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Moody's affirms Gold Fields' Ba1 Ratings; outlook changed to positive from stable - Moody's

Friday, 16 September 2016

London, 16 September 2016 - Moody's Investors Service ("Moody's") changed the outlook to positive from stable and affirmed the corporate family rating (CFR) and probability of default ratings (PDR) of Gold Fields Limited (Gold Fields) at Ba1 and Ba1-PD, respectively. Concurrently, Moody's has changed the outlook to positive from stable and affirmed the Ba1 rating assigned to the $1 billion ($852 million outstanding) senior unsecured notes due 7 October 2020 issued by Gold Fields Orogen Holding (BVI) Limited, guaranteed by Gold Fields.

"The change in the outlook on the ratings to positive from stable reflects the track record of better than expected cost and production delivery at Gold Fields' South Deep mine which in Q2 2016 achieved its first free cash flow positive quarter since the mine was acquired in 2006," said Douglas Rowlings, a Moody's Assistant Vice-President. "Accelerated debt reduction assisted by a higher than anticipated gold price in 2016 will see credit metrics and liquidity strengthening significantly by year end with management achieving their leverage target of net debt/EBITDA below 1x."

South Deep will remain a prominent feature of Gold Fields' credit profile given its important contribution to long term production accounting for around 74% of the company's total gold reserves. The ability for the company to continue to deliver on production ramp-up will remain essential to reducing production costs which are driven by economies of scale. South Deep increased production by 87% in the first half of 2016 compared to the first half of 2015. The mine is expected to begin to continue to contribute increasing free cash flow after a history of consuming it.

Moody's recognises the track record of continued over delivery since the new South Deep mine management assumed responsibility in October 2014. This together with continual replacement of orogenic ore reserves at Gold Fields' Australian mines are increasingly adding surety to the company's sustainability of production.

RATINGS RATIONALE

The Ba1 ratings are supported by very strong credit metrics for the 12 months ended 30 June 2016. Debt/EBITDA is expected to decrease to 1.2x at year end from 1.6x with CFO-dividends to debt strengthening to 62% from 47.7%. This reflects management's intention to continue to reduce debt, following the buyback of $148 million of its $1 billion bond due 2020 in February which was funded through a $150 million equity raise.

Over the past three years Gold Fields' credit profile has undergone a material transformation, becoming very strongly positioned in its rating category. The company introduced deep cost cuts following the gold price decline in 2013 which resulted in all-in sustaining costs reducing to $992 per ounce from $1,383 per ounce. An acquisition of three mines in Australia (Aaa stable) in 2013 resulted in the country becoming the biggest contributor to the company's geographic production mix representing 44% of total production. Before this acquisition and after the unbundling of its labour intensive South African (Baa2 negative) mines, Gold Fields' mines in Ghana (B3 negative) contributed the most to its geographic production mix. Over time, Gold Fields has demonstrated an ability to continue to replenish reserves at its Australian mines with orogenic ore bodies which are only discovered as the ore body is mined.

Moody's also considers that Gold Fields is unlikely to add to reserve development through greenfield projects given the company's preference to add to production either through acquisition of in-production and near production ounces. Gold Fields would likely continue to finance acquisitions with a balanced debt and equity funding mix as it has done in the past. The company has a number of brownfields opportunities in Ghana and Australia where it is likely to progress reserve development.

RATIONALE FOR POSITIVE OUTLOOK

The positive outlook takes into account the strengthening evolution over the past three years of Gold Fields' credit profile where credit metrics are already supportive of a more highly rated gold mining company.

WHAT COULD CHANGE THE RATING UP/DOWN

Considerations for the rating moving to Baa3 will include (1) the ability for South Deep to remain free cash flow generative assuming Moody's medium gold price range of $1,300-$1,100 per ounce; and (2) the company's plans to progress brownfields opportunities, specifically in Ghana and associated capital expenditure. Negative pressure could be exerted on Gold Fields' Ba1 corporate family rating if leverage, as measured by Moody's adjusted debt/EBITDA, exceeds 3.5x and cash flow from operations minus dividends/debt falls below 20% on a sustained basis.

Negative pressure could also be exerted on the company's rating following any potential increased liquidity risk or should Gold Fields be unable to access cash flows from any of its important international operations, namely, Ghana, Australia and Peru. Similarly any reversal of de-risking the South Deep mine project could also place negative pressure on the rating and/or outlook.

The principal methodology used in these ratings was Global Mining Industry published in August 2014. Please see the Ratings Methodologies page on www.moodys.com for a copy of this methodology.

The Local Market analyst for this rating is Douglas Rowlings, 971-4-237-9543.

Headquartered in Johannesburg, Gold Fields Limited (Gold Fields) is a global gold mining company with sales totalling $2.58 billion and annual attributable production of 2.2 million ounces for the last twelve months ended 30 June 2016, making it the seventh-largest gold producer globally.

The group is listed on the Johannesburg, New York, NASDAQ Dubai, Swiss and Brussels stock exchanges.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Moody's affirms Gold Fields' Ba1 Ratings; outlook changed to positive from stable - Moody's

Friday, 16 September 2016

London, 16 September 2016 - Moody's Investors Service ("Moody's") changed the outlook to positive from stable and affirmed the corporate family rating (CFR) and probability of default ratings (PDR) of Gold Fields Limited (Gold Fields) at Ba1 and Ba1-PD, respectively. Concurrently, Moody's has changed the outlook to positive from stable and affirmed the Ba1 rating assigned to the $1 billion ($852 million outstanding) senior unsecured notes due 7 October 2020 issued by Gold Fields Orogen Holding (BVI) Limited, guaranteed by Gold Fields.

"The change in the outlook on the ratings to positive from stable reflects the track record of better than expected cost and production delivery at Gold Fields' South Deep mine which in Q2 2016 achieved its first free cash flow positive quarter since the mine was acquired in 2006," said Douglas Rowlings, a Moody's Assistant Vice-President. "Accelerated debt reduction assisted by a higher than anticipated gold price in 2016 will see credit metrics and liquidity strengthening significantly by year end with management achieving their leverage target of net debt/EBITDA below 1x."

South Deep will remain a prominent feature of Gold Fields' credit profile given its important contribution to long term production accounting for around 74% of the company's total gold reserves. The ability for the company to continue to deliver on production ramp-up will remain essential to reducing production costs which are driven by economies of scale. South Deep increased production by 87% in the first half of 2016 compared to the first half of 2015. The mine is expected to begin to continue to contribute increasing free cash flow after a history of consuming it.

Moody's recognises the track record of continued over delivery since the new South Deep mine management assumed responsibility in October 2014. This together with continual replacement of orogenic ore reserves at Gold Fields' Australian mines are increasingly adding surety to the company's sustainability of production.

RATINGS RATIONALE

The Ba1 ratings are supported by very strong credit metrics for the 12 months ended 30 June 2016. Debt/EBITDA is expected to decrease to 1.2x at year end from 1.6x with CFO-dividends to debt strengthening to 62% from 47.7%. This reflects management's intention to continue to reduce debt, following the buyback of $148 million of its $1 billion bond due 2020 in February which was funded through a $150 million equity raise.

Over the past three years Gold Fields' credit profile has undergone a material transformation, becoming very strongly positioned in its rating category. The company introduced deep cost cuts following the gold price decline in 2013 which resulted in all-in sustaining costs reducing to $992 per ounce from $1,383 per ounce. An acquisition of three mines in Australia (Aaa stable) in 2013 resulted in the country becoming the biggest contributor to the company's geographic production mix representing 44% of total production. Before this acquisition and after the unbundling of its labour intensive South African (Baa2 negative) mines, Gold Fields' mines in Ghana (B3 negative) contributed the most to its geographic production mix. Over time, Gold Fields has demonstrated an ability to continue to replenish reserves at its Australian mines with orogenic ore bodies which are only discovered as the ore body is mined.

Moody's also considers that Gold Fields is unlikely to add to reserve development through greenfield projects given the company's preference to add to production either through acquisition of in-production and near production ounces. Gold Fields would likely continue to finance acquisitions with a balanced debt and equity funding mix as it has done in the past. The company has a number of brownfields opportunities in Ghana and Australia where it is likely to progress reserve development.

RATIONALE FOR POSITIVE OUTLOOK

The positive outlook takes into account the strengthening evolution over the past three years of Gold Fields' credit profile where credit metrics are already supportive of a more highly rated gold mining company.

WHAT COULD CHANGE THE RATING UP/DOWN

Considerations for the rating moving to Baa3 will include (1) the ability for South Deep to remain free cash flow generative assuming Moody's medium gold price range of $1,300-$1,100 per ounce; and (2) the company's plans to progress brownfields opportunities, specifically in Ghana and associated capital expenditure. Negative pressure could be exerted on Gold Fields' Ba1 corporate family rating if leverage, as measured by Moody's adjusted debt/EBITDA, exceeds 3.5x and cash flow from operations minus dividends/debt falls below 20% on a sustained basis.

Negative pressure could also be exerted on the company's rating following any potential increased liquidity risk or should Gold Fields be unable to access cash flows from any of its important international operations, namely, Ghana, Australia and Peru. Similarly any reversal of de-risking the South Deep mine project could also place negative pressure on the rating and/or outlook.

The principal methodology used in these ratings was Global Mining Industry published in August 2014. Please see the Ratings Methodologies page on www.moodys.com for a copy of this methodology.

The Local Market analyst for this rating is Douglas Rowlings, 971-4-237-9543.

Headquartered in Johannesburg, Gold Fields Limited (Gold Fields) is a global gold mining company with sales totalling $2.58 billion and annual attributable production of 2.2 million ounces for the last twelve months ended 30 June 2016, making it the seventh-largest gold producer globally.

The group is listed on the Johannesburg, New York, NASDAQ Dubai, Swiss and Brussels stock exchanges.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.


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