[miningmx.com] -- South African gold producer Gold Fields has sold its current 19.9% stake in Sino Gold, a Sydney-based gold company focused on gold exploration and mining in China.
It will sell its stake valued at $282m to Eldordo Gold, a gold producer active in exploration and development in Brazil, China, Greece, Turkey and surrounding regions.
In exchange, Gold Fields will receive 7% of the outstanding shres of Eldorado with a share exchange ratio of 48 Eldorado shares for every 100 Sino shares.
"After having received several expressions of interest for our stake in Sino Gold, we believe that this transaction is the most value creating for our shareholders because it has enabled us to crystallise the value of our investment while retaining exposure to China as a potential area for the future," Gold Fields chief executive Nick Holland said in a statement.
Holland said the sale does not change or delay Gold Fields' strategy of producing 1 million ounces per annum within three to five years. "We have definitely not changed course.
"Gold Fields will retain some exploration joint ventures with Sino over the Jinshu project and other nominated properties in China, while strengthening its own team in China, to allow for independent growth in that country," Holland said.
Eldorado plans to produce approximately 800,000 to 900,000 ounces of gold annually by 2013. It claims to be one of the lowest cost pure gold producers, with a strong balance sheet, no debt and no hedge positions.