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GOLD Fields said there were still unresolved "sticky points" regarding government approval for a proposed joint venture with AngloGold Ashanti in Ghana.
Mike Fraser, CEO of Gold Fields acknowledged on Tuesday (May 7) that while the gold mining firms and the Ghanaian government were "quite close" on an agreement there were "a number of sticky points" relating to the government’s final stake in the joint venture.
The joint venture, which was announced in March last year, sees Gold Fields merge its Tarkwa mine with AngloGold’s neighbouring Iduapriem. As a single mining complex, the mines would produce 600,000 ounces a year, cut costs and extend mine life.
It is proposed that Gold Fields will control the joint venture (60%) with the government taking a 10% stake. The government has a 10% stake in Tarkwa currently. AngloGold owns 100% of Iduapriem.
But negotiations have been complicated by Ghana’s debt crisis following the 2022 default on $20bn worth of international bonds and loans, and the prospect of elections which are due to be held in December.
Fraser said that while the companies weren’t ready to "call failure" on the joint venture, its benefits might not be seen until 2025.
"It is a politicised issue," said Fraser in question time following the presentation of Gold Fields’ first quarter production numbers. "The whole issue in Ghanaian media of resource ownership is background to the election process," he said.
"It is important we make sensible commercial decisions. We are not ready to call failure of this, but as we get closer to elections it might make it quite difficult. The last thing we want to do is make a poor decision against the backdrop of that political maneouvering."
Fraser said he expected to have "a very clear view" of how the discussions with the government might pan out in the second quarter.
Asked for details as to the sticking points, Fraser said that: "If follow media in Ghana you can get to that conclusion [that issue is around the percentage of government ownership in the joint venture]. But there is clearly some alignment that is required .. as well [on royalty and taxation]," he said.
Fraser had a tough first quarter, his first full reporting period since being unveiled as CEO of Gold Fields last year. First quarter gold production was 19.6% lower year-on-year while all-in sustaining costs were 50.8% higher year-on-year. The production decline was owing to weather related events in Australia and Chile as well as backfill handling problems at the South Deep mine in South Africa.
Gold Fields maintained full year production guidance of between 2.33 and 2.43 million oz with output weighted towards the second half of the year.
