August 22, 2013
Gold Fields Limited (Gold Fields) (JSE, NYSE, NASDAQ Dubai: GFI) today announced that it has entered into a binding sale and purchase agreement with Barrick Gold Corporation (Barrick) to acquire its interests in the Granny Smith, Lawlers and Darlot gold mines (collectively the Yilgarn South Assets) in
, for a consideration of
, subject to downward working capital adjustments to a maximum of
, Chief Executive Officer of Gold Fields, said:
"This is an attractive, opportunistic, and conservatively financed acquisition which is consistent with Gold Fields' strategy and focus. We see a clear path to value and, once fully integrated, these assets are expected to have a positive impact on Gold Fields' production, free cash flow and global credit rating."
The acquisition provides Gold Fields with:
- an additional 452,000 ounces of annual production, at an All-in sustaining cost (AISC) of US$1,137 per ounce [ 1 ];
- 2.6 million reserve ounces at a cost of about US$115 per ounce [ 2 ];
- 1.9 million resource ounces in addition to the reserve ounces; the total resource ounce acquisition cost is below US$67 per ounce [ 3 ].
will represent Gold Fields' largest regional production centre with 42% of the Group's production, with
decreasing to 34% and
remaining largely unchanged at 13% and 11% respectively.
Gold Fields can add value to the Yilgarn South Assets through the application of its proven low cost, free cash flow focussed operating model, which has been successful in repositioning Gold Fields
Australian operations competitively on the cost curve.
"In particular, we see considerable opportunity for cost synergies between Lawlers and the adjacent Agnew, one of the lowest cost producers in
. We plan to immediately consolidate these two operations and rationalise its processing infrastructure and on-site general & administrative expenses as well as capital. In addition to realising the obvious short-term operating synergies between these assets, we believe the consolidation of the Lawlers/Agnew operations within the Yilgarn belt will provide significant long-term benefits allowing for the considerable potential of this gold district to be maximised under one owner. As such, most of the consideration valuation is imputed to the Lawlers/Agnew camp.
"In addition to the underlying modelled value, we expect the assets to benefit from our proven understanding of and track record with orogenic systems in the Yilgarn belt and our ability to discover new ore bodies. We have demonstrated this through the addition of 7.8 million ounces to St Ives' and Agnew's reserves over the past 12 years. From a geological perspective, the acquisition will consolidate ownership within a significant gold system.