    415       367       388  
1997
    367       283       331  
1998
    313       273       294  
1999
    326       253       279  
2000
    313       264       282  
2001
    293       256       270  
2002
    349       278       310  
2003
    416       320       363  
2004 (through October 29)
    429       375       403  

Source: Bloomberg

On October 29, 2004, the London afternoon fixing price of gold was $426 per ounce.

As a general rule, Gold Fields sells the gold it produces at market prices to obtain the maximum benefit from prevailing gold prices and does not enter into hedging arrangements such as forward sales or derivatives which establish a price in advance for the sale of its future gold production. However, commodity hedges are sometimes undertaken on a project specific basis as follows: to protect cashflows at times of significant expenditure; for specific debt servicing requirements; and to safeguard the viability of higher cost operations. See “Quantitative and Qualitative Disclosure About Market Risk—Commodity Price Sensitivity—Commodity Hedging Policy.”

Significant changes in the price of gold over a sustained period of time may lead Gold Fields to increase or decrease its production in the near-term, which could have a material impact on Gold Fields’ revenues.

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Gold Fields’ realized gold price

The following table sets out the average, the high and the low London afternoon fixing price of gold and Gold Fields’ average U.S. dollar realized gold price during the past three fiscal years:

                         
Year
  2002
  2003
  2004
    ($/oz)   ($/oz)   ($/oz)
Average
    289       334       389  
High
    328       382       427  
Low
    265       302       342  
Gold Fields’ average realized gold price
    292       333       387  


Note:
 
(1)   Gold Fields’ average realized gold price differs from the average gold price due to the timing of its sales of gold within each year.

Costs

Over the last three fiscal years, total cash costs have typically made up approximately 84% of total costs. Total cash costs consist primarily of labor and, where applicable, contractor costs, and consumable stores, which include explosives, timber and other consumables. Gold Fields’ South African operations are labor intensive due to the use of deep level underground mining methods. As a result, over the last three fiscal years, labor has represented on average just below 50% of total cash costs at the South African operations. At the Ghana operations, mining operations have been conducted by an outside contractor. Over the last three fiscal years, contractor costs represent on average 52% of total cash costs at Tarkwa and 43% at Damang. As from fiscal 2005, outside contractors will no longer be used at Tarkwa, which has been converted to owner mining. Over the last three fiscal years, direct labor costs have represented on average a further 9% of total cash costs at Tarkwa and 8% at Damang. At the Australian operation, mining operations are conducted by outside contractors. Over the last three fiscal years, including the period prior to Gold Fields’ acquisition of St. Ives and Agnew, total contractor costs have represented on average 63% at Agnew and 84% at St. Ives of total cash costs and direct labor costs represent on average a further 25% at Agnew and 12% at St. Ives of total cash costs. For open-pit operations, such as those at the Ghana and Australia operations, cash costs tend to vary over the life of the open pit. Initially, cash costs are relatively high because the proportion of waste rock to ore, or stripping ratio, is higher when operations first commence. As an open pit evolves, the stripping ratio and cash cost per ounce tend to decrease.

The remainder of Gold Fields’ total costs consist primarily of amortization and depreciation, exploration costs, and selling, administration and general, or corporate, charges.

Income and Mining Taxes

South Africa

Gold Fields pays taxes on mining income and non-mining income. As a result of the consolidation of the South African assets into GFI Mining South Africa (Proprietary) Limited, or GFIMSA, the mines are no longer separate tax entities but are treated as a single tax entity except in respect of capital expenditure, which is ring fenced for each mine separately. The amount of Gold Fields’ mining income tax is calculated on the basis of a formula, which takes into account total revenues, and profits from, and capital expenditures on, mining operations. Five percent of total mining revenue is exempt from taxation. The amount of revenue

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subject to taxation is calculated by subtracting capital expenditures from operating profit, and making certain other minor adjustments to derive taxable income. The amount by which the adjusted profit figure exceeds 5% of total mining revenue constitutes taxable mining income. Gold Fields Limited and GFIMSA are taxed as separate entities, and therefore each calculates its own taxable income.

The tax rate applicable to the mining and non-mining income of a gold mining company depends on whether the company has elected to be exempt from the Secondary Tax on Companies, or STC. STC is a tax on dividends declared, and at present the STC tax rate is 12.5%. In 1993, all existing gold mining companies had the option of electing to be exempt from STC. If the election was made, a higher tax rate would apply for both mining and non-mining income. In each of fiscal 2004, 2003, 2002 and 2001 the tax rates for taxable mining and non-mining income for companies that elected the STC exemption were 46%, compared to 37% if the STC exemption election was not made. All of Gold Fields’ operating subsidiaries in South Africa have elected the STC exemption. However, Gold Fields itself, as a holding company without its own gold mining operations, is not eligible to be exempt from STC. To the extent Gold Fields receives dividends from any of its South African gold mining subsidiaries, such received dividends are offset against the amount of dividends paid by Gold Fields for purposes of calculating the amount subject to the 12.5% STC tax.

During fiscal 2000, Gold Fields obtained a tax ruling allowing the Beatrix and Oryx (now called Beatrix Shaft No. 4) mines to be treated as one mine for income tax purposes, with effect from July 1, 1999. As a result of this arrangement, assessed losses and unredeemed capital allowances at the Oryx mine can be utilized against the Beatrix mine’s income, resulting in no mining tax being paid by the combined Beatrix and Oryx tax entity. As a result of the sale of assets and liabilities of the St. Helena mine, Beatrix Mining Ventures Company was liable for excess recoupments tax on the difference between the proceeds on the disposal and the assessed losses and unredeemed capital allowances brought forward.

Ghana

Ghanaian resident companies are subject to tax on the basis of income derived from, accruing in or brought into Ghana. The standard corporate income tax rate is currently 32.5% and there is also a reconstruction and development levy, introduced on January 1, 2001, of 2.5% on operating profit. The Tarkwa and Damang operations are also subject to a 3% gold royalty, which came into effect from July 4, 1986, because the mineral rights are owned by the state. This royalty is included in Gold Fields’ income and mining taxes line item in the consolidated statement of operations.

Tax depreciation of capital equipment operates under a capital allowance regime. The capital allowances consist of an initial allowance of 80% of the cost of the asset and the balance depreciated at a rate of 50% per year on a declining balance basis. For the purposes of computing depreciation for the year following its acquisition, 5% of the cost of the asset is included in the balance. Under the project development agreement entered into between the Ghanaian government and Gold Fields Ghana and the deed of warranty entered into between the Ghanaian government and Abosso, the government has agreed that no withholding tax shall be payable on any dividend or capital repayment declared by Gold Fields Ghana or Abosso which is due and payable to any shareholder not normally resident in Ghana. Gold Fields Ghana and Abosso do not currently incur tax liabilities due to capital allowances carried forward.

Australia

Generally, Australia will impose tax on the worldwide income (including capital gains) of all of Gold Fields’ Australian incorporated and tax resident entities. The current income tax rate for companies is 30%. Exploration costs and the depreciation of capital expenditure may be deducted from income. In addition, other expenditures, such as export market development, mine closure costs and the defense of native title claims, may be deducted from income. The St. Ives and Agnew operations are also subject to a 2.5% gold royalty, which came into effect from July 1, 1998, because the mineral rights are owned by the state. This royalty is included in Gold Fields’ income and mining taxes line item in the consolidated statement of operations.

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With effect from July 1, 2001 the Australian legislature introduced a Uniform Capital Allowance, which allows tax deductions for:

  depreciation attributable to assets; and
 
  certain other capital expenditures.

Under current Australian tax law, certain grouping concessions are available to companies with the same ultimate head entities. These concessions include the ability to group losses and obtain capital gains tax roll over relief from the transfer of assets. Gold Fields’ subsidiaries in Australia will therefore also qualify to transfer losses from one entity to another in the event that a loss is made in any one entity and a profit is generated in another.

Withholding tax is payable on dividends, interest and royalties paid by Australian residents to non-residents. In the case of dividend payments to non-residents, withholding tax at a rate of 30% will apply. However, where the recipient of the dividend is a resident of a country with which Australia has concluded a double taxation agreement, the rate of withholding tax is generally limited to 15% (or 10% where the dividend is paid to a company’s parent company). Where dividends are paid out of profits that have been subject to Australian corporate tax there is no withholding tax, regardless of whether a double taxation agreement is in place.

Exchange Rates

Gold Fields’ revenues and costs are very sensitive to the Rand/U.S. dollar exchange rate because revenues are generated using a gold price denominated in U.S. dollars, while the costs of the South African operations are incurred principally in Rand. Depreciation of the Rand against the U.S. dollar reduces Gold Fields’ average costs when they are translated into U.S. dollars, thereby increasing the operating margin of the South African operations. Similarly, appreciation of the Rand results in South African operating costs being translated into U.S. dollars at a higher Rand/U.S. dollar exchange rate, resulting in lower operating margins. Accordingly, the impact on profitability of any change in the value of the Rand against the U.S. dollar can be substantial. Furthermore, the exchange rates obtained when converting U.S. dollars to Rand are set by foreign exchange markets, over which Gold Fields has no control. For more information regarding fluctuations in the value of the Rand against the U.S. dollar, see “Key Information—Exchange Rates”.

