Gold Fields will buy Barrick Gold’s interests in the Granny Smith, Lawlers and Darlot gold mines (collectively the Yilgarn South Assets) in Western Australia for $300 million.
“This is an attractive, opportunistic and conservatively financed acquisition, which is consistent with Gold Fields’ strategy and focus,” said Nick Holland, CEO of Gold Fields. “We see a clear path to value and, once fully integrated, these assets are expected to have a positive impact on Gold Fields’ production, free cash flow and global credit rating.”
The acquisition provides Gold Fields with an additional 452,000 oz of annual production, at all-in sustaining costs (AISC) of $1,137/oz and 2.6 million reserve oz at a cost of about $115/oz. Upon completion, Australia will represent Gold Fields’ largest regional production center with 42% of the group’s production, with Ghana decreasing to 34% and Peru and South Africa remaining largely unchanged at 13% and 11%, respectively.
“We see considerable opportunity for cost synergies between Lawlers and the adjacent Agnew, one of the lowest cost producers in Australia. We plan to immediately consolidate these two operations and rationalize its processing infrastructure and on-site general and administrative expenses as well as capital,” Holland said. “In addition to realizing the obvious short-term operating synergies between these assets, we believe the consolidation of the Lawlers/Agnew operations within the Yilgarn belt will provide significant long-term benefits allowing for the considerable potential of this gold district to be maximized under one owner. As such, most of the consideration valuation is imputed to the Lawlers/Agnew camp.”
From a geological perspective, the acquisition will consolidate ownership within a significant gold system, he added.
Holland said they expect to realize the full benefits of the acquisition in six to 12 months.
Completion of the proposed acquisition is subject to certain customary and regulatory conditions precedent.