Asanko Gold Inc. (“Asanko” or the “Company”)
(TSX:AKG) (NYSE American:AKG) is pleased to announce that it has
entered into certain definitive agreements under which Asanko will
receive US$185 million for a 50% joint venture (“JV”) interest in
its Asanko Gold Mine (“AGM”) from subsidiaries of Gold Fields
Limited (“Gold Fields”) (JSE:GFI) (NYSE:GFI), one of the world’s
largest gold producers and the second largest gold producer in
Ghana.
Under the various transaction agreements
(“Transactions”), Asanko and Gold Fields will, among other things,
form an incorporated 50:50 corporate JV which will own Asanko’s 90%
interest in the Asanko Gold Mine (the “AGM”) and all associated
properties in Ghana. The Government of Ghana will continue to hold
a free-carried 10% interest. In addition to the JV interest, Gold
Fields will purchase a 9.9% shareholding interest in Asanko for
approximately US$17.6 million to purchase 22,354,657 shares at
approximately US$0.79, equal to the 5-day VWAP as of market close
on March 27, 2018. Asanko will host an investor conference call at
9am ET today, details below.
Transaction Highlights
- Asanko will receive from Gold Fields:
- US$165 million in cash, payable upon closing of the JV
Transaction expected before end of Q3 2018
- US$20 million in cash, also payable for the JV Transaction, on
an agreed Esaase development milestone but in any event no later
than December 31, 2019
- US$17.6 million from Gold Fields for a 9.9% private placement
in Asanko shares at a price of US$0.79 anticipated to be completed
in the immediate future
- Asanko will remain the manager and operator of the AGM
and will continue to be paid an arm’s length management fee for
services rendered to the JV of approximately US$6 million per
annum
- Asanko will use the proceeds primarily to repay its outstanding
Red Kite debt of US$164 million
- Asanko views the JV as a significantly superior outcome than a
restructuring of the Red Kite debt facility as it provides a
balanced risk/return profile and creates a debt free platform that
will enable Asanko to accelerate growth opportunities and pursue
its strategy of becoming a mid-tier gold producer
“This transaction presents a unique opportunity
for Asanko to de-risk its future production targets whilst at the
same time eliminating corporate debt. With a healthy balance sheet
and robust operational cash flows, together with a strong technical
endorsement, our Life of Mine plan is assured,” said Asanko
President and CEO, Peter Breese.
“After carefully weighing the benefits of this
transaction, we have determined that it is superior to the
alternative of engaging with Red Kite to extend our debt. With the
repayment of the Red Kite debt, Asanko has achieved significant
financial flexibility moving forward as we seek to continue to grow
our business over the medium term.”
“The mine is now operating well within our
business targets, with mining efficiencies and the process plant
delivering ahead of plan. With this new investment and the freeing
up of our balance sheet, we will now move forward with the
development of our large scale Esaase deposit, with a view to
commencing production in 2019 with an interim trucking operation
until the conveyor is fully operational in late 2020. We look
forward to working in partnership with Gold Fields and sharing
mining and exploration expertise to create added value for all our
stakeholders.”
Nicholas Holland, CEO of Gold Fields, commented:
“West Africa is an important part of our business and we look
forward to a long partnership with Asanko in Ghana. We view the
Asanko Gold Mine as a high quality asset and a great addition to
our existing portfolio of open pit gold operations in the
country.”
Transaction Rationale
- Significantly improved balance sheet
- Asanko emerges debt free following repayment of Red Kite
Facility
- Strong attributable pro forma cash position of approximately
US$35 million (US$55 million including deferred consideration) as
at March 23, 2018
- World-Class Partner with Experience in Ghana
- Gold Fields is Ghana’s second largest gold producer with more
than 20 years of in-country experience
- Gold Fields brings considerable technical and exploration
expertise that complements Asanko’s existing development and
operating capabilities
- Management and Asset Validation
- Partnership endorses Gold Fields confidence in Asanko’s mine
operator capabilities
- Partnership validates the AGM from a technical and operational
perspective
- Well Positioned for Future Growth
- Near-term organic growth self funded by the AGM from internally
generated cash flows
- Robust balance sheet with which to fund growth initiatives
Further Transaction
ParticularsUnder the terms of the Transaction, on closing,
Gold Fields will acquire a 50% participating interest in Asanko’s
90% ownership interest in the AGM for an aggregate US$185 million
in cash, of which US$165 million is payable upon closing. The
remaining US$20 million is payable upon achievement of an agreed
Esaase development milestone but in any event by no later than
December 31, 2019.
The closing of the Transaction is expected to
occur before end of Q3 2018 and is subject to customary conditions
precedent including that no material adverse event occurs and
Ghanaian Minister of Lands and Natural Resources does not
object.
The Transaction will impact the recognition,
presentation and measurement of assets and liabilities associated
with the Company’s Ghanaian operations. The results of which are
expected to result in a non cash impairment charge based on the JV
Transaction indicative asset value.