With respect to its operations in Ghana, a substantial portion of Gold Fields’ operating costs (including wages) are either directly incurred in U.S. dollars or are determined according to a formula by which costs are indexed to the U.S. dollar. Accordingly, fluctuations in the Cedi do not materially impact operating results for the Ghana operation.

With respect to the Australian operations, the effect of fluctuations in the value of the Australian dollar against the U.S. dollar is similar to that for the Rand, with weakness in the Australian dollar resulting in improved earnings for Gold Fields and strength in the Australian dollar producing the opposite result. Gold Fields agreed with the lenders providing the loans for the acquisition of St. Ives and Agnew to manage its exposure to fluctuations in the value of the Australian dollar against the U.S. dollar by entering into financial instruments to fix the exchange rates for a portion of the expected future revenues from the operations. See “Quantitative and Qualitative Disclosures About Market Risk—Foreign Currency Hedging Experience—St. Ives and Agnew Australian Dollar Instruments.” Gold Fields accounted for these financial instruments on a mark-to-market basis, and revalued the loans, using exchange rates prevailing at the end of the relevant accounting period. These loans were repaid, and the related financial instruments were effectively closed out, during fiscal 2004. Gold Fields has obtained a significant benefit from the overall rise in the value of the Australian dollar against the U.S. dollar from the time it entered into the loan and related financial instruments until it repaid the loans and closed out the financial instruments. Subsequent to closing out the financial instruments, Gold Fields entered into a series of quarterly maturing Australian dollar/U.S. dollar call

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options. See “Quantitative and Qualitative Disclosures About Market Risk – Foreign Currency Hedging Experience – Australian Dollar Call Options”.

Inflation

It is possible that a period of significant inflation in South Africa could adversely affect Gold Fields’ results and financial condition. However, because the majority of Gold Fields’ costs at the South African operations are in Rand while its revenues from gold sales are in U.S. dollars, the extent to which the Rand devalues against the U.S. dollar will offset the impact of South African inflation. In Ghana, Gold Fields’ operations are not significantly impacted by Ghanaian inflation because a substantial portion of Gold Fields’ costs are either incurred directly in U.S. dollars or are determined according to a formula by which U.S. dollar amounts are converted into Cedi. Gold Fields expects that the impact of Australian inflation will be similar to that of South Africa.

South African and Ghanaian Economic and Political Environment

Gold Fields is a South African company and a substantial portion of its operations, based on gold production, are in South Africa. As a result, Gold Fields is subject to various economic, fiscal, monetary and political policies and factors that affect South African companies generally. See “Key Information—Risk Factors—Political or economic instability in South Africa or regionally may have an adverse effect on Gold Fields’ operations and profits.”

South African companies are subject to exchange control restrictions, including, for Gold Fields, the requirement to repatriate some or all of its offshore profits. While exchange controls have been relaxed in recent years, South African companies remain subject to restrictions on their ability to deploy capital outside of the Southern African Common Monetary Area. In particular, in his speech to Parliament towards at the end of October 2004, the Minister of Finance outlined the South African Treasury’s medium term budget policy statement and repeated that it was the government’s eventual goal to replace all remaining exchange controls with prudential benchmarks. He also announced the abolition of exchange control limits on new outward foreign direct investments by South African corporations and the lifting of their obligation to repatriate foreign dividends. An exchange control circular from the South African Reserve Bank detailing and regulating the above relaxations is expected shortly. See “Information on the Company—Regulatory and Environmental Matters—South Africa—Exchange Controls”.

Gold Fields also has significant operations in Ghana and is therefore subject to various economic, fiscal, monetary and political policies and factors that affect companies operating in Ghana. See “Key Information—Risk Factors—Political or economic instability in Ghana may have an adverse effect on Gold Fields’ operations and profits.” In addition, pursuant to an agreement which it has entered into with the Ghanaian government with respect to the Tarkwa mine, Gold Fields is required to repatriate at least 20% of the revenues derived from the Tarkwa mine to Ghana and either use such amounts in Ghana or maintain them in a Ghanaian bank account. Abosso is currently obligated to repatriate 25% of its revenue to Ghana, although the level of repatriation under the deed of warranty between Abosso and the government of Ghana is subject to renegotiation every two years. Although it has been more than two years since the last set of negotiations with the Bank of Ghana regarding the Damang mine’s level of repatriation, the next set of negotiations has not yet been scheduled. While management has no reason to believe that the repatriation level will increase as a result of the next set of negotiations, there is no agreed ceiling on the repatriation level, and it could be increased. Any increase could adversely affect Gold Fields’ ability to use the cash flow from the Damang mine outside Ghana, including to fund working costs and capital expenditures at other operations, to provide funds for acquisitions and to repay principal and interest on indebtedness.

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Significant Accounting Policies

The preparation of Gold Fields financial statements requires management to make estimates and assumptions that affect the reported results of its operations. Actual results may differ from those estimates. Gold Fields has identified the most significant accounting policies upon which its financial status depends. Some of Gold Fields’ accounting policies require the application of significant judgments and estimates by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty and are based on Gold Fields’ historical experience, terms of existing contracts, management’s view on trends in the gold mining industry and information from outside sources.

Gold Fields’ significant accounting policies are described in more detail in note 2 to the consolidated financial statements. This discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this annual report. Gold Fields’ management has identified the following as critical accounting policies because estimates used in applying these policies are subject to material risks and uncertainties.

Management believes the following significant accounting policies, among others, affect its more significant judgments and estimates used in the preparation of Gold Fields’ consolidated financial statements and could potentially impact Gold Fields’ financial results and future financial performance.

Business combinations

Management accounts for its business acquisitions under the purchase method of accounting. The total value of consideration paid for acquisitions is allocated to the underlying net assets acquired, based on their respective estimated fair values determined by using internal or external valuations. Management uses a number of valuation methods to determine the fair value of assets and liabilities acquired including discounted cash flows, external market values, valuations on recent transactions or a combination thereof and others and believes that it uses the most appropriate measure or a combination of measures to value each asset or liability. In addition, management believes that it uses the most appropriate valuation assumptions underlying each of those valuation methods based on current information available including discounted rates, market risk rates, entity risk rates, cash flow assumptions and others. The accounting policy for valuation of business acquisitions is considered critical because judgments made in determining the estimated fair value and expected useful lives assigned to each class of assets and liabilities acquired can significantly impact the value of the asset or liability, including the impact on deferred taxes, the respective amortization periods and ultimately net profit. Therefore the use of other valuation methods, as well as other assumptions underlying these valuation methods, could significantly impact the determination of financial position and the results of operations.

Amortization of mining assets

Amortization charges are calculated using the units of production method and are based on Gold Fields’ current gold production as a percentage of total expected gold production over the lives of Gold Fields’ mines. The lives of the mines are estimated by Gold Fields’ geology department using interpretations of mineral reserves, as determined in accordance with the SEC’s Industry Guide Number 7. The estimate of the total expected future lives of Gold Fields’ mines could be materially different from the actual amount of gold mined in the future and the actual lives of the mines due to changes in the factors used in determining Gold Fields’ mineral reserves, such as the gold price, foreign currency exchange rates and production costs. Any change in management’s estimate of the total expected future lives of Gold Fields’ mines would impact the amortization charge recorded in Gold Fields’ consolidated financial statements.

Valuation of long-lived assets

Management annually reviews the carrying value of Gold Fields’ long-lived mining assets to determine whether their carrying values, as recorded in Gold Fields’ consolidated financial statements, are appropriate.

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These reviews are based on projections of anticipated future cash flows to be generated by utilizing the long-lived assets. While management believes that these estimates of future cash flows are reasonable, different assumptions regarding projected gold prices, production costs and foreign currency exchange rates could materially affect the anticipated cash flows to be generated by the long-lived assets, thereby affecting the evaluations of the carrying values of the long-lived assets.

Deferred taxation

When determining deferred taxation, management makes estimates as to the future recoverability of deferred tax assets. If management determines that a deferred tax asset will not be realized, a valuation allowance is recorded for that portion of the deferred tax asset which is not considered more likely than not recoverable. These determinations are based on the projected taxable income and realization of tax allowances and tax losses. In the event that these tax assets are not realized, an adjustment to the valuation allowance would be required, which would be charged to income in the period that the determination was made. Likewise, should management determine that Gold Fields would be able to realize tax assets in the future in excess of the recorded amount, an adjustment to reduce the valuation allowance would be recorded generally as a credit to income in the period that the determination is made.

Financial derivatives

The determination of the fair value of financial derivatives, when marked-to-market, takes into account estimates such as interest rates and foreign currency exchange rates under prevailing market conditions, depending on the nature of the financial derivatives. These estimates may differ materially from actual interest rates and foreign currency exchange rates prevailing at the maturity dates of the financial derivatives and, therefore, may materially influence the values assigned to the financial derivatives, which may result in a charge to or an increase in Gold Fields’ earnings through maturity of the financial derivatives.

Environmental rehabilitation costs

Gold Fields’ mining and exploration activities are subject to various laws and regulations governing the protection of the environment. In August 2001, the FASB issued Statement of Financial Accounting Standards, or SFAS, No. 143, “Accounting for Asset Retirement Obligations,” which established a uniform methodology for accounting for estimated reclamation and abandonment costs. The statement was adopted on July 1, 2002 when Gold Fields recorded the estimated present value of reclamation liabilities and increased the carrying amount of the related asset, which resulted in a cumulative effect of a change in accounting principles of $1.3 million. The reclamation costs will be allocated to expense over the life of the related assets and will be adjusted for changes resulting from the passage of time and revisions to either the timing or amount of the original present value estimate.

