Gold Fields Limited (GFI) Q2 2025 Earnings Report, Transcript and Summary

Good afternoon, good morning, everybody, and welcome to the presentation of Gold Fields H1 2025 results. I'm joined here in the room in Johannesburg by -- with Alex Dall, our Chief Financial Officer, who will take us through the specific financial details of these results. I just draw your attention to the forward-looking statements in the presentation pack. Just going into our results, I just want to remind everyone that Gold Fields is a global gold miner. We have a number of high-quality operations in quality jurisdictions, and we have a high-quality growth pipeline ahead of us. Just to remind everyone of our strategy, our strategy is very clear. It's around delivering safe and reliable and cost-effective operations, having a positive social impact on our communities and environment and continually growing the quality of our portfolio. Our focus really, if you look at our portfolio, we have four multi-decade assets, which provide the production base load. We have an additional four assets that have upside optionality. And through our greenfields, brownfields exploration activities and M&A, we continue to improve the quality and value of our portfolio. The way that we think about creating value is by enhancing the longevity and quality of our portfolio of assets, the focus is on growing cash flow per share. And if we continue to do that, we're allowed to trade off the options of returning additional funds to shareholders, investing in our business and strengthening our balance sheet to take advantage of future options. If you look at our first half 2025 we've actually had a strong performance relative to the same period of last year. Firstly, and most importantly, the benefits of our safety improvement plan are becoming visible, and we've seen an improved safety performance in H1 2025. And in fact, over the last 4 quarters, have continued to see the improvements as we've ramped up that program. We are on track to deliver both against our production and cost guidance for 2025. And whilst our H1 '25 unit costs are slightly elevated, they have come off in absolute terms per ounce, and we continue to see an improvement in H2 post the period end, which would benefit our all- in cost during the second half. In terms of improving the quality of our portfolio, we have had a strong performance from Salares Norte with ramp-up progressing according to plan, and we've seen continued operations throughout the winter. And even post period end, we continue to see good performance. We also completed the signing of the Gold Road acquisition in quarter 2, and we expect that transaction to conclude in October. We've also identified significant opportunities across our portfolio for improving our assets, and I'll highlight a couple of those ideas later in the presentation. Our focus is very much on returning -- on returns to shareholders, and we've announced an interim dividend today of ZAR 7.00 per share, which is 133% higher on the equivalent period last year and matches the full year dividend that we declared in February. So we've made some really good progress in the enablers of our strategy. We continue to invest in creating a sustainable, simple, reliable organization. Then just moving on to our H1 operational performance. Again, just to reinforce, we've had a very strong delivery in H1. Our safety performance, we've made some really good progress. We did, however, have two serious injuries, which demonstrates that the journey on safety is never ending. And every day, we drive our focus. Importantly, and one of the key enablers of that is our cultural changes. And we have now completed 90% of the EB&Co recommendations and continue to make good progress in investing in culture. In the first half, we had a 24% improvement in gold production compared to the same period last year. That enabled us to deliver an improvement in unit costs, which Alex will talk to later. And importantly, saw that translate into -- with the combined leverage of 40% improvement in realized gold prices, a 256% improvement in cash flow from operations. Importantly, and an important driver for performance is the ramp-up of Salares Norte, and we saw a 46% improvement quarter-on-quarter for Salares. We see commercial production being delivered in quarter 3 as planned with steady state plan for quarter 4. And we're well on track for the delivery of our guidance. And our production in the first half is around 48% of the midpoint of our 2025 guidance. Just very briefly touching on our social and environmental performance. We have completed a midterm review as intended in 2025. And -- but we have made also really good progress across all dimensions of our ESG commitments. We've made some good inroads to our safety, health and environmental improvement. We've made some good progress on gender diversity, where we now have 28% of women in leadership and 56% of women are in core operating roles. We have delivered $2.9 billion of value created for stakeholders, of which just under $800 million has been delivered to our host community. On decarbonization, we have made some good progress. We have had a 14% absolute reduction against our 2016 baseline. We continue to make good progress on the investment in renewables, but probably the one area that's lagging is that the technology in our industry has really not caught up and enabled us to make those significant inroads into diesel usage in our portfolio, and that remains a key area of focus. On tailings, last week, we launched our GISTM conformance report. And pleasingly, I can say that we have a high level of achievement against all of our tailings facilities. And in particular, all of our high-priority tailings are fully conforming. And again, we continue to focus on water stewardship. Just on production, again, what I can say is that we have made good progress, as I said, up 24% half-on-half and remain well placed on our full year guidance. And I'll talk to some of the highlights on the assets in a short while. I'll now hand over to Alex to talk about the cost performance in the half.

Thank you, Mike. Pleasingly, we saw a $100 decrease in our all-in cost from $2,060 an ounce to $1,957. This was really on the back of the strong production, as outlined on the earlier slides from Mike, offset by an increase in operating costs of of $230. $60 of these $230 is due to the inclusion of Salares Norte in operating costs for the first time. And the remaining is due to significantly from an increase in volumes and mining contractor rates in Australia. Also on the back of these increased volumes, we have seen an offset in GIP as well as the unsold gold of 45,000 ounces. Again, we've also seen an increase in sustaining capital. This is due to winterization projects at Salares Norte as well as higher volumes at our Australian mines and infrastructure spend there. So back to you, Mike.

