Ian Cockerill, CEO Gold Fields
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Gold Fields sells Essakane project for $200m
Allan Seccombe
Posted: Thu, 11 Oct 2007

[miningmx.com] -- GOLD FIELDS has sold its 60% stake in the Essakane gold prospect in Burkina Faso for $200m to its partner in the project, Canada's Orezone Resources.

"While the Essakane project is expected to make a good return and deserves to be built, Gold Fields’ relatively small stake in the project mitigates against it becoming a Gold Fields franchise asset," said Gold Fields CEO Ian Cockerill.

The prospect has four million ounces of measured and indicated resources and 1.3 million ounces of inferred resources at a 0.5 g/t cut-off. It would cost $346m and take 18 months to build a mine and CIL plant with an annual capacity of 5.4 million tonnes.

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The mine is envisioned to produce 292,000 oz of gold a year at a cash cost of US$356/oz.

Orezone will decide whether it will pay Gold Fields $150m in cash and $50m in shares or the entire amount in cash. Gold Fields has spent $47m on the project already.

"The proceeds from the sale will be reinvested to create value for Gold Fields’ shareholders," Cockerill said, adding the options included debt reduction and funding its large capital programme.

Orezone will issue shares to raise at least $150m, making it one of the conditions of the deal.

Gold Fields and Orezone expect the transaction to close towards the end of November.