Gold Fields Believes That Harmony's Mineral Reserves are 33.7 Million Ounces if SAMREC Guidelines are Correctly Applied
May 11 2005 - 12:16PM
PR Newswire (US)
Gold Fields Believes That Harmony's Mineral Reserves are 33.7
Million Ounces if SAMREC Guidelines are Correctly Applied
JOHANNESBURG, South Africa, May 11 /PRNewswire-FirstCall/ --
Shareholders of Gold Fields Limited (GFI: JSE and NYSE) (Gold
Fields) are advised that in Gold Fields' view, Harmony has 33.7
million ounces of SAMREC compliant mineral reserves and not 62.26
million ounces as stated in the Harmony Gold Mining Company
(Harmony) offer document sent to Gold Fields shareholders on 20
October 2004, or 55.65 million ounces as stated in Harmony's press
release issued on 10 May 2005. Ian Cockerill, Chief Executive
Officer of Gold Fields said, "We note that, given Harmony's
repeated promises to deliver its CPR, and the fact that it has
taken seven months for such a vital document to be produced, it has
finally been made available to our shareholders barely two weeks
before the close of Harmony's offer. In Harmony's all-paper bid,
the true quantity of economically mineable mineral reserves is the
single most important measure required to value Harmony's offer.
From the outset of this hostile bid, we have maintained that
Harmony's shares were overvalued on the premise of its
ever-changing mineral reserve declarations." The key to
understanding Gold Fields' concerns about Harmony's reserve
declarations is the SAMREC Code. Gold Fields, as a member of the
South African mining industry abides by the definitions of the
SAMREC Code. On pg. 17 of the SAMREC Code, Reporting of Mineral
Reserves (paragraph 5.5.1) it is stated that "A 'mineral reserve'
is the economically mineable material derived from a measured and
or indicated mineral resource. The term 'economic' implies that
extraction of the mineral reserve has been demonstrated to be
viable and justifiable under reasonable financial assumptions" In
an unusual departure from convention, Steffen, Robertson and
Kirsten (South Africa) (SRK) presents three broad Options in the
CPR (refer to table below), each with five sub-options, from which
shareholders are required to derive a mineral reserve number for
Harmony. Significantly and in all Options, the numbers presented
are lower than the 62.26 million ounces stated in Harmony's offer
document refered to above. Option A 52.2 million ounces Includes
Evander Rolspruit and Poplar projects, as well as other entities
with a negative NPV Option B 42.3 million ounces Excludes Evander
Rolspruit and Poplar projects but includes other entities with a
negative NPV Option C 33.7 million ounces Includes only ounces that
can be economically mined at a gold price of R 92,000/kg Option A
All of the sub-options presented under Option A include the Life of
Mine (LOM) Plans of Harmony's assets, irrespective of economic
viability at R92, 000/kg, the price at which Harmony's CPR
calculates its mineral reserves. For this reason none of the
sub-options presented under Option A qualifies as a reserve as per
the SAMREC definition. Option B All of the sub-options presented
under Option B are exactly the same as for Option A, with the
exception that the Evander projects that are not economically
viable are excluded. These are Rolspruit and Poplar, which require
a gold price of R179, 792/kg and R98, 426/kg respectively (at an
indicative 15% nominal discount rate) to be economically viable.
