Gold Fields on Track for Growth on Multiple Fronts
Production on track, acquisition of Gold Road announced
Gold Fields (JSE: GFI) took another growth step this week via the proposed consolidation of the Gruyere gold mine in Western Australia.
On Monday, Gold Fields entered into a binding scheme implementation deed to acquire Gold Road Resources (GOR: ASX), its 50% partner at the circa 350,000 ounce per annum Gruyere mine.
The cash offer values Gold Road at A$3.7 billion, higher than the A$3.3 billion Gold Fields offered to pay for the company in late March.
The consideration as of May 2 equates to A$3.40 per share, comprising A$2.52 per Gold Road share and a variable cash portion equal to the full value of each shareholders’ proportion of Gold Road’s stake in Northern Star Resources (ASX: NST), which was A88c per share as of Friday.
Gold Road emerged with a stake in Northern Star worth around A$1 billion following Northern Star’s acquisition of De Grey Mining, which closed this week.
The deal is being recommended by Gold Road’s board and institutional shareholders accounting for 7.5% of the register have agreed to back it.
Gold Fields expects to be fund the transaction from existing cash and a new bridge financing.
“We continue to generate strong cash flows, particularly in the current gold price environment, and remain committed to maintaining a strong balance sheet in accordance with our capital allocation framework,” Gold Fields CEO Mike Fraser said.
Steady quarter
On Tuesday, Gold Fields reported its March quarter operating results.
The company produced 551,000 ounces of gold at all-in sustaining costs of US$1625 and all-in costs of US$1861/oz.
The new Salares Norte mine in Chile produced 50,000oz of gold equivalent, up 13% on the December quarter.
Following setbacks experienced during the 2024 winter period, Gold Fields undertook a further review of the processing plant and will install additional heat tracing and encapsulate additional components of the plant to mitigate the risk of freezing.
The mine is expected to produce 325,000-375,000oz AuEq at AISC of US$975-1125/oz AuEq, with commercial production expected to be declared in the September quarter.
Gold Fields maintained full-year group guidance of 2.25-2.45Moz at AISC of US$1500-1650/oz, and AIC of US$1780-1930/oz, or US$1732-1882/oz, excluding the St Ives renewable power project.
Full-year capital expenditure guidance is unchanged at US$1.49-1.55 billion, with sustaining capital expected to be US$940-970 million.
Net debt at the end of March was US$1.98 billion, down from US$2.08 billion at the end of December.
Net debt to adjusted EBITDA at the end of the quarter was 0.59x compared to 0.73x at the end of December 2024.
Gold Fields is advancing the permitting process at the Windfall project in Canada with an aim to make a final investment decision in the March 2026 quarter.
West Africa
In March, the Ghanaian government rejected a request from Gold Fields to renew the mining lease for the Damang mine.
However, a new agreement was reached last month with the government to grant a 12-month extension of the mining lease.
Gold Fields will continue to process stockpiles and will restart open pit mining, as well as completing a bankable feasibility study into the extension the mine life.
The government and company will create a joint asset transition team to work towards the successful transition of the asset to ownership by a Ghanaian entity in due course.
The government has also expressed support for Gold Fields’ ongoing operation of the Tarkwa mine.
For the past two years, Gold Fields and AngloGold Ashanti (NYSE: AU) have been working on a proposed joint venture to combine Tarkwa and the neighbouring Iduapriem mines.
The pair have since been working to obtain approval from the Ghanaian government.
Yesterday, the companies said discussions would be paused to allow focus on their respective standalone operations.
AngloGold said it had identified changes in its standalone mine plan for Iduapriem which had the potential to unlock significant additional value.