Thank you, Alex. Just want to quickly run through our each of the operations and talk to some of the highlights. I think, firstly, just to call out South Deep, which has had a 31% improvement in attributable production half-on-half. And you'll recall that we've had a really difficult start to 2024 at South Deep. But pleasingly, there's been some really significant improvements, largely driven by improved underground mining and improved stope turnover. We're also seeing some slightly higher grades from the distress activities, and that certainly provided a benefit to South Deep. Again, because of the higher -- or the higher fixed cost nature of the operation, those higher volumes have translated into a lower all-in cost. At Tarkwa, we were slightly down on the half, but that was largely because of a planned higher stripping -- accelerated stripping in the second quarter, which meant that we replaced fresh rock with the stockpiled material, which came in at a lower grade. We do see that production weighted to the second half and remain confident of the delivery of the full year guidance for Tarkwa. St. Ives, we saw a really good improvement, so a 33% improvement in attributable production in H1. And that was largely due to the improved open pit volumes and improved grade. And pleasingly, again, we see a second half weighting for St. Ives, and they really are tracking really well against their full year plan. Gruyere, we did see a 14% improvement in attributable production. That could have been slightly higher, but we did have some challenges in January with the process plant. I think pleasingly, apart from the difficult challenges that we had in Gruyere over the past few years with our mining contracting, we saw an 82% increase in tonnes moved and really a significant acceleration in the stage 5 waste strip. That contributed to a slightly higher all-in cost for the asset. We also see a second half weighting for Gruyere in performance. But I think the most pleasingly, we're seeing really the constraint moving from the mine to the plant, which is what we wanted to see. Granny Smith continues to deliver as per expectations. And again, we are -- an infrastructure spend during the 6 months. Agnew also saw an increased production in the 6 months, largely due to improved grade mines and processed. Again, we also saw slightly higher costs due to higher capital, but also due to -- at Salares Norte, again, ramp-up is going really well, going according to plan. We did have some higher capital, which Alex will touch on due to the delayed commercial production and also to some additional winterization activities, which were one-off items. Damang continues to track according to plan. We did renew our mining lease for 12 months, and we are continuing to process stockpiles as well as mining some of the satellite pits as per plan and now continue to work with the government of Ghana on the transition of the asset. Cerro Corona, we did see some increased volumes and better grades, mines and processed, which allowed us to deliver 24% improvement in production. And costs were obviously positively impacted by the higher gold sold and some of the byproduct credits. Just quickly touching on the catalysts, and we have got a planned Investor Day in November, where we will unpack some of these opportunities. We're very conscious. We haven't really lifted the lid on the full potential of some of our assets. But just to give a bit of a highlight on the work that's going on. So at Gruyere, clearly, we are very confident about a future life extension and looking at the various options of what life extension looks like for Gruyere. That includes also the pit and plant optimization, looking at exploration opportunities of the larger Yamarna land package, which we've acquired with Gold Road. And Granny Smith, the real constraint is really haulage. We know the ore body continues at depth and continues fairly consistently. So we are starting the material handling system, which should enable us to unlock at future life and reduce costs. St. Ives, similarly, we've got a very large and significant ore body in that invincible ore body. And to unlock the full potential of that, it's really looking at how we really optimize material handling and improve stope turnover. And we've got a number of initiatives that are driving performance at St. Ives. This is, again, a long-life anchor asset in our portfolio. Agnew, there's also an opportunity. This has always been a 4-year life asset. So we've always kind of drilled out 4 years ahead of us. But we do believe there's an opportunity through optimizing mining costs, really looking at brownfields exploration across the tenement to look at how we can really extend life at Agnew. Because, again, it's been a very good contributor for a long time in our portfolio. South Deep, the focus is all around stope turnover. We've got really significant installed infrastructure capacity. And if you've seen what the performance is in the last 6 months, we've seen improved backfill placement, improving drilling accuracy and enhanced stope extraction, which will help us to incrementally improve extraction. Tarkwa, we are really focused on future life extension on that asset. And as I flagged earlier, the key opportunity for us there, because mining costs represent 60% of the cost base for the mine is to how we improve mining efficiencies and how we drive lower mining costs, which allows us to extend life at Tarkwa and lift the value opportunity that exists there. Salares Norte, it's all about finding additional ore. We have got a lot of work going on, on brownfields exploration, and that certainly is the opportunity for us to provide additional life into Salares Norte. And lastly, at Cerro Corona, the real constraint is around tailings. We are looking for additional ore sources, but the work that's going on now is to see what opportunities exist for additional tailings capacity. I'll now hand over to Alex to take us through the financial performance.

