South African miner Gold Fields will splash $US300 million purchasing Barrick Gold’s Granny Smith, Lawlers and Darlot gold mines in the Yilgarn region, near Southern Cross, and plans to integrate the Lawlers mine with its nearby Agnew operation.
Gold Fields announced today it had entered a binding sale and purchase agreement with the Canada-headquartered Barrick for the assets, which are collectively known as Yilgarn South.
Chief executive Nick Holland said the acquisition was opportunistic and conservatively financed.
“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,” Mr Holland said in a statement.
Completion of the acquisition remains subject to regulatory and other conditions, including approval from the Foreign Investment Review Board and Mines Minister Bill Marmion.
Gold Fields will either pay the consideration in cash, or partly in shares issued to Barrick.
Mr Holland said it would take Gold Fields around six to 12 months to realise the full benefits of the acquisition.
He said the company saw considerable opportunities for cost synergies between the Lawlers mine and its adjacent Agnew development.
“We plan to immediately consolidate these two operations and rationalise its processing infrastructure and on-site general and administrative expenses, as well as capital,” Mr Holland said.
“In addition to realising 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.”
The planned rationalisation of the Lawlers and Agnew operations follows several other restructuring moves by Gold Fields in WA.
It has withdrawn from mining the low grade Main and Rajah ore bodies at Agnew and closed the marginal heap leach operation at St Ives.
As a result, both operations are in the lowest cost quartile, with Agnew one of its lowest cost operations.
Gold Fields said 42 per cent of its gold production would be in Australia, with the balance in Ghana (34 per cent), Peru (13 per cent) and South Africa (11 per cent).
Barrick Gold chief executive Jamie Sokalsky said the sale was part of the company’s efforst to optimise its portfolio of operations.
“I’d like to extend my gratitude and appreciation to our Yilgarn South employees, who have made a significant contribution to Barrick over many years,” he said in a statement.
Barrick maintained its 2013 gold production guidance of between 7 million and 7.4 million ounces of gold.
