Gold Fields Limited (GFI) Earnings Call Transcript

Good day, ladies and gentlemen, and welcome to the Gold Fields market & media call with the Chairman of Board and incoming CEO. [Operator Instructions] Please note that this call is being recorded. I would now like to hand the conference over to Yunus Suleman. Please go ahead, sir.

Thank you, Irene, and good afternoon to all of you, and thank you for joining us in this afternoon important announcement. As you would have seen this morning, we actually published at SENS appointing Mike Fraser as the incoming CEO effective 1 January 2024. And I'm delighted to be sitting in the Boardroom at Gold Fields in the corporate office with Mike on my right-hand side and Jongisa and Thomas on corporate communications team and this is a great opportunity for us to introduce Mike to the global, let's call it, media and market. We're really delighted that Mike accepted our offer and that we are really in a position to welcome him the new year. As you know, Martin has been the interim CEO since the beginning of the year, and we have been very delighted in terms of what Martin has achieved during his tenure, and he will continue in that role until the end of this year. What I wanted to do is for you to hear firsthand from Mike on his experience and his broad -- let's say, learning in different regions around the world and what he can offer in terms of Gold Fields and why we decided to appoint him. Over to you Mike.

Thank you very much, Yunus. And good morning and good afternoon to all of those on the call today. I'm sure I know many of you. And for those that I do, I look forward to reacquainting with you. And for those that I have not yet met, I look forward to meeting you in due course. Look, I'm delighted to be joining Gold Fields. Gold Fields is one of the preeminent gold mining companies, as we know. It's got a very proud track record and has really been innovative and creative in so many ways. In the last decade, there's been a complete transformation of this business, but there's a lot more that we can still do. And I'm really looking forward to joining a team that is going to take this business to the next level of performance. What is really important for me is focusing on the key priorities of the business. This isn't going to be a massive u-turn on strategy. I think the business has got a sound strategy that we need to just execute and deliver on it. There will be undoubtedly choices that need to be made in time. But the real focus is on delivering on the key things. So as we know, Salares Norte is a key priority for us, continually focusing on reserve replacement over time and focusing on the improvement of the assets within the portfolio. What I do bring to Gold Fields, I believe, is a very broad-based experience across leading operations in multiple geographies, particularly in the geographies that Gold Fields has exposure to. I've also got the benefit of some real big corporate experience through my time with BHP and also latterly South32. We have been able to see through the organization transformations and tweaking organizations as they deliver on high performance. Lastly, in the last 2 years, I took command through a junior gold mining company, which also brought some really rich experiences to bear and ones that I can bring back to Gold Fields not least of which is some exposure into the gold industry, particularly, but also just how commercial deals are done at the junior-end of the sector, which is kind of, I think, where opportunities exist for further consolidation in TAM. I am South African, have lived in a number of countries around the world. So I consider myself a bit of a global citizen in that respect. But I look forward to working with a team that has got an incredible technical bench and certainly will lean on that to deliver future performance for this great organization. So thank you very much for the time that you've got today. And if there's any questions that anyone has at this point in time, I'm happy to take them. Otherwise, in due course once I've joined the organization fully. I'm sure Jongisa will set up some time for us to engage more fully.

Thank you, Mike. Irene, are there any questions here? Or should I everyone making some additional comments.

Thank you sir, we do actually have a few people queued already. [Operator Instructions] The first question we have is from Raj Ray of BMO Capital Markets.

Congrats on the appointment Mike. First question, Mr. Chairman, for you. In terms of -- you did highlight what you were looking for in terms -- in the new candidate. But where Gold Field sits today, what were the key qualities that -- criteria you had in terms of appointing the next leadership position and how do you think the experience that Mike brings in, aligns with where Gold Fields is looking to move? That's my first question. And second is was it a requirement for the person to be based in Johannesburg [ who relocates over ] as the CEO of Gold Fields?

Thank you. Yes. So the first point, in terms of criteria, we as a Board you find that very clearly that we were looking for someone with global experience in a number of the regions in which we operate. And in essence, with the experience that Mike brings to the table, he's worked in a number of jurisdictions, including Australia, including Columbia, with South America, where we have a number of mining operations. And also in terms of transformational experience in terms of our cultural journey that we embarked upon a few months ago. So as you may know, but in June this year, we launched what we call the Gold Fields Way, which is very much about changing the environment, the cultural journey that we embarked upon and to make sure that from a human resource point of view, which Mike has extensive experience along will help us. But also from his role as the COO for the BHP stock -- South32 operations, it was very helpful for us to have that benefit where his experience could be brought to bear as well. So those are kind of some of the criteria. Overall, we were comfortable that his strategic experience and also his -- in terms of his, let's call it, corporate experience, fitting well with the operating experience that we have at the actual [ extol ] level as we have currently. So it's actually the combination of those 2 sort of, let's call it, areas, was enough for us to appoint Mike as our incoming CEO. Secondly, in terms of the other criteria, it's a matter of the actual head office of Gold Fields is in Johannesburg. And although when we went out to look for a candidate, we didn't put that as a prerequisite, that they had to be based in Johannesburg. But overall, it actually fits in well because Mike is South African and also, was going to be happy to relocate because he kept his house in South Africa and therefore, it will be an easier transition. And the third point I want to add is that because Martin is an operator and in essence, we decided together with Mike specially that he will remain as an executive committee member, the combination of the two will be literally an A-team that will take Gold Fields to another level. I hope that answers your questions.

Yes, that does.

The next question we have is from Jared Hoover of RMB Morgan Stanley.

