This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

The Deal: Gold Fields Buys Australian Mines From Barrick

LONDON ( The Deal) -- South Africa's Gold Fields Ltd. (GFI - Get Report) will pay $300 million for stakes in three Western Australian gold mines owned by Barrick Gold (ABX - Get Report), increasing its exposure to Australian gold mines at a time when rivals are looking to reduce production in the country.

Gold Fields said Thursday, Aug. 22, it will pay the equivalent of $1,137 per ounce of output from the three mines based on annual production of 452,000 ounces, and the equivalent of $115 per ounce for reserves of 2.6 million ounces.

"We estimate that these mines can add (at the current spot gold price) about $70 million in NPAT net profit after tax implying that GFI is paying 4.2x PE," noted Citigroup analyst Johann Steyn. "Even though we commend management for making acquisitions towards the bottom end of the cycle, the poor fundamentals of the gold industry ... make this a situation of doing the best you can with a bad hand."

Australian gold company valuations have tumbled over the past year, dragged lower by slumping gold prices that have prompted huge writedowns and a spate of asset sales and mine closures. Alacer Gold Corp. said on Aug. 13 that it will sell or shutter its two Australian gold mines. Days earlier, Australia's biggest gold producer, Newcrest Mining Ltd., booked A$6.23 billion in writedowns and said it wanted to offload its least profitable operations.

Johannesburg-based Gold Fields will buy Barrick's stakes in the Granny Smith, Lawlers and Darlot Gold mines. It will merge the Lawlers operation with its nearby Agnew mins, raising output from the country to about 42% of total producte. The acquisitions will make Australia the biggest area of operations for Gold Fieldis, raising output from the country to about 42% of total production. That will place Australia ahead of Ghana, which will account for 34% of output following the deal. Gold Fields spun off most of its South African assets earlier this year.

"This is an attractive, opportunistic, and conservatively financed acquisition," Gold Fields CEO Nick Holland said in a statement. "The acquired assets are located in a preferred jurisdiction that we know well and where we have significant operational and management experience and infrastructure to maximize the value of the acquired assets."

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
ABX $13.02 0.00%
GFI $4.65 0.00%
AAPL $128.46 0.00%
FB $78.97 0.00%
GOOG $558.40 0.00%

Markets

DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs