JOHANNESBURG, March 29, 2018 /CNW/ - Gold Fields Limited (Gold
Fields) (JSE, NYSE: GFI) is pleased to announce it has, through a
wholly owned subsidiary, entered into a definitive agreement
subject to certain customary conditions to form a 50:50
incorporated joint venture with Canada's Asanko Gold, Inc (TSX/NYSE AMERICAN:
AKG) (Asanko). The Gold Fields subsidiary has agreed to acquire a
50% stake in Asanko Gold Ghana Limited's (AGG) 90% interest in the
Asanko Gold Mine, associated properties and exploration rights in
Ghana (AGM). The AGM is a
multi-deposit complex, with two main deposits, Nkran and Esaase,
and nine known satellite deposits. The purchase consideration
comprises an upfront payment of US$165m on closing of the transaction and a
deferred payment of US$20m.
In addition, Gold Fields' subsidiary agrees to subscribe to a
9.9% share placement in Asanko by way of a private placement of
22,354,657 Asanko shares at a price of approximately US$0.79, equal to the five-day VWAP on the day
prior to date of this announcement, for a total consideration of
US$17.6m. The subscription will close
shortly after the date of this announcement, and is not conditional
on completion of the joint venture transaction.
The acquisition will be funded from cash and/or by drawing down
on Gold Fields existing debt facilities. Importantly, the AGM is an
in-production asset that generates EBITDA and cash flow and does
not require any additional investment by the JV partners.
Rationale for the Acquisition
- Portfolio management is one of Gold Fields' strategic
objectives, as we continually seek to improve the quality of our
portfolio (by lowering our all-in costs (AIC) and extending mine
lives) to enhance Gold Field's cash generation.
- The Asanko joint venture will give immediate access to low-cost
production ounces, increasing the quality of the Gold Fields
portfolio - Asanko's guidance for 2019-2023 is average annual
production of 253koz (100% basis) at all-in sustaining costs (AISC)
of US$860/oz, with a life-of-mine of
at least 15 years. Further, the sizeable resource base of the asset
is immediately accretive to Gold Fields in terms of life, with the
potential for further discoveries on the large, relatively
unexplored, tenement package
(c.540km[2]) held by Asanko.
- The transaction is also in line with our current growth
strategy of focusing on jurisdictions in which we already have an
established footprint. As the AGM is located in Ghana, we are adding an asset in a country
where Gold Fields has extensive experience, having operated in
Ghana for over 20 years.
The transaction exceeds our requirement of a return of 15% at a
gold price of US$1,300/oz, with a
payback period of five years out of an anticipated life-of-mine of
at least 15 years. The transaction is demonstrably accretive to
Gold Fields. We are comfortable that despite our current investment
programme (Damang and Gruyere) this acquisition is well within our
balance sheet capacity, particularly as it is a producing
asset.
About Asanko
Asanko is a Canadian-based gold producer (listed on the TSX and
NYSE AMERICAN) with operations in Ghana. Asanko's principal assets are the
Obotan operation (which includes the Nkran deposit) and the Esaase
deposit (collectively the AGM), which are situated 100km north of
Gold Fields' Tarkwa and Damang operations along the prospective and
under explored Asankrangwa greenstone belt in Ghana.
Following Asanko's acquisition of PMI Gold Inc. (PMI) in 2014,
Asanko combined its Esaase gold project with PMI's Obotan gold
project to form the AGM and pursued a phased development and
expansion strategy. The construction of the first phase,
essentially the Obotan gold project, including a 3 Mtpa
carbon-in-leach processing facility and associated infrastructure,
was completed in early 2016. Commercial production was declared on
1 April 2016, and the operation
reached steady-state production levels by the end of the second
quarter of 2016.
Asanko provided guidance to the market with the release of its
full year results on 15 March 2018.
For 2018, AGM is targeting production of 200-220koz (100% basis) at
AISC of US$1,050-1,150/oz, due to
investment in the Nkran Cut 2 pushback and the associated increased
waste stripping. Beyond 2018, over the five-year period from 2019
to 2023, average annual production is expected to be 253koz (100%
basis) at AISC of US$860/oz.
Particulars of the proposed
transaction
Upon completion, Gold Fields will hold a 45% interest in AGG -
the Ghanaian company that holds the mining assets. The remaining
AGG shareholders will be Asanko (45% through its existing offshore
holding structure) and the Ghana Government (10% free carried). In
addition, Gold Fields will hold a 9.9% listed stake in Asanko.
The aggregate consideration comprises:
Upfront consideration: US$165m
payable on closing of the transactions, which will be used to
immediately retire the AGG's existing external debt, being a loan
from the Red Kite group of US$164m,
leaving Asanko debt free.
Deferred consideration: US$20m
payable on the earlier of an agreed Esaase development milestone or
31 December 2019.
Share placement: Gold Fields will subscribe for 9.9% share
placement in Asanko by way of a private placement of 22,354,657
Asanko shares at a price of approximately US$0.79, equal to the five-day VWAP on the day
prior to date of this announcement, for a total consideration of
US$17.6m.
- Gold Fields and Asanko will establish a 50:50 incorporated
joint venture. Asanko will continue to manage the operations and
will remain the operator. A joint venture management committee,
comprising representatives from Asanko and Gold Fields, will be
formed for purposes of overseeing the operation of the mine, with
material decisions (including budgets, capital expenditure)
requiring unanimous approval. A technical sub-committee will also
be formed to provide technical advisory services to the management
committee.
- The transaction is subject to customary conditions precedent
including, among others, no Asanko material adverse event, and
Ghanaian Ministerial approval for the indirect (by way of change of
control) transfer of the various mining properties. Completion is
anticipated to occur in Q3 2018.
Notes to editors
About Gold Fields
Gold 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).
Sponsor: J.P. Morgan Equities South Africa (Pty) Ltd
Forward-looking statements
This announcement contains certain forward-looking statements
which reflect Gold Fields's intent, beliefs or current expectations
about the future and can be recognised by the use of words such as
"expects," "will," "anticipate, "or words of similar meaning. These
forward-looking statements are not guarantees of future performance
and are based on assumptions about Gold Fields's operations and
other factors, many of which are beyond Gold Fields's control, and
accordingly, actual results may differ materially from these
forward-looking statements. Forward-looking statements contained in
this announcement regarding past trends or activities should not be
taken as a representation that such trends or activities will
continue in the future. Gold Fields expressly disclaims any
obligation or undertaking to update or revise any forward-looking
statement (except to the extent legally required).
SOURCE Gold Fields Limited