Unbundle of joy: Gold Fields unveils new subsidiary
In a statement on Thursday, Gold Fields said Sibanye Gold, its wholly owned subsidiary, holds the Kloof Driefontein Complex (KDC) and Beatrix gold mines, both of which have been hotspots during the past months of unrest in the mining sector.
Gold Fields and Sibanye Gold will be operated as separate entities and will be independently governed and managed. Neal Froneman, chief executive of Gold One International, will take the helm as chief executive of Sibanye Gold, while Nick Holland will remain chief executive of Gold Fields.
"Following the unbundling, Gold Fields will retain the balance of its current portfolio of assets, including the developing of South Deep Gold Mine located in South Africa," Gold Fields said.
"While some parts of the GFI Mining South Africa operations have been in production for as long as 70 years, these assets still have inherent quality and extensive resource and reserve potential," Holland said.
"The separation will liberate Sibanye Gold into a fit-for-purpose, sustainable gold mining company best positioned to maximise long-term value for stakeholders."
Froneman said Sibanye will be committed to maintaining profitable, stable and low cost operations that provide a high degree of leverage to the gold price. Following the unbundling, Gold Fields will focus on cash flow generation, more predictable dividend pay-outs and growth through expansion.
"The South Deep project is core to our expansion plans and we will continue to invest in this operation to secure the ramp-up to 700 000 ounces per year," Holland said.
Highest dividend yields in the sector
Holland added Gold Fields's shareholders should continue to enjoy among the highest dividend yields in the sector.
The mineral reserves at December 31 2011 were 22-million ounces for Sibanye Gold and 64-million gold-equivalent ounces for Gold Fields.
Based on the results for the 12-month period ended December 2011, Gold Fields said Sibanye Gold's gold production was 1.4-million ounces – "making it one of the largest domestic gold producers in South Africa".
Sibanye Gold would retain Gold Fields's South African net debt of approximately R4-billion, while approximately $1.4-billion of offshore net debt would be retained by Gold Fields.
Subject to approval by the JSE and the New York Stock Exchange, Sibanye Gold would be listed as a separate and independent company on both exchanges in February 2013.
"Sibanye Gold shares will then be distributed to existing Gold Fields shareholders whether held in the form of ordinary shares or depository receipts," Goldfields said.
Goldfields said the transaction does not require shareholder approval and the listings have been approved by the South African Reserve Bank.
Mindful of the lingering tensions following unrest in the sector this year, Goldfields noted there would be no direct job losses as a result of the unbundling, and conditions of employment will remain unchanged.
It said Sibanye Gold would also develop policies that will incentivise its workforce to benefit from the success of the business through a profit-sharing scheme, as well as continued investments into improved living conditions that will improve the lives of employees.