Prior to adoption of SFAS 143, estimated future reclamation costs were based principally on legal and regulatory requirements. The costs related to active mines were accrued and charged over the expected operating lives of the mines using the units of production method based on proven and probable reserves. Future remediation costs for inactive mines were accrued based on management’s best estimate at the end of the period of the undiscounted costs expected to be incurred at a site. Such cost estimates included, where applicable, ongoing care, maintenance and monitoring costs. Changes in estimate were reflected in earnings in the period an estimate was revised.

Accounting for reclamation and remediation obligations requires management to make estimates unique to each mining operation of the future costs Gold Fields will incur to complete the reclamation and remediation work required to comply with existing laws and regulations. Actual costs incurred in future periods could differ from amounts estimated. Additionally, future changes to environmental laws and regulations could increase the extent of reclamation and remediation work required to be performed by Gold Fields. Any such increases in future costs could materially impact the amounts charged to operations for reclamation and remediation.

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Employee benefits

Management’s determination of Gold Fields’ obligation and expense for pension and provident funds, as well as post-retirement health care liabilities, depends on the selection of certain assumptions used by actuaries to calculate the amounts. These assumptions are described in notes 16 and 17 to Gold Fields’ consolidated financial statements and include, among others, the discount rate, the expected long term rate of return of plan assets, health care inflation costs and rates of increase in compensation costs. Actual results that differ from management’s assumptions are accumulated and charged over future periods, which will generally affect Gold Fields’ recognized expense and recorded obligation in future periods. While management believes that these assumptions are appropriate, significant changes in the assumptions may materially affect Gold Fields’ pension and other post retirement obligations as well as future expenses, which will result in an impact on earnings in the periods that the changes in the assumptions occur.

Recent Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board, or FASB, issued interpretation No. 46, or FIN 46, Consolidation of Variable Interest Entities, or FIN 46. FIN 46 requires the primary beneficiary of a variable interest entity to consolidate that entity. A variable interest entity is created when (i) the equity investment at risk is not sufficient to permit the entity from financing its activities without additional subordinated financial support from other parties, or (ii) equity holders either (a) lack direct or indirect ability to make decisions about the entity, (b) are not obliged to absorb expected losses of the entity or (c) do not have the right to receive expected residual returns of the entity if they occur. The primary beneficiary of a variable interest entity is the party that absorbs a majority of the variable interest entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. Expected losses are the expected negative variability of an entity’s net assets exclusive of its variable interest, and expected residual returns are the expected positive variability in the fair value of an entity’s assets, exclusive of variable interests. Prior to the issuance of FIN 46, an enterprise generally consolidated an entity when the enterprise had a controlling financial interest in the entity through ownership of a majority voting interest.

In December 2003, the FASB issued a revision of FIN 46, or FIN 46-R, clarifying certain provisions of FIN 46. Gold Fields adopted the provisions of FIN 46-R on February 1, 2003 to the extent that they related to variable interest entities created on or after that date. For variable interest entities created before January 31, 2003, FIN 46-R was deferred to the end of the first interim or annual period ending after March 15, 2004. Gold Fields fully adopted FIN 46-R effective June 30, 2004. Gold Fields completed its evaluation of FIN 46-R and has determined that the adoption of this interpretation did not have a material impact on its financial position at June 30, 2004 and did not identify any variable interest entities that would be subject to consolidation under FIN 46-R.

The Emerging Issues Task Force, or EITF, formed a committee to evaluate certain mining industry accounting issues, including issues arising from the application of SFAS, No. 141, “Business Combinations”, or SFAS No. 141, and SFAS No. 142, “Goodwill and other Intangible Assets”, or SFAS No. 142, to business combinations within the mining industry, accounting for goodwill and other intangibles and the capitalization of costs after the commencement of production, including deferred stripping. The issues discussed also included whether mineral interests conveyed by leases represent tangible or intangible assets and the amortization of such assets. In March 2004, the EITF reached a consensus, subject to ratification by the FASB that mineral interests conveyed by leases should be considered tangible assets. The EITF also reached a consensus, subject to the ratification by the FASB, on other mining related issues involving impairment and business combinations.

On March 31, 2004, the FASB ratified the consensus of the EITF on other mining related issues involving impairment and business combinations. This did not have an impact on Gold Fields’ financial statements since it did not change Gold Fields’ accounting. The FASB also ratified the consensus of the EITF that

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mineral interests conveyed by leases should be considered tangible assets subject to the finalization of a FASB Staff Position, or FSP, in this regard.

On April 30, 2004, the FASB issued an FSP amending SFAS No. 141 and SFAS No. 142 to provide that certain mineral use rights are considered tangible assets and that mineral use rights should be accounted for based on their substance. The FSP is effective for the first reporting period beginning after April 29, 2004, with early adoption permitted. As a result, Gold Fields has reclassified all of its mineral interests from mineral interests and other intangible assets to property, plant and equipment, net, in its balance sheets and ceased amortization on exploration stage mineral interests effective July 1, 2003. See note 2(d)(iii) to Gold Fields’ consolidated financial statements included elsewhere in this annual report.

The committee of the EITF is continuing its evaluation of mining industry accounting issues, which may have an impact on Gold Fields in the future.

Results of Operations

Years Ended June 30, 2004 and 2003

Revenues

Product sales increased by $168.0 million, or 10.9%, from $1,538.2 million in fiscal 2003 to $1,706.2 million in fiscal 2004. The increase in product sales was due to an increase in the average realized gold price of 16.2% from $333 per ounce in fiscal 2003 to $387 per ounce in fiscal 2004 partially offset by a net decrease of approximately 0.196 million ounces, or 4.3%, of total gold sold from 4.62 million ounces in fiscal 2003 to 4.41 million ounces in fiscal 2004. The decrease in sales resulted from a reduction at the South African operations from 3.081 million ounces to 2.804 million ounces offset in part by increases at the Ghanaian and Australian operations. The decline at the South African operations was due primarily to lower grades as well as the absence of St. Helena for the entire year, following its sale on October 30, 2002. Gold output from Kloof and Driefontein decreased by 120,000 ounces and 105,000 ounces, respectively. Production at the international operations increased by 8.1% from 1.253 million ounces in fiscal 2003 to 1.354 million ounces in fiscal 2004. Differences between total gold sold and total gold produced are mainly due to timing differences between gold production and gold sales.

Interest and dividends decreased by $1.9 million or 8.9%, from $21.3 million in fiscal 2003 to $19.4 million in fiscal 2004. Interest received on cash and cash equivalents was $17.1 million in fiscal 2004 as compared to $19.1 million in fiscal 2003, due to lower average cash balances during fiscal 2004 compared to fiscal 2003, including a depletion of cash balances at the South African operation for several months of the year, as well as lower interest rates. Dividends received were $2.3 million in fiscal 2004 as compared to $2.2 million in fiscal 2003.

Other income represents miscellaneous revenue items such as scrap sales and rental income, net of miscellaneous corporate expenditure not allocated to the operations and therefore not included in the corporate expenditure line item. Other income decreased by $3.0 million, from $4.7 million in fiscal 2003 to $1.7 million in fiscal 2004. Other income in fiscal 2004 consisted of $6.8 million in revenues, comprised principally of mineral right sales, rent, net of $5.1 million in expenses. Other income in fiscal 2003 consisted of $4.7 million in revenues, comprised principally of rent, proceeds from insurance claims and scrap sales, net of $0.1 million in expenses.

Costs and expenses

The following table sets out Gold Fields’ total ounces produced, weighted average total cash costs and total production costs per ounce for fiscal 2003 and fiscal 2004.

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    Fiscal 2003   Fiscal 2004        
   
 
       
                                                            Percentage
                                                    Percentage   increase/
                                                    increase/   (decrease)
                                                    (decrease)   in unit
                    Total                   Total   in unit   total
    Gold   Total cash   production   Gold   Total cash   production   total cash   production
    Production
  costs(1)
  costs(2)
  production
  costs(1)
  costs(2)
  costs
  costs
    (’00oz)
  ($/oz)
  (’00oz)
  ($/oz)
  %
       
South Africa
                                                               
Driefontein
    1,238       202       233       1.141       311       355       54.0       52.4  
Kloof
    1,140       215       246       1,038       341       388       58.6       57.7  
Free State
                                                               
Beatrix
    659       229       260       625       356       393       55.5       51.2  
St Helena
    44       289       289                                
Ghana
                                                               
Tarkwa(3)
    540       194       225       550       230       258       18.6       14.7  
Darnang(4)
    299       243       260       308       222       245       (8.6 )     (5.8 )
Australia(5)
                                                               
St. Ives
    513       198       295       543       300       377       51.5       27.8  
Agnew
    144       219       396       202       221       303       0.9       (23.5 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total(6)(7)
    4,577                       4,406                                  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Weighted average
            212       254               302       349       42.5       37.4  


Notes:

Except for gold production, all statistics are based on gold sold.

