Ian Cockerill, CEO, Gold Fields
Send this article to a friend
Print this page

» I just can’t find anything he does [Ian Cockerill] wrong - Peter Major, Cadiz.
» Gold Fields opens door to South Deep
» Gold Fields to dig 11m oz more gold in SA
» South Deep under due diligence
» Bidding for South Deep to intensify
» Barrick to sell South Deep

» JSE:GOLD FIELDS LIMITED:
10630c 7%

Gold Fields in $2.5bn swoop for South Deep
David McKay
Posted: Mon, 11 Sep 2006

[miningmx.com] -- GOLD Fields is to buy Barrick Gold's 50% stake in South Deep, a 30 million oz gold reserve west of Johannesburg, for $1.53bn, the company has announced.

In a related announcement, Gold Fields has also increased its stake in Western Areas to 34.7%, and has an option to extend its interest to 41% with the ability to make a general offer to Western Areas shareholders.

Western Areas owns the other half of South Deep and has a preemptive right over South Deep should there be a change in the ownership of the mine.

The bid for Barrick's stake in the South African mine, and the increase in its shares in Western Areas is equal to a total investment of $2.5bn, Gold Fields said.

"We're bringing South Deep home," said Gold Fields CEO, Ian Cockerill. "Including the recently announced extensions to Kloof and Driefontein gold mines, Gold Fields has now committed more than R25bn to growth projects in South Africa," he said.

Gold Fields announced last week that it would spend R4.7bn extending the life of its Kloof and Driefontein gold mines.

The bid for Barrick's stake comprises $1.2bn in cash and the remainder of the $1.53bn will be in Gold Fields shares.

"This agreement brings value and makes sense for all concerned," said Barrick Gold CEO, Greg Wilkens, in an announcement.

"Gold Fields has great expertise in deep level mining and there are synergies that they can realise in conjunction with their nearby flagship operations in South Africa," Wilkens said.

Gold Fields will buy 27 million Western Areas shares from JCI taking Gold Fields stake in the company to 34.7%. A "reciprocal call" will take Gold Fields stake in Western areas to 41%, Gold Fields said.

Gold Fields will offer its shares in exchange for Western Areas shares in a ratio of 35 ordinary Gold Fields shares for every 100 Western Areas shares.

This is equal to a 16.8% premium to Western Areas' share price based on Gold Fields' closing share price on September 7. It values Western Areas, which will be delisted from the JSE, at R52.75/share.
Free news alerts: click here to subscribe
Bernard Swanepoel, CEO of Harmony Gold, the company that owns 29.3% in Western Areas, declined to comment on whether he would sell his Western Areas shares to Gold Fields. "This is Gold Fields’ moment of glory," he said.

Cockerill said Harmony had also been in the running for Barrick's stake in South Deep. "I'm sure others were interested as well," he said.

Commenting on the massive hedge book Gold Fields will inherit in Western Areas, Cockerill said: "Once the dust has settled we will sit down with the hedge counterparties and see what it is." Gold Fields remained committed to not hedging it gold production.