The Joint Venture
AgreementAsanko will remain the manager (operator) of the
AGM. A management committee will be formed, with representatives
from each party, to govern the operating and development activities
of JV. The JV will continue to pay Asanko an arm’s length
management fee for services rendered of approximately US$6 million
per annum. The JV will fund its growth from operating cash flow.
The JV Agreement has customary terms for program participation
elections, dilution of equity interest for non-participation, sole
risk rights for new projects and expedited dispute resolution.
The Private Placement and Investor
Rights AgreementGold Fields has agreed to purchase
22,354,657 common shares of the Company through a private
placement, at a price of approximately US$0.79 per share (the
“Private Placement”) equal to the 5-day VWAP as of market close on
March 27, 2018. The net proceeds of the Private Placement will
total approximately US$17.6 million, which will further strengthen
Asanko’s balance sheet. These shares are subject to a customary
four month resale restricted period in Canada. In connection with
the Private Placement, Gold Fields will sign an investor rights
agreement with Asanko under which Gold Fields will receive certain
rights to participate in future Asanko share issuances in order to
maintain its 9.9% shareholding for up to five years. In addition,
Gold Fields has agreed that it will standstill at this level of
ownership for a one year period unless Asanko otherwise consents,
and will support Asanko management nominees at shareholder
meetings. The Private Placement is anticipated to be completed in
the immediate future and has received conditional TSX approval.
Repayment of the Red Kite
DebtAsanko will use the JV Transaction cash to repay in
full all outstanding principal and accrued interest (US$164
million) owing to RK Mine Finance Trust I (“Red Kite”) under the
Definitive Senior Facilities Agreement upon closing. There are no
early repayment penalties associated with the Red Kite debt. Red
Kite’s current gold offtake agreement will remain in effect until
all outstanding ounces have been delivered to Red Kite or the JV
elects to terminate the offtake and pay the associated fee.
In the event that the JV Transaction has not
completed by July 1, 2018, when the first principal repayment of
the Red Kite debt is due, Gold Fields has also agreed to provide a
bridge loan of up to US$20 million for Asanko, to be drawn at
Asanko’s sole discretion. The bridge loan will be credited towards
Gold Fields’ contribution to the Joint Venture on closing. If
closing does not complete for any reason, the bridge loan will be
repayable, after written demand with a 30 day notice, at any time
after six months from the date of advance of the bridge loan. If
Asanko does not repay the bridge loan, the bridge loan claim would
effectively be used to subscribe for new common shares of Asanko,
up to the point where Gold Fields would own 19.9% of the
outstanding Asanko shares, and the balance would be repaid in cash.
Pricing of these shares is subject to TSX policy.
Development of Esaase
ProceedingThe development of the large-scale Esaase
deposit will commence in 2018 and initial production is expected in
Q1 2019 with an interim trucking operation of approximately 1.5
million tonnes per annum during 2019 and 2020. The pre-production
capital associated with opening up Esaase is approximately US$9
million, of which US$7 million is expected to be spent in 2018. A
trucking permit has been applied for and is anticipated before the
end of 2018.
2018 Guidance and 5 Year
OutlookAs announced on March 15, 2018, the Company
released its 2018 Guidance and 5-Year Outlook, which is summarized
below. This Transaction will enable the AGM to generate strong cash
flows to fund its capital requirements over the next three
years.
Asanko Gold Mine 100% basis |
|
2018 |
2019 |
2020 |
2021 |
2022 |
2023 |
Ore tonnes mined |
000’t |
4,300-4,700 |
7,300 |
7,560 |
5,450 |
6,980 |
6,400 |
Average grade mined |
g/t |
1.4 |
1.4 |
1.5 |
1.3 |
1.5 |
1.4 |
Tonnes processed |
000’t |
4,700-5,000 |
5,000 |
5,000 |
5,000 |
5,000 |
5,000 |
Mill head grade |
g/t |
1.5 |
1.7 |
1.8 |
1.5 |
1.8 |
1.7 |
|
|
|
|
|
|
|
|
Gold Production |
000’oz |
200-220 |
255 |
280 |
220 |
265 |
245 |
AISC1 |
US$/oz |
1,050-1,150 |
950 |
810 |
905 |
775 |
880 |
|
|
|
|
|
|
|
|
Total capex |
US$m |
19.5 |
75.0 |
100.5 |
31.5 |
9.0 |
18.2 |
Notes: Based on US$1,250/oz gold and
construction of the overland conveyor in 2019/20
AdvisorsIn connection with this
transaction, BMO Capital Markets and Taurum International acted as
financial advisors and McMillan LLP acted as legal counsel to
Asanko. Fasken Martineau DuMoulin LLP acted as legal counsel to
Gold Fields.
Notes:1
Non-GAAP Performance MeasuresThe Company has
included certain non-GAAP performance measures in this press
release, including all-in sustaining costs per gold ounce (“AISC”).