(1)   Gold Fields has calculated total cash costs per ounce by dividing total cash casts, as determined using the Gold Institute industry standard, by gold ounces sold for all periods presented. The Gold Institute was a non-profit international industry association of miners, refiners, bullion suppliers and manufacturers of gold products that ceased operation in 2002, which developed a uniform format for reporting production costs on a per ounce basis. The standard was first adopted in 1996 and revised in November 1999. Total cash costs, as defined in the Gold Institute industry standard, are production costs as recorded in the statement of operations, less offsite (i.e., central) general and administrative expenses (including head office costs charged to the mines, central training expenses, industry association fees and social development costs), rehabilitation costs, amortization, reclamation, capital development and exploration costs plus royalties and employee termination costs. Under U.S. GAAP, production costs do not include amortization, reclamation, capital development or certain exploration costs. Changes in total cash costs per ounce are affected by operational performance, as well as changes in the currency exchange rate between the Rand and Australian dollar compared to the U.S. dollar. Management, however, believes that total cash costs per ounce provides a measure for comparing Gold Fields’ operational performance against that of its peer group, both for Gold Fields as a whole, and for its individual operations. Total cash costs per ounce is not a U.S. GAAP measure. An investor should not consider total cash costs per ounce in isolation or as an alternative to net income/(loss), income before tax, operating cash flows or any other measure of financial performance presented in accordance with U.S. GAAP. While the Gold Institute has provided a definition for the calculation of total cash costs, the adoption of the standard is voluntary and thus the calculation of total cash costs per ounce may vary significantly among gold mining companies, and by itself does not necessarily provide a basis for comparison with other gold mining companies, See “Information on the Company—Glossary of Mining Terms—Total cash costs per ounce”

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(2)   Gold Fields has calculated total production costs per ounce by dividing total production costs, as determined using the Gold Institute industry standard, by gold ounces sold for all periods presented. Total production costs, as defined by the Gold Institute industry standard, are total cash costs, as calculated using the Gold Institute industry standard, plus amortization, depreciation and rehabilitation costs. Changes in total production costs per ounce are affected by operational performance, as well as changes in the currency exchange rate between the Rand and Australian dollar compared to the U.S. dollar. Management, however, believes that total production costs per ounce provides a measure for comparing Gold Fields’ operational performance against that of its peer group, both for Gold Fields as a whole, and for its individual operations. Total production costs per ounce is not a U.S. GAAP measure. An investor should not consider total production costs per ounce in isolation or as an alternative to net income/(loss), income before tax, operating cash flows or any other measure of financial performance presented in accordance with U.S. GAAP. While the Gold Institute has provided a definition for the calculation of total production costs, the adoption of the standard is voluntary and thus the calculation of total production costs per ounce may vary significantly among gold mining companies, and by itself does not necessarily provide a basis for comparison with other gold mining companies. See “Information on the Company— Glossary of Mining Terms—Total production costs per ounce,”
 
(3)   In fiscal 2003 and 2004, 0.384 million ounces and 0.391 million ounces of production, respectively, were attributable to Gold Fields, with the remainder attributable to minority shareholders in the Tarkwa operation.
 
(4)   In fiscal 2003 and 2004, 0.213 million ounces and 0.219 million ounces of production, respectively, were attributable to Gold Fields, with the remainder attributable to minority shareholders in the Damang operation.
 
(5)   The consideration paid for the Australian operations in excess of the book value of the underlying net assets was allocated pro rata to the value of the underlying assets, which affected the allocation of amortization between St. Ives and Agnew.
 
(6)   In fiscal 2003, and 2004, 4.334 million ounces and 4.158 million ounces of production, respectively, were attributable to Gold Fields, with the remainder attributable to minority shareholders in the Ghana operations.
 
(7)   The total does not reflect the sum of the line items due to rounding.

The following tables set out a reconciliation of Gold Fields’ production costs to its total cash costs and total production costs for fiscal 2004 and fiscal 2003.

                                                                         
    For the year ended June 30, 2004
    Driefontein
  Kloof
  Beatrix
  Tarkwa
  Damang
  St. Ives
  Agnew
  Corporate
  Group
    (in $ millions except as otherwise noted)(1)
Production Costs
    356.1       354.7       223.7       126.5       66.7       182.2       45.3             1,355.2  
Less:
                                                                       
G&A other than corporate costs
    (5.6 )     (4.8 )     (4.0 )     (6.5 )     (1.8 )     (4.9 )     (0.6 )           (28.2 )
GIP adjustment
                                        (1.2 )           (1.2 )
Exploration
                                  (19.9 )     (1.0 )           (20.9 )
Plus:
                                                                       
Employment termination cost
    4.0       3.9       2.5                   0.1                   10.5  
Royalty
                      6.4       3.6       5.1       2.0             17.1  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total cash costs
    354.5       353.8       222.2       126.4       68.5       162.6       44.5             1,332.5  
Plus:
                                                                       
Amortization(2)
    49.5       46.0       22.8       15.2       6.8       41.8       16.5       1.2       199.8  
Rehabilitation
    1.6       3.2       0.5       0.1       0.2       0.3       0.1             6.0  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total production costs
    405.6       403.0       245.5       141.7       75.5       204.7       61.1       1.2       1,538.3  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Gold produced (‘000 oz)(3)
    1,141.2       1,037.6       624.9       550.0       308.3       542.6       201.5             4,406.1  
 
Gold inventory (‘000 oz)
                                                     
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Gold sales (‘000 oz)
    1,141.2       1,037.6       624.9       550.0       308.3       542.6       201.5             4,406.1  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Gold sold per production cost (‘000 oz)
    1,141.2       1,037.6       624.9       550.0       308.3       542.6       201.5             4,406.1  

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    For the year ended June 30, 2004
    Driefontein
  Kloof
  Beatrix
  Tarkwa
  Damang
  St. Ives
  Agnew
  Corporate
  Group
    (in $ millions except as otherwise noted)(1)        
Total cash cost ($/oz)(4)
    311       341       356       230       222       300       221             302  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total production cost ($/oz)(5)
    355       388       393       258       245       377       303             349  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 


Notes:

All statistics are based on gold sold.

(1)   Calculated using an exchange rate of R6.90 per $1.00.
 
(2)   Includes non-cash portion of GIP adjustments.
 
(3)   In fiscal 2004, 0.610 million ounces of production were attributable to Gold Fields, with the remainder attributable to minority shareholders in the Ghana operations.
 
(4)   Gold Fields has calculated total cash costs per ounce by dividing total cash casts, as determined using the Gold Institute industry standard, by gold ounces sold for all periods presented. The Gold Institute was a non-profit international industry association of miners, refiners, bullion suppliers and manufacturers of gold products that ceased operation in 2002, which developed a uniform format for reporting production costs on a per ounce basis. The standard was first adopted in 1996 and revised in November 1999. Total cash costs, as defined in the Gold Institute industry standard, are production costs as recorded in the statement of operations, less offsite (i.e., central) general and administrative expenses (including head office costs charged to the mines, central training expenses, industry association fees and social development costs), rehabilitation costs, amortization, reclamation, capital, development and exploration costs plus royalties and employee termination costs. Under U.S. GAAP, production costs do not include amortization, reclamation, capital development or certain exploration costs. Changes in total cash costs per ounce are affected by operational performance, as well as changes in the currency exchange rate between the Rand and Australian dollar compared to the U.S. dollar. Management, however, believes that total cash costs per ounce provides a measure for comparing Gold Fields’ operational performance against that of its peer group, both for Gold Fields as a whole, and for its individual operations. Total cash costs per ounce is not a U.S. GAAP measure. An investor should not consider total cash costs per ounce in isolation or as an alternative to net income/(loss), income before tax, operating cash flows or any other measure of financial performance presented in accordance with U.S. GAAP. While the Gold Institute has provided a definition for the calculation of total cash costs, the adoption of the standard is voluntary and thus the calculation of total cash costs per ounce may vary significantly among gold mining companies, and by itself does not necessarily provide a basis for comparison with other gold mining companies See “Information on the Company—Glossary of Mining Terms—Total cash costs per ounce”
 
(5)   Gold Fields has calculated total production costs per ounce by dividing total production costs, as determined using the Gold Institute industry standard, by gold ounces sold for all periods presented. Total production costs, as defined by the Gold Institute industry standard, are total cash costs, as calculated using the Gold Institute industry standard, plus amortization, depreciation and rehabilitation costs. Changes in total production costs per ounce are affected by operational performance, as well as changes in the currency exchange rate between the Rand and Australian dollar compared to the U.S. dollar. Management, however, believes that total production costs per ounce provides a measure for comparing Gold Fields’ operational performance against that of its peer group, both for Gold Fields as a whole, and for its individual operations. Total production costs per ounce is not a U.S. GAAP measure. An investor should not consider total production costs per ounce in isolation or as an alternative to net income/(loss), income before tax, operating cash flows or any other measure of financial performance presented in accordance with U.S. GAAP. While the Gold Institute has provided a definition for the calculation of total production costs, the adoption of the standard is voluntary and thus the calculation of total production costs per ounce may vary significantly among gold mining companies, and by itself does not necessarily provide a basis for comparison with other gold mining companies. See “Information on the Company— Glossary of Mining Terms—Total production costs per ounce,”

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The following table sets out a reconciliation of Gold Fields’ production costs to its total cash costs and total production costs for fiscal 2003.

