Gold Fields Limited (Gold Fields) (JSE, NYSE: GFI) has unveiled plans to divest its 45 percent stake in the Asanko gold mine located in Ghana, in a strategic move within the mining sector.
The mining giant is set to transfer ownership to its TSX-listed joint venture partner, Galiano Gold, marking a significant development in the industry landscape.
The divestment, valued at a total consideration of US$170 million, underscores Gold Fields’ strategic decision to reallocate its assets and streamline its portfolio. The transaction with Galiano Gold signifies a calculated maneuver in response to market dynamics and aligns with the company’s broader strategic objectives.
This move comes against the backdrop of evolving market conditions and highlights Gold Fields’ commitment to optimizing its resource allocation for sustained growth. The Asanko Mine, a key asset in the company’s portfolio, is poised to change ownership as Galiano Gold steps in to assume a more prominent role in the joint venture.
As the mining industry witnesses these transformative shifts, Gold Fields’ decision to divest its shareholding in the Asanko Mine is seen as the company’s proactive approach to adaptability and resilience in a dynamic market environment.
The US$170 million consideration adds a financial dimension to the strategic decision, providing Gold Fields with additional resources for future ventures and capitalizing on emerging opportunities in the sector.
Gold Fields is set to also receive a one percent net smelter royalty on future production from the Nkran deposit, the main deposit at the mine.
The Asanko Mine is currently owned 45 percent each by Gold Fields and Galiano Gold, with Galiano managing the Mine. The Government of Ghana holds the remaining 10 percent. The transaction will be settled by Galiano to Gold Fields through a combination of upfront, deferred, and contingent considerations.
An official statement on the development, by Gold Fields, detailed the transaction as follows: US$85 million which will be settled with US$65m in cash and US$20m in Galiano shares on completion of the transaction; US$25 million to be paid on 31st December 2025; and US$30 million to be paid on 31 December 2026.
The rest will be a US$30 million plus a one percent net smelter royalty to be paid once more than 100koz of gold equivalent is produced from the Nkran deposit. The royalty is capped at a volume of 447 thousand ounces (koz).
“Gold Fields currently has a 9.8 percent shareholding in Galiano and the share purchase agreement limits the shareholding that Gold Fields can raise this to 19.9 percent. Should the market value of Galiano shares be less than the requisite US$20 million, Galiano will make up the difference with an additional cash payment,” it was stated
The Interim Chief Executive Officer of Gold Fields, Martin Preece, is quoted to have said, “We are pleased to have concluded this agreement with Galiano. It is clear that the committed path forward for the Asanko mine requires consolidated ownership.
Gold Fields is pleased to realise value for its holding now, while providing flexibility to Galiano in the recapitalisation of the mine and resuming mining to maximise its prospects of success.”
He added that the “Divestment of our interest in Asanko is part of our ongoing disciplined portfolio management process and releases capital for deployment by the Company in line with our other capital allocation priorities.”
The current transaction, which is expected to be completed during Q1 2024, is subject to a number of conditions, including regulatory approvals.