These non-GAAP performance measures do not have any standardized
meaning. Accordingly, these performance measures are intended to
provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with GAAP.
The Company has adopted the World Gold Council’s
guidance for reporting of AISC. AISC include total cash costs,
corporate overhead expenses, sustaining capital expenditure,
capitalized stripping costs and reclamation cost accretion for each
ounce of gold sold.
Qualified PersonsFrederik
Fourie, Asanko Senior Mining Engineer (Pr.Eng.) is the Asanko
Qualified Person, as defined by Canadian National Instrument 43-101
(Standards of Mineral Disclosure), who has approved the preparation
of the mining technical contents of this news release.
Management Conference Call & Webcast Details - 9am ET
on Thursday, March 29, 2018A presentation is available at:
www.asanko.com.Conference Call:US/Canada Toll
Free: (800) 909-4985UK Toll Free:
08004960445International:
+1 (212)
231-2929Webcast:Please click on the
link:
https://cc.callinfo.com/r/144darwuupsw3&eomReplay:A
recorded playback will be available approximately two hours after
the call until April 28, 2018:US/Canada Toll Free: 800 558
5253UK Toll Free:
0800 692 0831 International:
+1 416 626 4100 Passcode:
21886753 |
About Asanko Gold Inc.Asanko’s
vision is to become a mid-tier gold mining company that maximizes
value for all its stakeholders. The Company’s flagship project is
the multi-million ounce Asanko Gold Mine located in Ghana, West
Africa. Asanko is managed by highly skilled and successful
technical, operational and financial professionals. The Company is
strongly committed to the highest standards for environmental
management, social responsibility, and health and safety for its
employees and neighbouring communities.
About Gold Fields LimitedGold
Fields Limited is a globally diversified gold producer with seven
operating mines in Australia, Ghana, Peru and South Africa, and a
total attributable annual gold-equivalent production of
approximately 2.2 million ounces. It has attributable gold Mineral
Reserves of around 49 million ounces and gold Mineral Resources of
around 104 million ounces. Attributable copper Mineral Reserves
total 764 million pounds and Mineral Resources 4,881 million
pounds. Gold Fields has a primary listing on the Johannesburg
Stock Exchange (JSE) Limited, with secondary listings on the New
York Stock Exchange (NYSE) and the Swiss Exchange (SIX).
Forward-Looking and other Cautionary
InformationThis release includes certain statements that
may be deemed "forward-looking statements". All statements in this
release, other than statements of historical facts, that address
the completion of announced agreements including the agreement with
Gold Fields, estimated resource quantities, grades and contained
metals, possible future mining, exploration and development
activities, are forward-looking statements. Although the Company
believes the forward-looking statements are based on reasonable
assumptions, such statements should not be in any way construed as
guarantees of future performance and actual results or developments
may differ materially from those in the forward-looking statements.
Factors that could cause actual results to differ materially from
those in forward-looking statements include market prices for
metals, the conclusions of detailed feasibility and technical
analyses, the timely renewal of key permits, lower than expected
grades and quantities of resources, mining rates and recovery rates
and the lack of availability of necessary capital, which may not be
available to the Company on terms acceptable to it or at all. The
Company is subject to the specific risks inherent in the mining
business as well as general economic and business conditions. For
more information on the Company, Investors should review the
Company's Annual Form 40-F filing with the United States Securities
Commission and its home jurisdiction filings that are available at
www.sedar.com.
Neither Toronto Stock Exchange nor the
Investment Industry Regulatory Organization of Canada accepts
responsibility for the adequacy or accuracy of this release.
Cautionary Note to US Investors
Regarding Mineral Reporting Standards:Asanko has prepared
its disclosure in accordance with the requirements of securities
laws in effect in Canada, which differ from the requirements of US
securities laws. Terms relating to mineral resources in this press
release are defined in accordance with National Instrument 43-101 -
Standards of Disclosure for Mineral Projects under the guidelines
set out in the Canadian Institute of Mining, Metallurgy, and
Petroleum Standards on Mineral Resources and Mineral Reserves. The
Securities and Exchange Commission (the “SEC”) permits mining
companies, in their filings with the SEC, to disclose only those
mineral deposits that a company can economically and legally
extract or produce. Asanko uses certain terms, such as, “measured
mineral resources”, “indicated mineral resources”, “inferred
mineral resources” and “probable mineral reserves”, that the SEC
does not recognize (these terms may be used in this press release
and are included in the public filings of Asanko which have been
filed with securities commissions or similar authorities in
Canada).
Enquiries:
For further information please visit: www.asanko.com, email: info@asanko.com or contact:
Alex Buck - Manager, Investor and Media Relations
Toll-Free (N.America): 1-855-246-7341
Telephone: +44-7932-740-452
Email: alex.buck@asanko.com
Rob Slater – Executive, Corporate Development and Strategy
Telephone: +27-11-467-2758
Email: rob.slater@asanko.com
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