                                                                                 
    For the year ended June 30, 2003
                            St.                        
    Driefontein
  Kloof
  Beatrix
  Helena
  Tarkwa
  Damang
  St. Ives
  Agnew
  Corporate
  Group
                            (in $ millions except as otherwise noted)(1)                
Production costs
    260.3       250.5       155.0       12.6       105.1       71.2       118.2       42.1             1,015.0  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Less:
                                                 
G&A other than corporate cost
    (7.5 )     (6.1 )     (3.9 )           (5.5 )     (1.6 )     (3.6 )     (0.8 )           (28.2 )
GIP adjustments
    (0.4 )                                   (1.1 )     (5.1 )           (6.6 )
Exploration
                                        (16.6 )     (5.8 )           (22.42 )
Plus:
                                                                               
Employment termination cost
    2.3       1.5                                                 3.8  
Royalty
                            5.4       3.0       4.6       1.1             14.1  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total cash costs
    254.7       245.9       151.1       12.6       105.0       72.6       101.5       31.5             863.4  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Plus:
                                                                               
Amortization(2)
    37.2       34.2       19.5             16.0       5.0       49.4       25.3       1.5       188.1  
Rehabilitation
    1.8       1.3       0.9             0.5       0.3       0.4       0.1             5.3  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total production costs
    293.7       281.4       171.5       12.6       121.5       77.9       151.3       56.9       1.5       1,168.3  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Gold produced (‘000 oz)(2)
    1,238.3       1,140.1       658.7       43.7       539.9       299.2       513.3       143.6             4,576.8  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Gold inventory (‘000 oz)
    23.2       2.0                                                 25.2  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Gold sales (‘000 oz)
    1,261.5       1,142.1       658.7       43.7       539.9       299.2       513.3       143.6             4,602.0  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Gold sold per production cost (‘000 oz
    1,261.5       1,142.1       658.7       43.7       539.9       299.2       513.3       143.6             4,602.0  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total cash costs(4) ($/oz)
    202       215       229       289       195       243       198       219             212  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total production costs(5) ($/oz)
    233       246       260       289       225       260       295       396             254  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 


Notes:

All statistics are based on gold sold

(1) Calculated using an exchange rate of R9.07 per $1.00.

(2) Includes non-cash portion of GIP adjustments.

(3) In fiscal 2003, 0.597 million ounces of production were attributable to Gold Fields, with the remainder attributable to minority shareholders in the Ghana operations.

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(4)   Gold Fields has calculated total cash costs per ounce by dividing total cash casts, as determined using the Gold Institute industry standard, by gold ounces sold for all periods presented. The Gold Institute was a non-profit international industry association of miners, refiners, bullion suppliers and manufacturers of gold products that ceased operation in 2002, which developed a uniform format for reporting production costs on a per ounce basis. The standard was first adopted in 1996 and revised in November 1999. Total cash costs, as defined in the Gold Institute industry standard, are production costs as recorded in the statement of operations, less offsite (i.e., central) general and administrative expenses (including head office costs charged to the mines, central training expenses, industry association fees and social development costs), rehabilitation costs, amortization, reclamation, capital development and exploration costs plus royalties and employee termination costs. Under U.S. GAAP, production costs do not include amortization, reclamation, capital development or certain exploration costs. Changes in total cash costs per ounce are affected by operational performance, as well as changes in the currency exchange rate between the Rand and Australian dollar compared to the U.S. dollar. Management, however, believes that total cash costs per ounce provides a measure for comparing Gold Fields’ operational performance against that of its peer group, both for Gold Fields as a whole, and for its individual operations. Total cash costs per ounce is not a U.S. GAAP measure. An investor should not consider total cash costs per ounce in isolation or as an alternative to net income/(loss), income before tax, operating cash flows or any other measure of financial performance presented in accordance with U.S. GAAP. While the Gold Institute has provided a definition for the calculation of total cash costs, the adoption of the standard is voluntary and thus the calculation of total cash costs per ounce may vary significantly among gold mining companies, and by itself does not necessarily provide a basis for comparison with other gold mining companies See “Information on the Company—Glossary of Mining Terms—Total cash costs per ounce” For a reconciliation of Gold Fields’ production costs toils total cash costs for fiscal 2004, 2003, 2002 and 2001, see “Operating and Financial Review and Prospects—Results of Operations—Years Ended June 30, 2003 and 2004” and “—Years Ended June 30, 2002 and 2003.”

(5)   Gold Fields had calculated total production costs per ounce by dividing total production costs, as determined using the Gold Institute industry standard, by gold ounces sold for all periods presented. Total production costs, as defined by the Gold Institute industry standard, are total cash costs, as calculated using the Gold Institute industry standard, plus amortization, depreciation and rehabilitation costs. Changes in total production costs per ounce are affected by operational performance, as well as changes in the currency exchange rate between the Rand and Australian dollar compared to the U.S. dollar. Management, however, believes that total production costs per ounce provides a measure for comparing Gold Fields’ operational performance against that of its peer group, both for Gold Fields as a whole, and for its individual operations. Total production costs per ounce is not a U.S. GAAP measure. An investor should not consider total production costs per ounce in isolation or as an alternative to net income/(loss), income before tax, operating cash flows or any other measure of financial performance presented in accordance with U.S. GAAP. While the Gold Institute has provided a definition for the calculation of total production costs, the calculation of total production costs per ounce may vary significantly among gold mining companies, and by itself does not necessarily provide a basis for comparison with other gold mining companies. See “Glossary of Mining Terms-Total cash costs per ounce.”

Gold Fields’ weighted average total cash costs per ounce increased $90 per ounce, or 42.5%, from $212 per ounce in fiscal 2003 to $302 per ounce in fiscal 2004. The principal reason was the strengthening of the Rand against the U.S. dollar, which had a 23.9% negative impact on costs converted from the South African operations. In Rand terms, average total cash costs per ounce at the South African operations were affected by a decrease in mining volumes and a 12% decrease in yields during fiscal 2004 as compared to fiscal 2003, as well as wage increases above inflation. Total cash costs per ounce in Rand terms at the international operations were similar to fiscal 2003 with lower unit costs at Damang, Agnew and Tarkwa offsetting the increase at St. Ives, as the appreciation of the Rand against the U.S. dollar contributed to the lower total cash costs per ounce in Rand terms in fiscal 2004.

Production costs.

Production costs increased by $340.2 million, or 33.5%, from $1,015.0 million in fiscal 2003 to $1,355.2 million in fiscal 2004, primarily due to increased production from all the international operations, inflationary increases at the South African operations, and the appreciation of the South African rand and the Australian dollar against the U.S. dollar. Increased operating costs at the South African operations were due to wage increases above inflation and increases in the amount and cost of stoping and development, during fiscal 2004 as compared to fiscal 2003 . In addition the Rand appreciated on average by 23.9% and the Australian dollar appreciated 22.3% against the U.S. dollar during fiscal 2004 compared to fiscal 2003, resulting in increased costs in U.S. dollar terms. In Australia, production costs increased primarily due to increased volumes mined and a shift towards underground mining. In Ghana, production costs increased primarily due to increased waste tonnage.

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Corporate expenditure.

Corporate expenditure was $20.3 million in fiscal 2004 compared to $16.6 million in fiscal 2003, an increase of 22.3%. Corporate expenditure consists primarily of general corporate overhead and corporate service department costs, primarily in the areas of technical services, human resources and finance, which are used by the operations. Corporate expenditure also includes business development costs. The increase was due to the appreciation of the Rand against the U.S. dollar as Rand costs decreased from R150.8 million in fiscal 2003 to R140.0 million in fiscal 2004 due to higher profits generated by the Treasury Department which are reflected as a credit against these costs.

Depreciation and Amortization.

Depreciation and amortization charges increased $10.5 million, or 5.6%, from $188.1 million in fiscal 2003 to $198.6 million in fiscal 2004. Depreciation and amortization is calculated on the units of production method and is based on current gold production as a percentage of total expected gold production over the lives of the mines. The principal reasons for this increase was the increase in production at the international operations compounded by the appreciation of the Rand against the U.S. dollar.

The table below depicts the changes from June 30, 2002 to June 30, 2003 for proven and probable reserves and for the life of mine for each operation, and the resulting impact on the amortization charge in fiscal 2003 and 2004. The life of mine numbers below are taken from the operations’ strategic plans, adjusted for proven and probable reserve balances. In basic terms, amortization is calculated using the life of mine for each operation, which is based on: (1) the proven and probable reserves above infrastructure for the operation at the start of the relevant year (which are taken to be the same as at the end of the prior fiscal year and using only above infrastructure reserves) and (2) the amount of gold produced by the operation during the year.

                                                 
    Proven and probable        
    reserves   Life of mine   Amortization
    as of June 30
  as of June 30
  for fiscal
    2002
  2003
  2002
  2003
  2003
  2004
    (‘000 oz)   (years)   ($m)
Driefontein
    16,400       16,000       19       17       37.2       49.5  
Kloof(1)
    15,300       15,900       20       18       34.2       46.0  
Free State
                                               
Beatrix(2)(3)
    11,800       11,800       20       20       19.5       22.8  
St Helena
    370                                
Ghana
                                               
Tarkwa(4)
    6.500       9,800       13       14       16.0       15.2  
Damang(5)
    1,190       900       4       3       5.0       6.8  
Australia
                                               
St. Ives(6)
    2,340       3,000       6       5       49.4       41.8  
Agnew(6)
    600       500       4       3       25.3       15.3  
Corporate and other
                                    1.5       1.2  
Total
    54,500       57,900                       188.1       198.6  
Reserves below infrastructure(7)
    26,600       26,600                                  
Total reserves(8)
    81,100       84,500                                  

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Notes:

(1)   A mineral resource study at Kloof during fiscal 2001 resulted in adjustments to grade zones, exclusions of certain mining blocks due to lack of adequate ventilation, a reduction in extraction from shaft pillars amongst other adjustments. The net effect on total reserves was insignificant but resulted in a movement from above infrastructure reserves to below infrastructure reserves at the end of fiscal 2002. As amortization is calculated using the above infrastructure reserves as its denominator (the numerator being the produced ounces) the amortization charge for fiscal 2003 increased accordingly.
 
