| UNITED STATES DOLLAR | |||||||
| 2016 | 2015 | 2014 | |||||
|---|---|---|---|---|---|---|---|
| 15.1. | EQUITY-ACCOUNTED INVESTEES | ||||||
| (a) | Far Southeast Gold Resources Incorporated (“FSE”) | 128.6 | 128.6 | ||||
| (b) | Maverix Metals Incorporated (“Maverix”) | 42.1 | – | ||||
| (c) | Other | – | 0.5 | ||||
| Total equity-accounted investees | 170.7 | 129.1 | |||||
| Share of results of equity-accounted investees after taxation recognised in the consolidated income statement are made up as follows: | |||||||
| (a) | FSE | (2.3) | (3.3) | (3.6) | |||
| (b) | Maverix | – | – | – | |||
| (c) | Other | – | (2.4) | 1.2 | |||
| (2.3) | (5.7) | (2.4) | |||||
| (a) | FSE | ||||||
| Gold Fields’ interest in FSE, an unlisted entity, was 40% (2015: 40%) at 31 December 2016.
Gold Fields paid US$10.0 million in option fees to Lepanto Consolidated Mining Company (“Lepanto”) during the six months ended 31 December 2010. In addition, Gold Fields paid non-refundable down payments of US$66.0 million during the year ended 31 December 2011 and US$44.0 million during the six months ended 31 December 2010 to Liberty Express Assets in accordance with the agreement concluded whereby the Group has the option to acquire 60% of FSE. On 31 March 2012, Gold Fields acquired 40% of the issued share capital and voting rights of FSE by contributing an additional non-refundable down payment of US$110.0 million. Lepanto owns the remaining 60% shareholding in FSE. The remaining 20% option is not likely to be exercised until such time as FSE obtains a Foreign Technical Assistance Agreement (“FTAA”) which allows for direct majority foreign ownership and control. FSE has a 31 December year-end and has been equity-accounted since 1 April 2012. |
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| Investment in joint venture consists of: | |||||||
| Unlisted shares at cost | 230.0 | 230.0 | |||||
| Equity contribution | 77.7 | 75.4 | |||||
| Cumulative impairment1 | (101.4) | (101.4) | |||||
| Share of accumulated losses brought forward | (75.4) | (72.1) | |||||
| Share of loss after taxation2 | (2.3) | (3.3) | |||||
| Total investment in joint venture3 | 128.6 | 128.6 | |||||
| 1 | Refer note 6 for details of impairment. | |
| 2 | Gold Fields share of loss after taxation represents exploration and other costs, including work completed on a scoping study. | |
| 3 | FSE is a company incorporated under the laws of the Philippines and owns the gold-copper Far Southeast exploration project (the “FSE project”). During the exploration phase of the FSE project and as long as the 20% option remains exercisable, the Group has joint control over the FSE project. The Group will only have the power to direct the activities of FSE once it exercises the option to acquire the additional 20% shareholding in FSE, which is only exercisable once an FTAA is obtained. FSE has no revenues or significant assets or liabilities. Assets included in FSE represent the rights to explore and eventually mine the FSE project. |
| UNITED STATES DOLLAR | |||||
| 2016 | 2015 | ||||
|---|---|---|---|---|---|
| (a) | Maverix | ||||
| Gold Fields’ interest in Maverix, listed on the Toronto Stock Exchange, was 32% (2015: 0%) at 31 December 2016.
On 23 December 2016, Gold Fields sold a portfolio of eleven producing and non-producing royalties to Maverix in exchange for 42.85 million common shares and 10.0 million common share purchase warrants of Maverix, realising a profit on disposal of US$48.0 million. The warrants are classified as derivative instruments and are included in investments (refer note 17). Maverix has a 31 December year-end and has been equity-accounted since 23 December 2016 |
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| Investment in associate consists of: | |||||
| Listed shares | 42.1 | – | |||
| Investment in associate – Maverix | 42.1 | – | |||
| The fair value of the investment in Maverix at 31 December 2016 is US$42.1 million. | |||||
| (c) | Other | ||||
| Bezant Resources PLC (“Bezant”)1 | – | 0.5 | |||
| Rusoro Mining Limited (“Rusoro”)2 | – | – | |||
| Investment in associates – Other | – | 0.5 | |||
| Total investments in associates | 42.1 | 0.5 | |||
| 1 | During 2016, the Group’s holding was diluted from 21.6% to 8.8% following the issue of new shares by Bezant. In line with the Group’s accounting policy, this resulted in Bezant no longer being accounted for as an equity-accounted investee and was re-classified to available-for-sale financial investments. | |
| 2 | Represents a holding of 26.4% in Rusoro. The carrying value of Rusoro was written down to US$nil at 31 December 2010 due to losses incurred by the entity. The fair value, based on the quoted market price of the investment was US$23.9 million and US$5.0 million at 31 December 2016 and 31 December 2015, respectively. The unrecognised share of profits of Rusoro for the year amounted to US$18.7 million (2015: unrecognised shares of loss of US$3.6 million). The cumulative unrecognised share of losses of Rusoro amounted to US$194.0 million (2015: US$212.7 million). On 22 August 2016, the Arbitration Tribunal, operating under the Additional Facility Rules of the World Bank’s International Centre for the Settlement of Investment Disputes, awarded Rusoro damages of US$967.8 million plus pre and post-award interest which currently equates to in excess of US$1.2 billion in the arbitration brought by Rusoro against the Bolivarian Republic of Venezuela. Management of Rusoro has not recognised this amount due to the uncertainty over its recoverability. |
| 15.2. | INTEREST IN JOINT OPERATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| On 13 December 2016, Gold Fields purchased 50% of the Gruyere Gold Project and entered into a 50:50 unincorporated
joint venture with Gold Road Resources Limited (“Gold Road”) for the development and operation of the Gruyere Gold
Project in Western Australia, which comprises the Gruyere gold deposit as well as additional resources including Central
Bore and Attila/Alaric.
Gold Fields acquired 50% interest in the Gruyere Gold Project for a total purchase consideration of A$350.0 million payable in cash and a 1.5% royalty on Gold Fields’ share of production after total mine production exceeds 2 million ounces. The cash consideration is split with A$250.0 million payable on the effective date and A$100.0 million payable according to an agreed construction cash call schedule. Transaction costs of A$18.5 million (US$13.3 million) were incurred. Below is a summary of Gold Fields’ share of the joint operation and includes inter-company transactions and balances:
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