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In a deal that will create the largest gold mine in Africa, Gold Fields and AngloGold Ashanti have agreed on the key terms of a proposed joint venture (JV) in Ghana between Gold Fields' Tarkwa and AngloGold Ashanti's neighbouring Iduapriem mines.
The two have agreed in principle on the key terms of the proposed JV and have commenced with preliminary, high-level engagements with senior government officials in Ghana with a view to implementing the JV as soon as practically possible.
The parties have agreed to mutual exclusivity during this engagement.
The Tarkwa Mine is held by Gold Fields Ghana, in which Gold Fields currently owns a 90% share, and the government of Ghana has 10%. The Iduapriem Mine is 100% owned by AngloGold Ashanti. Both mines are located near the town of Tarkwa in Ghana's Western Region.
The venture is intended to be constituted within Gold Fields Ghana, and operated by that company. AngloGold Ashanti will contribute its 100% interest in Iduapriem to Gold Fields Ghana in return for a shareholding.
The parties do not anticipate that any material additional capital injection will be required by either company to establish the JV.
Excluding the interest to be held by the government, Gold Fields will have an interest of 66.7% in the JV, while AngloGold Ashanti will have an interest of 33.3%.
The JV would create the largest gold mine in Africa and one of the largest in the world.
High quality
It will be a high-quality operation with an average annual production of almost 900 000 ounces over the first five years and average annual production in excess of 600 000 ounces over the estimated 18-year life of the operation.
Operational synergies will be achieved by optimising the mining of the combined ore bodies and consolidating the infrastructure of the immediately adjacent mines for the long-term benefit of all shareholders and stakeholders.
Interim Gold Fields CEO Martin Preece said the proposed JV is an exciting opportunity to combine mining operations that are essentially part of the same mineral deposit and is something that the two companies have discussed many times in years gone by.
"The ability to optimise mining and the use of shared infrastructure across the combined operation will result in significant flexibility in mine planning, materially enhancing the economics of the mine and ensuring quality and scale of operation that will be world-class," said Preece, noting the deal would enhance the overall quality of the Gold Fields portfolio.
AngloGold Ashanti CEO, Alberto Caldero, said the JV would allow the miners to share skills and infrastructure in order to significantly enhance every aspect of the mining operation.
"By creating one of the world's largest open-pit gold operations in a pre-eminent mining jurisdiction, we will create longer-term value not only for AngloGold Ashanti and Gold Field but for the combined stakeholders in our local host communities and for all of Ghana," he said.
Gold Fields' share price was up 1.44% to R200 a share in Thursday morning's trade. AngloGold Ashanti's share price was 2% lower at R357 per share.
