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Rating Action:

Moody's assigns Baa3 rating to Gold Fields' proposed notes

Global Credit Research - 30 Sep 2010

Johannesburg, September 30, 2010 -- Moody's Investors Service assigned a Baa3 senior unsecured rating to the proposed issue of senior unsecured notes issued by Gold Fields Orogen Holding (BVI) Limited, a wholly-owned subsidiary of Gold Fields Limited ("Gold Fields", rated Baa3/stable). The notes will be fully and unconditionally guaranteed by Gold Fields, GFI Mining South Africa (Proprietary) Limited, Gold Fields Operations Limited, and Gold Fields Holding Company (BVI) Limited. The outlook for the rating is stable.

RATINGS RATIONALE

The new guaranteed notes are senior unsecured obligations and will rank equally (pari-passu) with all other existing and future unsecured and unsubordinated debt obligations of Gold Fields. Proceeds from the bond issuance will be used to repay existing debt maturities and for general corporate purposes. The Baa3 rating of the proposed notes assumes that the final transaction documents will not be materially different from draft legal documentation reviewed by Moody's to date and that these agreements are legally valid, binding and enforceable.

"The Baa3 rating reflects Gold Fields' position as the world's fourth-largest gold producer with an annual attributable production of 3.5 Moz in fiscal year (FY) 2010, as well as the group's very sizeable reserve base of 81 Moz in proved and probable ore reserves and industry-leading reserve life in excess of 20 years as at 30 June 2009," explained Moody's Vice-President Senior Analyst, Soummo Mukherjee.

"However, the group is also less diversified than some of its key peers, with key producing assets (approximately 80% of reserves and 50% of production) located in SA. In this context, Moody's views positively Gold Fields' plans to reduce its exposure to South Africa (SA) by growing its international presence, so as to achieve a 60-40 production split between its international and South African operations in the long term," added Mukherjee.

Gold Fields' rating is supported by solid operating margins, despite a significant proportion of underground, deep-level mines in its asset portfolio, which are labour-intensive and costly to mine, as well as its ability to generate sizeable cash flow to fund the significant capital expenditure requirements associated with the ramp up of its key project, South Deep, and the maintenance and improvement of its SA legacy assets. In this context, Moody's takes comfort in Gold Fields' low financial gearing, underpinned by a conservative financial policy framework, which includes a strict policy of not engaging in gold hedging strategies and a track record of using disposal proceeds to repay debt.

The rating also considers Gold Fields' operating environment, including the inherent volatility in the gold price, given the fully unhedged position of the group, and the risks arising from a potential turn-around in the recent rally of the gold price, should global economic conditions recover. Further, we note that the mining industry has been subject to rising operating costs in recent years, as ore reserves have become more expensive to recover while price increases for most commonly used consumables have been running well ahead of general inflation. The group's significant presence in South Africa has left it exposed to heightened energy and wage inflationary pressures, exacerbated by the strength of the South African rand relative to the US dollar. In this context, Moody's believes that Gold Fields' group-wide cost optimisation initiatives should mitigate persistent inflationary pressures going forward.

The stable outlook for the rating is based on Moody's expectation that Gold Fields will maintain healthy operating margins and a conservative financial profile, allowing the group to remain within management's financial target of Net debt/EBITDA of around 1.0x. The outlook is equally predicated on the rating agency's assumption that, going forward, Gold Fields will continue to maintain its good liquidity, underpinned by the group's sizeable cash balance, healthy cash generation, and availabilities under medium-term committed facilities, in order to meet its ongoing funding needs. In this context, Moody's notes the group's efforts to diversify its sources of funding and extend the maturity profile of its debt obligations.

Given Gold Fields limited geographic diversity, its single-product business profile and its resultant sensitivity to the volatile gold price, an upward movement in the rating is unlikely in the short-term. However, longer-term, an upward movement may be possible if the group successfully implements its cost optimisation programme and achieves further geographic diversification of operations while maintaining its strong cash flow generation in a lower gold price environment.

Downward pressure on the Baa3 rating could result from a deterioration in the gold price and ultimately in the group's operating performance and/or financial profile, which would lead to a sustainable increase in the group's net debt/EBITDA ratio above the 2.0x range and cash flow from operations after dividends to debt below 30%. Downward pressure on Gold Field's senior unsecured rating could also arise if the company increases materially its current level of secured or priority debt raising subordination concerns.

The principal methodology used in rating Gold Fields Orogen Holding (BVI) Limited was Global Mining Industry rating methodology published in May 2009. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found on Moody's website.

Headquartered in Johannesburg (South Africa), Gold Fields is a global gold mining company with sales of ZAR31.6 billion (US$4.2 billion) and an annual attributable production of 3.5 Moz of gold in fiscal year 2010.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings, public information, confidential and proprietary Moody's Investors Service's information.

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Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

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Johannesburg
Soummo Mukherjee
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service South Africa (Pty) Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

London
David G. Staples
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's Investors Service South Africa (Pty) Ltd.
The Forum
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Moody's assigns Baa3 rating to Gold Fields' proposed notes
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