I think you've answered a lot of my questions in your preamble, Mike. And -- But maybe 2 more from me, if I could. I was hoping we could expand a bit on your commentary around some of the choices that need to be made at Gold Fields in time. And I mean, I appreciate you probably still need to dig deep into the nuts and bolts Gold Fields. But maybe if you can just chat about those choices and maybe from the outside looking in any underappreciated areas of value that you see. And then maybe just to add on to Raj's question earlier. Yunus, maybe if you could just chat about any specific mandate that you've actually given to Mike. And Mike, are there any specific terms that you laid out for Gold Fields before you were willing to accept that role? I'll leave it there.

A lot in that, Jared. And look, I think maybe I'll just start with your question about the -- where the value opportunities sit. I've got a few hypotheses where we can focus on. I don't think there's going to be anything mind blowing. I think it's going to come down to looking at how capital gets allocated, looking at where the opportunities exist within the existing assets for further optimization and value unlock. And lastly, looking at where growth, and I talk about growth loosely because I'm not sure there's been a decision about what is optimal size for Gold Fields. So I think there's got to be a question of how -- where does money get allocated to reserve replacement. Is that an internal or external focus. So those are the kind of conversations that I think are warranted. But then as Yunus has said, I think one of the true opportunities of taking Gold Fields to the next level of performance is not just looking at the existing assets, but how do you unlock the potential of the organization in its totality, particularly as you add on these existing growth options in the pipeline being Salares Norte and the Canadian additions. So that's kind of going to be early ways thinking. But I'm sure in the new year, after the results release, we'll have an opportunity of engaging more fully on some of those strategic questions.

And if I can add to the point you raised about the mandate. Essentially Mike is clear in his mind in terms of his strategic priorities and ours is very much aligned so essentially, what he has said is that the actual strategy that actually needs to be continuously implemented is very much in line with what the Board has approved. There's no plan to change anything drastically in terms of our strategy. I think in terms of the, let's call it the environment in which we have got a refreshed executive committee. I think he needs to play a role in the appointment of the next CFO. As you know, Paul Schmidt will leave us some time in the new year. And the reality is we've quite now got that show on the road. And Mike will play an important role in making sure that the right person comes in and the transition with him and Paul will be done in a very seamless way. So that's, I think, in terms of the current mandate, there obviously be a few months, he will work closely with Martin over the next few months. And there, we've also identified a number of opportunities for him to be able to work on certain areas, which we believe are important for the short term.

[Operator Instructions] The next question we have is from Adrian Hammond of SBG Securities.

Yunus, I'd like to just follow up on the [ comments you made around Martin], what specific role will you be offering him? And how do you ensure that there is continuation of technical leadership within the group. It's obviously Martin was -- [indiscernible] certainly that was well received by the market. So what do you think about ensuring that individual property is sustained? And then if I may, just use this platform to ask whether there is any concern from Mike's point of view on the outlook for Salares and whether that is on track?

Thanks, Adrian. So in terms of Martin's role, I think it's something that will evolve over the next few months. It's clear that he will remain on the executive management team and Mike and I have already spoken about it, this role that he will take will evolve, as I said, and then something in terms of, call it, [ announcing ] exactly what that level [ we will ] be done in the near future. I think an exact title will be difficult to assess at this stage. But Mike is clear in his mind that definitely he would want to work with Martin and that will supplement his role in terms of the way forward. But he will still be responsible as CEO to deal with the strategy and the vision of where we go with Gold Fields. But that will ensure there is consistency. I think in terms of the leadership there's really a broad spectrum of leadership in the Executive Committee and everyone will work as one team supporting Mike.

Adrian, good to meet you. I think I've had a great conversation with Martin. I think he's really well respected and got some deep operating experience, particularly in hard rock underground mining and also open pit mining. And I think there's no doubt that Martin is very keen to be part of this business going forward. And I think we want him to be part of it going forward and he's going to help us to grow the capability and the next set of leaders as well that will come through. So we're both committed to that journey, and I know Martin is going to be an important part of the business going forward. Sorry, just as far as -- Adrian, yes, so I've been, I think, briefed as much as you have in terms of what's available in the market. And the expectation is still for [ first goal ] by the end of Q4 2023.

There's been nothing [indiscernible] to date so yes.

So nothing has changed since our last announcement in that regard yet.

Adrian, you covered in terms of your questions?

Yes.

The next question we have is from Leroy Mnguni of HSBC.

I've got 2 questions, please. So the first one is for Mike. In the time that you spent at your current company, I think it's, Charaat, I don't know if I'm pronouncing that correctly, but I see they've got two some exciting projects, would you potentially, over the longer term, could you see those as a fit for the Gold Fields' portfolio of assets? And then my second question is just around Martin and sort of lock ins going forward? Have you put in anything to incentivizing to stay over the medium-term, considering that he sort of been overlooked for the CEO role?

Thanks, Leroy. Look, what I have learned a lot about Central Asia in the last 2 years, these are tough places to do business. We think Africa is a tough place and South America is tough, but these are equally tough. They are good assets with very high grades, but there's a lot of challenge as well around them. And I also think with some of the geopolitics playing out right now, I wouldn't necessary say that might be the first address we look at. But I think there's enough within the hopper of Gold Fields to focus on the current profile, at least initially.

So Leroy, getting back to Martin, I would think that earliest we would look at that would be in the February Board cycle. At this stage, Martin is a very loyal citizen and he's committed and he's very much wanting to remain with Gold Fields. So I don't think money would be the driving force to incentivize him to stay. He's very committed, he's very loyal. And like he said to me, we are here to serve you and so we're very comfortable where we are, but we could look at something in the new year when that comes up.

Okay. And maybe if I could just as a follow-up to that, you've obviously had significant turnover in the executive team over the last 12 months, understandably for various different reasons. But has that sort of led to you kind of relooking the structure of your long-term incentives?