However, despite the exclusion of the projects, Option B still
includes 8.6 million ounces at other entities which are not
economically viable at a gold price of R92, 000/kg. As both Option
A (52.2 million ounces) and Option B (42.3 million ounces) include
negative NPV entities and projects that are uneconomic, Gold Fields
contends that they do not conform to the definitions of Mineral
Reserves as described in the SAMREC Code or Section 12 of the JSE
Securities Exchange Listing requirements, which defines a Mineral
Reserve as the economic mineable material derived from a measured
or indicated resource. Option C Scenarios 4 and 5 under Option C
exclude all projects as well as other reserve ounces, which are not
economically viable at R92, 000/kg. Therefore, Gold Fields believes
that of the fifteen sub-options presented in Harmony's CPR, only
two are approaching compliance with SAMREC definitions for a
mineral reserve, as the Options correctly comprise only those
ounces that are economically viable and justifiable under
reasonable economic circumstances. Gold Fields continues to
emphasise to its shareholders that it believes that only those 33.7
million reserve ounces encompassed in Option C should be considered
when attempting to make an informed decision on the merits of
Harmony's hostile bid. In comparison and as published in its 2004
Annual Report, Gold Fields has 75.6 million attributable ounces of
independently audited mineral reserves that are economically viable
at a gold price of R90, 000/kg. Shareholders are advised to
continue to reject the Harmony offer. In the United States, Gold
Fields Limited ("Gold Fields") has filed a
Solicitation/Recommendation Statement with the Securities and
Exchange Commission (the "SEC") on Schedule 14D-9 and holders of
the Gold Fields Ordinary Shares and American Depositary Shares are
advised to read it as it contains important information. Copies of
the Schedule 14D-9 and other related documents filed by Gold Fields
are available free of charge on the SEC's website at
http://www.sec.gov/. Any documents filed by Harmony Gold Mining
Company Limited, including any registration statement on Form F-4
(including any prospectus contained therein) and related exchange
offer materials as well as its Tender Offer Statement on Schedule
TO, will also be available free of charge on the SEC's website. The
directors of Gold Fields accept responsibility for the information
contained in this document. To the best of their knowledge and
belief (having taken all reasonable care to ensure that such is the
case) the information contained in this document is in accordance
with the facts and does not omit anything likely to affect the
import of such information. Copies of this document are not being
made available, and must not be mailed, forwarded, transmitted or
otherwise distributed or sent in or into Australia, Canada, Japan,
the Republic of Ireland or any other jurisdiction in which it is
illegal to make this document available and persons receiving this
document (including custodians, nominees and trustees) must not
distribute, forward, mail, transmit or send it in or into or from
Australia, Canada, Japan, the Republic of Ireland or any such other
jurisdiction. This document contains "forward-looking statements"
with respect to Gold Fields' financial condition, results of
operations, business strategies, operating efficiencies,
competitive position, growth opportunities for existing services,
plans and objectives of management, markets for stock and other
matters. Statements in this document that are not historical facts
are "forward-looking statements". These forward-looking statements,
including, among others, those relating to the future business
prospects, revenues and income of Gold Fields, wherever they may
occur in this presentation, are necessarily estimates reflecting
the best judgment of the senior management of Gold Fields and
involve a number of risks and uncertainties that could cause actual
results to differ materially from those suggested by the
forward-looking statements. As a consequence, these forward-looking
statements should be considered in light of various important
factors, including those set forth materials filed with or
furnished to the SEC from time to time, including Gold Fields' most
recent Annual Report on Form 20-F. Important factors that could
cause actual results to differ materially from estimates or
projections contained in the forward-looking statements include,
without limitation: overall economic and business conditions in
South Africa, Ghana, Australia and elsewhere; the ability to
achieve anticipated efficiencies and other cost savings in
connection with past and future acquisitions; the success of
exploration and development activities; decreases in the market
price of gold; the occurrence of hazards associated with
underground and surface gold mining; the occurrence of labor
disruptions; availability, terms and deployment of capital; changes
in relevant government regulations, particularly environmental
regulations and potential new legislation affecting mining and
mineral rights; fluctuations in exchange rates, currency
devaluations and other macroeconomic monetary policies; and
political instability in South Africa, Ghana and regionally. Gold
Fields 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 document or to reflect the
occurrence of unanticipated events. Information included in this
document relating to Harmony and its business has been derived
solely from publicly available sources. While Gold Fields has
included information in this document regarding Harmony that is
known to Gold Fields based on publicly available information, Gold
Fields has not had access to non-public information regarding
Harmony and could not use such information for the purpose of
preparing this document. Although Gold Fields is not aware of
anything that would indicate that statements relating to Harmony
contained in this document are inaccurate or incomplete, Gold
Fields is not in a position to verify information concerning
Harmony. Gold Fields and its directors and officers are not aware
of any errors in such information. Subject to the foregoing and to
the maximum extent permitted by law, Gold Fields and its directors
and officers disclaim all liability for information concerning
Harmony included in this document. DATASOURCE: Gold Fields Limited
CONTACT: Enquires: South Africa, Willie Jacobsz, Tel
+27-11-644-2460 Fax +27-11-484-0639 North America, Cheryl A Martin,
Tel +1-303-796-8683 Fax +1-303-796-8293
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