(2)   The Beatrix operation, formerly called the Free State operation, was renamed following the sale of the St. Helena mine to Freegold on October 30, 2002.

(3)   Includes the former Oryx mine, now designated as Beatrix Shaft No. 4.

(4)   As of June 30, 2002 and 2003, reserves of 4.620 million ounces and 6.970 million ounces of gold, respectively, were attributable to Gold Fields, with the remainder attributable to minority shareholders in the Tarkwa operation.

(5)   As of June 30, 2002 and 2003, reserves of 0.850 million ounces and 0.640 million ounces were attributable to Gold Fields, with the remainder attributable to minority shareholders in the Damang operation.

(6)   The consideration paid for the Australian operations in excess of the book value of the underlying net assets was allocated pro rata to the value of the underlying assets, which affected the allocation of amortization between St. Ives and Agnew.

(7)   Below infrastructure reserves relate to mineralization which is located at a level at which an operation currently does not have infrastructure sufficient to allow mining operations to occur, but where the operation has made plans to install additional infrastructure in the future which will allow mining to occur at that level.

(8)   As of June 30, 2002 and 2003, reserves of 78.900 million ounces and 81.500 million ounces of gold, respectively, were attributable to Gold Fields, with the remainder attributable to minority shareholders in the Ghana operation.

Exploration expenditure.

Exploration expenditure was $39.9 million in fiscal 2004, an increase of 34.8% from $29.6 million in fiscal 2003. The increase was as a result of a deliberate effort to step up exploration activities, with $6.2 million spent in South and Latin America in fiscal 2004, compared to $1.9 million in fiscal 2003. Exploration expenditure in fiscal 2004 also included $11.4 million incurred at APP compared to $6.2 million in fiscal 2003. See “Information on the Company—Exploration.”

Impairment of assets.

During fiscal 2004, following a geological study at Beatrix Shaft No. 4 and an associated revision of the ore reserve, the latest life-of-mine plans indicated that future production of gold should be based on 2.0 million ounces as opposed to 2.8 million ounces as previously estimated. At this level of extraction and at a gold price of $350 per ounce, the life-of-mine plans did not support the carrying value of the shaft on an undiscounted cash flow basis. Accordingly, an asset impairment of $61.8 million was charged against income, which reduced the carrying value of the Beatrix Shaft No. 4 to $11.9 million.

During fiscal 2004,the potential future income arising from existing and possible new contracts for Biox® was reevaluated. See “Information on the Company—Research and Development.” This reevaluation did not support the patent carrying value and accordingly, an impairment write-down of $5.0 million was recorded, to reflect the fair value of the Biox patent of $15.0 million.

During fiscal 2004, new regulations were enacted in South Africa that will result in mining companies forfeiting those mineral rights not likely to be mined or explored. GFL Mining Services held certain mineral rights to which this new regulation applies. The carrying value of these mineral rights was $5.9 million. Accordingly, an impairment write-off of $5.9 million was recorded for those minerals that would be forfeited as a result of this new regulation.

The allocation of the purchase price to the Agnew and St. Ives mines was based upon geological and other information available to Gold Fields at the purchase date. During fiscal 2003, Gold Fields revised the Agnew life of mine plan based on the latest reserves and mineralized material. The life of mine plan was revised because the results of the Agnew mine following the acquisition had been below those anticipated due to lower recovered gold content and certain events which rendered certain mineralized material unexploitable. The revised life of mine plan did not support the original allocation of the purchase price to the Agnew mine orebody, mining tenements and undeveloped properties. U.S. GAAP does not permit a

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company to reallocate the purchase price more than a year beyond the acquisition date, when sufficient data was available to make the initial purchase price allocation. Accordingly, an impairment write down of $29.6 million was recorded to reflect the Agnew mine assets at their fair value.

Decrease in post-retirement health care provision.

In South Africa, Gold Fields provides medical benefits to employees in its operations through the Medisense Medical Scheme.

Under the medical plan which covers certain of its former employees, Gold Fields remains liable for 50% of the employees’ medical contribution to the medical schemes after their retirement. During fiscal 2004 and fiscal 2003, 6% and 61%, respectively, of these former employees and dependants were bought out of the scheme at a 15% premium to the actuarial valuation. At June 30, 2004, approximately 510 (fiscal 2003: 850) former employees were covered under this plan, which has not been available to employees of the Free State operations who retired after August 31, 1997 and members of Medisense who retired after January 31, 1999. See “Directors, Senior Management and Employees—Employees— Benefits.”

In fiscal 2004 an amount of $5.1 million was credited to earnings, compared to $5.0 million in fiscal 2003, in respect of Gold Fields’ obligations under this medical plan, a 2% increase. The $5.1 million credit was the result of a reversal of $6.2 million relating to the release of the cross subsidization liability as a result of the buyout and a $2.6 million release as a result of benefits forfeited offset in part by the annual interest and service charge of $3.0 million, and a $0.7 million charge relating to the 15% premium mentioned above. In fiscal 2003, the credit was the result of a $13.5 million reversal relating to the release of the cross subsidization liability as a result of the buyout, offset in part by the annual interest and service charge of $5.5 million and a $3.0 million charge related to the 15% premium. The post-retirement health care provision is updated annually based on actuarial calculations, with any increase in the provision reflected in the statement of operations.

Increase in provision for environmental rehabilitation.

For its South African operations, Gold Fields contributes to environmental trust funds it has established to provide for any environmental rehabilitation obligations and expected closure costs relating to its mining operations. The amounts invested in the trust funds are classified as non-current assets and any income earned on these assets is accounted for as interest income. For the Ghana and Australia operations Gold Fields does not contribute to a trust fund, but does make provision for estimated environmental rehabilitation costs. Full provision is made based on the net present value of the estimated cost of restoring the environmental disturbance that has occurred up to the balance sheet date. The rehabilitation charge for fiscal 2004 was $8.4 million compared to $5.3 million in fiscal 2003 principally because of the appreciation of the Rand against the U.S. dollar.

Finance income/(expense).

Gold Fields recognized a net finance expense of $12.2 million in fiscal 2004 as compared to finance income of $4.2 million in fiscal 2003. Net finance expense in fiscal 2004 consisted of interest payments of $27.2 million, comprising $18.2 million on the Mvelaphanda loan and $9.0 million on the loans used to acquire St. Ives, Agnew and Damang in Australia and Ghana , offset in part by a $3.6 million unrealized exchange gain on certain offshore funds denominated in Euros and a $11.4 million realized exchange gain on the Australian loan.

Net finance income in fiscal 2003 consisted of a $4.0 million unrealized exchange gain on the revaluation of the U.S. dollar loan incurred in connection with the acquisition of the Australian operations and a realized exchange gain of $11.5 million on the repayment of $119.5 million of the Australian loans, offset in part by interest payments of $4.8 million and realized loss of $6.5 million on certain other U.S. dollar denominated accounts in Australia.

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Unrealized gain on financial instruments.

Gold Fields recognized an unrealized gain of $39.2 million in fiscal 2004 compared to an unrealized gain of $35.7 million in fiscal 2003 relating to financial instruments.

Of the $39.2 million unrealized gain in fiscal 2004, $40.2 million related to an unrealized gain on the Australian dollar/U.S. dollar currency financial instruments purchased at the time of the acquisition of St. Ives and Agnew, offset by a $1.0 million negative mark-to-market valuation as at June 30, 2004 of the $50.0 million U.S. dollar/Rand currency financial instruments purchased to protect the Group’s commitment of $159.0 million in respect of the Tarkwa mill project and the conversion to owner mining. See “Quantitative and Qualitative Disclosures About Market Risk— Foreign Currency Hedging Experience.”

Of the $35.7 million unrealized gain in fiscal 2003, $36.7 million related to the positive mark-to-market valuation as at June 30, 2003 of the then remaining Australian dollar/U.S. dollar currency instruments offset by $1.0 million negative mark-to-market valuation as at June 30, 2003 of the $36.0 million U.S. dollar/Rand currency financial instruments purchased to protect the Group’s commitment in respect of the Tarkwa mill project and the shift to owner mining projects, of $159.0 million.

Realized gain on financial instruments.

Gold Fields recognized a realized loss of $8.7 million in fiscal 2004 compared to a realized gain of $15.1 million in fiscal 2003 relating to financial instruments.

Of the $8.7 million realized loss in fiscal 2004, a loss of $13.0 million was realized on the settlement of the U.S. dollar/Rand forward purchases offset in part by a $4.3 million gain on the U.S. dollar/Australian dollar financial instruments purchased at the time of the acquisition of St. Ives and Agnew.