Thank you, Mike. And this is a summary slide. I'll unpack each block in a bit more detail on the further slides. But on the back of the strong production increase of 24% as well as a 40% increase in the gold price, we were able to deliver a very strong headline and normalized earnings of approximately a $1 billion each. This enabled us to declare an interim dividend of ZAR 7 per share, which is a 133% increase on the H1 2024 interim dividend of ZAR 3 per share. We -- pleasingly, we delivered adjusted free cash flow of $952 million against an outflow of $58 million in the prior comparative period, which is an over $1 billion swing or $1.06 per share. Pleasingly, even after the funding of the Osisko acquisition in the prior periods, our net debt to EBITDA is sitting at 0.37x. If we unpack the cash flow a bit further, the operations before taxes generated $2.1 billion. We were -- we paid on the back of the higher gold price, taxes of $463 million to the governments in the jurisdictions in which we operate. After paying interest, working capital and other movements, we were left with $1.7 billion of free cash flow. This does include funding of $100 million of spend at Windfall. Then we paid -- we spent $665 million on capital. Significant capital spend in the first period was at Salares Norte as we got ready for the winterization. We do expect that to come off and normalize in the second half of the year as well as on underground and open pit development at our Australian operations and the St. Ives Renewables project. That enabled us to reach the $952 million of adjusted free cash flow. Again, we have a very robust capital allocation framework in place that we allocate all our spend to. We have pleasingly maintained our investment-grade credit ratings during the half with reviews from both S&P and Moody's confirming that. As outlined on the previous slide, we have made significant investments in our business, including ZAR 500 million on sustaining capital, ZAR 100 million at Windfall and ZAR 160 million on growth. We have paid -- we have declared a base dividend of ZAR 7 per share or 34% of normalized earnings. This has still enabled us to have ZAR 950 million of remaining free cash flow that must compete based on returns. We invested 600 -- sorry, after the dividend, it was ZAR 600 million, and that went to improving the balance sheet. On the next slide, we outlined the balance sheet. And as you can see, pleasingly, our net debt has reduced to ZAR 1.5 billion from ZAR 2.1 billion at December 2024 and our net debt-to-EBITDA ratio is 0.37x. During the half year, we raised a 7-year bond of $750 million, which was used to refund -- repay the bridge taken out to fund the Osisko acquisition. And also, we have now completed a $2.3 billion bridge facility to underwrite the Gold Road acquisition. We have had a strong improvement in dividend from ZAR 3 to ZAR 7. This is at a conservative payout ratio of 34%, which is in line with previous year's practice, where we made a top-up at the end of the period. This equates to an annualized dividend yield of 3%. And if we look at our cash flow profile of our portfolio at Salares Norte ramps up, we believe we have an opportunity to provide sector-leading returns. As mentioned by Mike earlier, at the Capital Markets Day on the 12th of November, we will unpack our strategy around shareholder returns. Thank you, Mike, and back to you.

Thanks very much, Alex. I just wanted to spend before we go into questions, just talk about our portfolio and the work that we're doing to improve our portfolio quality. And I think just firstly, to start off with the levers and the way that we think about how we grow the value of our portfolio. And firstly, we look at M&A really through the lens of bolt-on opportunities. And if you look at the two transactions that we've done recently, those were really opportunities that we knew they were low-risk opportunities. One was acquiring the other half of the Windfall project that we already owned, including that very significant land package in Canada, around 2,500 square kilometers of highly prospective land package. And then the consolidation of 100% of Gruyere, plus the additional opportunity that we identified through the Yamarna tenements. And we'll continue to look at value-enhancing opportunities in key jurisdictions. But again, M&A, we see as something we'll continue to monitor, but it's not something we have to do, but it is an element of our growth strategy. The second one is really around brownfields exploration. And we've been very, very successful historically, particularly in our Australian assets in replacing reserves. In H1 '25, we've spent $63 million on brownfield exploration, including $7 million at Windfall. Of this, $48 million was spent with our Australian business and $5 million spent in Chile in H1 with really the focus on extending life of Salares Norte. Lastly, we've also invigorated our greenfields exploration program, and I'll talk a little bit about some of the successes that we've had. And really, the focus there is building the early-stage project pipeline for Gold Fields and trying to fill the opportunity set that will deliver projects a decade from now. We've built a really attractive portfolio of greenfield interest, and I'll talk about some of the recent ones that we've done. And most of these include earn-in opportunities and equity partnerships. Again, our focus around greenfields is less about proprietary exploration, but more about leveraging some of the great opportunities that our juniors hold. And many of our juniors continue to remain capital constrained to develop these opportunities. Just looking at some of the near-term options. And I think, again, we are very excited about both of these opportunities in our portfolio. So Salares Norte, despite a difficult 2024, we've had uninterrupted operations despite similar weather conditions in 2024. We have also now captured 5 Chinchilla and relocated them before the program was paused due to the winter months. So we feel very confident about our partnership with the environmental agency in Chile to enable us to continue that once the end of the winter occurs in October. We're on track to achieve commercial levels of production in quarter 3, and we are making good progress to deliver steady-state production in quarter 4 as per our plan. And again, the key focus for us in the second half is that continued exploration program and preparing ourselves and reinitiating the Chinchilla capture program so that by quarter 4, 2026, we can start some of that preparing for the Agua Amarga open pit pre-strip activities. On Windfall, the next 6 months is very much on execution preparedness, progressing the EIA process, progressing the IBA program and advancing the detailed engineering and technical work in preparation for an FID in Q1 of 2026 post the receipt of the -- this is a 24-month construction period with the planned delivery of first gold in 2028. There's clearly a lot of questions that many of you'll have around, capital estimates for Windfall, and we intend to provide guidance and the execution plan at our Capital Markets Day in November. The next item just to call out, which again, we are really excited about is the acquisition of Gold Road, which really allows us to consolidate the ownership of Gruyere. If you look at the time line, indicative time line, so we kind of signed the transaction in the beginning of May. There are a number of steps to that pathway on last Friday. The scheme booklet was distributed to shareholders, and we're expecting an implementation date of around mid-October. Having said that, whilst the Gold Road and the corporation and essentially start reporting the production in quarter 4, all of the cash really starts generating and becomes accretive from the date of signature of the transaction. So really seeing the benefit of that playing out. There was also an independent expert report, which was produced in early August, and that demonstrated and confirmed that our offer was within the reasonable valuation range. Just on the Yamarna land package and many people have certainly suggested that, that has been significantly explored for some time by Gold Road. And I think this really ties to why the strategic rationale behind the transaction now is Gruyere was operating asset in the gold portfolio. And our development agendas were maybe slightly different in how we thought about development. Clearly, Gold Road, we're looking for another Gruyere on the Yamarna package. And for us, all that we need to do is to continue to find those small packages like Smokebush and Gilmore, which provide a great sweetener to the Gruyere mill, because they're absolutely within trucking distance. So our kind of thinking around the strategic value of that land package may be slightly different. But again, we are very pleased with the inclusion of this in our future growth prospects. And then just lastly, on our greenfield exploration portfolio, we really invigorated this around 2 years ago and have made some fantastic progress. During H1, we made probably 4 important -- continued important progressive partners. So on Onyx Gold, we lifted our stake to just under 10%, and there's been some outstanding intercepts in the drilling that Onyx Gold have delivered. So again, that presents a really exciting partnership. In addition, we participated in a capital raise with [ VO ] in Canada and maintained our 20% stake. And this supports a 60,000 meter drilling campaign on that project. Again, both of these are high- quality exploration projects in a jurisdiction that we are -- we have recently entered into. Also in addition at -- with Hamelin Gold in Australia, we maintained our stake in the West Tanami project. In addition, at Tesoro Gold, we participate in our raise and our 17% stake maintained to support regional exploration. So we are now building a really nice package of opportunities through these deep partnerships, which allow us to start building that long-term pipeline for the future success of Gold Fields. Just moving to the conclusion and our outlook. Pleasingly, I can confirm that our production and capital and cost guidance remains intact and unchanged for the full year. Our focus for the remainder of the year is very simple. It's continuing to improve our safety performance and ensure and guarantee that everyone goes home safe and well at the end of every day. We do that through the work on our safety improvement program and our investment in culture. It's the predictable delivery of our plan. It's the continued safe ramp-up at Salares Norte, delivering on our core asset plans as well as improving the quality of our portfolio through preparing for the Windfall FID, completing the Gold Road acquisition and continuing safe delivery of our exploration activities. As I indicated earlier, we do have a planned Capital Markets Day on the 12th of November, which I'm hoping many of you can join. And at that meeting, what we would like to do is really to start providing a bit of a longer-term outlook on Gold Fields and our portfolio as it evolves. We are certainly excited about the opportunities, not with just the bigger projects, but with what each of our assets can deliver and the opportunity to deliver on our strategy, which is really growing the value of the company and ultimately being the preferred gold player in the sector. And we do that by growing cash flow per share and making sure that we are disciplined in capital allocation and growing returns to shareholders. So with that, I thank you and move over to questions.

Thank you so much, Mike. Just because we've got a combination of questions that are coming from the webcast online as well as through Chorus Call, I propose taking kind of one from each and starting with the webcast questions. The first one is from Tom Middleton. He says, "Mike, leadership is such a critical factor in delivering on the strategy in mining. How do you approach building and sustaining that leadership strength across Gold Fields? And to what extent do you draw on specialist partners in the industry to help you identify and secure the right talent?"

Tom, thank you very much for that and a really excellent question. And it's been really quite interesting in the 18 months that I've been with Gold Fields. We've made quite a number of changes in the way that we organized. And that's certainly been a part of our culture and our change journey. We've also invested very heavily in leadership development, and that was a journey that started probably 6 months before I joined. And it was certainly a recognition that as part of the feedback that we got on the mirror from EB and company that we needed to do a lot of work around leadership development. And we did that, firstly, by having experts like EB&Co and others provide that mirror back to us on where we had gaps. And then we did need to partner up to ensure that we had that capability lift given and provided to us. In addition, going to the way that we think about our talent and our business, we also acknowledge that we had a huge amount of latent capacity that just weren't being given the opportunity to grow and develop. And it's been quite interesting as we've gone through processes of benchmarking our talent externally, we've realized we've got, yes, whilst we have opportunities to close gaps and Chris in the room with us, Chris Gratias is our EVP of Corporate Development, we did bring in externally because we recognize we needed some new thinking and new capability in that area. But increasing -- in addition to that, in the room next to me, we have Alex Dall, who's our CFO and has grown up in the business and is actually doing an excellent job, and I'll still say he is doing an excellent job in 12 months' time. And so I think it's a balance. It's a balance of making sure you grow your own timber in the business but equally supplementing that from time to time where we need to bring in some new capability and skills. So I think it's a bit of both, but I fully agree. Ultimately, the sustainability of our business is going to come down to the culture and capability sets for the next generation.

Good. Thank you. I'll pause for a second, Mike, and we can hand over to the operator to advise if there's any questions coming through the call.

There are a few questions from the call. [Operator Instructions] The first question we have comes from Josh Wolfson of RBC.

First question I have is on Salares. There was some very solid performance this quarter on throughput improvements and grade was healthy. On the recovery side, gold is, I guess, a little bit below plan, silver improved. With all this in mind, I'm just wondering what we should be thinking about more specifically on grade and recoveries in the second half of the year? I'm told there had been some discussion about managing stockpiles and really what that means for the second half?

Thank you, Josh. And thanks for that question on Salares. So I think on Salares, we certainly -- what we have done, and I think we may have flagged this earlier in the year, what we acknowledged in terms of recoveries is that we are struggling with the amount of silver that we could actually process, which kind of ultimately impacted the realized gold equivalent of the throughput. So what we have done is we've actually put in a larger capacity furnace, and that was commissioned in the beginning of August. And we're already seeing some of the benefits of that coming through. So we think that, that kind of those recoveries and maybe some of those challenges that we had a little bit earlier, which I would not call challenges. They're really just part of ramp-up teething issues. I think will be significantly mitigated by that. And already what we've seen in July and into August certainly gives us confidence that we're going to see some of those benefits coming through. I think in respect of grade, whilst we have a very good stockpile management and we've got these key kind of fingers that really allows us to separate the different grades. What we also track really closely is making sure that we try and process largely in line with our life of mine grade profile, because what we don't want to do, and in particular, during this ramp-up is to be high grading those stockpiles even though the grades are super good for us. But I think what we should expect to see for the remainder of the year is trying to get us back towards our long-term grade profile of roughly around that 8 grams per tonne. So I think that's largely what we delivered in the first half and probably something what we should expect in the second half to be close to that as well.

And then one other question on...

Please go ahead, Josh.

Sorry, if I -- yes, one other question, if I can ask. Just as it relates to Gold Road in the Northern Star share position as part of the company. Could you remind us what the mechanism there is exactly and what the intention is with that share position?

Yes. Thanks, Josh. And Chris Gratias, our EVP of Corporate Development, is in the room. So I'm going to ask Chris to talk to it.

Sure. Thanks, Mike. So there was a mechanism agreed that the value of our offer would float with the change in the Northern Star share price. And there's a 5-day VWAP calculation that will be implemented around the court hearing date, which is towards the end of September. And that will fix the amount of the cash that will be paid to the Gold Road shareholders. We will then inherit the shares. And while we're considering our options are -- it's not going to be a noncore holding for us. So we will look to find ways to then offload that position and not take on any unnecessary risk.

I think safe to say very much that I think since the signing on the 5th of May, we have seen a slight construction.

So the headline value of our offer on May 5 was AUD 3.40 a share. There has been some pressure on the Northern Star share price, obviously, that moves all the time. But currently, the implied value of the offer is AUD 3.30 a share, so there's been a 10% increment. But again, that value is passed through to a Gold Road shareholder is not risk to us.

Operator, just mindful that you said there's quite a few questions on the call. I will take one more, and then we'll go back to the ones on the web.

The next question we have comes from Adrian Hammond of SBG.

Thanks, operator. Yes, so I appreciate your slide on 14, the catalyst for portfolio optimization. It sounds like you've got a lot of good things planned. Obviously, this will come at a cost. I was just wanting to give a sense to us, if you can, about where Gold Fields sits in the CapEx cycle, knowing, of course, you also have a few projects lined up as well.

Yes. Really good question, Adrian. And I think the issue for us as we think about all of these opportunities is trying to ensure that whilst we want to identify and pursue these opportunities, we are going to rank them. So we've got to make sure that we deliver the most value-accretive options as priorities. So we are ranking all of these options. But I do think it's important for us to think about, and it comes back to capital allocation, which Alex talks to, is we are in a very privileged point in the price cycle where we are generating a huge amount of cash. And what we're wanting to do is to, again, deliver those 3 things that we spoke about is, one, invest in our business for the long term, take debt off the balance sheet and improve the quality of our balance sheet, but equally making sure that we continue to deliver upper quartile returns to shareholders. And I think the -- how we're going to be measured undoubtedly in the coming years and particularly as we deliver on this potential of this business is how we manage and balance those opportunities, because if we kind of create imbalance, i.e., we keep all the cash on the balance sheet, we don't invest in our business, we don't return to shareholders. We're not going to be attractive. So it's really about trying to manage that balance. So as you rightly identify, many of these come with capital. And I think the wisdom for us is about how we can balance those competing tensions and using the benefit of the tailwinds that we have today to invest judiciously in the future and where we do make these investments, making sure that they're setting up these assets for the long term at a lower cost and at a higher margin, which really becomes a multiplier in the ability to return -- deliver superior returns to shareholders. But I think you've hit the key issue here. Yes, one thing about identifying the opportunities and being very focused on how they add value to us, but then being very, very judicious about how we are disciplined in allocating capital to those opportunities in the portfolio. Alex, if you want to add to that?

