Gold Fields is questioning details of a hostile takeover bid by rival mining group Harmony, the company’s management said on Thursday.
Harmony’s hostile offer was received on October 20, Gold Fields chief executive Ian Cockerill told reporters in Johannesburg.
On Tuesday, Gold Fields asked the Competition Tribunal to interdict the offer because it questioned the two-stage process proposed by Harmony.
”We are still waiting for feedback,” he said.
On Wednesday, Gold Fields lawyers applied to the Johannesburg High Court for an urgent order declare the offer null and void. Gold Fields was hopeful that its lawyers could get a court date this week or at least before Tuesday of next week to argue the case.
Cockerill said Gold Fields and its lawyers were of the opinion that the offer did not comply with section 145 of the Companies Act that required such offers to be accompanied by a full prospectus.
He said the documents which accompanied the offer was not a full prospectus and the company’s lawyers said this meant it was null and void.
He conceded however that it was for the High Court to make a decision on this.
Explaining why the company was making use of the tribunal and court to block the offer, he said it was the ”fiduciary responsibility of any board to make sure shareholders are treated fairly and equitably”.
He said Harmony’s offer would disenfranchise the majority of the company’s 60 000 shareholders.
Cockerill said related matters requiring further investigation included the nature of the relationship between Harmony and Gold Fields’ 20% shareholder Norilsk of Russia.
Twenty-five percent of Gold Fields shareholders are in South Africa, another 30% in the US, 17 to 18% are in Europe, and the last five percent elsewhere.
Gold Fields chief financial officer Nick Holland disputed Harmony’s contention that Gold Fields shareholders would be better off under the new regime.
He made a series of what he called ”like for like” comparison that consistently showed Harmony’s finances at a disadvantage.
Gold Fields executives also rubbished Harmony’s plans to introduce continuous operations, saying it was unworkable at mines such as Beatrix. The jury was still out whether the extra overtime pay for such continuous operations (conops) was always repaid by higher output.
Conops also tended to defer maintenance required for long-term deep-level operations. It would therefore not be appropriate for several Gold Fields mines, where production was expected to last 30 to 40 years.
While analysts are divided over the pros and cons of the offer, Solidarity trade union’s Reint Dykema, also at the briefing, said his members were against the move as they did not wish to work under Harmony and also opposed conops.
Earlier Gold Fields announced that its net earnings for the September quarter was R102-million (21 cents per share) compared with a net loss of R186-million (39 cents per share) in June.
Earnings were down compared to September last year when a sum of R421-million (89 cents per share) was posted.
Gold Fields, in a statement, listed a number of salient features for the quarter, including:
attributable gold production was on target at 1 007 000 ounces;
costs were well controlled with total cash costs up less than one percent to R66,516 per kilogram;
costs at South African operations, quarter-on-quarter, were flat at about R73 000 per kilogram, despite a seven percent wage increase; and
an operating profit of R456-million was achieved despite a lower rand gold price and a small planned reduction in gold produced.
”In line with guidance provided for the quarter, Gold Fields delivered another solid operational performance,” said chief executive Ian Cockerill.
”The strategic repositioning of the South African operations…, to cope with the strong local currency, continues to deliver the expected results, reflecting the inherent quality and flexibility of these assets. Particularly pleasing has been our ability to control costs, offsetting the seven percent wage increase implemented at these operations during the quarter. Our initial target remains to reduce costs at the South African operations to R70 000 per kilogram, and we are striving to achieve this,” Cockerill added. – Sapa