The agreement will see a subsidiary of Gold Fields acquire a 45% stake in the Asanko gold mine (AGM) in Ghana, as well as associated properties and exploration rights for a total consideration of $185m.
Asanko Gold Ghana (AGG) currently holds a 90% interest in the mine and various other properties in the country, while the remaining 10% is held by the Ghanaian Government as a free carried interest.
The AGM complex comprises two main deposits, Nkran and Esaase, in addition to a total of nine known satellite deposits.
Gold Fields will be required to make an upfront payment of $165m upon completion of the deal, followed by a deferred payment of $20m.
In addition, the company is set to acquire a 9.9% shareholding in Asanko by subscribing to a private placement of 22,354,657 Asanko shares for a sum of $17.6m.
The acquisition is consistent with Gold Field’s ongoing strategy of improving the quality of its portfolio in order to enhance cash generation.
In addition, the latest JV is expected to grant the company access to low-cost production ounces (oz).
The mine is anticipated to produce 253,000oz per year based on Asanko’s guidance for 2019-2023.
In a statement, Gold Fields said: “The sizeable resource base of the asset is immediately accretive to Gold Fields in terms of life, with the potential for further discoveries on the large, relatively unexplored, tenement package held by Asanko.
“The transaction exceeds our requirement of a return of 15% at a gold price of $1,300 per ounce, with a payback period of five years out of an anticipated life-of-mine of at least 15 years.”
The asset base of Asanko in Ghana is situated 100km north of Gold Fields’ Tarkwa and Damang operations.
Completion of the transaction is subject to customary conditions, including no Asanko material adverse event and Ghanaian ministerial approval.
It is currently scheduled to take place in the third quarter of this year.