No, I think Mike has hit the nail on the head there. And I think, Adrian, if you look at a lot of those opportunities on those slides, a lot of them come to life extension, and that's just continuing our investment in brownfields Australian assets, that being Gruyere and Agnew. Yes, if materials handling systems become an option at both Granny Smith's and St. Ives as we look to unlock that value, that will obviously come with a CapEx spend, but the market needs to have the right returns on it and give a material decrease in costs and increase in volumes. But otherwise, a lot of them are just sort of the baseline expenditure we spend anyway.

Yes. And I think the other point, Adrian, I'd just make is we also -- as we think about these projects, we're looking at them through the lens of, in addition to ranking, what is the point at which they become sterilized as an option. And some of these options, you get to a point, well, if you don't make this investment, then really we probably need to think about what is the time to move on because then if we're not prepared to make some of these investments, then it's better off in the hands of others.

Yes, that's clear. I mean no doubt these are the challenges in mining. But while Alex was happy to talk a bit more. I mean the dividend surely is obviously a balancing act with everything else that you discussed, CapEx and debt reduction. Yet I think it's fair to say that the market is looking towards returns more now that you have a windfall from the gold price. You're paying a ratio that is still somewhat short of the top end. I mean, should we be thinking that given what you've discussed with us today, that we should be a bit more conservative in the way we should be modeling dividend payouts?

No. And Alex can talk to this. I think what we've done in the interim this year has been quite consistent with how we paid out an interim in the past years in terms of percentage of underlying earnings. But what we do know is that there is going to be further opportunity for additional returns. And I think Alex is going to talk about that in November. But we certainly think that with the outlook in our portfolio and the significant cash generation even at consensus, we will absolutely be in a position to be a bit more generous in how we think about returns to shareholders. But Alex, maybe you want to cover that?

No, no, I think that's spot on. Mike has covered it, Adrian. We have consistently paid out approximately 35% of normalized earnings as our interim dividend. And then we look at the year-end at any top-up optionality.

And just again to call out, I think we are very confident with our portfolio outlook that we can both fund our internal growth options and a number of these capital improvement options that we identify in the portfolio and deliver upper quartile returns to shareholders.

Thanks, Adrian. Just two from online from [indiscernible]. Please, can you give us some color on the winterization program at Salares and whether the operation is now fully winter proofed for coming years? And then I'm also going to lump in a next question from her is, can you give us guidance at a high level on production and ASIC for '26 and '27?

Yes. Thanks, [indiscernible]. So on Salares some of the additional capital that we spent this year was following a review that we had undertaken by independent experts to say, is there anything additional that we could do to provide protection for Salares. And that wasn't because we didn't believe that our existing design was sufficient, but we said what additional could we do? And this really entailed a couple of things. It entailed additional heat tracing on the larger diameter piping. It entailed complete encapsulation on our -- some of our exposed pipes as well as some full encapsulation on our exposed large diameter valves, which we've now completed. And I think -- that in conjunction with that continued operation, which is always going to be a requirement and operational readiness to make sure you minimize downtime during winter is really what's enabled us to deliver the good results this year. And so as long as we continue to operate this plant in that consistent way, then there's nothing really additional that we need to invest in for future winterization. So we think we're in a good place at Salares. In relation to your second question, we will come out at the Capital Markets Day in November and provide long-term guidance. And so I'd ask your indulgence to hold until then for us to provide that.

Thanks, Mike. One more from [ Peter Comridge ]. Could Gold Fields look at another U.S. dollar bond to replace the Gold Road acquisition facility?

Alex?

Thanks, Peter. So obviously, once the Gold Road bridge facility is in place, we need to look at our various takeout options, which could be putting in another bank facility, either revolver term loan or it could be looking at the U.S. dollar bond markets as well as in this strong gold price environment, the strong cash generation in the group, there could be some ability to use that cash to pay down a portion of the debt. But it goes back to balancing that tension of our capital allocation framework. We know that we need to delever the balance sheet after these 2 investments being Osisko and Gold Road and give returns to shareholders as well as invest in our business. So I mean, we will keep all our options open. But as always, the window for when we can do a bond is in April and May on the back of our publishing about 20-F. So we do have some time to see what our debt profile looks like.

Over to you, operator, to just check in if there's any other questions in the queue.

We have two more questions. The first question we have comes from Chris Nicholson of RMB Morgan Stanley.

My questions largely revolve around just CapEx, a couple of interrelated questions. So not to lose the wood to the trees here, obviously, the news that Salares is ramping up and has done well through the winter so far is great. The expenditure on Salares, I think you have explained is quite a bit higher than what you originally guided this year. I think you're tracking already at around $200 million. Where do you think that the Salares total CapEx for this year will end up? Kind of linked to that then, obviously, you're spending quite a bit more CapEx this year at Salares than originally guided, but you aren't changing your group capital guidance. Are you pulling back on CapEx anywhere else through the remainder of the year? And then just final question. There is some capital expenditure in the group that I think has kind of moved up. So obviously, you're doing stripping at Tarkwa. Certainly, the infrastructure build-out in Australia is higher and you're doing a bit of catch-up there. Should we expect that to continue into 2026?

Thanks very much for that question, Chris. If we go to the CapEx at Salares, we do expect that to come off significantly in the second half of the year. There is an element of a small element of uncertainty on what exact month we reach commercial levels of production because there you're reclassifying operating cost to capital expenditure. So that will determine where we land up, but that is going to come off significantly in the second half of the year. And when you look at the total group guidance, there are probably two other key drivers there that bring us back within the range. The first being that as Damang has a life that is shorter than 12 months, all of their capital spend, what would have been classified as capital spend is being classified as operating expenditure on the stripping of the mini pits as well as at Windfall certain items that we had originally included in the guidance as capital have turned out to be exploration expenditures, so they go to the operating expenditure line. So we're quite comfortable from that capital perspective on that side. And in 2026, we do expect to see the continued stripping at Tarkwa.

The next question we have comes from Tanya Jakusconek of Scotiabank.

Thank you for taking my 3 question. The first one is on Windfall. Can I just confirm that there is still going to be that updated feasibility study on November 12. Is that, Mike, what you were talking about that we're getting?

Yes. I think, Tanya, just to put that in perspective, we will provide an update on capital estimates as well as the execution plan. We will likely put -- when we declare the reserves for Windfall, which we're expecting in February of 2026 which will be in line with the expected timing of the EIA receipt. That's when we'll probably more formally release some of the detailed documentation. But what we intend to do on the 12th of November is at least provide some insight and guidance. Clearly, one of the things that we don't want to distract from during the EIA process is to have formal additional documents in the public domain. But we will provide updates on capital and development pathway.

Okay. Got it. And I'm saying capital, I'm assuming it's operating costs as well?

Yes, we'll provide guidance on that, yes.

And on Windfall, I just want to try and understand what -- where are we exactly on the permitting and the negotiations with First Nations. Can someone just give me an update on what has been done and just not up to speed on where we are on that process?

Yes. So the EIA has been in train for some time. We have now, at the end of July, submitted the second round of questions to [indiscernible], which are really the recommended body to approve the EIA. And we're now waiting for their responses to that. We are still expecting to go to public consultation around the end of October which really puts us in place to then get that approval in Q1 of 2026 in line with the timing of the FID. So that's going according to plan. We don't think there's any further kind of questions that we expect back from them. So we've addressed two rounds of them and certainly, the second round were relatively minor. In terms of the engagement with the -- our host community, the Cree First Nation of West Winnipeg, we have been engaging again for extended period with the community. And I think we started in February with the actual chapters of the IBA. And we've done, obviously, as you can appreciate, some of the easy chapters. And we're now this month getting into the specific compensation chapters. So Again, we are moving at the right pace in line with an expected timing of having this completed by the end of the calendar year. And again, just to remind everyone on the call, the one thing that is really unique about our relationship with the West Winnipeg First Nation is they have an active economic interest in seeing the mine developed because of their ownership and operatorship of the hydro power line that supplies power into windfall. And the sooner we get that plant up and running and developed, the sooner the rent from that and that investment in that transmission line starts paying effect. So we think the economic is strongly aligned, but we do need to work through systemically the chapters of the IBA, which is in train at the moment.

Okay. And so the IBA, we don't need that to be in place to -- with the permit to start? If we don't get it, it's not critical? I want to understand.

I think they both should be looked as a package. They will be stapled. And I think the IBA and the EIA, we should expect at the same time.

Okay. That's helpful. My second question is on Salares Norte. I just want to understand because I thought the definition of commercial production was at 30 days at 60% capacity at the mill and 85% recovery on the gold side. I see the recovery at 85% on the gold side. So is it the mill? I understood you had an issue with the silver recovery. I'm just trying to understand what exactly is happening to declare commercial production.

I'll leave it with Alex to answer that.

No. Thanks, Tanya. And that is correct as a definition, but the other element of it was that we would -- we're also forecasting to maintain that. And there was just, as Mike mentioned, some uncertainty around the silver grade and the new furnace coming online. So our group technical team went and actually are doing a detailed metal accounting review. And once they are comfortable with the recoveries and where they're sitting, we will be in a position to declare commercial levels of production.

And I think just from a -- just to manage the expectations on disclosures, I think Jakusconek, we will disclose that with our quarter 3 production update rather than a separate release.

