DARREN SCHUETTLER, Johannesburg | Tuesday
SOUTH Africa’s Gold Fields Ltd said on Monday it was eyeing more acquisitions in Australia and would spend up to $15-million a year searching for more gold on its two new mines in the western outback.
Gold Fields announced on Friday that it had reached an agreement with Australia’s WMC Resources Ltd to buy its St Ives and Agnew gold operations for $232-million in cash and shares, plus a royalty.
”This is an excellent beachhead,” Gold Fields Chairman and Chief Executive Chris Thompson told analysts in Johannesburg.
”We hope it’s not the end of the road. We will be looking at other acquisitions,” Thompson said, but he noted that Australian assets were being snapped up quickly.
The deal marks Gold Fields’ first major foray into Australia as it tries to diversify outside Africa, and comes on the heels of rival AngloGold Ltd’s A$3-billion paper bid for Australia’s Normandy Mining.
South Africa’s Harmony Gold, the country’s third largest gold producer, said on Monday it would take a 31,1% stake in Australia’s Bendigo Mining for R215-million.
Harmony earlier this year acquired gold producer New Hampton, and will also hold nearly 10% of a new company formed from the proposed merger of Delta Gold and Goldfields.
Thompson did not name any potential targets in Australia, and said the WMC deal would not hamper Gold Fields’ ability to finance future acquisitions through cash, debt or equity.
The St. Ives/Agnew deal comprises $180-million cash and $52-million in Gold Fields shares. The target closing date is November 30.
Gold Fields has secured a five-year $200-million debt facility, of which $160-million is expected to be used, with another $20-million sourced from Gold Fields’ offshore cash resources, the company said.
The remaining $40-million from the facility will be used for exploration and other programmes.
Gold Fields will also pay a four percent contingent production royalty, effective approximately from 2008, and a 10% contingent price royalty if the spot gold price hits A$600 an ounce.
Thompson said Gold Fields had proposed the royalties as part of its offer for the mines, adding that this was a common practice in the North American gold industry.
Several international gold miners had vied for the WMC mines, with Gold Fields finally edging out its closest rival Canada’s Placer Dome.
”I understand the two final bids were very close,” he said.
The two mines, located in Western Australia, together produced over 600 000 ounces of gold in the year ended December 2000, at a total cash cost of A$272 an ounce.
Their combined reserves are just over four million ounces, with resources topping at 9,53-million ounces.
Gold Fields produces the bulk of its annual 3,8-million ounces of gold from deep-level mines in South Africa, and an open-pit operation in Ghana.
But South African firms are seeking to become more global players to compete effectively with North American producers.
Gold Fields sought to tie-up with Canada’s Franco Nevada late last year, but the deal was rejected by the South African government, which feared it would not benefit the country’s economy. – Reuters