Gold Fields Enters Joint Venture With Asanko Gold

JOHANNESBURG, March 29, 2018 /CNW/ - Gold Fields Limited (Gold Fields) (JSE, NYSE: GFI) is pleased to announce it has, through a wholly owned subsidiary, entered into a definitive agreement subject to certain customary conditions to form a 50:50 incorporated joint venture with Canada's Asanko Gold, Inc (TSX/NYSE AMERICAN: AKG) (Asanko). The Gold Fields subsidiary has agreed to acquire a 50% stake in Asanko Gold Ghana Limited's (AGG) 90% interest in the Asanko Gold Mine, associated properties and exploration rights in Ghana (AGM). The AGM is a multi-deposit complex, with two main deposits, Nkran and Esaase, and nine known satellite deposits. The purchase consideration comprises an upfront payment of US$165m on closing of the transaction and a deferred payment of US$20m.

In addition, Gold Fields' subsidiary agrees to subscribe to a 9.9% share placement in Asanko by way of a private placement of 22,354,657 Asanko shares at a price of approximately US$0.79, equal to the five-day VWAP on the day prior to date of this announcement, for a total consideration of US$17.6m. The subscription will close shortly after the date of this announcement, and is not conditional on completion of the joint venture transaction.

The acquisition will be funded from cash and/or by drawing down on Gold Fields existing debt facilities. Importantly, the AGM is an in-production asset that generates EBITDA and cash flow and does not require any additional investment by the JV partners.

Rationale for the Acquisition 

The transaction exceeds our requirement of a return of 15% at a gold price of US$1,300/oz, with a payback period of five years out of an anticipated life-of-mine of at least 15 years. The transaction is demonstrably accretive to Gold Fields. We are comfortable that despite our current investment programme (Damang and Gruyere) this acquisition is well within our balance sheet capacity, particularly as it is a producing asset.

About Asanko  

Asanko is a Canadian-based gold producer (listed on the TSX and NYSE AMERICAN) with operations in Ghana. Asanko's principal assets are the Obotan operation (which includes the Nkran deposit) and the Esaase deposit (collectively the AGM), which are situated 100km north of Gold Fields' Tarkwa and Damang operations along the prospective and under explored Asankrangwa greenstone belt in Ghana.

Following Asanko's acquisition of PMI Gold Inc. (PMI) in 2014, Asanko combined its Esaase gold project with PMI's Obotan gold project to form the AGM and pursued a phased development and expansion strategy. The construction of the first phase, essentially the Obotan gold project, including a 3 Mtpa carbon-in-leach processing facility and associated infrastructure, was completed in early 2016. Commercial production was declared on 1 April 2016, and the operation reached steady-state production levels by the end of the second quarter of 2016.

Asanko provided guidance to the market with the release of its full year results on 15 March 2018. For 2018, AGM is targeting production of 200-220koz (100% basis) at AISC of US$1,050-1,150/oz, due to investment in the Nkran Cut 2 pushback and the associated increased waste stripping. Beyond 2018, over the five-year period from 2019 to 2023, average annual production is expected to be 253koz (100% basis) at AISC of US$860/oz.

Particulars of the proposed transaction  

Upon completion, Gold Fields will hold a 45% interest in AGG - the Ghanaian company that holds the mining assets. The remaining AGG shareholders will be Asanko (45% through its existing offshore holding structure) and the Ghana Government (10% free carried). In addition, Gold Fields will hold a 9.9% listed stake in Asanko.

The aggregate consideration comprises:

Upfront consideration: US$165m payable on closing of the transactions, which will be used to immediately retire the AGG's existing external debt, being a loan from the Red Kite group of US$164m, leaving Asanko debt free.

Deferred consideration: US$20m payable on the earlier of an agreed Esaase development milestone or 31 December 2019.

Share placement: Gold Fields will subscribe for 9.9% share placement in Asanko by way of a private placement of 22,354,657 Asanko shares at a price of approximately US$0.79, equal to the five-day VWAP on the day prior to date of this announcement, for a total consideration of US$17.6m.

Notes to editors  

About Gold Fields    

Gold Fields Limited is a globally diversified gold producer with seven operating mines in Australia, Ghana, Peru and South Africa, and a total attributable annual gold-equivalent production of approximately 2.2 million ounces.  It has attributable gold Mineral Reserves of around 49 million ounces and gold Mineral Resources of around 104 million ounces. Attributable copper Mineral Reserves total 764 million pounds and Mineral Resources 4,881 million pounds.  Gold Fields has a primary listing on the Johannesburg Stock Exchange (JSE) Limited, with secondary listings on the New York Stock Exchange (NYSE) and the Swiss Exchange (SIX).

Sponsor: J.P. Morgan Equities South Africa (Pty) Ltd

Forward-looking statements 

This announcement contains certain forward-looking statements which reflect Gold Fields's intent, beliefs or current expectations about the future and can be recognised by the use of words such as "expects," "will," "anticipate, "or words of similar meaning. These forward-looking statements are not guarantees of future performance and are based on assumptions about Gold Fields's operations and other factors, many of which are beyond Gold Fields's control, and accordingly, actual results may differ materially from these forward-looking statements. Forward-looking statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Gold Fields expressly disclaims any obligation or undertaking to update or revise any forward-looking statement (except to the extent legally required).

SOURCE Gold Fields Limited