MOODY'S STATEMENT ON GOLD FIELDS RATING DOWNGRADE

London, 06 December 2012 -- Moody's Investors Service has today downgraded 
the global scale issuer rating of Gold Fields Limited and the senior 
unsecured rating of Gold Fields Orogen Holding (BVI) Limited to Ba1 from 
Baa3. The outlook on the ratings is negative. This rating action was 
prompted by Gold Fields Limited's announcement (on 29 November 2012) that 
it plans to unbundle its South African mining assets (the 
Kloof-Driefontein Complex and Beatrix mines) into a newly formed entity, 
Sibanye Gold Limited, to be finalised by mid February 2013. This action
concludes our review for downgrade initiated on 30 November 2012. 
RATING RATIONALE 
"Gold Fields Limited's planned unbundling of its two South African mining 
assets (Kloof-Driefontein Complex and Beatrix) will initially lead to an 
overall weaker credit profile after the transaction is concluded, hence 
the one-notch downgrade to Ba1," says Gianmarco Migliavacca -- Vice 
President - Senior Analyst and lead analyst for Gold Fields Limited. "The 
rationale for the downgrade to Ba1 is driven by an overall weaker scale, 
geographic diversification and liquidity profile. The downgrade also 
reflects near-term deterioration of cash flow metrics, as the unbundled
-- more mature -- assets contributed more positive free cash flow 
compared to the company's South Deep mining project which is still in a 
ramp-up phase and is therefore reporting negative free cash flow 
generation. At the same time, Gold Fields Limited's Ba1 rating takes into 
account the credit positive aspects of the transaction such as lowering 
the company's cost base, thus contributing towards more sustainable 
higher operating margins and reducing exposure to South African mining 
industry risk factors such as: (1) productivity losses due to labour 
unrest; and (2) higher-than-inflation wage and electricity price 
increases" adds Mr Migliavacca. 
The negative outlook assigned to Gold Fields Limited's ratings is
primarily driven by the near-term deterioration of free cash flow and 
higher reliance of cash flows from its operations in Ghana in the short 
to medium term, until the South Deep project is complete and can 
contribute towards healthy positive free cash flows. 
The rating assumes that the current guarantee structure, which, according 
to management, will include the assets held by Sibanye Gold Limited, will 
remain in place for the existing $1 billion bond. 
Detailed considerations for Gold Fields Limited's Ba1 rating: 
REDUCED SCALE IN TERMS OF PRODUCTION, REVENUE AND EBITDA 
Following the unbundling of its Kloof-Driefontein Complex and Beatrix
assets, Gold Fields Limited's new position will be the seventh largest 
global gold producer with projected annual production of 2.0 million 
ounces (currently fourth-largest gold producer). The number of mines it 
operates will drop to six (from eight currently), and revenues and EBITDA 
will decrease by approximately 40% and 32%, respectively. 
WEAKER GEOGRAPHIC DIVERSITY WITH INCREASED EXPOSURE TO GHANA 
As a result of the unbundling, Gold Fields Limited's production profile 
will be predominantly exposed to Ghana (38% of production), followed by 
Australia (28%), South Africa (20%) and Peru (14%). The current 
production profile is South Africa (49% of production), followed by Ghana 
(24%), Australia (18%) and Peru (9%). 
Although Moody's recognises the risks of operating in South Africa, the 
rating agency views Ghana as a riskier country for Gold Fields Limited's
mining operations than South Africa, where there has been a mining
charter governing gold mining companies, such as Gold Fields Limited,
since 2004 (later amended in 2010). 
Moody's recently downgraded South Africa's sovereign rating to 
Baa1/negative from A3, with the rating agency's view of the institutional 
strength component having been lowered to "moderate" from "high". 
However, if Ghana was rated by Moody's, that country's sovereign rating 
and Moody's assessment of the institutional strength component are likely 
to be weaker than the rating agency's published assessments for South 
Africa. Therefore, replacing South Africa's contribution for Ghana, while 
improving factors such as the overall cost structure of Gold Fields 
Limited after completion of the transaction, leads to our conclusion that 
overall geographic diversification will weakens due to the higher 
perceived political and economic risks in Ghana. 
LOWER CASH COSTS EXPECTED TO IMPROVE MARGINS 
Gold Fields Limited's unbundled assets, Kloof-Driefontein Complex and 
Beatrix, are collectively known as "narrow vein assets", while the 
remaining assets are collectively known as "large ore body assets". The 
large ore body assets that are predominantly open pit operations (or 
mechanised underground operations) which also require a relatively 
smaller labour force, have a lower cost-base than the unbundled narrow 
vein assets, that are deep-level mining operations which require a 
significant manual labour force for extraction. Moody's therefore 
recognises that Gold Fields Limited's cash costs are expected to reduce 
to $780/oz from $879/oz currently, and its EBITDA margin would improve 
by around 500 basis points due to the unbundling of its two older South 
African mines. The rating agency also expects EBITDA margin to improve to 
48.4% from 43.5% for the 12 months ended 30 June 2012, according to 
Moody's standard definitions, adjustments and calculations. 
WEAKER SHORT-TERM CASH FLOW GENERATION AND LIQUIDITY PROFILE 
Nevertheless, on completion of the transaction, Gold Fields Limited will 
display weaker initial free cash flow generation, due to the removal of 
two healthy cash-generative assets. Its remaining mine in South Africa, 
South Deep, is still in ramp-up phase and thus still reporting negative 
free cash flow due to its high capital expenditure needs. However, based 
on current gold price assumptions South Deep is forecast to break-even 
during 2013. 
As a result of the proposed unbundling transaction, Gold Fields Limited 
would also have a weaker liquidity profile in the near term, as it will 
lose two of its cash-generative mining assets, whilst retaining the South 
Deep mine in South Africa will still require higher capital expenditure 
than the contribution it is making in terms of cash flows. As South Deep 
builds up to full production, we recognise that its free cash flow 
contribution could become significantly positive as a result of the 
ramp-up stage being completed. 
WHAT COULD CHANGE THE RATING UP/DOWN 
Given the change in the company's geographic mix and more limited scale, 
upward ratings pressure is currently limited at this stage. The rating 
outlook, however, could be changed to stable if (1) the higher reliance 
on Ghana does not prove to materially increase the overall business risk 
profile of Gold Fields Limited; (2) the completion of the South Deep 
project remains on track; and (3) the overall group's EBITDA margins 
prove to sustainably improve due to the unbundling transaction. 
Further negative pressure could be exerted on Gold Fields Limited's Ba1 
rating as a result of the company's inability to cut costs and projects 
in a (1) deteriorating gold price environment and/or (2) higher cost 
environment, thus allowing leverage, as measured by Net Debt /EBITDA, to 
increase above 2.0 times and cash flow from operations after 
dividends/debt to fall below 30% on a sustained basis. Negative pressure 
would also be exerted on the company's rating due to increased liquidity 
risk or an inability to access cash flows from any of its important 
international operations (namely Ghana, Australia and Peru). 
PRINCIPAL METHODOLOGY 
The principal methodology used in rating Gold Fields Limited and Gold
Fields Orogen Holding (BVI) Limited was the Global Mining Industry 
Methodology, published in May 2009. Please see the Credit Policy page on 
www.moodys.com for a copy of this methodology.     (The following press release 
from Moody's Investors Service was received by e-mail. The sender verified the 
statement.)
 
 
Press spacebar to pause and continue. Press esc to stop.