Okay. All right. Got that. And then my last question is just on South Deep. I know you talked about the portfolio optimization, Mike, about some of the stopes and work you're doing there. How does all of this fit into that previous plan and maybe it's not a plan anymore of getting this mine up from that 300,000 ounce production to 400,000 plus in the next 3, 5 years. Is this still a plan? Or is that gone? I'm just trying to understand.

Yes, absolutely. So we do have a future plan for South Deep, where we will see a ramp-up. And that part of that is about the investment into South of [ Ranch ], which is the next mining domain. So again, we'll share some of that more strategic insight into the future for South Deep. We do see it as an update. But I think, again, for the next few years, and as I've always said, every year that we can incrementally improve South Deep until we open up those new domains until we've sustainably delivered on some of the reliability on stope turnover, if I can call it that or removing that variation, I think we want to be cautious certainly in the next few years. But certainly, in the longer horizon, our ambition is absolutely to unlock some of the potential that sits in South Deep, and we'll share some of that in November. But again, I mean, if you look at South Deep, even for the 6 months, we produced 150,000 ounces of gold, but we generated $170 million of free cash flow, so over 6 months. So South Deep is becoming rapidly a very valuable contributor into our portfolio. And so getting that right will provide a real long-term anchor to our contribution from Gold Fields.

Yes, thanks Mike. It would be great to get an update on that one.

Just a question from the webcast, Mike. On Windfall, how much flexibility will you have within the environmental approvals to potentially scale up Windfall mine? Can you get amendments to the approval post FID if the mine design looks vastly different to the Osisko design? Or would you need to restart a more comprehensive approval process?

Yes. Thank you for that question. And I think we're already starting to look forward. I mean, what is really the way that the Windfall project was conceived in the initial application was really to ensure that it stayed within the provincial approvement levels and didn't fall into the federal approval levels. As we think about the technical review of the project ahead of the next stage of FID, we're not just looking at the optimization of the process plant, but really looking at how we optimize the mine for the long term. And so we've really looked at some incremental improvements there. But all of those are designed to stay within the intent of the current feasibility study as well as the provincial approval levels. But quite clearly, when you're looking at a mine with this kind of horizon and life that we believe it has, and with the upside optionality of even nearby exploration, we are already starting to put our minds to, well, what could the future look like for Windfall. And there's a number of studies that we will need to go through. And I think once we've gone through those studies, that will then start informing us, well, what is the development pathway. So at this stage, it's probably a little bit too early to answer that question. And we're clearly mindful that in particular during this approvals process that we remain largely in -- remain -- retain the integrity of the current application. But there's no doubt that given the potential of Windfall that there's more upside opportunity to come.

Thanks for that, Mike. A question from Patrick Jones. He says, another major mining company this week indicated that a lack of technological and commercial advancement for trucking and decarbonization is delaying diesel replacement and thus presents a risk to miners' long-term emission reduction targets. What has been the key impediment to progress? Are you confident that major OEM plans for truck transition can deliver -- can be delivered? Or does the industry need to shift focus to different decarb pathways?

Yes. That's a really good question, Patrick. And I'll answer it this way. That answer is precisely right. I think we are seeing a very slow reaction to how we remove diesel out of our fleets and how we look to electrify fleets. And we've done various different studies along the way. But you're right, I think the way that we've got to start thinking about it. And probably if we answer the reason well, why has the industry been slow, it's probably because the OEMs see our industry as relatively small scale compared to some of the other vehicle sectors or uses of vehicles. And there hasn't been that kind of crossover yet where OEMs have seen the value and the returns in significant investments in low-carbon fleet solutions. So we've got to continue to try and work with the OEMs and try and drive that forward. But in the absence of that, I think it looks at -- it comes down to how each mining company can look at the opportunities in the portfolio to drive decarbonization. And an example is the one opportunity that we highlighted at Granny Smith, for example. When we get down to Zone 160 or even at Zone 150, you've got a 3-hour cycle time of haul trucks from the bottom of the decline to the top. And the best way that we can take diesel out of that system is to put in a material handling system, which enables us to eliminate trucks out of the cycle. And if you combine that with renewable energy sources, immediately, that will unlock and decarbonize. So I think we're not sitting on our hands by any means. And despite the slow transition of diesel fleets, there are definitely alternatives that we've got to pursue.

Thanks, Mike. Back to you, operator, to check in if there's any questions remaining on the call.

At this stage, there are no further questions on the conference.

There's none further on the webcast or online as well, Mike. So over to you for closing remarks.

Great. Thank you very much, and thank you, everyone, for joining on a Friday for our results presentation. Just to summarize, we're very pleased to have delivered a safe, reliable delivery for the first 6 months of this year. And at this stage, remain very confident of our delivery in the second half. We're also very excited about the work that's going on to optimize our business, simplify it and set it up for long-term success. And we look forward to sharing some of the outlook and the great upside that we believe is in our business at the Capital Markets Day in November. So I look forward to engaging with you again then. But thanks again for joining. I really appreciate it.