Of the $15.1 million realized gain in fiscal 2003, $10.5 million was realized on the close-out of $175.0 million of the Australian dollar/U.S. dollar currency financial instruments purchased at the time of the acquisition of St. Ives and Agnew during fiscal 2004. The balance of $4.6 million relates to the amortization of deferred hedging gains relating to Abosso Goldfields forward sales contracts that Gold Fields acquired in connection with the purchase of Abosso.

Employee termination costs.

In fiscal 2004, Gold Fields incurred termination costs of $10.5 million as compared to $3.8 million in fiscal 2003. The increase in employee terminations costs is as a result of higher retrenchments during fiscal 2004.

Profit on sale of investments

During fiscal 2004, Gold Fields continued to liquidate certain non-current investments in order to fund foreign debt repayments. The profit on the sale of these investments amounted to $13.9 million resulting from the following sales:

  $7.7 million from the sale of 1.2 million shares in Harmony Gold Mining Company Limited and African Rainbow Minerals Limited,

  $2.1 million from the sale of 0.9 million shares in Chesapeake Gold Corporation,

  $1.0 million from the sale of 0.1 million shares in Glamis Gold Limited,

  $1.5 million from the sale of 2.5 million shares in Orezone Resources Inc, and

  $1.6 million from the sale of 1.3 million shares in Committee Bay.

During fiscal 2003, the profit on the sale of non-current investments amounted to $57.2 million resulting from the following sales:

  $42.4 million from the sale of 30.5 million shares in Eldorado Gold Corporation,

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  $13.1 million from the sale of 1.5 million shares in Glamis Gold Limited,

  $1.5 million from the sale of 0.4 million shares in African Rainbow Minerals Limited, and

  $0.2 million from the sale of 73,000 shares in Chesapeake Gold Corporation.

Profit on sale of mineral rights

During fiscal 2004, mineral rights and associated assets relating to a portion of Driefontein were sold for $45.7 million to AngloGold, resulting in a profit of $27.1 million.

Write-down of Mineral Rights

During fiscal 2004, mineral rights classified as inventories to the value of $3.6 million were written-off. This is in line with new regulations in South Africa that will result in mining companies forfeiting those mineral rights not likely to be mined or explored.

Income and Mining Tax Expense

The table below indicates Gold Fields’ effective tax rate for fiscal 2003 and fiscal 2004, including normal and deferred tax.

                 
    Year ended 30 June
    2003
  2004
    (%)
Income and mining tax
               
Effective tax expense rate
    32.9       14.3  

In fiscal 2004, the effective tax expense rate of 14.3% differed from the maximum mining statutory tax rate of 46% for Gold Fields and the subsidiaries as a whole, primarily due to the effect of the mining tax formula of $7.0 million (representing the tax-free status of the first 5% of mining revenue) on the South African mining operations’ taxable income and $15.1 million of non-taxable income primarily related to the profit on sale of certain investments. In addition, the tax expense rate is lower due to a credit of $17.6 million relating to income from Australia and Ghana being taxed at a lower rate. The effect of these items was partially offset by an amount of $19.8 million relating to foreign levies and royalties, which is included in the tax charge.

In fiscal 2003, the effective tax rate expense of 32.9% differed from the maximum mining statutory tax rate of 46% for Gold Fields and its subsidiaries as a whole, primarily due to the effect of the mining tax formula of $18.4 million (representing the tax-free status of the first 5% of mining revenue) on the South African mining operations’ taxable income, the utilization of assessed losses of $13.7 million mainly related to the disposal of the St. Helena mine not previously recognized and $30.6 million of non taxable income related primarily to the profit on the sale of certain investments. The effect of these items was offset in part by an amount of $16.1 million relating to foreign levies and royalties, which is included in the tax charge.

Minority Interests

Minority interests represented a cost of $21.8 million in fiscal 2004, compared to a cost of $14.4 million in fiscal 2003. The increase is due to the higher net income of the Ghanaian operations in fiscal 2004 compared to fiscal 2003. These amounts reflect the portion of the net income of Gold Fields Ghana, and Abosso attributable to their minority shareholders. The minority shareholders’ interest was 28.9% in Gold Fields Ghana and Abosso in fiscal 2004 and fiscal 2003.

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Net income

As a result of the factors discussed above, Gold Fields’ net income was $48.9 million in fiscal 2004 compared with net income of $257.0 million in fiscal 2003.

Years Ended June 30, 2003 and 2002

Revenues

Product sales increased by $328.2 million, or 27.1 %, from $1,210.0 million in fiscal 2002 to $1,538.2 million in fiscal 2003. The increase in product sales was due to a net increase of approximately 0.41 million ounces, or 9.7%, of total gold sold from 4.21 million ounces in fiscal 2002 to 4.62 million ounces in fiscal 2003, combined with an increase in the average realized gold price of 14.0% from $292 per ounce in fiscal 2002 to $333 per ounce in fiscal 2003. The increase in total gold sold resulted primarily from the inclusion of a full year’s production at Damang, St. Ives and Agnew. Damang produced 229,000 ounces in fiscal 2003 compared to 141,000 for the period from January 23, 2002 to June 30, 2002, while St. Ives and Agnew produced 513,000 ounces and 144,000 ounces, respectively in fiscal 2003 compared to 314,000 ounces and 83,000 ounces, respectively, for the seven months ended June 30, 2002. This was slightly offset by the inclusion of only 44,000 ounces from St. Helena prior to its disposal on October 30, 2002, compared with 116,000 ounces in fiscal 2002. Driefontein sold 42,000 ounces less than in fiscal 2002, mainly due to lower yields, offset by an increase of 43,000 ounces at Kloof due to higher tonnes mined offsetting a slight decline in yields. Production at Beatrix and Tarkwa remained virtually unchanged year on year although somewhat higher tonnes mined at Beatrix were offset by somewhat lower yields. The difference between total gold sold and total gold produced is due to: (1) timing differences between gold production and gold sales and (2) the fact that the gold sales figure for fiscal 2002 excludes gold produced at Kloof Shaft No. 4, which was capitalized because the shaft was at the development stage. This capitalization ceased at the beginning of fiscal 2003.

Interest and dividends increased by $12.4 million or 139.3%, from $8.9 million in fiscal 2002 to $21.3 million in fiscal 2003. This increase was mainly due to higher interest received in line with higher cash balances. Dividends received was $2.2 million in fiscal 2003 as compared to $0.2 million in fiscal 2002, mainly as a result of a special dividend comprised of shares and debentures received with respect to Gold Fields’ shareholding in Western Areas Gold Mining Company. Interest received on cash and cash equivalents was $19.1 million in fiscal 2003 as compared to $8.7 million in fiscal 2002, due to higher average cash balances during fiscal 2003 compared to fiscal 2002.

Other income increased by $4.2 million, from $0.5 million in fiscal 2002 to $4.7 million in fiscal 2003. Other income in fiscal 2003 consisted of $4.8 million in revenues, comprised principally of rent, proceeds from insurance claims and scrap sales, net of $0.1 million in expenses. Other income in fiscal 2002 consisted of $4.4 million in revenues, comprised principally of asset sales, rent and exchange differences, net of $3.9 million in expenses.

Costs and expenses

The following table sets out Gold Fields’ total ounces produced, weighted average total cash costs and total production costs per ounce for fiscal 2002 and fiscal 2003.

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    Fiscal 2002
  Fiscal 2003
  Percentage   Percentage
increase/
                                                    increase/   (decrease)
                                                    (decrease)   in unit
                    Total                   Total   in unit   total
    Gold   Total cash   production   Gold   Total cash   production   total cash   production
    Production
  costs(1)
  costs(2)
  production
  costs(1)
  costs(2)
  costs
  costs
    (’000oz)
  ($/oz)
  ($/oz)
  (’000oz)
  ($/oz)
  ($/oz)
  %
  %
Driefontein
    1,327       154       180       1,238       202       233       31.2       29.4  
Kloof(3)
    1,101       175       195       1,140       215       246       22.9       26.2  
Free State
                                                               
Beatrix
    655       169       191       659       229       260       35.5       36.1  
St Helena
    116       252       252       44       289       289       13.9       14.7  
Ghana
                                                               
Tarkwa(4)
    544       165       193       540       194       225       18.2       16.6  
Darnang(5)
    141       211       233       299       243       260       15.2       11.6  
Australia(6)
                                                               
St. Ives
    341       165       221       513       198       295       20.0       34.5  
Agnew
    83       218       351       144       219       396       0.9       12.8  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total(7)(8)
    4,307                       4,577                                  
Weighted average
            170       198               212       254       24.7       28.3  
 
           
 
     
 
             
 
     
 
     
 
     
 
 


Notes:   Except for gold production information, all statistics are based on gold sold.

