Gold Fields Terminates Royalty Over St Ives

    JOHANNESBURG, Aug. 27 /CNW/ - Gold Fields Limited (Gold Fields) (JSE,
NYSE, NASDAQ Dubai: GFI) is pleased to announce that an Agreement has been
executed in terms of which the royalty payable by Gold Fields' wholly owned
Australian subsidiary, St Ives Gold Mining Company Pty Ltd (St Ives) to Morgan
Stanley Bank's subsidiaries, (Royalty) has been terminated for a consideration
of A$308 million.
    When Gold Fields acquired St Ives in late 2001, the total consideration
included the Royalty, which was subsequently acquired by subsidiaries of
Morgan Stanley Bank. The Royalty comprises two parts (i) a payment equal to 4%
of the revenue from all future gold produced by St Ives; and (ii) provided
that the gold price exceeds A$600/oz, a payment equal to 10% of the revenue
difference between the spot gold price expressed in Australian dollars per
ounce and a price of A$600/oz calculated on all future ounces produced by St
Ives. Both components of the Royalty are payable on all future production from
St Ives and thus represent an uncapped liability.
    The punitive impact of the Royalty on the costs of St Ives, which equates
to approximately A$100 per ounce at current gold prices, have become clear
over the past year, both in terms of its adverse impact on the operating
margin of the mine, as well as St Ives' ability to convert further ounces into
    With the very exciting Athena and Hamlet projects progressing well
towards development and the historic success of St Ives in consistently
replacing depleted ounces, terminating the Royalty became an imperative to
Gold Fields. At current gold prices, St Ives will only have to produce a
further 700,000 ounces over and above the Reserves of some 2.3 million ounces
to justify the termination fee on an undiscounted basis. Gold Fields does not
envisage any difficulty in achieving this production level, especially in
light of the fact that as at 30 June 2009, St Ives had SAMREC compliant
Reserves of some 2.3 million ounces and a total Resource of 5.6 million
ounces. In addition, the Athena/Hamlet camp alone, which continues to grow,
contains an inventory of over 2.2 million ounces of which only 0.4 Million
ounces are in Reserve and 1,0 million ounces are in Resource. In addition,
based on current economic parameters, the reduction of costs associated with
the termination of the Royalty will lead to an estimated 220,000 ounces of the
existing Resource converting to Reserve.
    The termination of the Royalty represents an investment in the reduction
of costs and at current gold prices and envisaged production levels, the pay
back on this investment will only be about five years.
    Nick Holland, Chief Executive Officer of Gold Fields, said: "This
transaction positively transforms the cost profile of St. Ives, placing it
firmly within the bottom half of the Australian gold cost curve, and allowing
this operation to benefit fully from the higher gold price. St Ives, with its
proven ability to replace reserves through discovery, continues to be of
significant strategic importance to Gold Fields, and our cornerstone operation
in the Australasia Region. To this end, the investment in terminating the
Royalty is not only value accretive for shareholders in that it offers
immediate significant cash flows to St Ives, but is absolutely essential to
the Gold Fields group in light of the future prospects of the region."
    The transaction has been financed from cash resources and available
facilities and closed on 26 August 2009.

    Certain statements in this announcement constitute "forward looking
statements" within the meaning of Section 27A of the US Securities Act of 1933
and Section 21E of the US Securities Exchange Act of 1934. Such forward
looking statements involve known and unknown risks, uncertainties and other
important factors that could cause the actual results, performance or
achievements of the company to be materially different from the future
results, performance or achievements expressed or implied by such forward
looking statements. Such risks, uncertainties and other important factors
include among others, economic, business and political conditions in
Australia, the ability to achieve anticipated efficiencies and other cost
savings in connection with the announced transaction, decreases in the market
price of gold, hazards associated with underground and surface gold mining,
currency devaluations, inflation other macro-economic factors, industrial
action and temporary stoppages of mines for safety reasons. These forward
looking statements speak only as of the date of this announcement. The company
undertakes no obligation to update publicly or release any revisions to these
forward looking statements to reflect events or circumstances after the date
of this announcement or to reflect the occurrence of unanticipated events."

    About Gold Fields

    Gold Fields Limited is one of the world's largest unhedged producers of
gold with attributable steady state production of approximately 3.6 million
ounces per annum from nine operating mines in South Africa, Peru, Ghana and
Australia. The company has total attributable ore reserves of 83 million
ounces and mineral resources of 251 million ounces. Gold Fields is listed on
the JSE Limited (primary listing), New York Stock Exchange (NYSE), NASDAQ
Dubai Limited (NASDAQ Dubai), NYSE Euronext in Brussels (NYX) and Swiss
Exchange (SWX). For more information please visit the Gold Fields website at


    The Mineral Reserves and Mineral Resources comply with the SAMREC code.
The competent person, Mr MK Jolly, has approved the contents of this
announcement in writing.

For further information:

For further information: Media and Investor Enquiries: Willie Jacobsz:
Tel (508) 839-1188, Mobile (857) 241-7127, email;
Nikki Catrakilis-Wagner, Tel +27-11-562-9706, Mobile +27(0)83-309-6720, email; Media Enquiries: Julian Gwillim, Tel
+27-11-562-9774, Mobile +27(0)82-452-4389, email

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