COMMENTARY Corporate

Gold Fields and AngloGold Ashanti propose Ghana JV to create Africa’s largest gold mine

In March 2023, Gold Fields and AngloGold Ashanti agreed on a proposed joint venture in Ghana between Gold Fields’ Tarkwa mine and AngloGold Ashanti’s neighbouring Iduapriem mine.

The Tarkwa mine is held by Gold Fields Ghana, in which Gold Fields currently owns a 90% share and the Government of Ghana (GoG) holds 10%. The Iduapriem mine is currently 100% owned by AngloGold Ashanti.

The two companies have commenced engagements with senior government officials in Ghana and will continue engaging with the GoG, relevant regulators and other key stakeholders, with a view to implementing the Proposed Joint Venture as soon as practically possible. The Parties have agreed to mutual exclusivity during this engagement.

It is intended that the Proposed Joint Venture will be an incorporated joint venture, constituted within Gold Fields Ghana and operated by Gold Fields. AngloGold Ashanti will contribute its 100% interest in Iduapriem to Gold Fields Ghana in return for a shareholding in that company. Excluding the interest to be held by the GoG, Gold Fields will have an interest of 66.7%, or two-thirds, and AngloGold Ashanti will have an interest of 33.3%, or one-third, in the Proposed Joint Venture.

The Parties do not anticipate that any material, additional capital injection will be required by either company, which is expected to materially improve capital intensity of the combined operational.

The Proposed Joint Venture would create the largest gold mine in Africa and one of the largest in the world, It will be a high-quality operation, supported by a substantial mineral endowment and an initial life spanning almost two decades.

Operational synergies will be achieved by optimising 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.

Benefits of the proposed joint venture include:

Estimated life of at least 18 years, which could increase through an extension and optimisation plan, which will be considered over the next three years, and which could also enhance envisaged production and cost parameters.
Estimated average annual production (100% basis) of almost 900koz over the first five years and average annual production in excess of 600koz over the estimated life of operation
Estimated all in sustaining cost (in 2023 terms) of less than US$1,000/oz over the first five years and less than US$1,200/oz over the estimated life of operation.
It is expected that the Ore Reserves for the Proposed Joint Venture will exceed the sum of the Ore Reserves for the stand-alone operations due to the anticipated operational synergies, and the declaration of additional Mineral Resources and Ore Reserves as a result.

Key principles of the proposed joint venture:

Gold Fields and AngloGold Ashanti have collaborated across a broad and comprehensive range of work streams to formulate the indicative base case for the combination, which underpins the estimates above. Additional, detailed work will now be undertaken to develop the optimised initial operating plan which will apply from commencement of the Proposed Joint Venture.
Gold Fields and AngloGold Ashanti have agreed the governance principles of the Proposed Joint Venture, including their respective representation in management and the Board of Gold Fields Ghana. As operator of the JV, Gold Fields will receive a management and technical fee determined on an arms-length basis.

Implementation is subject to reaching agreement with the GoG regarding the Proposed Joint Venture, conclusion of confirmatory due diligence and definitive transaction agreements, and securing all requisite regulatory approvals.

Gold Fields partners with Osisko to develop the Windfall Project in Québec, Canada

In May 2023, Gold Fields Limited announced a partnership with Osisko Mining Inc. (Osisko) to develop and mine the world class underground Windfall Project in Québec, Canada, now known as the Windfall Mining Group (Partnership). Under the agreements, Gold Fields has acquired a 50% interest in the feasibility stage Windfall Project (including exploration potential) on the following key terms:

Cash payment of C$300 million (US$220 million) paid on signing;
Cash payment of C$300 million payable on issuance of key permits by the Québec environmental ministry authorising the construction and operation of the Windfall Project; and
50/50 co-share of interim and construction capital expenditures.

Under the Partnership, Gold Fields has also acquired a 50% up-front vested interest in Osisko’s highly prospective Urban Barry and Quévillon district exploration camps, totalling approximately 2,400km², which will be co-explored and co-developed under the Partnership. In exchange, Gold Fields will fund the first C$75m in regional exploration on those Exploration Properties over the first seven years of the Partnership. Thereafter, exploration spend will be shared 50/50.

This transaction constitutes a measured strategic entry into primary mining jurisdiction, at an attractive valuation, underpinned by a world class near mine asset, with significant camp scale exploration potential. Gold Fields is excited to do so in partnership with an experienced operator in Osisko, who has already achieved great exploration success at Windfall and the Urban Barry camp, and who brings with them a successful track record in the province of Québec.

Under the Partnership structure, each of Osisko and Gold Fields respectively hold an effective 50% partnership interest in the Windfall Project and the Exploration Properties. Management and operatorship will be joint, and each partner holds a 50% interest in a newly incorporated company. The management company will be governed by a Board of Directors comprising three directors nominated by Gold Fields and three directors nominated by Osisko. Having carried out extensive due diligence, management interaction and site visits for just over a year, Gold Fields believes the Windfall Project is on track to become a high-quality, low-cost underground gold mine with a relatively small surface footprint and considerable growth prospects along strike and down plunge, well beyond delineated Mineral Reserves and the current 10 year projected mine life set out in Osisko’s December 2022 Windfall Feasibility Study.

To accelerate the next phase of discoveries, Gold Fields will fund C$75m over the next seven years, with the goal of fast-tracking exploration discovery and transitioning the Windfall, Urban Barry and Quévillon belts into premier, multi-decade mining operations. Propertywide regional and near-deposit exploration is already in progress, with six drills exploring targets developed by Osisko over the past seven years, and include the Golden Bear, Fox and Shellian prospects.