(1)   Gold Fields has calculated total cash costs per ounce by dividing total cash costs, as determined using the Gold Institute industry standard, by gold ounces sold for all periods presented. The Gold Institute was a non-profit international industry association of miners, refiners, bullion suppliers and manufacturers of gold products that ceased operation in 2002, which developed a uniform format for reporting production costs on a per ounce basis. The standard was first adopted in 1996 and revised in November 1999. Total cash costs, as defined in the Gold Institute industry standard, are production costs as recorded in the statement of operations, less offsite (i.e., central) general and administrative expenses (including head office costs charged to the mines, central training expenses, industry association fees and social development costs), rehabilitation costs, amortization, reclamation, capital development and exploration costs plus royalties and employee termination costs. Under U.S. GAAP, production costs do not include amortization, reclamation, capital development or certain exploration costs. Changes in total cash costs per ounce are affected by operational performance, as well as changes in the currency exchange rate between the Rand and Australian dollar compared to the U.S. dollar. Management, however, believes that total cash costs per ounce provides a measure for comparing Gold Fields’ operational performance against that of its peer group, both for Gold Fields as a whole, and for its individual operations. Total cash costs per ounce is not a U.S. GAAP measure. An investor should not consider total cash costs per ounce in isolation or as an alternative to net income/(loss), income before tax, operating cash flows or any other measure of financial performance presented in accordance with U.S. GAAP. While the Gold Institute has provided a definition for the calculation of total cash costs, the adoption of the standard is voluntary and thus the calculation of total cash costs per ounce may vary significantly among gold mining companies, and by itself does not necessarily provide a basis for comparison with other gold mining companies, See “Information on the Company—Glossary of Mining Terms—Total cash costs per ounce”
 
(2)   Gold Fields has calculated total production costs per ounce by dividing total production costs, as determined using the Gold Institute industry standard, by gold ounces sold for all periods presented. Total production costs, as defined by the Gold Institute industry standard, are total cash costs, as calculated using the Gold Institute industry standard, plus amortization, depreciation and rehabilitation costs. Changes in total production costs per ounce are affected by operational performance, as well as changes in the currency exchange rate between the Rand and Australian dollar compared to the U.S. dollar. Management, however, believes that total production costs per ounce provides a measure for comparing Gold Fields’ operational performance against that of its peer group, both for Gold Fields as a whole, and for its individual operations. Total production costs per ounce is not a U.S. GAAP measure. An investor should not consider total production costs per ounce in isolation or as an alternative to net income/(loss), income before tax, operating cash flows or any other measure of financial performance presented in accordance with U.S. GAAP. While the Gold Institute has provided a definition for the calculation of total production costs, the calculation of total production costs per ounce may vary significantly among gold mining companies, and by itself does not necessarily provide a basis for comparison with other gold mining companies. See “Glossary of Mining Terms—Total cash costs per ounce.”
 
(3)    Includes gold production at Kloof Shaft No. 4, which is capitalized (fiscal 2002: 75,000 ounces; fiscal 2003: nil ounces).
 
(4)   In fiscal 2002 and 2003, 0.387 million ounces and 0.384 million ounces of production, respectively, were attributable to Gold Fields, with the remainder attributable to minority shareholders in the Tarkwa operation.
 
(5)   In fiscal 2002 and 2003, 0.100 million ounces and 0.213 million ounces of production, respectively, were attributable to Gold Fields, with the remainder attributable to minority shareholders in the Damang operation.
 
(6)   The consideration paid for the Australian operations in excess of the book value of the underlying net assets was allocated pro rata to the value of the underlying assets, which affected the allocation of amortization between St. Ives and Agnew.

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(7)   In fiscal 2002, and 2003, 4.109 million ounces and 4.334 million ounces of production, respectively, were attributable to Gold Fields, with the remainder attributable to minority shareholders in the Ghana operations.
 
(8)   The total does not reflect the sum of the line items due to rounding.

The following tables set out a reconciliation of Gold Fields’ production costs to its total cash costs and total production costs for fiscal 2003 and fiscal 2002.

                                                                                 
    For the year ended June 30, 2003
    Driefontein
  Kloof
  Beatrix
  St. Helena
  Tarkwa
  Damang
  St. Ives
  Agnew
  Corporate
  Group
    (in $ millions except as otherwise noted)(1)
Production costs
    260.3       250.5       155.0       12.6       105.1       71.2       118.2       42.1             1,015.0  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Less:
                                                                               
G&A other than corporate cost
    (7.5 )     (6.1 )     (3.9 )           (5.5 )     (1.6 )     (3.6 )     (0.8 )           (28.2 )
GIP adjustments
    (0.4 )                                   (1.1 )     (5.1 )           (6.6 )
Exploration
                                        (16.6 )     (5.8 )           (22.42 )
Plus:
                                                                               
Employment termination cost
    2.3       1.5                                                 3.8  
Royalty
                            5.4       3.0       4.6       1.1             14.1  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total cash cost
    254.7       245.9       151.1       12.6       105.0       72.6       101.5       31.5             863.4  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Plus:
                                                                               
Amortization(2)
    37.2       34.2       19.5             16.0       5.0       49.4       25.3       1.5       188.1  
Rehabilitation
    1.8       1.3       0.9             0.5       0.3       0.4       0.1             5.3  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total production cost
    293.7       281.4       171.5       12.6       121.5       77.9       151.3       56.9       1.5       1,168.3  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Gold produced (‘000 oz)(3)
    1,238.3       1,140.1       658.7       43.7       539.9       299.2       513.3       143.6             4,576.8  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Gold inventory (‘000 oz)
    23.2       2.0                                                 25.2  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Gold sales (‘000 oz)
    1,261.5       1,142.1       658.7       43.7       539.9       299.2       513.3       143.6             4,602.0  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Gold sold per production cost (‘000 oz)
    1,261.5       1,142.1       658.7       43.7       539.9       299.2       513.3       143.6             4,602.0  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total cash costs(4) ($/oz)
    202       215       229       289       195       243       198       219             212  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total production costs(5) ($/oz)
    233       246       260       289       225       260       295       396             254  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 


Notes:

All statistics are based on gold sold.

(1)   Calculated using an exchange rate of R9.07 per $1.00.

(2)   Includes non-cash portion of GIP adjustments.

(3)   In fiscal 2003, 0.597 million ounces of production were attributable to Gold Fields, with the remainder attributable to minority shareholders in the Ghana operations.

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(4)   Gold Fields has calculated total cash costs per ounce by dividing total cash costs, as determined using the Gold Institute industry standard, by gold ounces sold for all periods presented. The Gold Institute was a non-profit international industry association of miners, refiners, bullion suppliers and manufacturers of gold products that ceased operation in 2002, which developed a uniform format for reporting production costs on a per ounce basis. The standard was first adopted in 1996 and revised in November 1999. Total cash costs, as defined in the Gold Institute industry standard, are production costs as recorded in the statement of operations, less offsite (i.e., central) general and administrative expenses (including head office costs charged to the mines, central training expenses, industry association fees and social development costs), rehabilitation costs, amortization, reclamation, capital, development and exploration costs plus royalties and employee termination costs. Under U.S. GAAP, production costs do not include amortization, reclamation, capital development or certain exploration costs. Changes in total cash costs per ounce are affected by operational performance, as well as changes in the currency exchange rate between the Rand and Australian dollar compared to the U.S. dollar. Management, however, believes that total cash costs per ounce provides a measure for comparing Gold Fields’ operational performance against that of its peer group, both for Gold Fields as a whole, and for its individual operations. Total cash costs per ounce is not a U.S. GAAP measure. An investor should not consider total cash costs per ounce in isolation or as an alternative to net income/(loss), income before tax, operating cash flows or any other measure of financial performance presented in accordance with U.S. GAAP. While the Gold Institute has provided a definition for the calculation of total cash costs, the adoption of the standard is voluntary and thus the calculation of total cash costs per ounce may vary significantly among gold mining companies, and by itself does not necessarily provide a basis for comparison with other gold mining companies See “Information on the Company—Glossary of Mining Terms—Total cash costs per ounce”.

(5)   Gold Fields has calculated total production costs per ounce by dividing total production costs, as determined using the Gold Institute industry standard, by gold ounces sold for all periods presented. Total production costs, as defined by the Gold Institute industry standard, are total cash costs, as calculated using the Gold Institute industry standard, plus amortization, depreciation and rehabilitation costs. Changes in total production costs per ounce are affected by operational performance, as well as changes in the currency exchange rate between the Rand and Australian dollar compared to the U.S. dollar. Management, however, believes that total production costs per ounce provides a measure for comparing Gold Fields’ operational performance against that of its peer group, both for Gold Fields as a whole, and for its individual operations. Total production costs per ounce is not a U.S. GAAP measure. An investor should not consider total production costs per ounce in isolation or as an alternative to net income/(loss), income before tax, operating cash flows or any other measure of financial performance presented in accordance with U.S. GAAP. While the Gold Institute has provided a definition for the calculation of total production costs, the adoption of the standard is voluntary and thus the calculation of total production costs per ounce may vary significantly among gold mining companies, and by itself does not necessarily provide a basis for comparison with other gold mining companies. See “Information on the Company— Glossary of Mining Terms—Total production costs per ounce,”

                                                                                 
    For the year ended June 30, 2002
    Driefontein
  Kloof
  Beatrix
  St Helena
  Tarkwa
  Damang
  St. Ives
  Agnew
  Corporate
  Group
                            (in $ millions except as otherwise noted)(1)                                
Production costs
    205.8       181.6       113.3       28.8       85.5       28.5       55.8       17.8       (7.1 )     710.0  
Less:
                                                                               
G&A other than corporate cost
    (7.6 )     (5.5 )     (3.0 )     (0.3 )     (0.4 )           (1.9 )     (0.5 )           (19.2 )
Management costs
                                                    7.1       7.1  
Plus:
                                                                               
Employment termination costs
    2.7       2.7       0.2       0.8                                     6.4  
Royalty
                            4.6       1.4       2.4       0.7             9.1  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total cash costs
    200.9       178.8       110.5       29.3       89.7       29.9