Gold Fields hires Canadian bank to explore selling 30% of Salares Norte: report

GOLD Fields hired RBC Capital Markets to explore the sale of a 30% stake in the South African gold miner’s project in northern Chile, said Reuters citing two sources.

The company, however, declined to comment on the potential sale process. “We have not yet finalised the funding mechanism for the project should we decide to go ahead,” said Sven Lunsche, a spokesman for the company.

Gold Fields received environmental approval for the construction of Salares Norte, a mine high in the Andes mountains, in December, and said it would decide whether to go ahead in the first half of 2020 as it needs $834m in funds.

The two banking sources, speaking on condition of anonymity, said second-round offers are due in the next few weeks, said Reuters. RBC Capital Markets declined to comment.

Once approved, Salares Norte would start producing around 450,000 ounces of gold equivalent a year from late 2022.

JP Morgan Cazenove said in April last year that proceeding with Salares Norte might also be preceded by a decision on whether to continue with South Deep, Gold Fields’ last remaining South African mine.

South Deep and Salares Norte were “mutually exclusive” in Gold Fields’ portfolio over the long term if capital allocation targets more than 15% internal rate of return, the bank said.

“This is likely to mean that a strategic solution at South Deep is a likely condition precedent of Salares’ approval for funding,” said O’Kane. “Such a strategic solution at South Deep would be positive catalyst in Gold Fields’ share price.”

All things being equal, construction on Salares Norte was scheduled to begin in late 2020 with first gold production in 2023.

The mine would have an initial life of mine of 11.5 years and life of mine production of 3.7 million gold equivalent ounces at an all-in sustaining cost of $465/oz.