The acquisition of the 50% Partnership interest was executed and completed on 2 May 2023.

Gold Fields announces Non-Executive and Executive appointments

The Board of Directors announced the appointment of Carel Smit as a Non-Executive Director of the Company with effect from 1 June 2023.

Gold Fields Limited announced the following appointments to its Group Executive Committee: Kelly Carter as Executive Vice-President: Legal and Compliance, Benford Mokoatle as EVP South Africa and Francois Swanepoel as Chief Technical Officer. Gold Fields has also appointed Jongisa Magagula, a director of African Rainbow Minerals, as EVP Investor Relations & Corporate Affairs, with effect from 1 September 2023.

Gold Fields announces first sustainability linked loan

Gold Fields Limited announced that it has successfully refinanced its US$1.2bn 2019 RCF. For the first time, the new facility is linked to the achievement of three of Gold Fields’ key ESG priorities: gender diversity, decarbonisation and water stewardship.

Key terms of the new RCF are:

A principal loan amount of US$1.2bn, with an option to increase the facility by up to US$400m.
Maturity of five years, with an option to extend the tenor through two one-year extensions.
A competitive margin, subject to rating margin adjustments and sustainability margin adjustments.
Gold Fields will benefit from a lower margin depending on the fulfilment of the sustainability linked key performance indicators (KPIs) under the facility agreement. Conversely, Gold Fields will pay a premium on its margin if the KPIs are not met.
The facility agreement was concluded with a syndicate of 16 banks, with MUFG Bank as sole global co-ordinator and ING Bank and MUFG Bank as joint sustainability co-ordinators.

The sustainability linked KPIs for the five-year term of the loan until 2027 are aligned with Gold Fields’ strategy as well as its 2030 ESG targets. They address the most material ESG priorities for the Company and the mining sector in general:

Improving women representation in our total workforce from Gold Fields’ current 23% level.
An abatement in scope 1 and 2 CO₂ emissions through renewable energy projects.
Increasing the amount of reused/recycled water from the 75% of total water consumption achieved in 2022.

The KPIs set in the loan, if achieved, will assist Gold Fields in reaching its 2030 ESG targets launched in 2021. For the relevant ESG areas the 2030 targets are 30% women representation, reducing net scope 1 and 2 emissions by 30% and absolute emissions by 50% and 80% of water consumed to be recycled/reused.

Gold Fields has also completed four five year RCFs with South African banks for a total of R2.5bn to fund capital expenditure as well as general corporate and working capital requirements of the Group. The interest rates under the RCFs with Rand Merchant Bank (R1.0bn) as well as Nedbank, ABSA Bank and Standard Bank (R500m each) are linked to the Johannesburg Interbank Average Rate (JIBAR) plus a margin.

Mining industry collaborates to improve TSF performance

performance A new consortium of eight global mining companies has been launched in a multi-year initiative to develop and implement new technological applications for managing tailings.

The GeoStable Tailings Consortium (GSTC) comprises Antamina, Barrick, BHP, Freeport-McMoRan, Gold Fields, Newmont, Teck and Vale, with external expert support provided by the University of Alberta.

The GSTC will study options to combine various blends of tailings with waste rock to create ‘geo-stable’ landforms that are stronger and more stable than conventional tailings deposition methods and are likely to reduce process water consumption.

The GSTC will undertake a range of research and development activities, including laboratory testing, field trials, and data analysis, and will collaborate to promote best practices in tailings and waste management and foster a culture of continuous improvement across the mining industry.

Gold Fields supports host community SMEs

Gold Fields Limited celebrates its partnerships with small- and medium sized enterprises (SMEs) on United Nations SME Day.

In 2022, Gold Fields introduced preferential payment terms for our SMEs in host communities, particularly those led by minority and disadvantaged groups. Payment terms have been reduced from 30 days to 14 days (from date of ratified invoice) for host community SMEs and, in Australia, for Aboriginal-owned businesses.

The improved terms, which have been implemented since mid-2022, seek to alleviate the cash-flow challenges often experienced by SME suppliers and service providers. At the end of 2022, Gold Fields had 731 host community companies on its books, of which approximately 60% are classified as SMEs.

During 2022, Gold Fields' global procurement spending was US$2.42bn, of which US$747m, or 31%, was with host community businesses.

Cash dividend

In line with the Company’s dividend policy, the Board has approved and declared an interim dividend number 98 of 325 SA cents per ordinary share (gross) in respect of the six months ended 30 June 2023. The interim dividend will be subject to the Dividend Withholding Tax of 20 per cent. In accordance with paragraph 11.17 of the JSE Listings Requirements, the following additional information is disclosed:

The dividend has been declared out of income reserves;
The gross local dividend amount is 325 SA cents per ordinary share for shareholders exempt from dividends tax;
The Dividend Withholding Tax of 20 per cent (twenty per centum) will be applicable to this dividend;
The net local dividend amount is 260 SA cents per ordinary share for shareholders liable to pay the dividends tax;
Gold Fields currently has 893,540,813 ordinary shares in issue; and
Gold Fields’ income tax number is 9160035607.

Shareholders are advised of the following dates in respect of the final dividend:

Interim dividend number 98: 325 SA cents per share;
Declaration date: Thursday, 17 August 2023
Last date to trade cum-dividend: Tuesday, 5 September 2023;
Sterling and US Dollar conversion date: Wednesday, 6 September 2023;
Shares commence trading ex-dividend: Wednesday, 6 September 2023;
Record date: Friday, 8 September 2023; and
Payment of dividend: Monday, 11 September 2023.

Share certificates may not be dematerialised or rematerialised between Wednesday, 6 September 2023 and Friday, 8 September 2023, both dates inclusive.