There is likely to be continued competition among the world’s major gold players for the remaining listed quality bullion assets, world number-four gold miner Gold Fields’s director of international operations John Munro said in an interview.
During the past decade or so the global gold-mining sector has seen consolidation that has left about six major producers — three South African-based producers and three in North America.
However, any move to embark on an acquisition by a major gold player is likely to be tempered by the high United States dollar gold price, which remains at about $400 an ounce, after touching a long-term high of about $430/oz in early January, he added.
After a strong period of consolidation, the global gold industry is in a relative lull with the key companies playing a “waiting game”, Munro said.
But, the continued consolidation of global gold mining is evident by the fact that world number-two miner AngloGold is in the process of merging with Ghana’s Ashanti Goldfields to form AngloGold Ashanti.
The key reason Gold Fields did not enter the fray for Ashanti, which was fought out between AngloGold and Randgold Resources, was that Gold Fields already has exposure to Ghana via its Tarkwa and Damanga mines, Munro said.
A successful bid for Ashanti would have given Gold Fields too great an exposure to Ghana, he added.
In South Africa, Gold Fields’s three mines are Driefontein, Kloof and Beatrix.
As part of South Africa’s empowerment charter requirements, Gold Fields is currently winding up the sale of a 15% stake in its South African operations for R4,1-billion to Mvelaphanda Resources.
On completion of the deal, which includes a loan to Mvelaphanda of about R200-million, Gold Fields will pocket about R3,9-billion.
After a tough December quarter, the group is in the process of improving the margins at its South African operations.
On the international front, the company owns the St Ives and Agnew mines in western Australia and its Ghana mines.
The group currently has expansions at St Ives and Tarkwa and these will start to contribute to Gold Fields’s earnings from December 2004 — the second half of its 2005 financial year.
On the production front, the expansions are likely to lift Gold Fields’s output to between 4,5-million and 4,6-million ounces, Munro said.
Also on the international front, Gold Fields is set to complete a feasibility study into the viability of developing its Artic platinum project in Finland by December this year, Munro said.
Artic platinum is a deposit consisting mainly of palladium, but it also holds platinum, copper and nickel.
Platinum, used in auto catalysts and jewellery, as well as nickel, largely consumed in the production of steel, are currently at long-term highs, while palladium is in the doldrums, burdened by oversupply.
The company has set itself the target, within five years, of increasing its dollar-denominated gold ounces to 1,5-million ounces from 800Â 000 ounces currently. The group has an annual gold output of about 4,3-million ounces.
This move comes at a time when commodity currencies such as the rand and the Australian dollar are strong relative to the dollar.
At part of its drive to increase dollar ounces, Gold Fields is conducting a due diligence of the Cerro Corona gold project in Peru in what could be its first foray into South America. The group also recently ventured into China.
China has extensive prospective geology that could yield gold deposits and Gold Fields is also looking to learn about the world’s most populous country and its culture.
“We don’t expect any developments in China in anything less than two years,” Munro added.
Gold Fields is exploring in many parts of the world, but the key prospective gold mining areas that the company has identified are China, Africa and the west coast of South America.
Russia is another area of exploration and Gold Fields is currently assessing the country and the surrounding region to see if the group can do business there, Munro said. — I-Net Bridge